Tuesday, September 16, 2014

It's the time and the season for innovation

Time has been on my mind a lot lately.  That usually because we've been busy, and time seems to accelerate.  When I was a kid, a day seemed to take forever.  Now it seems that the day rushes past, and I can't get anything done.  I look back and wonder where the day went. 

Corporations are constructed of lots of individuals who have their own time opportunities and constraints.  The more people, the more constraints and interruptions, the less time to do something new and different.  Of the three most significant barriers for innovation, culture, time and risk, I still remain convinced that culture is the most pernicious barrier, but time is the easiest scapegoat.

I've written ad nauseam about culture.  Corporate culture is really quite fascinating.  No startup on earth starts out deciding to gain some market share and then clamp down and defend it.  Startups and entrepreneurs want to "put a dent in the universe" but somewhere along the way professional management, hierarchy, risk controls and a lot of other factors weigh down the original startup and make them complacent, defensive and slow.  Perhaps firms like Thermo Electron and Gore have it right - to keep the operating units to a small enough size that they remain hungry, nimble and creative.

But I didn't plan to write about culture today.  Instead I wanted to write about time and its relationship to innovation.   Time has a curious relationship with innovation.  First, there's no appropriate time for innovation, as if corporations have "seasons".  Of course they do.  There's the sprint from the first of the year until the end of the first quarter, the recovery and rush to the end of June, the slack months of July and August when everyone is on vacation, the recovery after labor day to rush to Thanksgiving, after which little of interest gets done until New Year's swings around.  Trying to start innovation activities in any of these seasons is fraught with peril, but for different reasons.  Arguments against starting in the first quarter are that you may distract the company during its important implementation of new strategy.  Arguments against starting in the second quarter are that we are still evaluating the results from the first quarter, and anyway summer vacation season is coming.  In July and August no one wants to start a new project or effort, because so many people are away.  After Labor Day people realize that a lot is left to be done before the end of the year, including developing the annual plan, so folks are distracted by that.  And nothing of much value gets done after Thanksgiving except office parties, so no need to start a new project then.  There's no "season" in the corporate calendar that's conducive to innovation.

In a resource constrained organization, what's the most precious resource?  The answer is time - time from very capable people who face multiple competing demands.  Time is precious, yet time is of the essence of innovation.  Innovation requires that good people with a clear goal spend time thinking - not doing - so that they can create new ideas.  Yet this is the last action that people are comfortable with.  They want to move quickly, to do something, and move on.  Contemplation, creativity, deep experiential learning are simply not how they operate.  There's no season for innovation, and even when it is imposed there is no time, yet time is the very essence of innovation.

What would we use that time for, you ask?  Why, to introduce new skills and new perspectives or new ways of thinking.  Time to experiment, contemplate, actually daydream.  Time to connect disparate ideas and create completely new solutions that aren't obvious on the surface.  Time to reflect, to digest customer needs and respond with really interesting new ideas.  But until people have time to do this, innovation is a box-checking exercise in which we race to complete the activity, eager to demonstrate we've successfully completed the task.

How might we change this?

Let's first assert that we could set aside "innovation seasons" within a corporate calendar.  The first quarter of the year is definitely a time for innovation, because innovation is so intertwined with the new strategies.  It must be part of the launch of a new year, to implement and grow the impact of the strategies developed the previous fall.  The second quarter compounds with more innovation, as the organization hits its stride, and builds on success or on the "failures" of the first quarter.

Summer becomes a time for even more radical experimentation, as we set aside time to contemplate larger, more disruptive opportunities and build goals that will inform the annual planning cycle.  Fall incorporates innovation into the annual plans, and the holidays become a time of introspection, evaluation and internal focus for improvement and skill building.  In fact every season is innovation season, because innovation becomes simply part of the fabric of the way we work.

Time becomes less of an issue because innovation is no longer an interrupter or interloper, but part of the strategy.  Good individuals are still pulled between competing priorities, but now innovation has the cache of integrated strategy, so it gets more time and more visibility.  As people become more engaged and more experienced, a happy accident occurs - they become better innovators, requiring less time to complete incremental assignments or allowing for more disruptive innovation activities.  The risk and uncertainty falls because they are more experienced and because innovation is a core capability rather than a bolt-on activity.

