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Tuesday, March 23, 2010

Voice of the Emergent Customer

by Drew Boyd

Voice of the Emergent CustomerAre some customers better than others at developing new concepts? Professor Donna L. Hoffman at the University of California Riverside thinks so. Emergent customers have a unique ability to "wrap their head" around a new concept and improve it. She created a scale to identify them so companies hear the voice of the 'right' customer during new product development.

Emergent customers are better at imagining how concepts address latent unmet needs. Dr. Hoffman describes it as a "unique constellation of personality traits and processing abilities that enables such consumers to engage in a synergistic process of visualization and rationalization to improve product concepts." Those characteristics are:
  • Openness to new experiences
  • Reflection
  • Experiential and rational processing style
  • Verbal (rational style) and Visual (experiential style)
  • Creativity (self perceived)
  • Creative personality
  • Optimism

The study included 1,124 respondents and compared performance of those identified as emergent customers against those of lead users, early adopters, and a control group. The emergent customers significantly outperformed the other groups.

How would you put this to use?
  • Market research firms could use the scale to screen research candidates. Emergent customers focus on improving concepts, while 'non-emergent' customers judge marketplace acceptance.

  • Companies could learn about their emergent customer's behaviors and beliefs. Do they buy more, use more, or pay more for certain products? Do they use products in a different way? Do they influence other customers?

  • Companies could set up advisory panels of emergent customers to watch for opportunities and threats.

How would emergent customers perform using a structured innovation method? It is tempting to assume they would do better using methods like S.I.T. These people are more motivated and optimistic. They are more hopeful about the output of innovation workshops and are likely to push harder. Star performers "Google" their mind to make innovative connections and associations in rapid fire fashion. This relates to Dr. Hoffman's factor of "experiential and rational processing style."

For innovation workshops, my 'dream team' would include a mix of emergent and non-emergent participants. Perhaps the ideal scenario is pairing them together. As the emergent thinker pushes ideas into new territory, the non-emergent thinker can offer quick feedback. Innovation is a team sport after all.

Researchers have long noted that the "voice of the mainstream customer" is not that useful in developing new products. Instead, finding the 'Voice of the Emergent Customer' could be a new source of competitive advantage.

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Drew BoydDrew Boyd is Director of Marketing Mastery for Johnson & Johnson (Ethicon Endo-Surgery division). He is also Visiting Assistant Professor of Marketing and Innovation at the University of Cincinnati and Executive Director of the MS-Marketing program. Follow him at www.innovationinpractice.com and at http://twitter.com/drewboyd

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Wednesday, March 17, 2010

A Simple Model for Innovation

by Thomas Petersen

A Simple Model for InnovationFinding the next big thing is probably one of the biggest challenges in the world of startups. Countless companies, entrepreneurs and VC's spend a considerable amount of time plus money figuring out where and what to invest in. Yet often the game changers seem to be coming out of nothing and from unexpected areas. Is it luck or do those who change the world know something we don't?

In my last post I talked about some principles that can be used to design better digital products. In this post I will look at a model to map and explore what different kind of product you should do.

Most of the businesses spawned in the first bubble, where based on the belief that taking any business from the physical world and putting it online was enough to be successful. Any assessment regarding logistics, economy of scale, or competition with offline brands, was naively optimistic if not absent. A lot have changed since then.

It's easy to be a wisecrack in retrospect. There is no shortage of expert analysis for why something became a success after the fact. It's much harder to know what products or services will become a success before they hit mainstream. Yet some people seem to be doing just that. Do they know something that we don't or are they just plain lucky?

Even though luck does have something to do with it (timing?) it's not all just random. As a matter of fact there are some very good models to help you better understand the art of innovating. Some of them complex others rather simple. The one I find most useful is this two-way matrix which covers four different types of innovation.

Exploring opportunity by mapping your idea on this matrix.

Innovation Matrix

Do what others do, but do it better.

This is the most popular category to invent within. The basic premise is to create something that outperforms either on price, features, ease-of-use or performance. For instance: Sony Ericsson and Nokia competing on features or MS Office and Sun StarOffice competing on price (Free vs. expensive) This category is the easiest (on paper) to compete in, but also the category with the fiercest competition. With the introduction of the free price-tag this haven't gotten easier

Advice: Be better by being different. Think about how your product solves the jobs that your customers are trying to get done with your product, rather than simply thinking about what jobs you are solving. See what Steepster did for tea-connoisseurs

Do what others do, but do more.

This category is a little bit trickier. The basic idea here is to create an ecosystem for your product or service. The category takes advantage of easing the usage of a given product or service on different platforms.

Take the iPod as an example. You don't only get a music player. You also get the software to create play-lists plus access to buy music. Recently with the introduction of the iPhone and the AppStore this have created an even stronger ecosystem.

Another example is HP digital cameras, HP Snapfish for online picture storage and HP Snapfish print service that allow you to create albums with your own pictures and get them printed.

For a pure digital ecosystem Google is a good example. Google Search, AdWords and Google Analytics.

This category often has some "hero" product (the iPod, Google search, or the HP Camera) and often with a mixture of hardware and software and services.

From a company point of view this is often called vertical integration. Simplified meaning that a given company, own all the parts of the production that are needed to deliver to their customers.

The challenge with this category is that it often requires a successful product to build the ecosystem around. For a startup this is a difficult area to deliver in.

Advice: But even though you often do need a hero product, there are ways around it. Create an API that allows others to interfaces with your product. Then they will help you build your ecosystem. You won't necessarily have complete control (vertical integration) but you will become an important part of it.

37 signals API, FaceBook API and Google API all provide opportunity for interfacing with their products.

Do what others do, but for a new audience.

This is the most interesting type of innovation IMHO. Basically you are trying to find non-consumers and turn them into consumers by either making the product affordable or by making the product less specialized so that non-experts can use it.

An example on the latter is WYSIWYG editors such as Dreamweaver from Adobe. Mint.com took the idea of managing your own money to a new level allowing people without financial skills to suddenly understand their money in a different light. SalesForce.com basically created a SAP like product and broke it into pieces thus allowing access to the power of data-warehousing without the price that normally comes with it.

Leasing is an example on the former with its different financial plans are used to give non-consumers access to products they couldn't originally afford. The subsidizing that comes with most cell-phones is also an example of giving non-consumers access to your products.

Sometimes technologies that have previously been available for government or the scientific community find its way to the consumer market. It is interesting that rarely the original usage of the technology that ends up being the way consumers use it.

The very Internet we are using right now is an obvious example. GPS is another, both originally military systems.

But perhaps the best example is in the mobile industry with SMS (Texting if you're from the US).

Originally used by technicians to send test messages around the network. Then mobile customers began sending messages between each other. Later someone figured out a way to turn the SMS messages into commands that a server would understand (Look at any reality show). Then banks started using SMS for mobile banking (Large parts of Africans access their banks primarily through their cell-phone). Lately I have been buying ferry tickets with my cell. Ring-tones can be purchased through SMS. And last but by no means least, Twitter turned SMS into a broadcasting service.

