Choosing which innovative ideas to pursue is often an exercise in guesswork. But by using existing management tools in a new way, executives can effectively gauge an innovation’s potential along two crucial dimensions: Can it withstand market pressures from competitors? And can it deliver more economic value to customers than alternatives?
In this article for Harvard Business Review, Monitor partner Geoff Tuff outlines this distinctive approach: a combination of the Ten Types of Innovation® and Economic Value Estimation (EVE)® tools. The Ten Types of Innovation®, developed by research at Doblin, a member of Monitor Group, classifies the innovation activities organizations pursue. EVE® is a simple framework pioneered by Monitor’s pricing practice that breaks down the economic value of an offer into its component parts and compares this value to a next-best alternative.
This article explains how executives using the Ten Types of Innovation® can take the idea’s “ambient temperature” to assess how well-positioned it is for success. Ideas that innovate in six or more areas—going beyond product innovation to also include business model or customer experience innovation, for example—stand the best chance of success.
After that, EVE®—calculated by dividing the Incremental Economic Value by the Reference Value—can provide a gauge of the innovation’s “heat index,” or how much measurable value it delivers to customers.
Author: Geoff Tuff
Sources: Harvard Business Review, Monitor Group
Subject: Innovation
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