Category Archives: American Express OPEN Forum

The Big Myth of Innovation

Innovation And Entrepreneurship Fatal Flaws

Innovation And Entrepreneurship Fatal Flaws Scott Painter, Founder and Chief Executive Officer of TrueCar, made a great comment at an innovation event put on by The Economist about how all ideas have a ‘fatal flaw’. But like all great insights, on the surface the audience does not always recognize all of its potential impact on their thinking, and the author of the comment does not always recognize its transcendent ability to simplify and drive impact deep into the broader context of business.

The ‘fatal flaw’ comment was made in the context of entrepreneurs and the rose-colored glasses that they tend to wear when it comes to the warts of their idea. But, if you step back and take a wider view, the same thing about ‘fatal flaws’ can be said of all ideas, not just the ideas of entrepreneurs – take the ideas of innovators for example. Entrepreneurs and innovators share much in common, and successful entrepreneurs are often those capable of transforming useful inventions into valuable innovations.

Now, one thing that we all know to be true is that whether we are talking about the ideas of entrepreneurs or the ideas of innovators, people love to poke holes in anyone’s idea. And, when it is time to look for the fatal flaw of an idea, you have to harness this tendency of individuals, because you want to find the fatal flaw of an idea as early as possible.

The first reason that it is so important to find fatal flaws early is not so that you can strangle every potential innovation or potential new business in the crib, but so that you can make smart investments of your limited resources. We only have so much energy and resources to expend on developing ideas, so you want to cull those that will fail in the marketplace from your portfolio as early as possible to invest all your energy and resources into those that have the best chances of succeeding.

The second reason that it is crucial to identify the fatal flaws in ideas early is that often they are harder to see than their benefits, and so you want as much time as possible early on before resources are mobilized and the financial commitments escalate to evaluate whether or not the fatal flaws can be overcome.

You have to say to yourself: “Wow, this is a really great idea; what would make this fail in the marketplace? What would prevent this idea from succeeding with customers, and how do we solve for this? Can we solve for this?”

No idea is perfect, and so when you can identify the potential fatal flaws or the high hurdles that have to be overcome, you can challenge them, you can solve for them, you can unleash the passion of your team on trying to find a way around them. The fatal flaws are always there, and the wise entrepreneur or innovator doesn’t ignore them or assume that they will overcome them at some point in the future, but instead invests energy upfront into both trying to identify the fatal flaws of their idea and into identifying whether they can isolate the solutions before moving the idea forward.

Timing is a huge key to success both for entrepreneurial ventures and for the development of innovation. Sometimes the time is not right to proceed, and the smart entrepreneurs and innovators can recognize this.

So what’s the fatal flaw of your idea?

Are you ignoring it and pushing forward?

Or are you testing to see if you can solve it, and moving on if you can’t?

This article originally appeared on the American Express OPEN Forum.

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Illusions of Entrepreneurship

News from the Innovation Front Lines

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News from the Innovation Front Lines I had the honor of keynoting last year at the Imaginatik Innovation Leaders Forum at the New York Stock Exchange in New York City. But, I also had the privilege of hearing great innovation leaders speak from a diverse set of organizations including: Chubb, NYSE, Bombardier, Medco, and the General Services Administration (GSA).

When it comes to innovation, people are always talking about organizations like Apple and Google, but there are a lot of other organizations working hard to achieve innovation excellence.

Fighting for Innovation

Jon Bidwell, Chief Innovation Officer at Chubb, shared some interesting research from the Desai Group that found that 75 percent of successful innovation efforts came as the result of unplanned activities (either internal or external), and only 5 percent of innovation successes were the result of internal, planned innovation activities. This of course would lead you to believe that while diligently pursuing innovation is important, most successful innovations are going to bubble up outside your normal, formal new product development processes.

Innovation Chart 1

Insight to remember: You have to choose which fights to pick. We celebrate George Washington’s victories, but at the same time, lesser known is that he was an expert at retreating. This allowed him to save his best army personnel for battles he thought he could win.

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Build a Common Language of Innovation on your team

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Little Black Book of Innovation

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Little Black Book of Innovation I had the honor of keynoting at the Imaginatik Innovation Leaders Forum last year at the New York Stock Exchange (NYSE) in New York City. But, I also had the privilege of hearing great innovation leaders speak from a diverse set of organizations including: Chubb, NYSE, Bombardier, Medco and the General Services Administration (GSA).

One of the best stories at the event was from Mike Hatrick and David Wooten of Bombardier about the early days of their formal innovation effort and one of their employees and his little black book.

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Building a Global Sensing Network

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Building a Global Sensing Network If the innovation war is just beginning, then you need to make sure you’re fighting it outside your organization — not inside.

The old way of succeeding in business was to hire the most clever, educated, experienced and motivated people you could afford and then direct them to come up with the best customer solutions possible, organize and execute their production and marketing predictably and efficiently, and do their best to outmaneuver the competition.

