This podcast takes a look at a particular kind of innovation that is exceptionally powerful. Innovation that creates an entirely new business segment is not an everyday occurrence, but when done successful it is a business breakthrough that redefines an industry.
Consistent with making this a podcast about best practices, the information in this particular podcast comes from the Harvard business review article sharing research in two case studies – Home Depot and Intuit.
This is a story about innovative companies breaking free from existing competition by creating an entirely new business concept. In so doing, they have no competitors – at least initially.
Let’s take a close look at Home Depot. Prior to the introduction of Home Depot, there were two ways that customers met their in-home needs for various kinds of home improvement and repair.
First, there was their local hardware store. It tended to have friendly employees who had some knowledge, but were not skilled practitioners in the field like plumbers and contractors. The aisles tended to be crowded and narrow. Product assortments were a bit of a maze and mystery. Prices tended to be high. Net, the local hardware store was not easy to shop, prices seemed high, and in-store expertise was unpredictable. After the shopping experience, the customer was then left with the not always pleasant and successful task of making a repair or improvement by themselves. Directions seemed to be few and far between. It is not surprising that many people when faced with a repair or improvement found it a daunting task.
From my own personal experience, I remember going to my local hardware store to get a part to fix the toilet. This was an older house built in 1926. I did my best to find the right part. I did my best to install the right part. At the end of the day, I had made things much worse. The result was that I needed to call a professional plumber to make an expensive repair.
The second option customers had was to hire a professional to come into their home to make a repair or create an improvement. Finding a trusted and vetted professional was not easy – this was prior to Angie’s list. A stranger was in their home, which was not always comfortable for some people. Sometimes the repair or improvement was successful and other times not so much. Sometimes bringing a contractor into your home required a person taking time off from work which added to the real cost. Customers chose this option when they recognized they did not have the competence to make the repair or improvement. It almost always proved to be far more expensive than most people would ever estimate. Net, making a repair or improvement by hiring a professional like a contractor, electrician, or plumber was seldom easy or fun.
The founders of Home Depot realized there was an opportunity here to create a new segment. They staff their stores with people who have considerable experience in areas like construction, electrical, and plumbing. These in-store experts not only could help you quickly and easily find the right materials for your job, they also have the ability to provide step-by-step advice. They were also in a position to recommend the right tools for a job. I know from my own personal experience, that the right tool for a job makes a remarkable difference.
The shopping experience was far better than the local hardware store. There were wide aisles, abundant signage, logically organized product categories, and ease of shopping. The pricing typically was significantly lower than the local hardware store. In the instances when a customer clearly knew they didn’t have the personal expertise to do a particular job, Home Depot could recommend and connect them with appropriate vetted professionals. For example, if you needed a new door, they could connect you with an installer they trusted. If you needed roofing repairs, a professional from their network could be contracted with in the store. So instead of crossing your fingers that you found somebody qualified in the Yellow Pages, you now contracted with professional who had a much higher chance of successfully making the repair or improvement.
For customers, it has made the prospect of home improvement far less daunting. They can now go into an easy to shop environment to look at kitchen cabinets, a new front door, and new windows to name just a few possibilities. They get quality advice in the store, attractive pricing, and the ability to connect with a quality professional as needed.
Now let’s take a look at Intuit a company we know for QuickBooks, Quicken, and TurboTax.
Prior to Intuit, customers relied upon a pencil and a calculator for their home accounting systems. People would receive their monthly printed checking account statement and engage in a reconciliation of their checkbook. It was not a task that most people looked forward to. It required close attention to detail and careful calculations. When numbers did not reconcile, it required a frustrating redo of the process.
Alternatively, they could’ve hired an accounting company to manage this for them. The vast majority of home accountants could not afford this option.
This situation existed for a long time. Customers had resigned themselves to this unpleasant monthly task.
Intuit created a new segment of computerized solutions with exceptional accuracy, an amazingly low price, and a very simple to use program. It not only made it easy for people to manage their home checking and accounting systems, it also brought the same benefits to many small businesses. The latter group may have had to previously rely on an accountant or accounting company. With the advent of a product like QuickBooks, small businesses had better control and understanding of their finances at a fraction of the cost.
Intuit used the same insight process when it came to personal taxes. Prior to TurboTax, customers were forced to either the do-it-yourself solution for tax preparation or hiring an external company to prepare the taxes. Customers did the former when they could not afford hiring an external company. Having made this decision, they faced significant risks of miscalculations and misunderstandings of tax law – something that is very easy to do. Customers hired a company when they recognized the challenges of doing it themselves and could afford to hire a professional.
Into the market came TurboTax. This relatively simple, step-by-step approach to do-it-yourself tax-preparation took virtually all the negatives out of personal tax preparation. The computerization insured accurate calculations. The tax advice built into the program helped ensure better choices through better understanding of tax law. The cost was dramatically lower than hiring an external tax-preparation company or accountant.
With the understanding of these two case studies, what can we learn about the innovation process that can potentially help your business?
This is innovation about creating a new value curve. Creating a new value curve through innovation can explore the following considerations.
First, from the current industry options what can be eliminated that would be very beneficial to customers? Intuit eliminated the need for personal calculations and increased consistent accuracy. Home Depot eliminated the often difficult shopping experience of the local hardware store.
Second, what can you reduce? Intuit dramatically reduced the cost of personal tax preparation guided by professional expertise built into their program. Home Depot reduced customer cost compared to their local hardware store.
Third, what can you create? Home Depot created a whole new way of hiring a trusted professional to come into your home for a repair or improvement. Intuit created a new level of speed and accuracy that had previously not been available in personal accounting systems.
Fourth, what can you raise? Home Depot created a whole new standard for the home improvement process. In the store, you could see many more kitchen remodeling options than you would ever see in a hardware store. Working with an in-store professional, you could clearly understand what a do-it-yourself solution would look like compared to hiring a professional. The process of hiring a professional became easier and had a higher likelihood of success. The bottom line is Home Depot set a whole new standard in the home improvement industry.
There’s another way that I like looking at this process of identifying a new market segment. Identify the current negatives. How can you replace the negatives with dramatic new positives? Remember the importance of dramatic differences in creating a successful new business.
Identify the current positives in existing alternatives. How can you take those positives to an even higher level?
How can you create dramatically better value? You create value by eliminating/reducing negatives, increasing – even dramatically increasing – positives, and do this for a startlingly great price. Put another way how do you provide a basket of benefits at a dramatically better price than is currently available? When you successfully answer this question, you have created exceptional value. You now have something that is dramatically better than existing alternatives. We know from Merwyn Technology that you can double your chances for success when you have something that is dramatically better than some, most, or all of the current options.
The process that we’ve just gone through is something that most companies can benefit from. To be successful, it will probably require a quantum idea generating session with all of its diversity and creative power. The end result can be major competitive advantages with a dramatic new market segment.
This podcast continues our look at innovation from the perspective of Stephen Covey’s perennial bestseller The Seven Habits of Highly Effective People. I am a major fan of this book. In teaching advanced leadership courses at Arizona State University, this is one of the textbooks that I used. It comes under the heading of being proven and practical which many leadership traditional textbooks fail to measure up to, in my opinion.
And when it comes to best practices, the seven habits in this book are well-documented as highly proven and successful in the real world. In the previous podcast, we examined the first three habits – be proactive, begin with the end in mind, and put first things first. In this podcast we look at the final four habits of highly effective people.