How unlikely is the situation I've described in the last two paragraphs?  Not unlikely, not even that improbable.    A generation of new executives and managers who understand the risks of an all-out focus on efficiency are already coming to grips with the need for more balance between efficiency and innovation.  Incorporating innovation into the fabric of daily operations won't happen suddenly but will happen as product lifecycles grow shorter and shorter and competition from all sides increases.  The race to the bottom is ending; we can't get much more efficient, but we can get much more innovative.

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posted by Jeffrey Phillips at 6:25 AM 0 comments

Monday, September 15, 2014


When is the best time to innovate?  We get this question all the time.  Some of our clients know they need to innovate, and what's more they want to innovate RIGHT NOW.  Typically the "right now" crowd has encountered one of two conditions.  Either they are getting crushed in the market by a new competitive product, or they are crushing the competition.  Most "RIGHT NOWers" are on the far ends of the bell curve, well ahead of the competition and planning to stay that way or well behind the competition and forced to make a definitive move.

If you know your statistics, and, let's be honest, who doesn't enough a great statistics discussion, you know that in a normal distribution a vast majority of the population lies close to the mean.  That in turn tells us that the vast majority of companies aren't in the "RIGHT NOW" mindset.  They are in what I call the "AS SOON AS" mind set.  That is, they'll get around to innovation as soon as the markets improve, profits increase, customers pressure them for new products, and so on etc.  The "AS SOON AS" businesses are operating on a historical premise that will inevitably catch up to them.  That premise is the concept of "steady state".

Steady state is the point in a process where things are at an equilibrium, all inputs and outputs as expected, all environmental conditions normal.  In other words, normal working order - no surprises, no changes, no abrupt transitions.  Most organizations argue that they need to get to "steady state" - the ability to think and work without those pesky interruptions and dastardly competitors - in order to think about innovation.  They need less distraction, more focus and more time to consider innovation before implementing any action.  This "strategy" is doomed to fail for several reasons, most of which have to do with circumstances far beyond their control.

The urgency and pace of change has increased, and as it increases many other factors and conditions change as well.  Consumer appetites and expectations change.  Competitors change.  New products and solutions emerge.  The frequency and pace of interruptions, dislocations and new entrants increases.  I'm sure in the not too distant past that Kodak had some good ideas about how to compete with the growing impact of digital photography on the film business.  They were simply waiting for a breather, a pause in the pace of change, so that they could catch up and do some good thinking that would lead to innovation.  The problem is that once the whirlwind starts up, it feeds itself.  Technology is rapidly changing and will continue to do so.  The advent of social media means that more people are aware of new ideas and solution in less time than ever before.  A more highly educated population with more disposable wealth means we can adopt new solutions faster than ever before.  There's no time, no pause, no breathing space.  And if you think you've found some breathing space, you've probably simply stumbled into a solution space that's been abandoned, like finally releasing a Betamax upgrade only to discover that everyone's gone VHS.

In the comfortable, familiar past of Happy Days, Leave it to Beaver and the age of Disco, the pace and tempo of competition was much more sedate.  In those days you could anticipate competitive change, spot the rise and fall of good products.  Long product lifecycles weren't a luxury, they were the reality.   In a protected market with few competitors you don't need a lot of innovation, you need a lot of marketing.  As the world changed and more competitors entered, industry didn't need innovation, they needed to cut costs.  They needed more efficiency.

But what do you do when every firm and every competitor runs full speed on high efficiency, but consumers demand new solutions?  The breathing space necessary to think above the fray of incessant competition isn't coming.  You've got to be good at two wildly divergent things simultaneously:  you've got to be good at holding down costs, building and delivering solutions effectively, and you've got to be good at creating new products and services based on unmet customer needs that may lead you into new markets or new business models.  You've got to constrain the scope of your business at the same time that you explore all of the boundaries or adjacencies.  And this is where most businesses fail today.  They don't believe they have time to do both.  And they are right.

