Innovation = Eye for Technology + Nose for Business Opportunity

Innovation is about coming up with insightful ideas and taking them successfully to the market. Success in innovation requires an eye for promising technologies - most innovators constantly scout for new technologies, they are good at quickly assessing the promising technologies and they are adept in adapting new technologies into their innovative solutions. But this is only half of the story. These ideas, however insightful they may be, see a variety of barriers on their way to the market - current statistics indicate that less than 5% of the original ideas become innovations that succeed in the market. Growing the ideas into innovation requires an uncanny ability to smell business opportunities. Many good ideas are lost in the funnel as they could not be aligned to business opportunities. Hence a successful innovator has a good eye for technology and a reliable nose for business opportunities. If an innovator lacks in one of these skills, he needs to join hands with a partner possessing complementary skills. Here is an example, from the Philips brothers who founded Philips in the Netherlands, that corroborates this view.

Gerard Philips

Gerard Philips, the son of a banker, and in his twenties began to investigate the incandescent lamp that had been demonstrated by Thomas Alva Edison in 1879. With the capital provided by his father he established in 1891 a company based in an old factory building in Eindhoven whose objective was to manufacture incandescent light bulbs and other electrical products. Gerard Philips’s principal expertise was in manufacturing technology, and he was joined in 1894 by his brother Anton, who had commercial expertise, and promoted the sale of the company’s products in other countries. The impressive business performance of the Philips-brothers had been based almost entirely on their combined development and sales capabilities. Gerard, the engineer, was a master at quickly converting new technology into marketable lamps, and manufacturing these at a large scale and at low costs.

Anton Philips

  Anton was gifted with natural charm, a negotiating talent, energy and confidence. He had courage: In 1898, just twenty-four years old and hardly speaking any foreign languages, he took a train to Russia and returned with huge orders. He became a formidable salesman: in 1912, he started a joint venture in the USA and in a couple of years reached 10 percent of General Electric's sales numbers, making this giant fear that he would eventually threaten its dominant market position. He had an excellent nose for business opportunities. By 1900 Philips was the third largest supplier of light bulbs in Europe. 

Much of the company’s subsequent success was based on the research laboratory that Gerard Philips established in 1914. The manufacturing technology used for bulbs could also be applied in the production of radio valves, and from valves the company progressed in the 1920s to become one of Europe’s principal producers of radio receivers, making a million by 1932.

Key Takeaways

• Innovation = Insightful Idea + Go to Market Plan
• Innovation needs Eye for Technology & Nose for Business Opportunity
• Innovators need to acquire both technology expertise and business acumen.