Let’s get started. The fourth habit is think win/win. Like all of his other habits which are from a personal perspective, this also applies in group situations. Covey succinctly states, “Win/win is a frame of mind and heart that constantly seeks mutual benefit in all human interactions.”
In an earlier podcast I addressed the subject of the curse of the expert. In this podcast, I made a point that in group situations experts can often posture and defend their expertise and position as an expert. This is an ego-based behavior. In Covey terms, sometimes experts really like a win/lose outcome in which their expertise prevails over the views and positions contrary to theirs.
In the dynamic environment of a quantum idea generating session, win/win behavior by everyone in the session easily propels the group to achieve all objectives. When there is mutual respect between supposedly experts and non-experts, a playfulness with ideas can occur. As I facilitate these kinds of groups, I specifically asked people to play with possibilities. Engage the “what if.” Engage the “and we could do this.” The best results come from a group willing to go with the flow of ideas to make a core seed idea better and better and even better. When this happens, no one is looking for credit for the idea. There is no, “I did this” or “this is my idea.” It’s always “we did this” and “this is our idea.”
In earlier podcasts, I shared my deep personal belief that the best idea of any one person can be made better by the best idea of another person. I do not reserve these kinds of actions for innovation sessions. Anytime I’m working on something important, I share it with a colleague with the request that they make it better.
Is a closing quote from Covey on win/win, “cooperation in the workplace is as important to free enterprise as competition in the marketplace. The spirit of win/win cannot survive in an environment of competition and contest.”
The next habit is seek first understand, then to be understood. While this is one of my favorites for innovation sessions, it’s also one of my favorites for life.
Regarding this habit, Covey hits the nail on the head when he says, “most people do not listen with the intent to understand; they listened with the intent to reply. They are either speaking or preparing to speak.”
When it comes to innovation, this habit is critically important in one-on-one conversations and group sessions. Recall that in a quantum idea generating session that we bring in significant amounts of internal and external diversity. As an individual in the session, you can be guaranteed that people will share tremendous amounts of information, which will range from being totally new to vaguely familiar. If you do not engage this communication from the standpoint of seeking first of understand and then be understood, you will operate in the session on a lonely island where the only thing you know is your point of view.
This habit is all about listening and learning. When you do it well, you become a powerful co-contributor. When you do not do this, you’ll find your views barely engaged to totally ignored. It then makes it very difficult for you to be a contributor to the final outcome.
Since this is about listening, Covey does a great job in this quote of driving home when he means by listening: “when I say empathetic listening, I mean listening with intent to understand. I mean seeking first to understand, to really understand. It’s an entirely different paradigm. Empathetic listening gets inside another person’s frame of reference. You look out through it, you see the world the way they see the world, you understand their paradigm, you understand how they feel.” Through this kind of listening you engage the ability to combine what you have learned with what you know which is a very powerful outcome.
The sixth habit is synergize. How important is this habit? Covey states, “when properly understood, synergy is the highest activity in all life – the true test and manifestation of all the other habits put together.” I’d say it’s important.
So what is this thing we call synergy? He says, “Simply defined, it means that the whole is greater than the sum of the parts. It means that the relationship which the parts have to each other is a part in and of itself. It is not only a part, but the most catalytic, the most empowering, the most unifying, and the most exciting part.”
This becomes such an important part of successful innovation. Again, he says it well – “when you communicate synergistically, you are simply opening your mind and heart and expressions to new possibilities, new alternatives, new options.” This is what successful innovation looks like.
You act synergistically when you value differences – different points of view, different facts, and different expertise. In a creative session valuing and respecting points of view and expertise of others is a highly empowering behavior.
He also comments on another important personal quality: “the person who is truly effective has the humility and reverence to recognize his own perceptual limitations and to appreciate the rich resources available through interaction with the hearts and minds of other human beings.”
As you may have noticed, I’ve actually been talking about this habit throughout this podcast and some others. Successful innovation happens when individuals and groups have the ability to learn and respect different ways of thinking that can lead to the different solutions enabling enterprise to be much, much more successful in the marketplace.
The final and seventh habit is sharpen the saw. This is about continuous improvement both as an individual and an enterprise. Improvements can come in many dimensions. Some of the more powerful improvements are in areas like stronger emotional intelligence and discriminative thinking. Sharpening the saw includes other dimensions like spirituality, which can contribute to calmer and clearer thinking along with a stronger connection to others.
In these two podcast we’ve explored how the seven habits of highly effective people apply to and can dramatically help your innovation program. In this seminal book Covey provides insights that can help any human enterprise. I’ve attempted to show how each of the habits can directly benefit innovation. The advice he provides is some of the most proven and practical advice ever to come from a single person. The enduring popularity of his book is strong testimony to the ongoing benefits people receive.
This podcast turns to what you might first think of it as an unlikely source for innovation best practices. I’m talking about Stephen Covey’s perennial bestseller The Seven Habits of Highly Effective People. I am a major fan of this book. In teaching advanced leadership courses at Arizona State University, this is one of the textbooks that I used. It comes under the heading of being proven and practical which many leadership traditional textbooks fail to measure up to, in my opinion.
And when it comes to best practices, the seven habits in this book are well-documented as highly proven and successful in the real world.
The other day I was looking at the book and the seven habits and I was immediately struck by how the seven habits have direct application to successful innovation. As a result, this podcast will briefly walk through the seven habits and how they contribute to successful innovation.
Let’s get started. The first habit is to be proactive. Covey starts the chapter on this habit with a great quote from Henry David Thoreau, “I know of no more encouraging fact then the unquestionable ability of man to elevate his life by conscious endeavor.” Innovation is about making something better. When innovation becomes a conscious endeavor, we have the ability to elevate the life and experience of our customers by working on a new product or a company’s employees by working on a new benefit program, to just mention two examples.
Being proactive is establishing a personal vision that can then become a shared group vision. But for each individual it starts as a personal vision. Covey makes the distinction between the circle of influence in the circle of concern. He makes it clear that proactive people don’t worry about everything, but work on the things that they can do something about, which is the circle of influence.
So when it comes to innovation, focus the innovation on those elements that you have the opportunity to influence and in some cases actually change. You cannot change broad cultural values and behaviors in the United States, some of which may be negatively impacting your business. But you can change many things about the product and your customers experience with the product.
The second habit he calls begin with the end in mind. In earlier podcasts, I talked about developing a vision of what success looks like, which is another way of saying this. This is important because as Covey says, “begin with the end in mind is based on the principle that all things are created twice. There is a mental or first creation, and a physical or second creation to all things.” In other words, the physical creation does not happen if the mental creation does not happen first.
Covey makes a great distinction between management and leadership that both Peter Drucker and Warren Bennis share: “management is doing things right; leadership is doing the right things.” As an innovation leader, when you begin with the end in mind you help to make sure that you’re doing the right things.
This is very important because pulling together a quantum idea generation can involve a lot of money from the salaries of the internal people to the cost of external experts. You want to make sure that all of the energy and expertise is focused on doing the right thing. Doing the right thing requires making sure that you begin with the end in mind.
The third habit is put first things first. He starts this chapter off with a great quote: “things which matter most must never be at the mercy of things which matter least.”
While priority setting is certainly an important part of this, it’s not the only part. Putting first things first requires the ability to make decisions between what is most important ranging down to those things that are least important. Any of you who are in the world of business know that this is easy to say and not always easy to do. But do it you must. You cannot do everything and if you do the likelihood is that nothing will turn out well.
