Innovation or Growth: Which is More Important?

In this tough economy, companies often put innovation on the back burner. In a recent survey of executives, innovation has dropped as a priority for senior management teams. In some sense, this seems logical. Why invest your company's capital in long-term innovation efforts when short-term survival is key? Do you really need to invest in technology R&D when the payoff in revenue and profitability growth might be years away?

The problem with this logic is that it uses and incorrect definition of innovation. The traditional definition of innovation focuses on breakthrough ideas, usually a scientific or technological advancement that enables a new type of product. But this is the wrong way to think about innovation. Innovation is the process of creating a solution concept that satisfies customers’ needs.

Why is this definition of innovation better? Because innovation is a solution to help your company grow. And growth doesn’t have to come from a technological breakthrough. It can come from better positioning of your current products against your competitors, better prioritization of your current product pipeline, and improved sales materials. And in tough economic times, these types of innovations can be made with very little investment.

Of course, creating these types of innovations is dependent on understanding customer needs. This is the problem companies should focus on. Defining customer needs correctly and identifying market opportunities is the key to generating growth. The good news is that identifying opportunities can be done cost effectively and new innovations that meet customer needs can generate growth without technological or scientific breakthroughs.

About the author:

Jay Haynes, Cofounder and Managing Director of Strategyn Equity Partners, is an award-winning executive with two decades of experience leading growth companies and executing private equity transactions. Mr. Haynes graduated Phi Beta Kappa with highest honors from Brown University, and he received his MBA with distinction from Harvard Business School.
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