Joshua Kantar, a researcher with Caesar’s Entertainment in Las Vegas has been quoted as saying, “Thereis a tension between Innovation and ROI that stifles creativity.” When I first heard this I cheered inside like a middle school kid. How many times have I raved to someone about a cool idea or innovation program and had them dismiss my flash of brilliance by playing the money card? And how many times have I stamped my feet like a five year old – in my mind, of course – when innovation programs don’t lead to market introductions because they just don’t deliver the margins of a new flavor or new color of
the same old same old. But then, I grew up.
I started to innovate for my own company, InsightFarm, first by studying what women carry in their purses and why, so that companies could innovate new products for this home away from home carried on the shoulder of nearly every woman (www.inyourpurse.com). I was gambling with my own money. And as a sole proprietor, I was betting funds that could have gone into a college savings account for my kids, so ROI was a serious consideration. In fact, while recently scoping one of my new ideas for a syndicated study with a data collection firm, they dismissed my need to discuss what they called “monetization.” They said, “We can discuss monetization later, let’s just figure out how to do this.” I stopped them cold. “Nope,” I said “we can discuss it now because without it we don’t need to know how to do this.”
Ideally, every concept or new product innovation we test would have a substantive ROI estimate before it’s tested. At P&G years ago, we wouldn’t test a concept that didn’t have a creative brief already written by the advertising agency. Each concept needed to be translatable into advertising or we didn’t test it. ROI estimation is similar. There should be baseline assumptions that tie purchase interest, frequency and other measures to margin expectations used to set pricing. Pricing should be a part of every concept testing if you’re asking purchase interest anyway, so taking a swag shouldn’t be so hard. With this in hand, the “tension” between Innovation and ROI becomes a motivator for diligence in creativity. And creativity without discipline is child’s play, not innovation.
