Rethinking Innovation: Creating Customer Value is the Mark of Distinction

By Shane Callanan

When it comes to innovation, people typically gravitate towards thinking of new inventions, possibly involving either a scientist or an engineer working in a laboratory. However, this is not the most dominant value-add that innovation can bring, nor is it a main contributor to growth. If we define innovation as “doing something different that creates value” and always putting your customer in the forefront when creating this value, then you will continue to grow an innovative environment that will establish you as a thought leader in your industry sector. It is this intangible difference that will set you apart as both product and service provider and keep you at the forefront of innovation. However, you should not make the mistake that successful innovation comes from flashes of random genius acts. 

Peter Drucker has written repeatedly that successful innovation comes from a purposeful structure and a conscious effort to seek out solutions to specific problems. While in many circumstances it can be difficult to establish causality, with innovation, this is not the case. There are a significant number of accredited research programs that have demonstrated the direct connection between structured commercialisation of innovation and the benefits to a company. There is also a need for companies to ensure that they continuously develop their structures and approaches to innovation to ensure they keep moving from left to right on the innovation continuum^[1].

[Figure 1]

The innovation continuum above shows progress from left to right. Between each step there are only incremental improvements, but when taken across its entire span, unique value proposition is created for your customer. By collaborating with the very people who are driving your customers’ road maps, you can ingrain an intangible difference between you and your competition that is difficult to define and even more difficult to dislodge. 

Barriers to Innovation:

However, do not be fooled by the oversimplification of the structure above. There are many barriers to innovation that span from the executive board room right down to the shop floor. Does the company have the right leadership, does the right culture exist, does a fear of failure prevent innovative thinking? These are but a few of many examples of barriers that can exist. If a company is serious about being innovation thought leaders, the key is to simultaneously eliminate barriers and enhance the accelerators that will drive the correct behaviors to achieve the goal. At Advanced Energy, the foundations for this are set by our Chief Executive Officer, Yuval Wasserman. When interviewed for “Behind the Bell” after opening the Nasdaq Stock Exchange in December 2019, Yuval was asked by Lyanne Alfaro on what separates Advanced Energy and how we distinguish ourselves. His answer was simple but powerful, and a clear message for all to hear, “Innovation, innovation, innovation, the key cultural aspect of our company is a continuous focus on innovation.”

So, how does this manifest itself throughout the company?

At Advanced Energy, we repeatedly put our customer in the forefront of our mindset when evolving our innovation to create more value-add. While the outcome of this process may be market leading and innovative products, we have only been able to do so by developing a purposeful culture of innovation with a continuous focus on solving specific problems for our customers. We focus first and foremost on understanding and overserving our customer needs. Throughout our global organization, there is a culture of collaboration which in many cases goes beyond the organization. We engage with universities across three continents to develop postgraduate and post-doc research programs. Through a series of strategic acquisitions, we have brought onboard a multitude of new talent and continue to integrate and collaborate with these new teams. While this is not an exhaustive list, it does provide evidence of a range of innovation that spans a number of innovative products, services and processes from disruptive, product , process , experiential, value chain , marketing and structural innovation to name a few. 

In looking towards the next generation of modular, configurable AC/DC low voltage power supplies, we asked ourselves some very fundamental questions.

1. What problem are we solving for our customers?
2. What do our customers see as true value add for their needs?
3. What do they view as high excitation factors on next-generation power supplies?
4. Can we identify any hidden needs of our end users?
5. How do we ensure we future proof our customers’ power needs?

By adapting an outwards-in thought process and understanding the needs as well as identifying hidden needs, the CoolX platform from Advanced Energy is living proof of how a structured approach to the commercialization of innovation can succeed.

CoolX Customer Case Study 

Advanced Energy’s CoolX platform isn’t innovative simply for its features and functionality; it’s the customer value we brought to the innovation equation. 

In medical device applications, Clause 8 (Protection Against Electrical Hazards) of the 60601-1 Safety Standard for Medical Electrical Equipment requires that a fuse or over-current release shall be provided in each supply lead for Class I ME equipment (equipment which relies on a Safety Earth connection for protection against electrical shock) unless the equipment is permanently installed. Fuses reduce the risk that a fault in the ME equipment will cause a protective device in the installation (such as a circuit breaker) to operate, which may remove the supply of power to other ME equipment in the installation. Having a fuse on both Live and Neutral ensures protection even when the polarity of Live and Neutral is interchanged due to an outlet socket or supply line wiring error. This means that both the Live and Neutral connections of the Ultimod must be fused for medical applications. As standard, the Ultimod has a fuse on Live only. Many customers add a Neutral fuse in their system, sometimes incorporated into a toggle switch. However, due to strict size constraints, incorporating an external fuse was not possible in this application. Advanced Energy worked with the customer to design an additional fuse in the standard Ultimod power supply, meeting the customers’ needs without increasing the overall size of the solution.

Conclusion

Innovation for the sake of innovation itself is not enough. Even the act of being innovative by itself is not enough. In order to continue to create a sustainable competitive advantage, you must focus on the commercialization of this innovation. Most growth failure stems from factors that are avoidable, including the breakdown of innovation management. Establishing the right culture, eliminating barriers, focusing on and overserving your customer needs, and understanding the complexities of bringing your innovation to the market are all key elements in creating an innovative culture. While at times luck will work in your favor, it is only through a purposeful and structured approach to innovation that will result in the right culture to keep you ahead of the competition.

References:

[1] Source:Howard Yu Professor of Strategic Management and Innovation, IMD Lausanne Switzerland

Shane Callanan is VP, DC Systems Engineering, for Advanced Energy.