You need the discipline to stay the course with your vision of success. Your decisions need to be made in accordance with that vision – it acts as a sort of compass.
Covey became famous for his time management matrix and its associated four quadrants. The matrix is on two dimensions – urgency and importance. There is urgent and important, important and not urgent, not important and urgent, and not important and not urgent. If you will, this is for levels of priorities.
Innovation is all about making choices. When you’re setting up a multiple day quantum idea generating session, there are always more things you would like to cover then there is time available. Time is not your only limit. To cover everything that you would want to do would require hiring more expensive external expertise and taking more internal people away from their company responsibilities.
The choices you need to make can include what products to focus on what products not to focus on, what dimensions of the chosen product to work on and what you’re not going to work on when it comes to developing innovative ideas. You will have choices about what diversity to bring into the room. Out of the world of all possible stimulus, you need to make choices about which stimulus is most appropriate and likely to produce the big ideas that you need.
These first three habits fall into a group that Covey calls private victory. These habits are about the personal leadership characteristics we need to develop and deploy.
For innovation to be successful you need to be proactive. There needs to be a vision. There needs to be measures of what success looks like. There needs to be the due diligence done to make sure that the vision is the right one.
Doing this requires making decisions, many of which are tough decisions. There choices are about what you are going to do and what you are not going to do.
Without all of this preparation, your innovation will wander, be inefficient and frustrating, and have unacceptably high chances of failure. With all of this preparation, you’ve established a great foundation and very fertile conditions for high levels of creativity and probability of success.
In the next podcast, I will conclude the application of the seven habits of highly successful people to innovation. The next four habits also have the ability to dramatically improve your innovation results.
This podcast goes in a very different direction than most podcasts you have heard to so far. With innovation we sometimes get tied up in the details of specific processes and insights. For example, we dive deep into the four elements of quantum idea generation and the three elements of Merwyn Technology. Today were going take a big step back and take a look at the broader change going on in the world.
In the interest of best practices, the guide I’ve chosen for this bigger picture look is Jean Houston, PhD. Jean is a giant in her field. She’s been co-director of the Foundation for Mind Research. She is the author of multiple very popular books like The Possible Human, A Mythic Life, and A Passion for the Possible. Today’s podcast is drawn from her very popular book title Jump Time, Shaping Your Future in a World of Radical Change.
In this podcast I’m also going to take the somewhat unusual step of using multiple quotes from this book since she is an eloquent and insightful writer.
So let’s start with understanding what she means by jump time. She says, “with the present move toward planetization and with the entire spectrum of historical social development at hand, I believe that the world is set for the radical transformation that I call Jump Time.” She adds, “Ours is an era of quantum change, the most radical deconstruction and reconstruction the world has seen.” In addition, she says, ” ….. virtually every known institution and way of being is currently in a state of deconstruction and break down.”
Put simply, from a historical perspective the rate and depth of change is at a historical high. There are numerous other books by very, very respected authors also making this point. I may include in future podcast some of their perspectives. This is difficult to see when you’re in any particular point of time. But when you study this deeply, as I have, you come away deeply convinced that the rate of fundamental change is at a historical high and that rate of change is accelerating.
This point certainly has cultural and spiritual importance, but my goal in this podcast is to also relate this change to innovation.
You will find me using the word spiritual in this podcast which you might think is unusual for a business or innovation podcast. This should not be the case. The last megatrends book from several years ago indicated that the megatrend of megatrends was spirituality. For most people this can be different from religious. My goal here is not to advocate for any spiritual or religious way of thinking. Rather, from a bigger picture perspective, I am suggesting that our culture is increasingly connecting with strong spiritual values like compassion, service, and noble purpose.
I’m going to share her various perspectives on the dimensions of the quantum change we are currently living in. At the end of this podcast, I will make some direct suggestions about how this can impact your innovation efforts.
One of the major perspectives that is reinforced from both a scientific, specifically quantum physics, and spiritual, especially Buddhism and Hinduism, perspective is that everything in the world is interconnected and part of a bigger whole.
Quantum physicist David Bohm was a close associate of Albert Einstein. David talked about the implicate order as a grand energy frequency that contained in essence all other dimensions and knowledge. All quantum physicists agree that the world we see is electromagnetic energy where everything and everyone is connected. Anthropologist Joseph Brown noted, “unlike the conceptual categories of Western culture, American Indian traditions do not fragment experience into mutually exclusive dichotomies, but tend rather to stress modes of interrelatedness across categories of meaning, never losing sight of an ultimate wholeness.” Both the Buddhist and Hindu wisdom traditions and metaphysical systems speak of a primary ground of being where all patterns and potentials exist through interconnectedness.
So what is the importance of all this interconnectedness? Jean Houston notes, ” When our local self comes into resonance with what Native Americans call “all my relations” and Buddhists call “all sentient beings,” we act in ways that are consonant with both our highest purpose and the world’s destiny. This enlarged perception brings us into phase with the evolutionary way that is propelling us in the universe forward. We escape the sense that our choices are limited or that life is without meaning or purpose, and our sense of the future opens.”
There are many points worth emphasizing here. First, when we recognize that we are all interconnected, we tend to shift from acting with selfish purpose to acting with noble purpose. Noble purpose is when we care about not just others, but the entire world around us in all of its aspects. Second, we recognize that this shift is a powerful evolutionary trend that is the thread through much of the emerging quantum change. Third, we wake up to the realization that our life has powerful meaning and purpose and that we are no longer as limited in our choices as we may have thought.
Acclaimed economist David Korten, The Post Corporate World.
These determined pioneers are creating new political parties and movements, strengthening their communities, deepening their spiritual practice, discovering the joyous liberation of voluntary simplicity, building networks of locally rooted businesses, certifying socially and environmentally responsible products, restoring forests and watersheds, promoting public transportation and defining urban growth boundaries, serving as peacemakers between hostile groups, advancing organic agriculture, practicing holistic health, directing their investments to socially responsible businesses, organizing recycling campaigns, and demanding that trade agreements protect the rights of people and the environment.”
Jean Houston in her book A Passion for the Possible, says ” The Essential Self knows the possible paths our life may take and wants to help us choose the best ones. It knows how to turn imagination into reality and to make the life we live fulfilling and creative. After all, it knows why we are here and what we yet can do; where we can go and why we need to go there.”
So, how do we relate and apply these insights to our innovation programs?
First, there needs to be the recognition that innovation does not happen in a small bubble of a specific product category. Customers live in our broader culture and are aware of and participate in that broader culture to varying degrees. By living in a world experiencing historically high rates of change, we as innovators first and foremost need to be aware of this bigger picture perspective.
Second, the dimensions of the current quantum change need to be factored into possible innovative solutions. I previously mentioned that some of the major dimensions of the current change our compassion, service to others, and noble purpose. Compassion is when empathy moves into action to relieve the suffering of others. Noble purpose is when we guide our actions with a sense of responsibility not only to other humans but for our entire planet. This sense of responsibility triggers actions to help others and the planet.
Third, I want to share an actual innovation session story from my experience. We were running a session on a consumer product. We were exploring various dimensions of leaps forward in product efficacy, convenience, and packaging. We had made spectacular progress on these dimensions. Sensing that the client’s purpose had already been delivered, I designed some idea generating exercises around noble purpose. I described noble purpose as eloquently as I’m capable of from many of the multiple perspectives discussed earlier in this podcast. When the groups began the next creative exercise, I saw a dramatic leap in energy and engagement in the groups even though we were in the concluding phase of the session where I would normally expect energy to trend down. The group took all of the ideas from earlier in the sessions as stimulus and embarked on creating noble purpose solutions. All of a sudden we were concerned about more than profits and more concerned about doing the right thing for all humans and the planet. The results were inspiring! The ideas were presented with energy and passion. People were excited and proud. The ideas were some of the biggest ideas I had ever seen come out of a group.
