When being innovative, don't neglect market analysis

"Innovation" has become a managerial mantra in the last decade. Are the Chinese beating up your company? Are you losing market share? Are your profits free-falling? Blame it on your lack of innovation.

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The business media tout creativity and innovation as the way American companies can create or maintain competitive advantages in an increasingly stressful global environment. But in pursuit of innovation, we often forget the main reason for the pursuit: a better bottom line.

Studies show a strong correlation between new product development and company profitability. But the odds are that innovative new products will flop. So how can businesses make sure innovation improves the bottom line?

For openers, look carefully at the front end of the innovation process. Because new-product flops tend to be expensive, many academic and industry experts have conducted autopsies on the failures.

They've found, among other things, that companies that assess the market at the "idea" stage tend to have more successful new products. In general, companies that balance technical and marketing-related expenses, rather than focus just on the technical, wind up with more profitable products.

Analyzing customer input, market trends and competition can be done cost-effectively early in the development process, and outcomes suggest payback on the effort is well worth it. So, with all the evidence suggesting that early stage market research is a smart investment, why do companies often skip it?

I've come to the very unscientific conclusion that building things is just more fun.

The product development pro-cess at many companies shows a disproportionate focus on technical factors � in spite of the fact that post-mortems usually point to market factors, such as a lack of adequate competitive analysis and insufficient customer feedback, as the cause of most failures.

One reason companies give for a lack of early stage market analysis is that they are pressed for time. They have a window of opportunity and want to jump through it fast. In reality, early stage assessments don't appear to significantly extend the time to product introduction. In fact, some companies believe that it shortens the overall development time because it "informs" the later stages.

Early stage market assessments also help companies use scarce resources wisely and set the stage for further investment and development. Again, partly because of increased global pressure, companies often feel the need to jump prematurely into the more expensive parts of the development process, which can include patent protection.

Joseph Leone, intellectual property attorney at DeWitt, Ross & Stevens, tells his clients "early and often, that it's vastly easier to patent an invention than it is to get a customer to buy the invention. Neither the Patent & Trademark Office nor your patent lawyer is offering any refunds if the patented invention turns out to be a market bust. Therefore, it's critical to get a solid and realistic grasp on the market potential of the invention earlier on, before beginning the patenting process. If customers are not going to buy the invention (and, therefore, competitors are not going to try to copy the invention), there's no reason to patent the invention in the first place."