Innovation Planning: Avoiding Revenue Gaps

We transition from innovation strategy to innovation planning which begins with the timing of existing revenue life cycles to anticipated capital expenditures from innovation activities.

If markets, products and technologies have life cycles, then so do the revenues they produce. We want to avoid extended revenue gaps from falling prices for products in decline or substitution phase of their life cycle. Innovation not only maintains leverage over rivals, it also replenishes your revenue structure and asset value to keep a strong balance sheet. It is this strong balance sheet that lowers the cost of capital.

Notice the juxtaposition of multiple revenues cycles. We must begin innovation efforts for the next offering while in robust revenue growth of the existing offering. Thinking this way is counter-intuitive and against human nature. As such, most companies delay until visible signs of decline before looking ahead. This leads to missed opportunities, lower asset value and inefficient capital utilization.

Timing can greatly influence market access cost and thus efficient capital utilization. Keep in mind, most innovation fails from the inability to access markets. However, investing too early, leads to idle resources, over capacity and poorly allocated capital. Too late, risks lost revenues, expensive market share and a premature investment write-off.

Coordinating revenue cycles while scaling innovation to market adoption are no small feats. It requires skill and effectiveness in uncertainty. Nobody said strategic innovation and financial performance leadership would be easy. At n2 (n-squared) Solutions our winning program management services provide the intellectual capital to scale your innovation projects.