I have barely touched on the dimensions of quantum change that are currently going on. I have been a deep and dedicated student of this topic for decades. There is much to be learned. What you learn can genuinely create transformational products and change. It’s about getting beyond relatively small efficacy changes, which even though they create meaningful competitive advantages, are still relatively small ideas compared to what is really possible.
In closing, if you find these podcasts both enjoyable and helpful, please be sure to get the android or Apple apps so that you get 100% of the episodes that you can listen to on demand at your convenience.
I have people ask me where they should look for new ideas, especially big ideas that can create a competitive advantage. This podcast is going to take an interesting approach to answering that question. To be clear, it’s not the only answer but it is a very good one.
This podcast is based on A Harvard Business Review article titled Discovering New Points of Differentiation. Since this is a podcast of innovation best practices, this is a pretty good source for finding best practice ideas.
The objective of this whole approach is to differentiate yourself from competition in a way that is important to customers and that your competitors do not have. Most companies in attempting to do this focus primarily on their products and services. How well do they deliver their key benefit? What is the value equation for the price they charge? What are the strengths and weaknesses of competitors? These are all good questions and deserving of close examination.
The approach the authors take in this article is to map the consumption chain. The consumption chain starts with your customers becoming aware of your product and goes all the way through to the point that they have totally used the product and/or discard what’s left over. By closely examining the details of this chain, you almost always will find ways that you can differentiate yourself versus your competitors and have that differentiation be strong enough to be a competitive advantage.
I’m now going to rather quickly walk through the many possible steps in a consumption chain. Not all of these steps apply to all products. The details of each step will certainly vary dramatically between consumer products and B2B products, for example. Even within a category, there can be significantly different answers to the questions you want to examine as you map your consumption chain.
Let’s get started. First, how do people become aware of their need for your product or service? Does a problem intermittently pop-up in their life that needs a solution? Do they use your product routinely every day and they notice they are running out of the product? In some cases the answer to this question can result in an innovative way of leveraging this moment.
Next, how do consumers find your product? In today’s world, consumers often have multiple options – local store, online, and mega chain, for example. You want to know how they find your product and what steps they go through in finding your product. For example, in today’s digital world they might enter a search term into Google. You want to know what those search terms are so that you can have a Google ad words advertising pop-up on their page.
How do consumers make their final selections? Okay, they found your product and they probably found competitive products also. Just imagine yourself needing toothpaste and standing in a store in front of more than 50 tooth paste options. The answer to this question in many cases is that various groups of consumers have different number one important considerations in making their selection. For some people price may be more important. For other people loyalty or confidence over a long period of time in a product performance may be most important. Another group of people might really prefer the scent of your particular product.
How do customers order and purchase your product or service? Again, the answer to this question will vary significantly by type of product. Cash and/or credit card? Purchase order? Coupons? The list goes on and on.
How is your product or service delivered? As short as a couple of decades ago, it was usually delivered by your personal car that went to a store to buy the product and deliver it to the home. To be clear, that’s still a very popular option. But with the advent of companies like Amazon and almost every manufacturer having an online store, the world and answers to this question have become far more complex.
What happens when your product or service is delivered? If it’s a consumer product, where does it go in the home? Is the person who uses product different than the one who purchases it? For example, parents often make a toy purchase decision but their children are the ones that use it. Parents might make food purchases, but different family members use different products.
How is your product installed? This does not necessarily apply to many consumer products, but it certainly applies to many products sold at Home Depot. In the case of products sold at Home Depot, what do people need to install the product – directions, tools, etc.
How is your product or service paid for? Again, the answer this question varies dramatically by the type of product. For products purchased in a grocery store it’s either cash or credit card or debit card. For B2B products, there is probably an invoice and payment terms. What if you could gain a competitive advantage in the ease of paying for your product or service?
How is your product moved around? For example, Pepsi gained a short-term advantage when they recognized the use of their product in some important consumption occasions was better facilitated by plastic bottles than glass bottles.
What is the customer really using your product for? This is one of those questions that can produce some very surprising answers. Yes, they use it for the intended and most popular use, but it may also be used in very different occasions by different people. There can be some valuable insights gained here.
What do customers need help with when they use your product? It’s not only what they need help with but how they get help. For example, do you want to deal with tech support from Apple or Dell? Based on my experience, Apple by a landslide! Engaging in both quantitative and qualitative research to answer this question can produce many promising ideas. For example, it can be as simple as the problem opening one of those clear clamshell packages – is there simpler packaging that gives you a win for convenience? What consumers need help with may also reveal opportunities to improve your product and to improve the on package directions about how to use the product. Nothing is more frustrating with a product that is not easy to use and getting answers about how to use it is even more difficult.
What about returns or exchanges? Remember, these are usually to some degree unhappy customers. How you handle returns and exchanges can make them more unhappy or make them a loyal customer. I am always impressed with the ease of returning a product with Amazon. I know that if I make the wrong purchase choice for any reason, returning it is not a hassle.
How is your product repaired or serviced? Clearly this doesn’t apply to a many consumer products like toothpaste. But anybody in the appliance, automobile, and tool businesses knows that this is an important question to answer. When it comes to computer tech support, I have no misgivings when I call Apple for help. On the other hand, in my personal experience, if I have a problem with my ADT security system, I dread making the call because of the difficulties I usually encounter.
What happens when your product is disposed of or no longer used? For many consumer products, it’s easy to answer this question – it goes into the trashcan. For more complex products ranging from computers to industrial equipment, this becomes much more important and challenging. Are there opportunities to create a competitive advantage at this end of the consumption chain?
That’s the end of their suggested questions. Now that you have these questions what do you do?
First, I suggest that this is a potentially productive line of questioning and that the answers you develop could have potential. To better understand the potential I suggest the following steps.
Select the questions that are most important and relevant to your business. The selection can be based on knowledge about how important an area is to consumers, your lack of competitive disadvantages, and consumer dissatisfaction.
Having made the selection, go deep to understand consumer behaviors and attitudes. When you go deep you will groups of consumer behaviors and attitudes. You want to understand how important each group is – for example, how much they purchase relative to an average purchaser. There are some relatively fast and inexpensive forms of research that can help you understand this.
Explore potential alternatives to the way you’re currently doing something. The first level of alternatives is different approaches your competitors are using. The second level of alternatives is other approaches used by people in your broader industry. For example, in the home improvement industry there may be certain practices for manufacturers of power drills and you can learn from other people in the home improvement industry like other kinds of tools, plumbing supplies, electrical devices, and other related types of products.
Lastly, you want to explore alternatives in the broader world. For example, if it is how people pay for a product look at all the alternatives in all categories and from a global perspective. Technology in this area is rapidly changing. Forms of payment like bitcon are also emerging.
At this point, you have a tremendous amount of stimulus. As a suggested next step, put together a quantum idea generating session. Organize the stimulus you have into a form that can be easily and provocatively shared. Search for the appropriate diversity you need in the session both internally and externally to the company. Understand the left and right brain makeup of your group and prepare to have fun by reducing fear.
