Innovation: Not Born from Painful Experiences

Innovation: Not Born from Painful Experiences but from Sustainable Growth Dynamics

The word "innovation" has been constantly buzzing in our ears for years. As I recall, it started around the time of the 2007 financial crisis when we received IMF bailout funds. The dictionary definition of innovation suggests "new skin, new look." It means that we must endure the pain of shedding our old skin and flesh to be reborn in a new form. This painful innovation has come to Korea due to the "memory of success" through compressed growth and the "innovation conditions" that the IMF demanded from Korea, which have been followed to this day.

During my 30 years working in research institutes and business support organizations in Korea, I have come to realize that many people's understanding of innovation is wrong. Innovation cannot happen in an environment of suffering. It's impossible to have sustainable innovation drivers and gain inertia and acceleration energy. This conviction grew stronger and stronger as I met thousands of companies and studied related data.

"Amazing results never come from a ruthless environment."

People say it's hard to do business in Korea. Many people say that the procedures for receiving government funds are complicated and that there are doubts about fairness and transparency. However, the criteria for evaluating business viability are very similar, whether in Silicon Valley in the United States or in Korea. SRI International (Stanford Research Institute International), which leads innovation in Silicon Valley, has its own business viability evaluation method called "PNABC."

PNABC Approach

P(Purpose): The purpose of doing business N(Needs): Confirm customer needs through market research A(Approach): Breakthrough access technology (patents) or human resources B(Benefit): Secure customer value through price or product quality C(Competitiveness): SWOT analysis against competitors

N is to judge whether there is a market need (Needs). If it is an item that customers are waiting for, it is definitely worth investing in. A(Approach) asks if the business has the technology to protect its customers even if they are paying money and waiting, and the core technology that can keep competitors at bay. If you don't have patented technology, you won't be able to compete in the market in the medium to long term. In Korea, the world's fourth-largest patent powerhouse, there are about 5 million registered patents. There are about 300 companies and the remaining 2 million are owned by individuals. As patents become universal assets, they are also recognized as assets through value assessment in finance. Companies can incorporate them into their capital. If they are incorporated into capital, the company's creditworthiness increases and it is a great help in securing operating funds.

The next third is B(Benefit), which asks what kind of value (Value) and profit (Profit) can be given to customers. It is an item that evaluates the customer value part, such as whether the price is much cheaper than existing technologies or products, or whether the maintenance cost is low. After the subprime mortgage crisis in 2008, a new word was born. It's cost-effectiveness. Cost-effectiveness is a neologism that means the performance is excellent for the price, and products with excellent cost-effectiveness are almost sweeping the market. Households are sensitive to prices due to their debt of about 2 trillion won and the economic downturn. The last one is C(Competitiveness), which reflects whether the competitor status has been properly analyzed. It is a question that asks whether the status of competitors, alternative technologies, and substitutes has been properly analyzed and prepared for business. Surprisingly, there are many people who underestimate or ignore the capabilities and technologies of their competitors. They are so immersed in their own technology that they belittle or ignore the capabilities and technologies of their competitors. I believe that my product will be a huge success once it is launched on the market. However, the evaluator's position, who invests or supports funds, is initially very cynical and conservative. Looking at the competition rate for startup funds from the Ministry of SMEs and Startups recently, it often exceeds 10 to 1. This means that the enthusiasm for entrepreneurship and technology development is very high.

After getting a loan from a bank, etc., they often start a business in a state where they have overestimated their technology, and they encounter difficulties within a year. And they blame the government for not recognizing their technology. If this happens, it will not only enter an irreversible vicious cycle, but it will also cause major problems in the family.

Case Study: A Journey from Failure to Success with PNABC Approach

Introduction

The story of Mr. A, an entrepreneur who overcame failure and achieved remarkable success in the cosmetics industry, exemplifies the power of the PNABC approach to business evaluation. His journey highlights the importance of not only having a viable business idea but also possessing the unwavering conviction and leadership to drive sustainable growth.

The Challenge: A Failed Business and a Return to Korea

In his mid-40s, Mr. A had experienced a devastating business failure in China, leading him to contemplate suicide. However, fueled by a desire to start anew in his homeland, he returned to Korea with a determination to succeed. His expertise lay in a unique moisturizing ingredient for cosmetics, a market that was entirely reliant on Japanese imports at the time.

Embracing the PNABC Approach: A Path to Revival

Recognizing the potential of his technology, Mr. A sought guidance and support to commercialize his product. He was introduced to the PNABC approach, a comprehensive framework for evaluating business viability. By meticulously adhering to the PNABC principles, Mr. A crafted a compelling business plan that addressed each aspect of the framework:

• P(Purpose): Clearly defining the purpose of the business, which extended beyond mere profit-making to contributing to the well-being of society by providing an innovative solution to a market need.

• N(Needs): Thoroughly researching and validating the market demand for the moisturizing ingredient, ensuring that it addressed a genuine customer need.

• A(Approach): Protecting the intellectual property of the technology through patents, establishing a competitive advantage in the market.

• B(Benefit): Demonstrating the clear value proposition of the product, emphasizing its superior quality and cost-effectiveness compared to existing alternatives.

• C(Competitiveness): Conducting a comprehensive competitive analysis, identifying potential threats and opportunities, and developing strategies to differentiate the product in the market.

Securing Funding and Achieving Success

With a solid business plan grounded in the PNABC approach, Mr. A successfully secured funding from the Ministry of SMEs and Startups. He further enhanced the purity of his ingredient through technology development, achieving a quality that rivaled imported products. His company's unwavering commitment to quality and innovation propelled it to become a leading exporter, generating substantial revenue.

Lessons Learned: The Essence of Sustainable Growth

Mr. A's remarkable journey underscores the significance of the PNABC approach in fostering sustainable business growth. It highlights the importance of not only having a sound business idea but also possessing the following qualities:

• Entrepreneurial Spirit: A deep-rooted belief in the purpose of the business and a relentless drive to achieve its vision.

• Leadership: The ability to inspire, motivate, and empower employees to contribute to the company's success.

• Commitment to Social Responsibility: A sense of responsibility to extend the company's positive impact beyond mere profit-making, contributing to the well-being of society.

Conclusion: A Global Perspective on Innovation

As the world becomes increasingly interconnected, the ability to communicate effectively across cultures becomes paramount. In this spirit, the author has embarked on a journey to translate his insights and experiences into English, aiming to reach a wider audience of aspiring entrepreneurs and innovators worldwide. The PNABC approach, with its emphasis on comprehensive business evaluation and a focus on sustainable growth, serves as a valuable tool for navigating the complexities of the global business landscape. By embracing this approach and embodying the principles of entrepreneurial spirit, leadership, and social responsibility, individuals and organizations can pave the path towards innovation and success.