There is no steady state - no breathing room, no competitive pause.  You know you need to innovate, but you put it off, joining the "AS SOON AS" crowd, safely tucked into the majority.  But what that majority doesn't recognize is that the expectations and means are shifting.  Increasingly we aren't talking about a bell curve, but a curve that has shifted to demand far more innovation.  Now, what will you do in an organization that is optimized for efficiency and needs time to shift gears to even consider innovation, much less put it into practice?

Recognize now, today, this moment, that your organization has to be ambidextrous, doing both efficiency and innovation exceptionally well.  It's like juggling a fragile egg and a running chainsaw at the same time, while being pelted by body blows by disinterested customers and aggressive competitors.  The sooner you realize that "AS SOON AS" is today, and that the opportunity to sit back and think about innovation isn't coming, the better for your business.  I hear people talking about innovation as if it is a choice, and to a certain degree they are correct.  Innovation is a choice in the same way that you have a choice to continue your business or shut it down.  Once you realize that there is no choice, and there is no breathing space, you'll arrive at the only real conclusion:  it's time to create a sense of urgency and passion about innovation, or to go into another line of work.

And yes, I know your people are busy, occupied with lots of important stuff.  I know the customers, regulators and competitors are demanding.  If you think they are demanding now, about your existing products, just wait until they discover you don't have anything new coming out of the funnel.  Their reactions will become a vicious circle from which you will not escape.

Right now versus as soon as is a Hobson's choice.  In fact there really isn't a choice to be made.  It's either RIGHT NOW or NOT AT ALL, with all the issues NOT AT ALL contains.  
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posted by Jeffrey Phillips at 7:57 AM 0 comments

Thursday, September 11, 2014

Mash-ups and collisions at the periphery

My good friend Paul Hobcraft encouraged a dialog from some of his friends on the idea of the innovation "mashup".  That is, good things may occur when two technologies or capabilities are connected or combined.  I want to concur and further explore his idea.

The best marketing ad ever developed for a "mash up" is for the Reese's Peanut Butter cup - one of my favorite snacks.  As many of you who may be old enough to recall, the setting was that one individual woudl be eating peanut butter, another eating plain chocolate.  Through many different machinations, the two would collide, and one would get peanut butter on his chocolate, while the other got chocolate on her peanut butter.  Both recognized a great combination.  Then the ad would cut away to the obvious - the combination already existed!  We didn't have to create it!

Anyway, as Paul notes there's a lot of talk today about "mash ups", which are interesting but I think difficult to plan for or execute.  Mash ups are easy when products or services are simple to combine.  It's not that hard for a music producer to borrow or lift one track from a song, such as a bass line or drum beat, or for a food manufacturer to add chocolate to peanut butter. These mash ups are simple, and may be found by identifying lead users who are already modifying existing products and creating new ones.  The value of easy mash ups may be to find lead users who are already creating new solutions with existing products.

However, you can't "mash up" a pharmaceutical, or an airplane.  There's too much complexity and too much at risk.  Adding peanut butter to chocolate is one thing; mashing up a new airplane wing without significant design and trials is another.  That's where innovation at the periphery may come into play.  We know that a lot of innovation occurs when technologies or capabilities are imported from other industries or solutions, or when two adjacent markets or technologies intersect or collide.  A good example here is air bladders in running shoes.  When looking for better cushioning for shoes, many different solutions were tried (and many are still being tested).  One designer happened to see air bladders used in a completely different solution and thought - why not?  The bladders were "imported" and used in soles, which was strange and unusual at first, but now commonly accepted.

