Stop wasting your money on innovation

Failure itself is not a bad thing; in fact failure is an essential part of innovation and if you’re not registering some failures, then you’re not really innovating. But there’s a big difference between “smart failure” and “dumb failure”. 

Failing dumb
There are many ways to fail in innovation while wasting a lot of money and time. How many of these mistakes are you making? I’ve certainly made them all in my time.
Overestimating Ideas: The truth is that ideas are adimeadozen and opinions are worthless. Although it’s a great feeling when you have a moment of inspiration, unless you’re Elon Musk, the chances are it’s actually a lousy idea. In reality, innovation usually comes from insights not inspiration, and from collaboration not the lone genius. 
Not prototyping: The second mistake is not testing ideas quickly and cheaply with real cusฌtomers to see if they have genuine appeal – and how they can be further improved. When we commit to an idea it begins to build momentum and before we know it significant investment has been made to ensure that everything is in place for the big launch. And then you find out too late that no one wants it. 
Not assessing the opportunity: We tend to focus on the problem in front of us so when we have an idea, we tend to think about how to make it work, how to solve the technical chalฌlenge, but we tend to neglect the business case. Is anyone actually asking the question, “Will we actually make money if we do this?” 
No discipline in execution: Overinvestment in unproven innovations and a reluctance to kill ideas that clearly aren’t working are among the biggest causes of waste. 

Failing smart
Avoiding dumb mistakes, and so “failing smart”, is a question of learning and applying some simple but highly effective processes and mindsets. Failing smart is about giving yourself the best possible chance of success and recognising when it isn’t working. It’s failing fast and inexpensively and moving onto the next idea or iteration, taking your learning with you. 
Use design thinking: Base innovation on insights not inspiration by using the design thinking process to generate ideas that that solve problems with real value to people. This begins with empathy; the art and science of truly understanding customers through observation and interviewing to surface their deep, unrealised and unmet needs. Then, when you think you’ve developed the solution to this need, mock it up and test it with some real users. Repeat this with multiple iterations until you find the right solution.
Conduct opportunity assessment: Manage the market and business risk by assessing the market value, commercial model, profitability and repeatability. Build a strong business case before moving ahead. 
Adopt a venture capitalist mindset: The common advice is to “think like a startup” but this is only half of the story. Equally important is to think like a venture capitalist. Be ruthless and realistic, invest in success and don’t reinforce failure. Even ideas that emerge from a solid design thinking process won’t always work. Ideas need to earn their investment step by step, so set a series of gates with clear KPIs tied to increasing investment releases. Perhaps the first gate will be proving that the product or service is technically possible. If this is achieved then you invest a little a more and set another KPI, perhaps a certain level of user adoption or repeatability, and so on. However, if KPIs are missed by a sizeable margin, you need to make hard decisions about killing the idea. 
If you learn to love smart failure and root out dumb failure you’ll make every baht of your innovation budget count and get your innovation process running like a welloiled machine. 

Richard Gilman is the senior consultant at SEAC (formerly APMGroup) Southeast Asia’s leading executive, leadership and innovation capability development centre. He can be reached at [email protected]