Basically this approach to innovation is ripe with possibilities. Either a market has been proven (HTML editors, accounting, car markets and housing market) or an infrastructure is in place (Internet, GPS, Mobile net, Fiber).

This means that a lot of the hard work has been done already and you can focus on exploring different alternative uses of these to turn non-consumers into consumers.

Advice: Look around you and find areas that are served by only one type of customers and see if you can make that product available for what what previously non-consumers. As an example wordy.com to quote: "Let professional copy-editors check your text for grammar, spelling, punctuation and structure". Looking at the amount of typos, spelling and grammar mistakes, I normally do, be sure to sign me up when it's available!

Do what no other is doing

This is normally considered to be the holy grail of businesses innovation. Inventing something new that does not exist on the market already.

Classic example would be the light bulb, the car, the computer, the telephone. But also many types of software and services such as the OS and the spreadsheet. The innovations either create a demand or tap into jobs people are already trying to accomplish but with arbitrary tools.

It's hard to find something new, but not impossible.

By using the 2way matrix you can start to think more methodically about your startup. It won't guarantee success but it will help you gain a better understanding of your products and thus allow you to better explore different approaches to become a success.

To dig deeper and get a firmer understanding of innovation without the marketing hype I suggest you read some of the work from Clayton C. Christensen, Tony Ulwick or Peter F. Druckert.

And remember. The art of innovation is not just about finding something completely new but as much to connect two known areas in new ways.

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Thomas PetersenThomas Petersen is the co-founder of hello, a digital creative agency that designs and develops products and services. He writes on Black&WhiteTM and on twitter @hello_world.

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Tuesday, March 09, 2010

Setting Expectations for White Space - Apple iPad

by Adam Hartung

It's easy to misunderstand White Space. About twenty years ago Apple launched the Newton. The company sold about 375,000 of the first commercial PDAs, but Apple's leadership thought the market wasn't really there - and decided instead to focus on growing Mac sales. Obviously, as Palm and other PDA makers demonstrated, there was a tremendous market for PDAs. Apple misread the feedback from White Space.

Look now at the recent iPad launch. Silicon Alley Insider headlined "Now That They've Seen Apple's iPad, Most People Don't Want One." The headline keys on the fact that after the launch the number of people who said they were not interested to buy doubled (26% to 52%). Wrong fact to grab onto.

Apple iPad Sentiment
Instead, look at the fact that the number who said they would buy one tripled, from 3% to 9%. This is incredible, and should excite Apple's management as well as employees, suppliers and shareholders.

Most people will see a new, innovative product and say "why would I want that? I already have this other thing and it works great." And that is what marketers should expect. Most people are just trying to 'Defend & Extend' what they regularly do, and thus all the want is a product that helps them do their thing a little easier, faster, better and cheaper. They want minor improvements - variations and derivatives of what they already have. Improvements that are immediate, without them doing anything new or different.

All new deeply innovative products start with customers who are under-served or unserved. And this is why it is so important they be launched in White Space. White Space teams aren't intended to develop the big, mass market of known customers looking for something new. White Space is about doing new things that bring in new customers, give new solutions that attract real growth. And White Space teams have to learn how the market is evolving, how they fit into the market shift and how their solution will advance the market in order to sell more.

Setting Expectations for White Space - Apple iPadFor the iPad, the 3% to 9% shift in likely buyers is huge because it shows that the iPad is an offering that appeals to people who are not today well served by their existing PC, laptop, netbook, mobile phone, kindle or mix of these solutions. 9% of respondents are saying that they see the iPad and they see a solution for what they want to get done. And if 9% of potential buyers see this option, that is HUGE. By White Space standards, often there are only .5% or 1% or 2% of people who initially see how the new product fulfills their under-served needs.

Set expectations right for White Space. White Space is not for launching variation 4 of an existing product - targeted at existing customers. That's what the marketing and sales department can do fine, thank you very much. White Space is the team that finds the 3% (or in Apple's case 9%) of users that see value in this solution, then works with them to implement the product/solution in order to make sure it fulfills the market need and is priced to sell effectively while providing a profit to the company.

Apple understands this, you can be assured. Look at how successfully the Apple White Space teams found the underserved users that jumped all over the iPod and iTunes, the iTouch and then the iPhone. They got the product positioned and selling in a hurry. And now that Apple has that skill, the company is going to apply it to the iPad. If you understand this chart correctly, you understand that it bodes very, very good things for Apple.

And it tells you the importance of having White Space teams, setting their expectations correctly, and managing them for the kind of results that can turn your organization into the next Apple. It took Apple 10 years to reach this skill level. It did not happen overnight. Or with one product introduction. And it will take your organization a few years to build this skill. So, what are you waiting on?

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Adam HartungAdam Hartung, author of "Create Marketplace Disruption", is a Faculty and Board member of the Lake Forest Graduate School of Management, Managing Partner of Spark Partners, and writes for "Forbes" and the "Journal for Innovation Science."

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Sunday, January 17, 2010

Basically Anything Can Be Innovated

by Hutch Carpenter

Basically Anything Can Be InnovatedIn a recent post, Four Quadrants of Innovation, I described one type of innovation as leveraging existing technologies, serving existing customers. In popular culture, this type of innovation is... well, frankly it's boring. No cool new advances, no new stuff you haven't tried before.

But what is compelling about this type of innovation is how well it fits Clayton Christensen's focus on understanding the "job" your product has been hired to do. Companies need to stay on top of their products, and changes in customer behaviors. Sometimes that's sexy new technology advances. Mostly, it's not. Rather, it's good old roll-up-the-sleeves and innovate to meet changing customer needs and expectations.

SlideShare CEO Rashmi Sinha wrote a great post recently where she asked Is it time to reimagine your product or service? She makes the point that many web services reflect their vintage year. They fail to evolve as the market does, ultimately falling further behind the curve of customer expectations.

Rashmi Sinha's post very much reminds me of Clayton's Christensen's point of view. Your customers have:
  • Requirements you have not yet discovered at any given point in time

  • Changing requirements over time that you need to decide whether to meet

A New Stoplight InnovationOn top of that, there's something deeper in the Sinha's post. There are times you need to push need innovations, even if your customers aren't yet asking for them. Let your customers catch up to you.

These points don't just apply to web services. They apply to all manner of products and services. Everything can be innovated. One key is to understand that sometimes innovation comes in service delivery or business models, not just product features.

Even things you wouldn't expect to be innovated, can indeed be innovated.

In line with this, I came across a great post by Jake Kuramoto of Oracle AppsLab. In Unexpected Innovation, Jake notes two recent innovations he has seen with...

...traffic lights. Of all things.

Yes, Traffic Lights Can Be Innovated

The first innovation is actually not all that surprising, and really is the application of existing technology. New lights use energy efficient LED bulbs. They have some issues to be worked out in terms of their ability to melt accumulated snow. But they make a lot of sense.