How does peripheral innovation happen?
How does innovation at the periphery, or "collisions" as I like to call them, happen?  Your designers and product developers must be willing to ask themselves "how do people in other situations or industries solve a problem similar to the one I have?".  It's only when the solution set is expanded to consider how other companies (or even other industries) solve similar problems that you can begin to imagine a different solution - one that you can "import" from another industry or technology, or one that can be a "mash up" in Paul's language.  But these don't happen until we move away from very narrow definitions and scope.  Imagine if the shoe designer said to himself - one inch of foam in the sole seems to provide good cushioning - why not go for two inches.  If cushioning = foam, and one inch of cushioning is good, then eventually we'll all be running on platform running shoes, five or six inches off the ground.  Of course there are other constraints.  Height and weight being just two that might lead someone to a different alternative.  Then the question becomes - how can I get more cushioning with the same or less weight, the same or less sole height, regardless of the technology?  Now the scope expands laterally, to potentially encompass new or different technologies, and likely technologies that are from other industries.

But there arises another problem.  In the age of tight budgets, efficiency and specialization, most people don't have many insights or networks into industries or even companies other than their own.  They don't know "who" is solving a similar problem, and don't have the contacts, networks or relationships to discover who is solving the problem or how it is being done.  In fact a whole new breed of consulting firms has been spawned to do technology scouting or to create intermediary bridges between firms that need solutions and firms that have solutions.  Good innovators have broad networks that span companies and industries.  Today many people lack the ability to identify solutions in other industries and demonstrate how those alien solutions may contribute to a better product in their organization.

Complexity Problem
There's another problem with "mash-ups" and it has to do with increasing complexity and interdependence of solutions.  The more complex the solution, the less likely a simple "mash up" will be successful, but the more likely that new solutions or technologies imported from other industries or solutions may make a significant difference.  It's a strange conundrum, but one that has parallels in nature.  Overly specialized animals, like the Irish setter, have been bred for years to have specific traits, but the breeding program has relied on interbreeding, so few new genes have been introduced.  This leads to an animal that has some interesting superficial traits but many genetic weaknesses.  Our businesses are the same way - overspecialization has led to hyper efficient organizations that lack breadth and creativity.  Specialization discourages learning from other industries or importing new ideas, while at the same type reinforcing sterile internal concepts.

We need far more capability to perform "mash ups" in the creativity and design phases of innovation, and to learn and incorporate ideas and technologies from other industries, in the same way that cross-breeding for desired traits is also healthy for animal populations.  What's your organization doing to encourage you to learn more about adjacent industries and import ideas, technologies or solutions?  Or, more to the point, what cultural barriers exist to keep you from doing just that?
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posted by Jeffrey Phillips at 6:39 AM 0 comments

Thursday, September 04, 2014

Good innovators get the big picture and the minutiae

Pity the poor innovator, especially those in large corporations.  They are constantly whip-sawed between competing narratives and perspectives.  In one moment, executives are complaining that no one stops to look at the big picture, to bring them new ideas that are "game changers".  In another, subsequent moment, the same innovators are slammed by people who want them to "get their heads out of the clouds" and create something immediately useful.  Good innovators are constantly buffeted by these two competing storylines.

What's interesting is not that they are buffeted, but that they should EXPECT and further WELCOME the demands to look simultaneously at the big picture and the minutiae.  That's because good innovators should be able to hold several different kinds of ideas or perspectives simultaneously, (called by Roger Martin "associative" thinking) and, what's more, should gather new insights or create new solution because they are adept at associative thinking.  Rather than "switching" from one perspective or viewpoint to another, good innovators should recognize that it's in holding these different perspectives simultaneously that will create great new ideas.

The Big Picture

We fail so often to consider or contemplate the "big picture".  Often times innovators fail to think "big picture" for very long because they aren't sure the big picture is really their domain.  They default to the expectation that senior executives are contemplating the big picture - strategy and the like - and that they should focus on more operational and tactical innovation.  Little could be further from the truth.  While executives may contemplate the big picture and develop strategy, it's innovators who become the bridge between that vision and realizing the vision with new products and services.  If the vision exists, take it on and start building.  If it doesn't, don't shy away from deeper contemplation.  The "big picture" is where interesting ideas lie, where industries and solutions intersect, where unmet needs emerge.  We lose these insights when the aperture shrinks and tunnel vision sets in. Innovators need the courage, the foresight and the ability to contemplate the big picture, rather than quickly whistling past the graveyard to move to more comfortable vistas.