I know that I’ve covered an awful lot in a short period of time. You can dive deeper into the subject by reading the article I mentioned at the beginning of the podcast. There are so many variations by type of product and industry and geography that by necessity the podcast has needed to be from an overview perspective. There is a lot in this podcast that can help you sell more and make more.
This podcast is another very clear best practice that can help virtually any company with its innovation needs. As with every podcast, insights in this podcast are ones that you can immediately use to help you sell more and make.
Today’s podcast is drawn from an excellent article in the Harvard Business Review titled Creating Breakthroughs at 3M. In the 80s and 90s and even the early 2000’s 3M was viewed as one of the most innovative companies in America. They have an innovative culture and leading-edge processes. Even with this great reputation, they pioneered an innovative approach that uses what they call lead users.
They define lead users as “companies, organizations, or individuals that are well ahead of market trends. Their needs are so far beyond those of the average user that lead users create innovations on their own that may later contribute to commercially attractive breakthroughs. The lead user process transforms the job of inventing breakthroughs into a systematic task of identifying lead users and learning from them.
3M with the help of some external experts developed two major lead user findings.
First, researchers found that many commercially important products were first developed by innovative users/customers who, in some cases, actually prototyped and tested a solution. Second, they found that these users/customers were often innovative in their own right and had needs that went well beyond the average user. To meet these greater needs, they internally developed innovative add-ons, new associated products, or additional processes to be sure their needs were met.
The article’s authors identify four phases related to a lead user project. The process typically involves a cross disciplinary team – that is, people from various functions within the company like marketing and technical departments. These teams typically involve 4 to 6 people with one of the members serving as the project leader. Each phase typically takes 4 to 6 weeks and about 4 to 6 months for the entire project, although needs and circumstances can change the schedule significantly. You should not view this as a fixed given.
They call phase 1 laying the foundation. This is a learning phase and using the learning to make some key decisions. They learn about which markets for users they want to target. They become aware of the types of innovations and level of innovation that management is already looking for from their team or business unit. All of this learning concludes with a recommendation to the key stakeholders and/or managers responsible for the team’s results. It is critical at this phase that the team and management are fully aligned before moving on to the second phase.
The second phase is also primarily a learning phase. The primary learning focuses on trends – what’s growing/declining, what’s getting better/worse, and what’s emerging/fading. To do this phase successfully requires going outside the company. They can use external consultants and industry databases. They are most interested in things like emerging technologies and leading-edge software. Sources for this include new patent filings and talking to key industry leaders. At the end of this learning phase, the most important insights are identified – usually no more than three to five. While these may change over time, they mark an important beginning point for what direction the team wants to go in.
In phase 3 they identify lead users. There are many ways to do this and the ways vary by type of product and industry. Here are just a couple of methods used to identify lead users. First, the sales organization that calls on customers – this is especially true for B2B businesses – knows which ones have the greatest and most complex needs. They may actually have seen modified versions of their product being used to meet these unique needs. This can often be a good beginning point for having some customer conversations. Second, companies can use telephone interviews with both customers and consultants in the industry. They are searching for information about customers who fit the lead user profile of unique needs that they solved through internal innovation.
Phase 4 the writers called developing the breakthroughs. The team begins this phase by conducting a creative session/workshop with a mix of lead users and in-house marketing and technical people combined with the lead user team itself. Such sessions can last several days. Typically they work in small groups of 2 to 4 people. The goal is to develop concepts of interesting and even high potential new products. In most cases, the ideas and solutions coming from lead users are starting points for bigger solutions. By combining the capabilities and expertise of the lead users with the company’s internal capabilities and expertise, bigger, more efficient, higher value solutions often are the result. Phase 4 concludes with a recommendation to the team’s management. Next steps can involve a number of possibilities – concept research, quantitative research to estimate your one sales, rapid prototyping, and an agreed to stage gate process to name a few of the possible next steps.
Here are a few of my observations regarding this process.
First, this process is very consistent with many elements of quantum idea generation. The lead user process leverages external expertise with internal experts – a core principle in the diversity element of quantum idea generation. Lead user solutions often provide great stimulus for idea generation. Again, this is a critical component to quantum idea generation’s ability to generate at least 12 X more ideas than brainstorming.
Second, in my business management and innovation responsibilities at companies like Procter & Gamble and Gallo, we identified another group that provided rich learning. We called this group heavy users, usually because they bought the product far more frequently and used it in greater quantity. They often did this because their needs were different than the average user and learning about these needs could be very beneficial. Because they had a much higher level of engagement with the product they could also communicate their likes/dislikes and ways that they thought the product could be better. This was a group that you wanted to visit them in their homes where they actually use the product. It provided very rich learning in many cases.
The major insight in this podcast is that there are groups of your current customers/consumers who can provide you very beneficial learning. This learning can often jumpstart your innovation program. The chances for success tend to be above average because they start and well grounded consumer experience.
You will need to decide which groups are most important to your business. The key point is that every business has groups of users that provide well above average learning.
There’s an important caveat in this process. In my experience, when you ask users, even lead users and heavy users, how a product can be made better their ideas are often fairly modest and close in. Nonetheless, they can mark an important beginning point that can fuel your innovation program.
As always, I think you’ll find these insights can immediately help your innovation program. These insights can lead to the breakthroughs that help you to sell more and make more.
This podcast covers a perspective on innovation that I’ve not fully appreciated. It is how old ideas can inspire really big new ideas. This is drawn from a Harvard Business Review article titled Building an Innovation Factory.
To achieve this they suggest a strategy the authors call knowledge brokering. The system for sustaining innovation is the knowledge brokering cycle and the authors discuss its four parts.”
They describe a knowledge brokering cycle that includes four steps.
The first step is capturing good ideas. They describe good innovators as people who are constantly looking for new and great ideas for any product anywhere in the world. In this sense, they are idea scavengers..
They keep a constant lookout for technologies, products, business practices and business models. These existing or old ideas become a bank of stimulus. There is a systematic process for capturing and organizing these ideas. This is one of the differences between a more informal process which often gets lost when a person leaves the company or moves to a new assignment.
This is more than just a collection process. The knowledge brokers as they call them actually play with possibilities with the ideas that they collect. Often they collect them in physical form, which deepens the understanding and exploration of possibilities.
From my perspective this is an interesting process. The authors refer to external innovation companies like IDEO as being practitioners of this process. You may recall in an earlier podcast I talked about my experience with IDEO. In touring their facilities I had the opportunity to see parts of their knowledge brokering system.
I find this an interesting form of stimulus. Most forms of stimulus that I’ve used focuses on cutting-edge, new developments of various kinds. I can see how combining this with older and successful ideas in other businesses can expand the power of stimulus. Having said that, it does require a systematic, ongoing process for this collection to have integrity and value.
The second step they call keeping ideas alive. In this step the knowledge brokers do not just keep ideas to themselves. They find ways to have others in the company or organization to have the opportunity to become aware of and play with these older and more successful ideas. It varies significantly by company and type of business, but functions that could benefit from this include sales, marketing, and research and development.
IDEO has significant quantities of what one person refers to as the “science of accumulating junk.” This junk is often brought into brainstorming sessions where its value continuously surprises people. One of their engineers at one point had 23 battery-powered toy cars and robots, 13 plastic hotel keys, a flashlight that goes on when the handle is squeezed, and industrial pump, 11 prototypes of a portable computer, 14 prototypes of a computer docking station and other forms of junk. The same company shares its junk and what they call “tech boxes” where they share over 400 different materials and products among their six locations.
