Prof. Dr. Roland Mattmüller, Chair of Strategic Marketing at EBS Universität in Oestrich-Winkel, Germany, explains how innovations are born, why companies should support their employees’ entrepreneurship and what role failure plays in the innovation process.
“There is no secret recipe for innovation”
Mr. Mattmüller, how do innovations come about?
There are two ways for innovations to emerge: Technical innovations, where a company’s employees “spontaneously” invent something and then develop it, are the first possibility. In this case, the question of how to satisfy customers’ expectations and provide them with something they can use is only addressed afterwards. These traditional innovations are also referred to as inside-out innovations, because they develop from within the company. Then there are innovations that come into the company from the outside and are mainly generated through market research: so-called outside-in innovations. By observing consumers, we identify their needs for which no solution currently exists. The company then tries to solve those problems with new offers.
Is there a secret recipe for successful innovation?
No, there isn’t one right way to innovate. However, the question of what an innovation’s insight is should be asked systematically. In other words, why will consumers buy a product? We often realize that our product does fulfill a certain purpose, but doesn’t yet cover all of the relevant needs. It’s like peeling an onion: The outer layer has been removed, but we haven’t yet reached the inner layers, the real core. We have to do more research to get there.
Where do you start your research?
When we talk about market research and insights, the principle of participative observation is very important. To reach the “core of the onion”, you have to get very close to the customer: see, feel and live like the customer. The decision-makers in a company are at particular risk of losing sight of the target market’s needs. That’s why we have to ensure that we are picking up on trends from all social environments, without letting anything slip through the cracks. The top managers at Disney, for example, sell beverages at one of their amusement parks for a day every year. This way, they come into close contact with the customer – at least temporarily.
How can employee entrepreneurship and power of innovation be promoted within a company?
There is a wealth of ideas, impulses and potential to be tapped among the employees of any company. To develop this power of innovation, companies should encourage their employees to keep their eyes and ears open and stay attentive throughout the day. It’s also important to provide employees with a mouthpiece: an easily accessible platform on which they can share their ideas. They should get the feeling that their impulses are worth something. This is the only way to give them the confidence to share them within the organization. The third step should be to develop a feedback loop. Every idea should be acknowledged and elicit feedback. This prevents ideas from getting lost: The less useful ones are still appreciated, and employees are not discouraged from suggesting further ideas as they come.
Not all innovations can be successful. What role does failure play in the innovation process?
When projects fail in a company, it is often for similar reasons. That’s why it is all the more important to talk about what went wrong. Unfortunately, this happens only rarely in Germany. In the USA, by contrast, companies often cultivate a real culture of failure. Some companies even organize their own events around it, where, instead of telling the success stories, they present the biggest failures of the year. This allows all employees to learn from those experiences and avoid repeating the same mistakes. At the same time, employees become braver and more motivated as a result. Let’s be honest: Failure is always a possibility, so it should be allowed within a company.
What role do diverse teams play in the innovation process?
They are always important, and not just in the innovation process. Companies need to work and think cross-functionally. Innovations shouldn’t be created by individual teams or departments, but rather by connecting different areas of expertise. Today, as many companies reassess their business models, being able to think on the overarching level of the organization as a whole is a clear advantage.