The Minutiae

Far too frequently innovators end up in the weeds.  They don't feel they have the approval or the charter to examine big picture issues, even though executives demand it, and they feel the urgency of their workmates and the time pressures inherent in publicly traded companies.  What have you done for me lately, and why can't you innovators solve this immediate problem?  It's too easy, and too comfortable to fall back into working on small bore ideas and to ignore the big picture.  No wonder that many ideas seem to disappoint, or to reflect ideas or solutions that already exist.  We all move very quickly into our comfort zone.

The problems with crossing over

On the few occasions when innovators do manage to get to spend time on the "big picture", they often become subject to complexity creep.  By that I mean that they can identify interesting problems to solve, but they fail to scope those problems carefully, or those problems have great internal complexity.  Just because we identify one big problem to solve or opportunity to address doesn't mean that it should be solved through one solution.  The Texas Rangers (the lawmen, not the baseball team) used to have a saying:  "One riot, one ranger".  But that doesn't apply to big picture opportunities.  We can easily define and scope one big opportunity that by all rights should be divided into multiple innovative projects or solutions - moving from the big picture to the "medium picture" to solve several components simultaneously rather than trying to solve it all at once with one magical solution.  It is in the movement from scoping to solving that most innovators fail in this regard.  For those who can keep their eye on the "big picture" they need to know when to break a potential need or solution into components that can be resolved in smaller batches, simultaneously rather than in one fell swoop.

Another factor that must be considered is the use and nature of the innovation tools.  For the most part, whether you are focusing on a very large and disruptive opportunity or a very incremental solution, the tools remain the same.  What changes is the depth of the investigation and the amount of risk or change that may occur.  So, in some regards it's good to be well practiced at incremental innovation, because you'll have great familiarity with the tools.  The barrier for most of these teams isn't tool knowledge, but perspective and confidence.  They know "how" to innovate but aren't comfortable with the "why" and the "what".

The truly engaged innovator

The best innovators are those that are well practiced at incremental innovation, who understand the process and know the tools, but who are equally comfortable translating strategy and "big picture" needs into actions for new disruptive ideas.  It's the marriage of people familiar and comfortable with the methods, tools and processes of innovation who are also comfortable with defining or translating the strategic visions and identifying disruptive new solutions who will be the best innovators.  The challenge most organizations have is the yawning gap between these skill sets.  Most executives are relatively good at defining strategy and managing day to day execution, but aren't experienced innovators.  Most innovators are relatively good at incremental innovation but don't feel as though they are allowed to translate strategy or are uncomfortable with larger, big picture opportunities and risks.  Until we develop innovators who are a blend of both capabilities, innovation will continue to revert primarily to incremental solutions.
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posted by Jeffrey Phillips at 12:03 PM 0 comments

Tuesday, September 02, 2014

Train, apply, repeat

So the question of the day is:  can innovation be learned, or "taught"?  The underlying assumption is that innovation is inherent, a creative spark that one is either born with or cannot hope to possess.  The rationalist in all of us considers this unusual and unfair.  Certainly everyone can "learn" to innovate, no?

This begs the question of whether innovation is simply a skill reducible to practice, which can be taught through instruction, application and repetition, or whether innovation is mystical and poorly distributed capability that few possess and even fewer can learn. And, to paraphrase Henry Ford, whether you believe the former or the latter, you are probably right.  That is, if you believe that innovation is a capability that you simply don't possess, then no amount of education or training will change the fact that you'll struggle to innovate.  If you believe that you have even the smallest spark of innovation capability, training and instruction will only magnify the skills you have.

But the real question should be not whether we are innovative or not, but how we can become more innovative.  That is, let's accept that we all have some spark, some inherent creativity or innovation potential.  Once we accept that concept, how do we become better innovators?  Is education enough?  Can we find good training?  What does it take to build and reinforce the skills so we become better innovators?