The second innovation is one that really speaks to a deeper understanding of what's going with traffic lights. See the pictures at the top of this post? Designer Damjan Stankovic came up with a concept where a timer is added to stoplights. Stankovic posits these benefits of such a timer:
  • Less pollution. Drivers can turn their engines off and cut carbon emissions while waiting for the green light.

  • Less fuel consumption. Turning off your vehicle while waiting on the traffic light can lower fuel consumption in the long run.

  • Less stress. Since you know exactly how long you have to wait you can sit back and clear your head for a while.

  • Safer driving. With the Eko light both drivers and pedestrians can be fully aware of how much time they have left before the light changes and that way reduce the chance for potential traffic accidents.

That last bullet is the benefit that intrigues me most, in terms of the job I want a stoplight to do: safer driving. Here in San Francisco, we have walk signals at intersections that include countdowns. When the WALK signals appears, you can see how many seconds are left to cross the street.

Both Jake Kuramoto use these walk signal countdowns in a different way. When you are driving, you can see the countdowns. If you're, say 50 meters out, this gives you something of an advantage in how you approach the intersection. When there are only a few seconds left, you know the light will be yellow well before you get to the intersection. With kids in the car, I slow down to be ready to stop for what will be a late yellow light by the time I reach the intersection.

Now if someone had asked me, I wouldn't have come up with a requirement for traffic lights to have timers. But because someone put those countdowns on the walk signals, I've found myself using them in my driving when they are available. And Stankovic's design makes me realize that, "hey, I want those timers on traffic lights."

Which goes to show you. Everything can be innovated upon. Even the most... uh... pedestrian of products and services.

Finally, I love this quote from Amazon's Jeff Bezos in a Newsweek interview:

"There's a tendency, I think, for executives to think that the right course of action is to stick to the knitting - stick with what you're good at. That may be a generally good rule, but the problem is the world changes out from under you if you're not constantly adding to your skill set."

Markets are always shifting. Don't think that anything is immune from innovation.

Image Credits: John Chuckman, Damjan Stankovic

Hutch CarpenterHutch Carpenter is the Vice President of Product at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

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Saturday, January 16, 2010

Innovation Perspectives - Packaging Up Innovation

This is the sixth of several 'Innovation Perspectives' articles we will publish this week from multiple authors to get different perspectives on 'What product or sector is in desperate need of innovation?'. Here is the next perspective in the series:

by Adam Schorr

Innovation Perspectives - Packaging Up InnovationWhile recent years have been a boon for innovation in various industries such as consumer electronics and automotive, the consumer packaged goods industry seems to be stuck serving up warmed over versions of past innovation. But while product innovation in CPG is badly needed, the true innovation crisis in CPG has to do with the fundamental business model. Although the players have been changing due to industry consolidation, the CPG industry continues to labor under a decades old business model whose foundational truths evaporated years ago.

The essence of the CPG business model is as follows: One group of companies manufactures products that are perceived by consumers as significantly better than the alternatives. Over time, these products serve as the backbone for brands that are loved and trusted by consumers and which are relied on as shortcuts to simplify purchase decisions. These companies sell their products to a second group of companies (retailers) who have expertise in merchandising and who, in turn, sell the products to the end users (consumers).

This model worked out well for the manufacturers when two things were true: 1) Their products were perceived by consumers as significantly better than the alternatives and 2) They had the trust and attention of consumers and were able to motivate consumers to go to the retail stores to buy.

Today, these essential truths are no longer true.

With ample contract manufacturing capacity available in the market, private label goods are proliferating. More importantly, a sizable and growing share of consumers perceive private label versions of products to be as good or better than their branded counterparts. Just as troublesome is the fact that manufacturers no longer have the trust and attention of the consuming public which means they cannot influence consumers to go out in droves and shop in retail stores as once they could. In a world where manufacturers are not producing products that are perceived as significantly better than the private label alternatives and where the 30 second commercial no longer holds a mass audience in rapt attention, manufacturers of branded consumer goods are in a very precarious position. One has to wonder whether the role they play in the CPG value chain is still needed. I can assure you that the retailers are asking this very question and are answering it ever more vociferously in the negative.

Sadly, some of the CPG players draw the wrong lesson from their current woes. Some have declared a war on costs, seeking to drive cost of out of their system so that they can reinvest back in their brands. This is an example of trying to play your game harder. Playing your game harder makes sense when success is a function of skill. But success in CPG today is not a function of skill, it is a function of position. The retailers occupy a privileged position on the competitive landscape. They own the shelves and they own the stores in which consumers shop. Trying to win a battle of costs against private label goods is a waste of time. Branded goods will not only lose this battle, they will undercut whatever raison d'etre they still possess.

All is not lost for the CPG community. As always, innovation is the key to success. Branded goods manufacturers need to focus on two things: 1) Knocking the socks off of their consumers with products that are not easily copied. These fantastic products will earn the attention of the consuming public. 2) Finding a way to recapture the relationship with the consumer.

The 30 second commercial is not coming back as a means of building consumer relationships. Brand stewards must leverage new technologies to turn the attention that their products earn into brand loyalty that can deliver financial returns. Once these two fundamentals have been re-established, CPG manufacturers would be wise to re-evaluate the rationale for funneling all of their sales through a channel that has demonstrated robust support for building its own private label business at the expense of the big brands.

The path of meaningful innovation is the only path to success for the manufacturers of branded consumer goods. They can choose to continue tweaking the current model or to seek a new model. One thing is clear: The market will not wait for them.

You can check out all of the 'Innovation Perspectives' articles from the different contributing authors on 'What product or sector is in desperate need of innovation?' by clicking the link in this sentence.

Adam SchorrAdam Schorr is an experienced innovator and brand manager with a passion for the human soul and its ability to reshape the universe. Adam blogs about innovation, marketing and all sorts of quirky topics at www.adamschorr.com.

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Thursday, January 14, 2010

Innovation Can't Wait

by Jeffrey Phillips

Innovation Can't WaitOne of my partners, an electrical engineer, let out a loud cry a few minutes ago. He was responding to an article I sent him about a new electical gizmo that monitors eletrical usage in the home. He was upset because he came up with a very similar idea about a year ago, but he assumed it was safe to put on hold for a while.

This points up an innovation fallacy, and a separate truism. First, the fallacy. Good ideas are rarely conceived in isolation. Even really good ideas often happen in several different places relatively simultaneously. So while you may think your great idea is unique and original, there's a good chance it isn't. The truism that follows is that it's not the individual or team that conceives the idea that wins, it's the individual or team that commercializes that wins.

Let's look at the fallacy first. As is fairly well documented, Newton and Leibnitz conceived calculus at roughly the same time in history with no interaction. Alexander Graham Bell and another inventor applied for patents for the telephone on the same day. Good ideas to solve seemingly intractable problems or address emerging opportunities are rarely unique. Simply ask yourself - have you ever seen a new product or service and thought "I thought of that years ago". There are enough smart people reading the same news and watching the same events unfold as your team, so many ideas are likely to be spawned simultaneously in a number of geographies or in a number of different companies.