The third step is imagining new uses for old ideas. This is where innovation kicks in. It is often a process of exploring how existing/old ideas can be solutions when they are translated to new contexts. Sometimes the solutions can be stunningly simple. There is the story of the Edison inventors. While they were developing the light bulb their experimental light bulbs kept falling out of their fixtures. You may recall at this time that kerosene lamps were the primary light source. One technician seeing the threaded cap on a kerosene bottle wondered whether that would help to hold light bulbs in their sockets. This directly led to the threaded base to the light bulb fitting into the threaded light bulb socket. This is a very simple example of an old solution working in a new context.
Again at IDEO they are set up with design groups working on specific kinds of projects. It is an open space plan. People from other design groups are expected to come into other spaces where they can see projects at various stages of development. This provides the opportunity for solutions that work in on entirely different types of products and contexts.
The fourth step is called putting promising concepts to the test. Customer/consumer testing is the best and proven method for determining commercial potential.
As the authors state so well, “a good idea for a new product or business practice isn’t worth much by itself. It needs to be turned into something that can be tested and, if successful, integrated into the rest of what a company does, makes, or sells.”
I have touched on testing in other podcasts. In future podcasts I will dive deeper into both qualitative and quantitative research. You will recall in a previous podcast I talked about how new products only have a 25% chance of success. One of the things that can be done to increase the chances for success is to conduct high-quality informative research to guide critical decision-making.
People in the innovation business recognize that there is value in sharing a written description of a potential idea with the right customers or consumers. Valuable inputs can be gained regarding the overall interest and the appropriateness of the language used to talk about the idea.
Having said that, the value of research jumps up dramatically when a prototype is shared with customers or consumers. It now goes beyond just words to a physical form. Functionality can be observed and evaluated. You can also gain valuable feedback on other factors like size and effectiveness. This is why the best innovation companies quickly move to a prototype.
There are various forms of prototypes ranging from a complete and actual replica of an idea to what is called a looks like prototype. With this type of prototype there is no actual functionality that can be evaluated since it merely a picture translated into a non-functioning form. Having said that respondents provide far more valuable feedback than when it is only words.
To be clear, research does have value in evaluating potential new products. But as I tell clients and associates, research is never to be confused with the “voice of God.” All research no matter how well done has strengths and weaknesses. As I said earlier, I will dive deeper into these in a later podcast. Suffice it to say at this time that research is best used as one of the factors considered in making a decision. It is more of a guide than a director to the right decision.
So what have we learned from this that can help you in your business? This podcast is focused on older or existing ideas as stimulus for producing new, innovative ideas. From my perspective, old ideas are another kind of stimulus. We talked about the power of stimulus many times.
This podcast also talks about sharing older ideas with a diverse group of people. Again, from quantum idea generation we know how the power of stimulus with a diverse group of people can be a very powerful way of producing breakthrough ideas. This podcast focus on knowledge brokers as another way of doing that.
The bottom line for me is I’m not sure if I would have a systematic process of collecting, retaining, and sharing older or existing ideas. For me, when the need presented itself I would readily dive into an exploration in this area. Solutions that are working in one kind of business can often translate to or be adapted to innovative new products in an entirely different business. For me, this would be part of the stimulus creation process. To be clear, in this stimulus collection I would also include futuristic examples – for example, patent applications.
In this podcast we reaffirm the power of stimulus and diversity in creating breakthrough innovative ideas. Each version of stimulus and diversity needs to be tailored to the unique conditions in each business. This is the nugget of knowledge that I think can help everyone listening to this podcast to be more innovative as they strive to sell more and make more.
Today we take a look at innovation at IDEO, one of America’s most successful and well-known innovation companies. The insights in the podcast come from one of its founders, Tom Kelley, in his book The Art of Innovation.
There are many excellent insights from this book that can help you in your business. Today I’m going to focus on two areas of insights from his book.
First, we take a look at the five basic steps of their innovation methodology. In one way or another these five steps can help you in your innovation programs. Second, we take a look at their deep insights on brainstorming – yes brainstorming. When we get to this section of the podcast I will share some perspective that goes well above and beyond what Tom shares in his book.
As background, my company Innovate2Grow Experts was hired by a client to develop a major breakthrough product. We knew that that breakthrough product would involve highly innovative packaging and systems. After talking to several external innovation companies, we chose to work with IDEO. I led this project for the client. This involved every week or every other week meetings at their Palo Alto offices with their team and our team. As a result of this intensive experience, I developed a personal understanding of how they approach innovation and, in my opinion, their strengths and challenges.
Let’s start with the five basic steps of their innovation methodology. These steps certainly have some application to a client company – a company like yours. But there are also some differences. They are an external company that takes on a client project at some point downstream from when the original idea or strategy was developed for an innovative product or service. The client has already determined by the time they arrive at IDEO that there is a very good foundation for their direction and there is a range of possibilities that appear to have meaningful and even significant potential. After the client has reached this point, they are then ready to knock on the door of IDEO and companies like it to get their proposals.
The first of their five steps is to understand the market, the client, the technology, and the perceived constraints on the problem. In my experience with the project we worked on, they did a very good job of searching worldwide for examples that had varying degrees of relevance to the project we were working on. Viewing these examples immediately triggered additional thoughts, which led to additional exploration. Most of this exploration featured visuals which are very powerful stimulus for new ideas. They also work to understand the client – their business and innovation strategy, the basis for the need, why they believe there is a possibility, the direction they want IDEO to help with, and the always present budgetary parameters. They probably spend most of their time trying to understand the clients perceived constraints and challenges regarding the direction they are interested in pursuing. IDEO’s perspectives from having worked on so many major projects and seen so many perceived constraints can be exceptionally valuable in expanding the client company’s perception of what is possible and not possible. This can make the first step a powerful leap forward in the very beginning of the project.
The second of their five steps is observing real people in real life situations to find out what makes them tick on the product category. You will recall from the Kari McNamara podcasts that she did a very good job of getting down to the nitty-gritty of what a product is with customers and in one case with manufacturing. This is not just reading research reports. This is going out into the real world and talking with real people often in their homes. In our project, we went into people’s homes and saw everything from the preparation of the product to where ingredients were stored to equipment they used to the care and personalization they went through. In the course of this you learn things like what confuses consumers, what they like and what they hate, and what needs don’t seem to be addressed by current products and services.
The third of their five steps is visualizing new to the world concepts and the customers who use them. There are several ways that this can be done. One of the more popular ones is to visualize success from a consumer perspective. For example, visualizing the consumer having their problem fixed and what that would look like and feel like. Wha t is life like with the new product you are going to invent? This process is a well accepted method for focusing a group so they can clearly understand what success looks like.
The fourth of their five steps is to evaluate and refine prototypes in a series of quick iterations. While this varies for various products and services, this is a well accepted innovation best practice. You want to get to prototypes, even very rough looks like prototypes, as quickly as you can and then dive into customer learning and feedback. In later podcasts, will talk more about the prototyping process, but for now remember two things – rapid prototype versions and using looks like prototypes if you need to.
The fifth step is to implement a new concept or product for commercialization. They can be a tremendous amount of work involved here including things like selection of the right materials and manufacturing process.
Each of these five steps includes basic principles and insights that you can use in your innovation program. Focus on the principles and the insights and adapt them to your business need without losing the critical learning that comes in each step.
