In order to determine whether the EIC Horizon Accelerator programme is for you, you need a crystal clear definition of innovation. This is not only necessary if you deliberate whether to apply or not under the guidelines. Having a clear understanding of definition and mapping your start-up against it will make you clearly understand whether and where the added value of your undertaking lies. This value may have nothing to do with innovation at all and rest in some other project, product or service virtues.

To manage your start-up project in a systematic and value-additive way, you have to have a clearly understood and shared amongst team definition of innovation. Without this, it’s impossible to know how much “real” innovation is going on and whether it’s paying off. Just as critically, you can’t rationally commit and prioritize limited resources if no one can agree on what’s innovative and what’s not.

Coming up with a practical definition of innovation is harder than it sounds, particularly if the goal is to rank every new initiative or product by its “innovative­ness.” When Heinz puts ketchup in a new squeeze bottle, is that innovation? When Comcast rolls out a new “triple play” pricing scheme, is that a break­through? When Whirlpool launches a washing machine that dispenses just the right amount of detergent, is that a game changer? While most people can distinguish between a genuine breakthrough (like the original iPhone) and a near-trivial product enhancement (like a new shade of Post-It® notes), it’s tougher to get agreement about all the shades of grey in between.

In our experience, it can take several months for a start-up team to hammer out its definition of innovation. As a starting point, it is important to look successful companies, products and services and identify the sorts of ideas that have produced noticeable margin and revenue gains.

For a product or service to be counted as innovative, it must be unique and compelling to the consumer, create a competitive advantage, sit on a migration path that can yield further innovations, and provide consumers with more value than anything else in the market. This definition may seem somewhat generic. What makes it useful, though, is the understanding that has developed over time as these criteria have been used to determine which ideas are truly innovative and which aren’t. With use, the definition has gotten tighter, and differences of opinion have narrowed. It’s also important to periodically review the definition: did the products that got rated as highly “innovative” actually yield above-average returns?

Having a practical, agreed-upon definition of innovation makes it easier to set goals for innovation, to allocate resources to innovative projects, to plan a cadence of innovative product launches, to target advertising on high-value breakthroughs, and to measure innovation performance.