This places all the more emphasis on commitment to your ideas. If you have a good idea, then you need to move as quickly as possible to prototype it, pilot it, assess it and gain customer feedback. Don't assume you have time on your side, or that your idea is significantly unique. The latter is a fallacy and the former is a trap. Time is not on your side. As people become more aware of opportunities or challenges and attempt to create their own solutions, more people will try to innovate a robust solution. Some of those firms won't have the scruples to evaluate, test and refine their ideas. They'll stick an idea out there, gain feedback and learn from their products and mistakes.

Innovations wait for no man. Since it's easy to show the same ideas are often conceived by disparate groups at roughly the same time, you need to be prepared to move on your ideas as soon as possible. This means you need a process or methodology to enrich, nurture and develop ideas quickly, and a piloting or feedback loop to gain customer feedback. Once you've received the feedback, you may then decide the idea is too nascent or the needs still too undefined for your idea, and place it on the shelf. Otherwise, someone else is likely to beat you to the punch, and leave you yelling at your monitor that you had that idea a year ago.

The race goes not to the swift or the battle to the strong, but success in innovation goes to the confident team prepared to act on its ideas.

Jeffrey PhillipsJeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of "Make us more Innovative", and innovateonpurpose.blogspot.com.

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Friday, December 18, 2009

Innovating the Hockey Stick

by Drew Boyd

Ice Hockey InnovationIce hockey is big business. But it lags behind other professional sports - soccer, football, baseball, and basketball. As with all industries, the key to growth is innovation. Equipment manufacturers such as Reebok are taking this seriously with the creation of the Hockey Research and Innovation Center. In this month's LAB, we will focus on the equipment side of hockey, specifically on: the hockey stick.

Hockey has been around a long time with evidence of its origins dating to the sixteenth century. The first organized indoor game was played in 1875. Since then, many innovations have been introduced. Let's see how a systematic, corporate innovation method can be applied to drive new sales opportunities.

I used the Attribute Dependency template of Systematic Inventive Thinking. Attribute Dependency differs from the other templates in that it uses attributes (variables) of the situation rather than components. Start with an attribute list, then construct a 2 x 2 matrix of these, pairing each against the others. Each cell represents a potential dependency (or potential break in an existing dependency) that forms a Virtual Product. Using Function Follows Form, we work backwards and envision a potential benefit or problem that this hypothetical solution solves.

Here is my attribute list:

Hockey Stick Attribute InnovationInternal Attributes:
  • length of stick

  • curve of stick

  • flex of stick

  • friction of stick (bottom)

  • weight of stick

External Attributes:
  • game situation (even strength or penalty situation)

  • condition of ice (smooth or rough)

  • type of shot (forehand or backhand)

  • force of shot (slap shot, wrist shot, snap shot)

  • use of stick (blocking, hooking, checking, etc)

Here are five innovations for the hockey stick using combinations of these attributes (underlined for emphasis):

1. "Extenda-Stick:" The hockey stick changes length depending on the game situation. If the player is in a defensive mode, the stick can be extended to its maximum allowable length to allow better blocking of shots. When the player transitions to the offensive puck handling mode, the stick reverts to its optimal length as determined by the height and preference of that player. This would be great for situations when your team has a player in the penalty box where defensive play is called for. The stick length could be changed, perhaps, with a push button and spring-loading within a certain range.

2. "Curve-Switcher:" Hockey sticks are either right-handed or left-handed as determined by the direction of the curve of the stick. The challenge occurs when a player wants to take a backhand shot with the back, convex side. It is difficult to control direction and speed of the puck with the back of stick that is curved the wrong way. With this new innovation, the direction of the curve changes depending on the type of shot the player is about to take. Like the "Extenda-Stick," the curve direction changes with the push of a button or a squeeze of the stick. The would be particularly useful on the "wrap-around" attempt (demonstrated here by my son, Ryan, at age 14). This would increase goals, game interest, attendance, etc.

3. "Feel-the-Ice:" The friction on the bottom of the stick adjusts to the smoothness of the ice. Hockey players want to "feel the ice" with their stick as they handle the puck. Early in the game, the ice is freshly prepared and very slippery. That is when the stick bottom needs to have more friction. Later, as the ice surface gets rough and snowy, the stick bottom needs to be slippery. Perhaps the stick has a pad that is added to the bottom at the beginning of a period and it changes over a 20 minute time frame, going from sticky to slippery, adjusting passively to the change in ice surface.

4. "Flex-Flex:" The flexibility of the stick changes with the type of shot the player is taking. If the player "winds up" for a hard slap shot, the shaft of the stick stiffens to maximize the power applied to the puck. If the player takes a shot with the stick at a low angle to the ice (in other words, a wrist shot), the shaft becomes more flexible allowing the player to transfer power with the spring action of the stick.

5. "Whistle-Blower:" Hockey players use their sticks for lots of things, but some of them are illegal. Hooking, tripping, and spearing are examples. With this innovation, the stick alerts the referee when it is being used improperly, causing a penalty. For example, if a player holds the stick parallel to the ice with the blade turned sideways and hooks the body of another player (placing pressure on the top of the blade), the stick would send a signal to the referee indicating a foul.

Perhaps the stick could detect when it draws blood!

Drew BoydDrew Boyd is Director of Marketing Mastery for Johnson & Johnson (Ethicon Endo-Surgery division). He is also Visiting Assistant Professor of Marketing and Innovation at the University of Cincinnati and Executive Director of the MS-Marketing program. Follow him at www.innovationinpractice.com and at http://twitter.com/drewboyd

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Tuesday, December 08, 2009

Innovation Convergence

by Stephen Shapiro

I never really thought much about toothpaste. But at the last two innovation conferences where I spoke, toothpaste was one of the hot topics.

At the FT Innovate conference in London, Unilever discussed their "Signal White Now" (and other brands) toothpaste. Instead of using harsh bleaches and abrasives, they borrowed an optical-effect technology from their laundry team. This toothpaste uses a blue pigment to make yellow teeth instantly appear whiter. This same ingredient is used to make white clothes look even whiter.

At the Open Innovation Summit in Orlando, GSK discussed how their "Aquafresh iso-active" toothpaste borrowed an idea from Edge shaving cream (now a division of Energizer Holdings, Inc). The toothpaste comes out like a gel, but foams in the mouth, much like the shaving cream. This formulation, according to the can I was given, removes 25% more bacteria than regular toothpaste - or 3x more according to the picture on the right.

This got me thinking. If toothpaste manufacturers can get ideas from shaving cream and laundry detergent, where else could they get ideas? Within 5 minutes, I thought up a few ideas of how to gain inspiration from other products:
  1. Pop Rocks: As a kid, I loved how Pop Rocks, the carbonated candy, exploded in your mouth. What if you added Pop Rock-like crystals to toothpaste? Not only would the toothpaste foam, it would fizz and explode. Maybe this would blast the plaque off your teeth. Of course, it might blast off your teeth like Pop Rocks reputedly did a few times.