Let’s move now to the second topic which is brainstorming. Tom identifies what he calls the seven secrets of better brainstorming. As you know from previous podcasts, quantum idea generation is a process that generates at least 12 X more ideas than brainstorming. When I was working on my project with IDEO, I took Tom to dinner to explain how quantum idea generation was so, so much better than his brainstorming. I even invited him to a demonstration of in one of the steps of our actual project idea generation. Suffice it to say that he was most comfortable in the existing box he operated in.
I’m not going to go into all seven of his secrets. I will focus on some that I think have good application anytime you need to generate new ideas.
The first of these is to develop a carefully crafted statement of what the problem is that you want to solve. It can be a question. You want to make it what he calls “edgy” instead of being fuzzy. They found that the best statements focus outward on a specific customer need or service enhancement rather than focusing inward on some organizational goal.
A second one is a warning that a brain storming session to not the best time for the critique or debate ideas. This is consistent with what we talked about in quantum idea generation. There will be a time to evaluate ideas, but the actual brainstorming session is not the best time to do that.
The third one is that they like to have the facilitator write down ideas as they emerge in a brainstorming session. They are written on a visible medium of some sort – flipchart, giant posters for the walls, butcher shop paper on tables, etc. This is generally a good idea since it serves as stimulus for people during the process. One idea can remind them of another version of it or they can jump to an entirely new idea.
A fourth one is that they like a warm-up practice. They actually did some qualitative testing of three different ways of doing this. In one group people did some background reading and listened to an expert lecture. Another group spent half an hour at a local toy store looking for and purchasing some interesting products to serve as visual stimulation. A third group had no preparation. Not surprising to me, the top performing group was the one that went to the toy store. It’s not surprising to me because it provided the richest form of stimulus. You will recall in quantum idea generation that stimulus alone can double or triple the number of ideas you get from brainstorming alone. While stimulus is done differently within quantum idea generation, the principle of stimulus is what you want to remember
The fourth one is to create visuals of ideas as you create them. In my work with companies we’ve brought graphic designers into a creative session when we believe product form and/or product packaging could be an integral part of a breakthrough new product. In other sessions, I have brought about 100 magazines into an idea generating session. After initial ideas have been developed, I asked people to work in groups of two and the search the magazines for visuals that they can cut out and paste onto a board. This creates a story about their idea and the potential customers that can often be very provocative and developing additional ideas in the group.
In this podcast I’ve only covered a small part of Tom’s book on The Art Of Innovation. I’ve covered the five steps of their innovation process which either in its exact form or an adapted form can help you greatly with your internal innovation program. I’ve also covered some key points they make to support brainstorming that I think also are relevant to the quantum idea generating process we discussed earlier.
Bottom line, you have some well proven insights and processes you can immediately start using in your innovation program so that you can sell more and make more.
In future podcasts I will draw more relevant and helpful insights from this book. There’s a lot more benefit to be had!
This podcast shares insights from Bill Gross about what it takes for a start up to succeed today’s world. So who is Bill Gross? He is a very successful finance manager who has learned about why companies succeed and fail in order to make his finance company successful. He is also been an entrepreneur, actually a serial entrepreneur, with many notable successes and of course some failures. Businesses like Citysearch and go to.com.
In this podcast, he shares his thoughts on why companies like space X, uber and airbnb succeed while others fail. He identifies five factors that he sees driving success and identifies the one of those five factors that is the most important influencer of success. But start by looking at the five factors.
The first of the five factors is “the idea.”
Consistent with what we learned from Merwyn technology about what it takes to be successful, he points to some critical questions you need to ask in evaluating how strong the ideas.
Is a truly new or just a variation on something that already exists? New always tends to get people’s attention, so it’s a starting point for engaging potential customers. But if you’re only new and not truly uniquely new and beneficial in meeting customer needs, chances for longer-term success are not very high.
It’s very clear that with a startup there is an initial idea that evolves over time. The evolution of the idea can be a tricky process. Sometimes you can lose sight of the inspiration or original insight, which can be a costly loss. Nonetheless, an idea must and will evolve so there is no one original idea but rather an ever evolving idea that drive success.
The second of the five factors is the team and execution.
In this podcast I’ve not spent much time on this topic. I will spend more time in future podcasts, since it is very important.
There are several aspects of what it takes to have excellent teamwork. First, there are the factors that contribute to a high performing team. These involve organizational, process, and interpersonal elements. Second, a team needs a clear vision, strategy, and definition of success. Third, teams need resources, both core and ancillary resources. Fourth, teams need organizational and management support. And I could add to this less which I will do in a future podcast.
The third of the five factors is the business model.
The business model is all about how are you going to make money.
This is not as simple as it sounds – it’s not just about how you price it. Depending upon the business that you’re in there can make many ways of making money. For example, some software companies sell their clients full rights to use of the software and then they largely disappear. Other software companies, enable clients to bring in the software at a relatively attractive price and then sign long-term service contracts. In the first case, the business model makes money from selling rights to the software and in the second case they make money primarily through servicing the software.
While it’s not just about price, for many products it is about price. It is the difficult challenge of figuring out your value equation. The value equation is the benefit you provide and the price people have to pay for it. If you’re providing a very important customer benefit and you are the only one that can provide this benefit, then you are in a position to charge premium pricing. If on the other hand, you essentially have the same or similar basket of customer benefits, it’s very difficult to understand how you could succeed with premium pricing, although it is something that occasionally works.
The fourth of the five factors is funding.
Almost no successful startup makes it all the way to the marketplace with the only source of funding being from the founder.
As a result, startups need rounds of funding to take a step-by-step approach in getting to the marketplace. Each round of funding is dependent upon the enterprise making promising progress in manifesting the idea and business model. Investors are also interested in the continuing viability of the idea, especially as the marketplace changes and if a major competitor enters with a similar initiative.
The fifth factor is timing.
In many ways, this is the most challenging of the factors. There clearly have been ideas that were very promising but launched too early – that is, before customers were ready for them.
There also ideas that launched too late. Enterprise hope to be a fast follower, maybe with some additional customer benefits, only to find that the initial company grabbed consumer attention and loyalty.
An example of this is tablets. Despite what you may think, the iPad was not the first tablet. In fact, in many ways it was not Apple’s first tablet. At a later date we can get into why the iPad was successful when earlier ones were not and even later ones were not successful.
What is the relative importance of each of these factors? Bill’s analysis suggested the following ranking of importance.
The fifth most important factor was funding. In truth, there are plenty of examples of companies that succeeded without getting the ideal amount of funding.
The fourth most important factor was the business model. Remember, the business model is how you’re going to make money. Facebook and twitter launched without a true business model or should I say revenue model. That came later in their existence.
The third most important factor is the idea. This is especially true for the initial idea. As I mentioned, the initial idea changes over time – in fact, it needs to change over time. It needs to reflect what you learn from qualitative and quantitative research. It needs to reflect what you learn about competitors as you go along in the development process. Net, the idea that you launch with is significantly different than the one that came up in the first idea generating session.
The second most important factor is the team and execution. In all of my work I have seen many, many good and even great ideas. When the ideas were brought back from an idea generating station to the broader company, they often experienced a rapid death or a slow and dysfunctional death. There are many reasons for this including company culture, lack of internal team expertise, and ever changing management support and funding.
The most important factor is timing. He shares the Airbnb success example. Many people use their business model before. They launched the company when the recession hit and a lot of people were looking for additional sources of income. As a result, people were willing to rent out rooms or entire homes and apartments. Space X launched in the face of the Columbia disaster.
