Five conditions for innovation

Incremental innovation is everywhere, but revolutionary innovations – using new technologies and business models to reduce costs, improve accessibility and improve service – are not typical. I think the reason for this is that the conditions for cultivating innovation and motivation are not correctly realized. These five conditions include:

• Experiment
• Phase out old products and services
• Feedback loop
• Product or service improvement incentives
• Budget limit

To illustrate how these conditions affect the innovation process, let's examine each one.

experiment from

 . Any organization that wants to adapt to a changing environment needs an experimental mechanism for new technologies and delivery models. If there is no ability to develop experimental infrastructure, basically new and different methods rarely appear.

Phase out old products and services from

 . If the experiment is successful, new challenges will arise. Many organizations lack the ability to freely remove outdated technology and business models. This requires strong leadership to meet the challenges of change.

Feedback loop from

 . Not surprisingly, strong feedback between customers and organizations requires incentives to invest and adopt the most valuable innovations. Managers need clear feedback to determine when to focus on service improvements and cost reductions.

Product or service improvement incentives from

 . With the knowledge customers need, suppliers can get the most momentum to improve their products by earning higher revenues and/or lowering costs. The key to incentives is to adapt them to the goals of the organization.

Budget limit from

 . The budget enforces prioritization. Restrictions not only force people to prioritize, but also create incentives to cut costs. To make innovation a reality, leaders should ensure that budgetary constraints exist to motivate appropriate priorities. In some cases, such as separately distributed services, constants should be placed on the customer. In other cases, such as at the time of purchase, the person responsible for the acquisition should be bound. Regardless of where the constraints are, you must use budget incentives to enforce prioritization.

These five conditions of innovation make continuous change possible, and the difference between success and failure lies in the ability to create or retain most, if not all, of these five conditions.

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