  2. Shampoo: Shampoos are infused with vitamins and minerals to give your hair bounce and shine. What if you infused toothpaste with these ingredients? Or maybe you could add some homeopathic remedies - for those who believe in these alternative "medicines." Sublingual administration (under the tongue) is a common and effective way of delivering drugs directly into the bloodstream.

  3. Conditioner: We use shampoo to clean and conditioner to protect. Maybe they can create a tooth conditioner; a special toothpaste that you use after your regular toothpaste. It could coat your teeth to prevent staining, bad breath, or split ends. Even better, they could borrow the "technology" used by shampoos like "Pearl" that combine shampoo and conditioner into one formulation.

  4. Moisturizers: Several moisturizers have an AM and a PM formulation. One is used in the morning and the other at night before you go to sleep. The AM formula of toothpaste could be infused with caffeine that would be absorbed into the bloodstream sublingually (see idea #2 above). And the PM formulation could be infused with melatonin to help you sleep better at night.

  5. Weight Loss Products: I'm not sure how this would work, but what if you could create a toothpaste that somehow made certain foods taste bad? This might cause you to reduce the amount of food you eat. Or maybe there is another way to make toothpaste a weight loss product. OK, this one is a stretch, but there might be a kernel of an idea there!

In a breakout at the Open Innovation Summit, an innovation leader from Johnson & Johnson, when asked to name the most important word for their business right now, answered "Convergence." By this, he meant the sharing of ideas across business units and brands.

Ideas can indeed come from anywhere. And quite often, the best ideas will come from inside your own organization - just from a different product, function, division, or brand. Where will your next big idea come from?

If you have other toothpaste innovation ideas, I would love for you to post them as comments!

Stephen ShapiroStephen Shapiro is the author of three books, a popular innovation speaker, and is the Chief Innovation Evangelist for Innocentive, the leader in Open Innovation.

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Thursday, December 03, 2009

Are you crimping your innovation funnel?

New Product Development Requires Fresh Perspective on 'Creative' and 'Structure'

by Robert F. Brands

New Product FunnelNew product development can be a misunderstood concept.

Is the "product" actually a product? Or can it be a process? Is it a mandate from the C Suite? Or can it be a suggestion from the factory floor, the retail showroom, the Idea Box or a customer tip?

How wide is your idea funnel? And how do you treat ideas once they land in the organization's "idea hopper"? (see the blog post on "Innovation and Idea Management" to discover how to handle in-bound ideas).

Answer these questions, and you've placed your finger on the pulse of how your organization embraces new product development (NPD).

NPD best blossoms in that place where creativity commingles with structure - where fresh thinking is fostered in a nursery of structured liberation. Think of ideas as if they were offspring: They should be free to roam and explore, but they need fences - structure - in their lives to ensure safe maturation in a controlled environment.

The same is true for NPD - regardless of whether products are widgets for sale or processes envisioned to improve the organization. For the concepts of "creative" and "structured" are not mutually exclusive. Creativity is the thinking that goes behind the ideation of a new product. Structure helps define and determine the vetting process that NPD must go through.

Keep in mind that each step of this entire process has distinct "sub-steps," if you will, that must be accomplished even before a Go/No-Go decision can be made. These often are done together - and simultaneously. This vetting and completed steps will than determine which products pass the Go/No-Go decision - regardless of the source or even the potential "profitability" of any new product.

These are important distinctions. When creating a foundational NPD process, all ideas should be welcomed from all sources - from the customer service rep to the C-level exec. No short-shrift or free pass here. If the structured vetting process, one established by the Chief Idea Officer and his/her team, gives a Thumbs-Down to a new idea, the source should not spin that determination.

Regardless of whether a product is seen as a revenue source, or just an internal concept or process, that, too, should have little impact on a product's viability or survivability in the organization. Good "products" don't have to result in revenues; they can enhance processes, that in turn, can boost profitability.

As you're pondering your NPD capabilities, consider whether your pipeline accommodate simultaneous multiple product development streams? A new, physical product for sale should not force a process-focused product to be shelved. This level of scalability ensures a wide "innovation highway" - one that is lean, adaptive and flexible, and can handle various products at the same time.

Finally, is your organization prepared to measure the results - not of the new product, but of the process itself? Do you have a system in place to gather, measure and share both the success and the stumbling blocks? Are you prepared to ask yourself, how did the process work?

The truth is, future success can be closely tied into past accomplishments - if you're willing to ask the right questions, create the right environment, and learn along the way.

Robert F BrandsRobert F. Brands is President and founder of Brands & Company, LLC. Innovation Coach Robert Brands has launched a new site - www.RobertsRulesOfInnovation.com - to complement his upcoming book.

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Friday, November 13, 2009

Innovation Sighting - Smart Floors

by Drew Boyd

Smart TextilesIn a world where gravity is ever present, floors are essential. We spend most of our waking hours standing or walking on them. But we tend to ignore them. That is a pity given the nearly constant contact we have with them. What if the floor could be innovated? What could it do for us that it doesn't do today?

Here is an innovative technology worth standing up for. Future-Shape GmbH, a German technology startup, has developed Sens-Floor, a layer of textile sensors that monitor human movement and can be installed underneath almost any type of flooring. The product works by sending a small electrical charge through a conductive fabric containing integrated sensor plates and radio modules. When someone walks over a sensor, a small change in charge capacity triggers the system. The company offers a few suggested applications such as home security, activating room lights, and monitoring the elderly.

However, to reach its full potential, innovating with the Attribute Dependency template will link this technology to many more things that take place on a floor. Imagine, for example, the floor can detect a specific person (through body weight, foot size, etc) to activate things in the room related to that person (lighting preferences, sounds, smells...anything with an "on" button). Taking it further, imagine the floor can keep track of how many people are on the floor and what they are doing (standing, dancing, sitting, etc). The floor can tell a party host when it's time to serve dinner or to enliven the party with different music. Think of the sports applications - score keeping in tennis, required elements in gymnastics, or basketball three second violations. What about retail store applications? The floor could keep track of customer movements - where they shop, where they stop, and how they go from product to product. Perhaps the floor can detect when to raise prices on popular items or drop prices on a slow ones.

The company calls its core product, Smart Textiles, and this idea is embedded in its other products. To make them truly smart, it will take a bit more work on the application side. As an investment, Future-Shape might be an excellent "ground floor" opportunity.