The timing being the most important factor, it can also be a very frustrating factor. As noted in the two examples, as an entrepreneur and inventor you often have little or no control over the macro factors influencing your success.
The importance of this factor does suggest that you identify a set of actual or potential macro conditions that could impact your success. Having identified them you want to then track them so that you are at least aware of what is going on in the macro world.
I think that Bill was made a good contribution to understanding what it takes to be successful. His five factors are not new. Other people have identified other factors some of which are not listed here. For example, Jim Collins has written a series of books on this topic including good to great.
I think his most valuable contribution is the relative importance of these factors. Having said that, I can easily see how the relative importance of these factors could vary by industry and type of product.
I hope this helps you understand the factors driving a startup’s success. At the end of the day, it’s never easy, but you increase your chances for success if you have an awareness of the critical factors driving the success.
Before getting into the specifics of today’s podcast, I want to say hello to all of you who are listening to this podcast somewhere in New England. I grew up in Ipswich, Massachusetts and briefly attended Boston University school of Law. As I record this in the summer of 2015, the Red Sox are buried in last place with little prospect of becoming better this year – and they finished in last place last year.
The subject of today’s podcast is not one you will find in any innovation books, podcasts or articles that I’ve ever read or heard. Despite this fact, there is a curse of being an expert that works powerfully to inhibit innovation, especially when the need is very important and urgent.
Let’s make sure we’re starting in the same place by understanding the meaning of the word expert. When used as a noun, the dictionary defines expert as “a person who has a comprehensive and authoritative knowledge or skill in a particular area.” When used as an adjective the definition is “having or involving authoritative knowledge.”
When you ask someone if they are an expert, they will answer depending upon their level of humility. Those who are egocentric will quickly acknowledge that they are an expert in one or more particular subjects. Those who have a higher level of humility might not describe themselves as experts but acknowledged that the no quite a bit about a particular subject.
So how does someone considering themselves to be an expert or believing that they know a lot about a particular subject impact innovation results?
Since I have been facilitating creative sessions for many years, I have seen the negative impact of someone considering themselves to be an expert. Most often I see the impact when one person suggests an innovative idea and the other expert person immediately jumps in to provide their point of view. In expressing their point of view a often expressed that they are experts. Their expressions often criticize the idea or suggest it has a very low chance of being successful. This is often because the suggested innovative idea is outside the box of their expertise.
There are a few factors to be aware of here.
If asked, experts would tell you they are well-intentioned. They want others to benefit from their expertise. But looked at another way, they want to be right and to control the direction of innovation. Unfortunately, other people in a creative session might defer to the stated expertise. When this happens, all VA or goes out of the creative balloon.
Experts do not know what they do not know. They can be threatened by what they don’t know because it could undermine their position as an expert. It becomes about protecting their ego and image. Most experts are loath to say “I don’t know” or “I have never heard of that before.”
Experts can create to dysfunctional behavior in groups. Others can see the kind of behavior I have described as arrogance, controlling, and disrespectful. On the other hand, experts can view their fellow group members as naïve and poorly informed.
But briefly take a closer look at what being an expert in expertise is all about. There are at least two perspectives.
The first perspective is how much a person knows compared to other people in their field, like marketing, sales, research, product development and many more. Indeed a person who considers themselves to be an expert may have considerable more knowledge and experience than many or most of their peers and colleagues in a particular field. So the first perspective is a benchmark of how much knowledge and experience the person has compared to peers and colleagues.
The second perspective is how much a person knows about all that is known in a particular field. For example, let’s consider someone who considers themselves to be an expert in customer research. Peers and colleagues might readily acknowledge this person to have greater knowledge and experience than they do, maybe even by a wide margin. But when you compare how much knowledge and experience the same person has compared to everything that can be known and experienced in the field of consumer research, they might have a very low percentage of total knowledge and experience.
Let me illustrate this point by using myself as an example.
Many people consider me to be an expert in marketing. There is a basis for people believing this. I worked at Procter & Gamble for 16 years in sales and marketing and the company was voted marketing company of the century by its peers in the year 2000. I was vice president of marketing at the Gallo Winery for 10 years. As a professor at Arizona State University in the school of management I taught upper-level marketing courses. Because of all this, for many years I did consider myself to be an expert. This consideration was from the first perspective only – my level of knowledge and experience compared to other people both in marketing and more generally in business.
Then one day, for some reason, I decided to search Amazon for how many books on marketing they had. They have well over 500,000 books on marketing. I perused many of the titles and found that they were covering topics that in many cases I knew little or nothing about. I then did some Google searches on marketing topics. Again, I discovered a vast world of marketing knowledge and experience that went way beyond my personal knowledge and experience. I came away from this process deeply impressed by how much I did not know.
Let me try and put some order of magnitude numbers on this to make it a little bit clearer. First, from the perspective of my marketing expertise compared to peers and colleagues, in any particular situation I probably had 50% – 75% more expertise, that is knowledge and experience than these peers and colleagues. Second, from the perspective of how much I knew about marketing compared to all that there was to be known about marketing knowledge and experience, I probably had 5% – 10% knowledge of everything that was to be known about marketing. The difference between 50% – 75% and 5% – 10% is dramatic.
I repeated this process in a few other areas of my life where I thought I had a pretty good level of expertise. At the conclusion of this process, I came away deeply, deeply impressed by my ignorance. I realized that there was a sort of curse to be an expert. That curse was arrogance that limited openness to new thinking and diminished innovation possibilities.
Instead of feeling diminished in any way, I felt exhilarated. I’m a reasonably good learner. I now had a major opportunity to enjoy the thrill of learning new things and finding ways to productively and beneficially use my new knowledge and experience in my life. I quickly became a learning junkie, which I continue to this day.
For those of you that have listened to previous podcasts on quantum idea generation, you are aware of the power of diversity. I also made a very strong point about bringing diverse expertise into a creative session. So yes, I love experts and I love to have them part of the creative session.
Here are a couple of thoughts for your consideration about how to manage a creative session that includes significant levels of expertise.
Respect as a two-way street: in the early stages of a creative session have people talk about themselves and expectations for the session. As a facilitator, look for opportunities to celebrate the accomplishment of experts, especially when you have multiple experts in the same or similar field. You want people to know that there are multiple experts, not only one or two. The street also goes the other way. For people in the session who do not have the same or even significant levels of knowledge and experience in a field, you want to celebrate them also. You celebrate the possibility of fresh thinking – people who see things in their more essential state of being, who see things in simpler terms where experts might only see the more complicated view. Net, you want to celebrate expertise and, if you will, lack of expertise. In our creative sessions we always look to include both of these dimensions.
Help people understand why out-of-the-box thinking is so important and yet so difficult. It is natural for people to create new ideas that will fit into their box of knowledge and experience. On this point, history is very clear – the really big ideas exist outside the box. To get these ideas, experts need to let go of preconceptions that say the future is going to be very similar to the past and present, which is where they are comfortable inside the box. Making this point starts giving experts the permission to entertain new possibilities. During the course of the session when you reward these new possibilities with praise, the creative juices continue to flow. At the end of the day, you can harvest a good number of out-of-the-box ideas with high potential for success.
As I mentioned at the start of this subject, you will not find many if any other people in the field of innovation mentioning the curse of being an expert. Yet, it is a very real factor you need to address if you’re creative sessions are going to get the truly big ideas. I hope this has helped you to see this dynamic and how you might manage it in your own creative sessions.