Why Speed Is Critical in Innovation

We talk about innovation at scale, but innovation at speed is just as important. Being able to innovate fast and cheap, test digital products and services in the market, perfect them, and deliver them on a regular basis, is, not surprisingly, a significant competitive advantage. And yet, there are far too many articles written, with regular frequency, that lament how enterprises move slowly, and fail to innovate at the right pace. Therefore, we figured a quick reminder of why speed is a critical aspect of innovation and will serve as an effective reminder that innovation is not just about new things, or about doing them in new ways, but also about doing them fast.

So why does speed matter at all, when it comes to innovation? Most of the answers below are common sense, but there might still be a surprise for you.

Benefits of Speed:

Improving speed to market leads to diverse financial and nonfinancial gains. Greater agility has the potential to boost gross sales and shareholder value. The financial gains are often directly measurable and hugely exceed the upfront costs of introducing speed-to-market strategies to the organization. Some examples of the benefits of speed are:

Faster Innovation:

If an enterprise innovates quickly, it naturally gains the first-mover advantage. The first-mover advantage typically results in gaining quick market share, a headstart on iterative improvement, and a significant window for building a moat around the business powered by the new innovation.

As enterprises learn to move fast, they often go into a virtuous cycle and see their growth accelerate further. This is essentially the culture of speed. As, innovation and efficiency increase, the competitive advantage for the fast enterprise becomes significant. No enterprise in any industry can expect to move forward with a slow culture; by purpose, entrepreneurship is all about moving forward and promoting innovation forward.

Source BCG Global Innovation Survey

Lower Research and Development Cost

Limited and focused iterations, streamlined processes, and decreased slack release financial and operating resources for other value-adding activities are the need of the hour. Enterprises need to diligently balance plans for more effective and better results. And the basic logic is simple: when you develop and launch an innovative product or service quickly, you also invariably reduce your pre-launch investment in it. Post-launch, if you have the right product-market fit, you can always invest more and refine your innovation further. But initially, keeping the cost low (by launching quickly) is a significant advantage, as it frees up your organizational resources to focus on other innovations, as well as on improving the just-launched innovation on the basis of real-world feedback.

Larger Market Share

A swift introduction also gives a product more time to increase its market share before it fades into being a commodity. A product that goes to market quickly is unlikely to face early competition. Brand leadership and loyalty are usually awarded to first-movers, but one must continue to evolve to avoid being overtaken by competitors.

While first-movers have the privilege of capturing undivided consumer mindshare, attention, and brand loyalty before competitors emerge on the scene. Let’s consider some real-life examples of the first-mover advantage. Here are a few of my favorites.

Kelloggs: James Caleb Jackson in 1863 is credited to have created the first Graham flour based cereal called Granula but it didn’t attract as much. It was shortly after, when surgeon John Harvey Kellogg made a similar kind of cereal, and named it granola, and debuted with his younger brother, that Corn Flakes with added sugar came into being. Thereafter they started mass-marketing their brand, which then really started to take off and they seized the first-mover advantage.

Let’s go down the memory lane – remember when Amazon sold only books? They were the first major online bookseller and a force in the reckoning, who rocked the longtime brick-and-mortar stalwarts like Barnes & Noble and Borders as they didn’t stand a chance. Borders group shuttered in 2011 and Barnes & Noble — Where Amazon’s Jeff Bezos used to have company meetings — has steadily seen share prices falling, revenue, layoffs, and store closures.

Ironically, Amazon has even overstepped on Barnes & Noble’s physical store center over the past few years. With fast shipping, an increasing number of Prime members, and incredibly low prices have placed Amazon to seemingly unbeatable market share and space.

With Kindle, Amazon knocked off Barnes & Noble by the punch again with their 2007 e-reader. Barnes & Noble answered them back with the Nook in 2007, but it was too late. While Nook initially peaked as a $933 million per year business, but, in 2016, they announced meagre earnings of just $146 million.

Two years of Kindle brand loyalty was able to overcome an initial market share grip by Barnes & Noble, which had lost $1.3 billion on Nook in the last six years.

Greater Forecasting accuracy

One of the biggest challenges that enterprises face is forecasting demand for new products over time. Exceed it, and risk warehouses full of excess inventory. Underestimate it, and your customers could leave empty-handed or you might be left with a huge bill for expedited delivery. Therefore with a shorter time frame between product design and product release, enterprises would be interested to take it to market.

A case in point worthy of a mention: In a new study conducted by Van Mieghem and Doug Thomas of Penn State University, researchers partnered with Dell to analyze sales data from over a hundred of the company’s products. While companies count significantly on managers’ experience and market research, researchers observed that companies like Dell could use past data from previous products to better forecast accuracy on new products by as much as 9%. This essentially means millions of dollars of worth savings.

Design the system for Speed

From an innovation attitude, we can count on two aspects to speed: firstly the rate at which enterprises develop new products and services, and secondly the pace at which they deliver those products and services to market. Enterprises insist on one or the other; for example, innovation leaders emphasize development and fast followers concentrate on delivery. Therefore, enterprises who have designed their systems, structures, processes, and cultures for speed in either context tend to keep four things in common:  application of lean processes, prototyping, and iterations, with committed innovation staff, and follow the right metrics.

Conclusion:

Fast innovators have long manifested that by shortening the innovation and product development cycles and tapering the time to market can be a potent source of competitive advantage. However, with the increasing importance on speed, even enterprises that already operate on lean processes and are fast, infer that a new awareness is dawning: the need for speed is itself rising.