Drew BoydDrew Boyd is Director of Marketing Mastery for Johnson & Johnson (Ethicon Endo-Surgery division). He is also Visiting Assistant Professor of Marketing and Innovation at the University of Cincinnati and Executive Director of the MS-Marketing program. Follow him at www.innovationinpractice.com and at http://twitter.com/drewboyd

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Monday, October 19, 2009

Where are the Market and Product Explorers?

by Jeffrey Phillips

Market and Product ExplorersOk, after a number of years and a range of clients, I've seen a lot of titles. Product Manager, Product Developer, Product Development Manager, etc. I've even seen titles like Innovation Manager and Ideator and some other more fanciful titles. These are all valid and important roles. But what is evident to me is that while we place great emphasis on maintaining the existing product and service lines, there's almost never a person whose job it is to devise entirely new products and services. It's as if we believe that all future growth will spring from existing products and services, and we won't have to address new markets or new competitive threats, leave alone the opportunity to create a new "blue ocean".

Run down the list of titles in your firm that have to do with product or service management or development. There will be a host of people who "manage" products or services. These individuals have a vital job to maintain the existing product or service line. They have detailed plans for several years out about product enhancements and new features. They keep the lights on and ensure the existing products and their incremental improvements are planned and released. Additionally there will be people with the title of Product Developer or Service Developer. Their job is to work with the product managers to ensure the product or service is built according to the identified needs and specifications. Again, a vital job focused on very near term opportunities.

Occasionally we'll find a "New Product Development" or New Product Manager title in an organization. That role is probably closer to what we are advocating, but is still rooted in the near term. A new product or service developer or manager is still working under the constraints of the product or service mantra within the firm.

What most firms need, and sorely lack, are people whose full time job it is to identify new opportunities or markets and start shaping those opportunities into new products, services or business models that the firm can deliver. Existing and near term opportunities are important. They keep the lights on and the beast fed. But only rarely are they going to produce new, dramatic growth or differentiation. Innovation will spring from people who have longer term vision and are less tied to the day to day product or service delivery, and who are more interested in emerging opportunities or threats. In my experience, most product managers rarely read or interact outside of their own area of expertise, so the firm is constantly surprised when new products enter the market from unexpected quarters.

According to most CEOs, there's little that's more important than innovation, yet there are few if any defined roles in the organization who "own" it. It would do my heart good to see a few people with permanent responsibility to explore new markets and new opportunities. Perhaps we could call these individuals market or opportunity explorers. Naming them explorers gives them the right to investigate, explore and identify really dramatic new things and introduce them to the organization, which can then convert new opportunities into products and services. Most organizations have programs like Stage-Gate that do that part well. What's missing is an intentional focus, and an assignment and role(s) that focus solely on the longer term innovation.

Yes, I know that Product Managers and Product Developers consider this work part of their job, but given the demands of the job and the relentless quarterly reporting, longer term, disruptive work gets pushed out constantly. Let's have one or two people whose job it is - full time - to uncover and explore new opportunities and markets. You can't manage a task without assigning someone to do it and measuring them and their results. You certainly can't be successful over the long term when no one is actively responsible for this important work.

Jeffrey PhillipsJeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of "Make us more Innovative", and innovateonpurpose.blogspot.com.

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Wednesday, September 30, 2009

It's Tough to be a Follower

by Steve McKee

Following the Market LeaderThe news is out. Sales of the much-ballyhood Palm Pre are...a disappointment. The new smartphone, launched to compete head-on with Apple's groundbreaking iPhone, has lost its momentum.

The Pre, which was launched June 6, got off to a good start but has faded in recent weeks. According to the Wall Street Journal, analysts projected lower sales in the current period than had been expected, and Palm reported a loss of nearly $165 million for its most recent quarter--the first full quarter to include Pre sales results.

Jon Rubinstein, Palm's CEO, says the company "will face near-term pressures until we transition to a more diversified carrier base and expand our family of webOS products, but we are confident we're on the path to success." Makes you wonder if this is a case of actions speaking louder than words, as Palm recently cut the Pre's price by 25 percent (tied to a two-year service agreement), and is issuing 16 million more shares of common stock to overcome a cash problem.

The Pre, by all accounts, is a terrific phone, and offers some enhancements that the iPhone doesn't yet have (see "Features, Smeachers"). But drafting behind the leader isn't the same as taking the lead, and being a little bit better often isn't enough. Especially when the guy up front has his own race strategy (Apple cut the price of its first generation iPhone to 99 bucks within two days of the Pre's launch).

Palm PixiPerhaps Palm will do better with Pixi, a phone targeted at youth, which should be available in time for Christmas. If it's different enough from other offerings in the marketplace, Palm may get it share of attention (and accolades). But if it's another me-too product, the Pixi will get little more than a yawn.

Sometimes a company, like an athlete, falls behind and simply has to catch up. But "catching up" is not a strategy for victory. Innovation is all about finding a way to get--and stay--out front.

Steve McKeeSteve McKee is a BusinessWeek.com columnist, marketing consultant, and author of "When Growth Stalls: How it Happens, Why You're Stuck, and What To Do About It." Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

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Friday, September 11, 2009

The Front End Of Innovation Challenge

by Stefan Lindegaard

Front End of InnovationIn a recent meeting in one of my network groups, we focused on the front end of innovation as a couple of the members have current challenges on how to identify and develop ideas in the very early stages.

I remember attending my first Front End Of Innovation conference in Boston five years ago. Hundreds of people participated and there was a great energy. At that time, front end of innovation was the talk of the town in the innovation community just as open innovation is today. Interestingly enough, the front end of innovation is still one of the key challenges for innovation leaders and the Front End of Innovation conferences continue to attract hundreds of participants.

I wonder why this is the case. Has the innovation community failed on developing models that provide answers to this? Are innovation leaders not good enough at learning from other's experiences on this?

In my talks with innovation leaders on this, the issues evolve around the funnel system and stage-gate like models; how to identify the ideas and get them from one stage to the next. Another key issue is how you organize for this. It is my experience that companies often make a couple of mistakes on this. They are:

1. Too much focus on internal sources
  • Many innovation leaders mostly talk about internal and employee-driven ideas. There is not enough focus on how to involve external sources in the front end of innovation. This will change as open innovation moves ahead, but why not try to get a head start on this.

2. Too much focus on ideas and too little on processes and people
  • I have always said that getting ideas is not an issue. There are plenty of them. If you do not find them internally, it is because you do not look in the right places or because you need to include external sources to a higher degree. The real issue on ideas is how you filter and later on mature them.

Front End of Innovation ChallengeSo a lot of ideas do not necessarily equal success. This only occurs when you have the proper processes in place and more importantly when you have the right people at the right time.

See this post: People First, Processes Next, Then Ideas

3. No filtering process in place
  • The "everything goes" process does not work. You need to set up filters to make sure the early ideas fit the strategic intent you are working towards. You can get an idea of what it looks like when this is not the case in this blog post: How Not to Implement Open Innovation

4. Processes are too complex
  • I have seen several cases where companies created processes that attended every issue related to getting ideas through the funnel and their stage gate processes. It looked very good on paper, but it did not work in the real world. Sometimes you need to keep things simple and leave room for "learn-as-you-go" development.

These are just some quick thoughts on this. It would be great to hear your perspectives on why the front end of innovation continues to be such a big challenge.

