Many companies still do not innovate to match customers′ needs. Suggests that to achieve competitive advantage a product innovation matrix should be developed to help marketing and technology staff to think in terms of innovation for the customer. Risks need to be managed from the beginning by identifying them, assessing their likelihood and possible impact, and preparing an overall action plan to deal with them. Suggests several prerequisites to make innovation safer and faster. Outlines various tools and techniques which have been used by other companies for effective innovation. Also gives various examples of the trends towards R&D outsourcing.