I've hinted at the answer above:  instruction, application and repetition.  No one becomes good at any vital skill without all three components.  Sure, Mozart sat down at the piano and was a virtuoso from the start, but those types of savants are few and far between.  You will need initial instruction, to learn the tools and techniques, as well as the necessary perspectives and mindsets.  You'll need to apply what you've learned to reinforce the tools and try them out.  And then you'll need to consider your successes and mistakes and repeat the process until it becomes second nature.

This is where basic "innovation training" gets it all wrong.  Plenty of firms are popping up everywhere offering innovation training - over the web, in classrooms, instructor led or self-paced.  Absolutely nothing wrong with getting training on tools and techniques, unless that training isn't reinforced with application.  Imagine learning to hit a baseball by reading about it in a book, but never going to the batting cage.  That's what a lot of innovation training looks like.  Academic information with little practical application.  We at OVO believe in innovation training - we believe that everyone has the innovative spark - but we practice "JIT" training.  That stands for Just In Time.  This allows us to deliver innovation training in the classroom days or weeks before an innovation team will attempt to use the tools in a real innovation project.  Offering the tools and techniques without practical application means the concepts will be lost very quickly, as people turn their attention to their "day jobs".  Innovation training is a side show, and what little information is presented is quickly lost. 

There's one final component to real expertise in any subject or skill, and that's repetition.  Take our batting analogy.  A good batter hits hundreds of baseballs a day, every day, under a lot of different conditions, in order to improve his swing.  He watches film of his at-bats to identify weaknesses in strikeouts and good swings when he connects.  He learns from mistakes and constantly repeats the skill, growing in confidence and moving from needing to think about the technique until the technique becomes second nature.  How many of us can claim that innovation is "second nature" when we practice it so infrequently?

Instruction, application, repetition.  If you want to "learn" innovation and grow in proficiency, these are the steps.  As in many other facets of corporate business, we place far too much emphasis on the gathering of knowledge, and far too little on the application and repetition.  And then executives wonder if "anybody here can play this game".

So I come not to bury innovation training, but to praise it, if innovation training is followed rapidly by actual innovation work to put the tools just learned to use, and if the innovators themselves have the opportunity to try, to fail, and to repeat their innovation work.  Everyone can be innovative, but few have the staying power to make it through the entire process.
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posted by Jeffrey Phillips at 5:42 AM 0 comments

Tuesday, August 26, 2014

Innovation: faster horses or deeper needs?

In a bout of "physician heal thyself" we at OVO led an internal idea generation session yesterday for some of our internal compatriots who are developing new products and services.  It was a valuable and highly productive session, because our counterparts committed to doing the pre-work we asked.  Further, they invested their trust in us about the approach and methods to generate better ideas.  We all left thinking it was a valuable session, and they have some great new product ideas to pursue.

Now that I've patted myself (and Dean, and Dom) on the back, we can turn to a brief sideline discussion that I found insightful and interesting.  We were discussing what new features or outcomes the potential customer desired.  One senior executive argued that it's impossible to know, that like Steve Jobs we should tell the customer what they need, since they can't possibly imagine it.  He quoted the old Henry Ford saying about faster horses.  Another executive took the opposite view.  He argued that we should be meeting with customers to understand the challenges and faults with existing solutions and working to project future needs from current frustrations.  And in this divide we see one of the great innovation philosophical debates.  That is, is innovation derivative or emergent?

The "whole" cloth

On one hand you have the Jobsians, or perhaps the Fordians, who had the foresight (or simple luck) to create products that consumers may not have imagined that they needed.  These and other innovators argue that talking to customers about their wants and needs is fruitless because the only answers you'll receive are either very small tweaks to existing solutions (the notorious "faster horse") or impossibly large or vague requests that can't be fulfilled commercially (where's my jet backpack).  The argument posits that most consumers can't create new solutions from the thin air, can't imagine what they can't see, can't create features and attributes of new products from the whole cloth.  To a great extent, the people who hold these views are correct.  The vast majority of people are "anchored" in what they can see, what they experience, and for the most part find it difficult to imagine any product or service that doesn't conform to current expectations of a product or solution.

