Successful innovations bring value to customers. However, not every successful innovation brings value to the organization providing it. Therein lies one of the great problems of innovation.

In order to innovate effectively, an organization must keep in mind both what is of value to its customers and what is the impact on the organization's highest priority outcomes. To increase the chances of making this happen, the key is to first define the business you are in and the core aspects of your business. (A terrific resource on this concept is Profit By The Core: Growth Strategies In An Era Of Turbulence by Chris Zook and James Allen.)

Rather than staying on a theoretical level, let's examine a variety of examples.

The Walt Disney Company is in the entertainment business. Their core business activities revolve around entertaining all members of the family. If they were to sell guests electronic travel systems for their cars that would help them find the best way to Walt Disney World from anywhere in the U.S., they would be adding value to their customers. However, this is not a form of entertainment. Consequently, the small amount of revenue they would generate would substantially reduce their focus on their core business. Therefore, this would not be an effective innovation. However, if they provided electronic travel systems that also provided songs from various Disney movies, then they would be providing entertainment.

Southwest Airlines defines itself as providing short trips, cheap fares and good humor. An added value to customers would be a full breakfast buffet outside of each gate. However, this doesn't fit within the definition of their business. An innovation they might consider is to partner with Krispee Kreme Donuts and have them sell their donuts at the Southwest gates. This way customers could have another option in addition to peanuts and it would still fit within the fun atmosphere.

McDonald's is all about friendly crew quickly serving hot and fresh food in clean and convenient restaurants. Having a bookstore within a McDonald's restaurant would add value to the customers, but it doesn't fit within the definition of their business. However, a device that automatically cleans the grease and crumbs off of the tables would be an innovation that fits within their core business areas of cheap, fast and fun.

What is your business? Define it clearly. What are the core areas of your business? Define them clearly. Then look for opportunities to add more value to your customers within those core areas.

Send questions to Dan Coughlin at The Coughlin Company, Inc., a firm specializing in enhancing the effectiveness of top performing executives, groups and organizations.

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