You can also check out this group at LinkedIn if you want to get an idea of the issues people discuss on this topic: Front End Of Innovation

Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation.

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Sunday, September 06, 2009

A Cosmetic Fix?

by Steve McKee

Cosmetic FixOne of the questions I'm frequently asked by corporate leaders struggling to manage in the current environment is how far to go with their cost-cutting measures. With their companies suffering sales declines, they've got to trim somewhere to maintain profitability (and in some cases to stay afloat), but they don't want to cut the wrong things.

Recent moves by Jean-Paul Agon, CEO of L'Oreal, offer a good example. The luxury cosmetics maker has had a difficult year so far, in part because it "scrimped" on brand promotion, reports the Wall Street Journal. In light of this Agon knew he had to cut back, but he has done so wisely. He launched a reorganization plan which included a hiring freeze. He trimmed travel expenses and even closed three factories. What Agon did not do was cut off the company's lifeblood, marketing and R&D.

Says Agon, "We're strengthening our media and promotion. It's a brave strategy because when you face a crisis, most companies say I'm going to reduce my media budget. We decided to do just the opposite." When it comes to R&D, Agon is even more resolute: "The last thing to do would be to give up innovation because cosmetics is really about permanently inventing new products, new technologies, new benefits, new results."

There is no cookie cutter answer for how a struggling company should cut back to make its numbers work. But when you're faced with those difficult decisions, do your best to trim expenses and leave the investments in place.

Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of "When Growth Stalls: How it Happens, Why You're Stuck, and What To Do About It." Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

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Friday, September 04, 2009

Never Miss an Idea - The LiveScribe Pulse Smart Pen

by Drew Boyd

Innovating is mental, visual, and vocal. Here is a new product to help capture...and coordinate...all three. It is called the PulseTM by Livescribe. The PulseTM is a smart pen that records and links audio to what your write, so you never miss a word...or an idea.

The PulseTM will become a great tool for conducting innovation workshops. One of the more challenging issues in workshops is capturing ideas. No matter how diligent the team is in collecting ideas, many subtle insights and concepts are missed. Even if an innovation workshop is recorded on audio or video tape, it is nearly impossible to connect the spoken word to the drawings and notes taken by the participants. The PulseTM SmartPen solves that.

Here is how I will use the PulseTM in my workshops:
Innovation Workshop
  • Recording component lists

  • Recording Virtual Products

  • Recording "Function Follows Form" ideas

  • Drawing new product embodiments

  • Recording potential benefits of new ideas

  • Recording potential challenges and drawbacks of ideas

  • Scoring ideas

  • Creating Attribute Dependency matrices

  • Recording initial business cases to support new ideas

  • Recording names of participants and facilitators

I envision using the pen with teams of two or three people as they use a structured innovation method. One team member will use the pen to keep track of ideas and draw physical representations while recording the actual discussion as it happens. Each team member will sign the page while verbalizing their name. Idea sessions upload automatically to a computer when the pen is attached to its charging cradle. This approach captures the moment of innovation in audio and written form...forever. It creates a permanent record of who innovated, how they innovated, and what they innovated. We'll never miss an idea again.

Potential benefits of this approach include:
Innovation Workshop 2
  • Better records and annotations for filing patents and protecting intellectual property

  • Better archiving for future workshops to refine and improve ideas

  • Better metrics of ideation programs

  • Easier sharing of ideas with R&D teams, consultants, and agencies

  • Better marketing strategy development

Congratulations to the team at Livescribe for the development and launch of this useful product. For innovation practitioners, this is a must-have.

Drew Boyd is Director of Marketing Mastery for Johnson & Johnson (Ethicon Endo-Surgery division). He is also Visiting Assistant Professor of Marketing and Innovation at the University of Cincinnati and Executive Director of the MS-Marketing program. Follow him at www.innovationinpractice.com and at http://twitter.com/drewboyd

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Thursday, August 20, 2009

Can You Have Slow Innovation?

by Jeffrey Phillips

Just as the peacekeeper missile and "postal service" have entered the lexicon as oxymorons, I'd like to add another: slow innovation. Clearly, slow or cautious innovation is anathema to innovation and an oxymoron. Why is there such an emphasis on speed where innovation is concerned?

Innovators have to respond quickly with new ideas, and implement the ideas as they arrive, and move boldly when generating ideas and implementing ideas. There's no such thing as "slow innovation". Think about it - even firms that aren't really innovative but want to be ahead of the "pack" are called "fast followers".

Let's look at a couple of reasons innovators have a need for speed. First, the world is changing quickly. It seems the pace of change is accelerating and new concepts, new products, new services are constantly being introduced. Simply to participate in this product or service development cycle, your firm has to be operating at a high rate of speed, to spot new trends and identify new opportunities. Then, to ensure your innovations win, you've got to identify the right opportunities at the right times, and produce the right products or solutions to meet those needs. Also, it is helpful if you produce them before your competitors, so you can gain more of the awareness and market share than they do.

The second reason for speed is that many new entrants, entrepreneurs and disrupters are looking for the same opportunities to produce new products and services as your firm. Yet they are relatively unencumbered by sloth-like decision making bodies and annual plans that lock an organization in for the next 18 months. If your firm is going to compete, it has to compete with the same rules and the same capabilities. Where innovation is concerned, size isn't nearly as important as speed.

The third reason for speed is that at some point every person on earth has looked at a new product or service and said "I thought of that two years ago". Congratulations. You are now a member of the "I thought of that and did not commercialize it" club. Too many firms actually have good, viable ideas for products and concepts but do not commercialize them quickly enough, only to see new entrants or competitors bring a product or service to market faster and gain more credibility and market share. Simply having the idea isn't enough - you have to speed the product or service through the development process and launch it successfully.

Now, some of you will say "Edison took years to perfect the light bulb. He was rather methodical and took his time." Edison lived in a period where few people could even imagine what electricity was, much less have the time or knowledge to experiment with different forms of filaments. Today's Edisons have to move much more quickly as information and knowledge is much more diffused and pace of change is much more radical.

So, what's an innovator to do? Establish processes and methods for moving quickly, subverting or avoiding the typical planning and approval cycle. Demonstrate the importance of quick decisions, quick implementations of new ideas and the quick death of an idea that doesn't prove out. Understand the pace of change and how quickly new needs and opportunities arise, and constantly assess the market to understand the opportunities. Respond quickly to these opportunities, and you'll be an innovator, not an oxymoron, or worse, roadkill.

Jeffrey Phillips is a senior leader at OVO Innovation. OVO works with large distributed organizations to build innovation teams, processes and capabilities. Jeffrey is the author of "Make us more Innovative", and innovateonpurpose.blogspot.com.

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Thursday, August 13, 2009

Beyond Product Innovation

One of the problems with innovation is that, in any given industry, it can get harder and harder over time to come up with the kind of ideas that totally reinvent things in a fundamental and significant way.