What the Fordians leave out is that with a few simple questions or a little bit of directional discussion, many consumers can provide better insight into their needs.  Let's use Ford as the example.  When asked what new transportation the average consumer might need, most would probably turn to the horse and buggy. They might seek a "faster" horse, or a larger, more comfortable buggy, or a horse that ate less but delivered the same transportation.  But anyone asking poorly defined questions like these shouldn't be in market research.  The vast majority of people had horses, and were very familiar with wagons and buggies.  Also, most were familiar with the idea of motors - electric and fuel based - which had been in existence since the 1870s.  Asking a leading question - could you imagine using a buggy that was powered by a motor rather than a horse - would have elicited a complete different and insightful set of answers.  Good innovation is often found at the intersection of several technologies or solutions that haven't been merged.  Could we take a wagon, remove the horse and add a new motive power?  Would that be valuable?  What are the benefits and/or downsides to doing so?

The average person asked a poorly conceived question about product aspiration will never provide good insight.  In this Ford and Jobs are correct. But can you actually argue that people weren't aware of the issues managing music and their players?  After all, music sharing and music management systems existed.  Jobs imagined a way to combine them, but in many ways he wasn't the first, just the one who considered it holistically and commercialized it successfully.

The researchers

On the other hand there are plenty of folks in the innovation community who have given up on being a Ford or a Jobs, and who insist on deep customer interaction, to learn about unmet needs and use that insight to drive innovative ideas.  If the former group can be defined as emergent, creating ideas that they then impose on the consumer, this latter group can be labeled as inquisitive, relying heavily on discovering needs to the detriment of creating leading products that consumers can't define.  The question becomes - how much should we trust our own (instincts, technologies, judgment) and how much should we discover or validate with prospects and consumers?

The problem with true market research is that far too many firms take too cramped an approach to discovering "customers" and "needs".  They inevitably rely on consumers who already use their products and are reasonably satisfied, because those consumers are easy to talk to and non-confrontational.  They are also the people who have the least interest in something radically new and different, because it will require them to change.  Talking to happy, well-adjusted consumers who are familiar with your products is OK, but don't expect them to introduce a lot of new concepts or features because they are already invested in your solution.  To discover interesting new needs, you must talk to the disaffected customers or to prospects who don't want or need your existing products or solutions.  And this target audience is not comfortable for many market research enthusiasts. They are hard to recruit and often say things that conflict with what is known internally or believed to be true.  In fact the people you may need to talk to most may be the people you strive to talk to the least.

The middle ground

There's nothing wrong with trusting in your gut, leading with your ideas as long as you validate the needs and expectations.  There's nothing wrong with deep investigation and interviews with customers, as long as you ask the right questions of the right people.  The choices you make should be based on the capability and vision of the people within your organization, and the breadth and depth of the people you can interact with outside your organization, and your ability to sift and analyze the feedback and insights of both interactions.  Trusting market research alone may leave you with a very cramped response based on existing products.  Trusting in your own vision may leave you with a compelling product no one wants or needs.  As with many issues where there is a spectrum of responses, the reality is that a middle ground approach is best for creating new products.  As Reagan was fond of saying, trust but verify.  Create a solution that you believe in, but verify the need and the potential uptake. It's typically the case that internally driven solutions look different than solutions created with exclusively external content.  It's probably in the mix of this insight and feedback that good innovation, that can be developed and will be accepted by the consumer, is discovered.

Let's face it, few of us have the insight or the intestinal fortitude to bet a company on internal gut feel or insight alone.  Pay homage to Jobs but don't mimic him.  Likewise, understand that there are people within your company who have good insights and ideas that can be validated.  Research is important, but only if you are talking to the right people and asking the right questions.  Good innovators will discover the best answers between their gut feelings and insights and the needs they discover from customers.
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posted by Jeffrey Phillips at 10:30 AM 0 comments

Wednesday, August 20, 2014

Innovation in developing economies

Recently I was asked by a Twitter user to talk about innovation in developing countries, especially in Asia.  While I have some experience with innovation, and have been to some countries in Asia, and have even led programs on innovation in two (China and Malaysia), I'm not a economic development expert.  But I did offer to give my opinions on the evolution of innovation in developing countries, so here goes.  Just remember, this advice is priceless, and if you have any concerns, there's a money back guarantee.