But the battlefield of business success is changing. Future business success will be built upon the ability to:

Utilize expert communities.

Identify and gather technology trend information, customer insights and local social mutations from around the globe.

Mobilize the organization in organic ways to utilize resources and information often beyond its control.

Still organize and execute production and marketing predictably and efficiently in the middle of all this complexity.

At the same time, market leaders will be increasingly determined not by their ability to outmaneuver the competition in a known market, but by their ability to identify and solve for the key unknowns in markets that will continue to become more global and less defined. Future market leaders will be those organizations that build superior global sensing networks and do a better job at making sense of the inputs from these networks to select the optimal actionable insights to drive innovation.

By this point, hopefully you are asking yourself two questions:

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Is the Era of Innovation Over?

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Is the era of innovation over? Or is the war for innovation just beginning?

I came across an article in one of Canada’s main newspapers — The Globe and Mail — by Barrie McKenna titled ominously, ‘Has Innovation Hit a Brick Wall?’

The article speaks to how the Canadian government sinks billions of dollars into research and development every year, yet the country remains an innovation laggard compared with most of its trading partners. The author refers to this as Canada’s “innovation deficit.” The article then goes on to examine some research from University of British Columbia economics professor James Brander that examines whether Canada’s problem is part of a much broader global phenomenon.

The conclusions that Dr. Brander comes to are less than comforting (if you agree with his view of innovation); his research found the pace of innovation to be slowing dramatically in four key areas: agriculture, energy, transportation, and health care.

As someone who works with companies to help foster innovation and whom frequently writes and speaks on the topic, I have a problem with Dr. Brander’s conclusions about Canada and the world in the same way that I have issues with the way that the U.S. Congress and President Obama approach innovation in the United States. In fact the American government’s approach to innovation prompted me to write the controversial ‘An Open Letter on Innovation to President Obama.’

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What is Your Innovation Equation?

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What is Your Innovation Equation? Have you ever wondered why with all of the people trying to innovate, more innovation isn’t created?

I’ll give you a hint…

Often, something gets lost in the translation between what people think their customers want and what their real desires are.

Part of the reason so many people fail to innovate is that they fail to recognize that ideas and innovation are not the same thing. Ideas are easy, innovation is hard. For ideas to translate into innovation they must be based on unique insights that unlock new customer value.

In their book The Other Side of Innovation, Chris Trimble and Vijay Govindarajan assert that:

Innovation = Idea + Execution

Successful innovation is based on how effective firms are at execution, and that ideas aren’t as important as execution. But the equation could be better because many companies are good at generating ideas and at executing their ideas, but are still bad at innovation. The problem is not that companies don’t know how to execute, but that they often fail to identify a unique insight that unlocks sufficient new customer value to displace existing solutions.

So let’s modify the equation to be:

Innovation = Insight x Execution

The equation improves by multiplying the two elements instead of adding them because if the insight is not unique or does not unlock new customer value, then even the best execution doesn’t equal innovation.

But even this modified equation doesn’t go far enough. Instead it should be something more like this:

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Managing Innovation Complexity

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Managing Innovation Complexity Ideas are easy; innovation is hard. Ideas are exciting, but innovation is scary because it is all about change. The changes required by minor innovations are easier for customers and organizations to absorb. But the large changes generated by major innovations often disrupt not only the market, but the internal workings of the organization as well. This requires organizations to become increasingly flexible and adaptable. And companies that successfully innovate in a repeatable fashion have one thing in common: they are good at managing and adapting to change and complexity.

People often fail to imagine just how the change injected into organizations by innovation ebbs and flows across the whole organization’s ecosystem. Innovation creates a complex web of change not just for customers, but also for employees, suppliers, marketing, operations, and many other groups. Let’s explore some of the change categories visualized in this framework using an Apple iPod example from my book, Stoking Your Innovation Bonfire:

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Staging an Innovation Party

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Staging an Innovation Party In 2011, I was a regular contributor to the American Express OPEN Forum on the topic of innovation. Here is the first one of that year:

Have you ever woken up in a cold sweat in the middle night from a nightmare focused on you throwing a big party that nobody comes to? Or, in real life, have you ever thrown a big launch party for a new product or service, made a lot of noise with advertising, marketing and public relations – only to have the sales returns be anemic at best?

According to a Linton, Matysiak & Wilkes study from 1997 titled Marketing, Witchcraft or Science, the success rate for new product introductions in the food industry is only between 20 and 30 percent. But, there is a key insight inside that data not to be ignored. The results highlight the power of market research and strategic marketing:

The bottom 20,000 U.S. food companies in the study combined for an 11.6 percent success rate.

The top 20 U.S. companies in the study enjoy a 76 percent success rate for new product introductions.

Sure, the 1997 data is coming from a single industry that many of you may not be in, but other data I’ve seen from the Product Development Management Association (PDMA) and other sources are similar and reinforce the importance of market research and strategic marketing. Worded another way, success in the market is often:

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