Take any vector of innovation and you get to some point where you may have just exhausted the possibilities. Look at today's automobile. It's essentially based on the same architecture we've been using for a hundred years - a wheel at each corner, a steering wheel on one side, an engine at the front or back, a gearbox, and so forth. So innovation in the automobile industry has got to the point where the car is a little bit better here, a little bit better there, but it's the kind of stuff you hardly even notice. Apart, maybe, from the new hybrid motors which have been quite a breakthrough. But, again, if you look at the car as whole, the change is quite cosmetic.

The same has happened in mobile phones. Back in the nineties, companies like Nokia were producing some very distinctive phones. At the time, they were the most stylish, the easiest to use and so on. But over time, with so many companies joining the fray, and so much being outsourced to the same suppliers, almost every mobile phone you pick up is just a variation on the same theme.

So, in any given industry, you may get to a stage where you have to think about shifting the basis of differentiation away from the physical. That's why Lexus puts so much effort into innovating around the dealer experience. A lot of people couldn't honestly tell a Lexus from a Mercedes, so the company has decided to made the dealer a huge part of the differentiation. Because, when everything else is the same, you have to innovate around whatever you have left.

Take Rexam, the world's leader supplier of beverage cans. They've spent years looking at tin cans and trying to figure out where they can be innovative.

And, of course, there are still one or two possibilities to do interesting things (i.e. resealable cans, different formats and sizes etc.), and every company needs to avoid getting blinded by its own orthodoxies. But, essentially, the beverage can hasn't changed its basic form for decades. So rather than it being the physical can itself, Rexam's basis for differentiation tends to come from all the stuff around the can - the parts of their business model that give them their unique advantage, particularly in terms of their global capability and the depth of their customer relationships.

Instead of thinking about innovation merely in terms of what you provide (i.e. your products and services), you should be looking at ways to innovate across the entire business model in an effort to meet important customer needs in unconventional ways.

For example, think about customer groups that you and your competitors may have been ignoring. Think about delivering what you provide in ways that would reinvent the customer experience - i.e. by making it easier or more enjoyable. Think about how you might break the dominant pricing paradigm in your industry. Ask yourself whether there any dimensions of differentiation which you and your competitors have not yet explored.

In other words, think about how you might be able to design your whole business model from the customer backward, looking at each and every component as an opportunity for innovation and competitive advantage. When you start to unpack your business model in this way, you will invariably discover lots of ways to dramatically redesign what you do - and how you do it - in order to create new value for the customer.

Rowan Gibson is a global business strategist, a bestselling author and an expert on radical innovation.

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Wednesday, August 12, 2009

Why Edison Was Wrong

The other night I had an enlightening conversation with Alph Bingham, the co-founder of InnoCentive from Eli Lilly. This guy is fascinating!

Alph suggested that many people do not like open innovation (external crowd sourcing) because it runs counter to a widely held belief of the R&D community. Researchers often throw around the Edison quote, "I have not failed 700 times. I have not failed once. I have succeeded in proving that those 700 ways will not work. When I have eliminated the ways that will not work, I will find the way that will work."

Researchers use this quote because it "validates" the iterative development innovation process; the cornerstone of most R&D departments. They have convinced themselves that they learn as much from their failures as they do from their successes. Call it what you want, the 700 attempts were failures.

When some R&D people look at open innovation, they see it as linear rather than iterative: post a challenge and get a solution. This seems inconsistent with their belief in learning from failures.

Alph made the point that in the R&D world, the value of iterative development is overrated.

What if Edison found a solution to the light bulb challenge on the first try? Would that be bad? Would he have continued to find the 700 ways that did not work? Did the 700 failures really add that much value? Can R&D organizations afford to fail 700 times? Not in today's competitive environment.

Alph suggested that open innovation is a massively parallel process where failures and successes happen at the same time. You post a challenge and you get dozens or hundreds of solutions. Some won't work. But all you need is one solution that does work. And with open innovation, you only pay only for the solutions that do work. Failures cost you nothing in terms of time and money. With internal iterative development, you pay for the successes and the failures. Do you really learn enough from your failures to justify the extra cost and time involved?

Alph's perspective is fascinating and I fully agree with him for analytical/deterministic challenges. Creative challenges and their solutions, on the other hand, often can't be proven correct until they are tried out in the real world. Iterative development - via small and scaling experiments - may still be the best approach for solving less deterministic problems. I call this approach the "build it, try it, fix it" model. Having said that, the iterations could potentially be staged as a series of open innovation challenges that continue to refine concepts until they are market ready. This would be a massively parallel iterative creative development. Very cool.

This got me thinking about a conversation I had with an executive from Chrysler many years ago while I was working at Accenture. I asked him who he felt his biggest competition would be in the future. He pointed at me and said, "You." Although he was half-joking, it's true that the role of car manufacturers these days is less about manufacturing and more about integration. The Accentures of the world are masterful at integration.

And maybe this integration skill is the MOST important skill for your organization to have.

As platforms like InnoCentive continue to grow, problem solving of all types - creative and analytical - will be outsourced in a massive parallel way to a huge network for solvers. If we take this to an extreme where all challenges are outsourced via crowdsourcing, the role of a company would only be to integrate these solutions together into a seamless offering.

Although this is easier said than done, this one skill may be critical for the survival of your business...and maybe even the US economy.

China and India have a growing base of highly educated engineers and experts. Eastern European countries and parts of Asia have large creative bases. The world is truly flat. And all of these countries have people who are willing to work for pennies on the dollar.

If we try to beat these countries at their game, we will lose. We could never educate enough people. And even if we could, our workforce would probably not be willing to labor for lower wages.

Integration is the key. Yes it is difficult. And that is good news. While the rest of the world is focused on the trees (the point solutions to specific challenges), we need to become masterful at defining the forest (the strategy, architecture, and integration of the point solutions). This is where value is created. And this is much harder to outsource.

It reminds me of something from my "24/7 Innovation" book I wrote back in 2001...

"(As innovators,) we are architects of companies and industries. An architect is not a 'reengineer.' To illustrate this point, I often ask clients what is the difference between an optimist, a pessimist, a reengineering consultant, and an architect. The optimist looks at a half filled glass of water and sees it as half-full. The pessimist looks at the same glass and sees it as half-empty. The reengineering consultant sees too much glass. Cut off the top. Downsize. An architect looks at the same glass and asks questions such as 'Who's thirsty?' 'Why water?' Or 'Is there another way to satisfy the thirst?' It is this questioning, challenging and rethinking that differentiates architects from those who rearrange the deck chairs on The Titanic."

Find solutions everywhere. Embrace open innovation. And think like an architect. Ask the difficult questions. Assess what matters most. And build a core competency around integrating point solutions.

Remember, we are no longer in the tree business...we are in the forest business.

Bonus: An interview with Alph Bingham and Dwayne Spradlin of Innocentive

Stephen Shapiro is the author of three books, a popular innovation speaker, and is the Chief Innovation Evangelist for Innocentive, the leader in Open Innovation.

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