The first question I was asked was about the state of innovation in Asian economies.  I'll address that by extending it to encompass developing economies generally.  First, there's plenty of "innovation" in every country.  A lot of the discussion needs to start with definitions.  If we take the simplest definition of innovation, there is innovation in every corner of the globe.  I'll define innovation as "people converting ideas into valuable action" meaning that innovation isn't simply ideas, but the ability to realize an idea commercially.  When early man sharpened the first stick, and then hardened the point with fire, he was innovating.  There's plenty of innovation going on in every economy, but what make it less noticable is another categorization.  A lot of innovation in developing economies is "new to that location".  There are three categorizations we'll often use for innovation:
  • New to us (locally, segment, geography, industry)
  • New to the market (exists elsewhere but not here)
  • New to the world (completely new and different globally)
In the West we get hung up on "new to the world" innovation.  You'll hear people speak of disruptive or breakthrough innovation, because continuous improvement and incremental innovation is almost commonplace.  In the West, where we have more technology and more complexity in our economy, to innovate means to create something radically new or different.  In developing countries it may be sufficient to solve a problem with technology or solutions that the rest of the world doesn't find new or interesting.  Or with a solution that is innovative but has less novelty or technology than the West might find interesting.  The concept of reverse innovation plays well here, where the developing world may innovate more simply or more inexpensively.  The analogy is when the Russians and the US were in a space race.  The Americans created a fancy writing instrument that allowed their astronauts to write with a pen even in zero gravity.  The Russians used a pencil.  Both got the job done.

How do we leapfrog

One of the questions the individual on Twitter asked was - can we leapfrog our way to more innovation?  The challenge in a developing country is to solve important and basic needs.  In the west we have clean water, a relatively robust transportation system, clear title and ownership of intellectual property.  These infrastructure and legal mechanisms provide protection and encouragement for people and companies that want to invest in creating new ideas.  The infrastructure ensures scalability and to some degree profitability, while the markets and legal systems ensure that if the idea is successful there are ways to protect the revenue streams.  If developing countries want more innovation they need to provide these two factors, or their innovators will seek to develop ideas and market them abroad.

Secondly, you need an economy and people who are convinced that they have good ideas and can have the education and understanding to move the ideas from a nascent concept to a reality.  That means a strong educational system to help people prioritize needs, identify solutions and build and deliver new products or services.  It's been demonstrated that good innovation follows good education, and that's not merely technical education but also deep education in markets, channels, commerce and other factors that stand between an idea and a commercial success.

What would I recommend

I'm not a economic development expert, but if a developing country approached me to ask about how to drive more innovation, I'd work on deeper market education, understanding how to identify customer needs and develop new ideas and technologies.  I'd work on developing networks of people who are passionate about developing new ideas, because good innovation seems to require cross-functional networks of people who create exchanges of goods and services as well as ideas.  I'd focus on creating products and solutions that create local value and that can offer value globally.  Most local markets are too small or lack fluidity to create a larger market opportunity.

I'd pay a lot of attention to what some of the Korean firms did, because they've become innovation leaders in the last twenty years from a very basic starting point.  Many developing countries start out by copying existing technology and scaling a learning curve, which is what many of the Korean firms did, but very quickly.  It's this base of education and knowledge that then allows them to innovate new products.  It's difficult to build an innovative economy and culture with little infrastructure, whether that's a legal infrastructure, knowledge infrastructure or market infrastructure.

That's not to say that innovation won't happen in any developing economy. It will happen and it is happening.  Much of this is in the definition of innovation, and the size and scale of innovation your local market can adopt.  To enter a regional or global innovation market, you'll need investments in education, legal systems and market development, as well as the ability to identify challenges or problems that many people around the globe face, want to solve and are willing to pay for.
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posted by Jeffrey Phillips at 5:43 AM 0 comments