GUEST POST from Jeffrey Phillips

I had the opportunity to speak to a group at a university recently about innovation. In fact, I’ve spoken to four universities about innovation in the last few months. There’s a growing awareness that innovation needs to happen in university settings. This would include innovation on the administration of the university, in the teaching methods and in what is taught. But that’s a sideline to what I want to write about today.

In my most recent speaking engagement I was confronted by a senior faculty member who argued that all this talk about “innovation” was pointless, and missed the main target, which was that we needed more focus on science and engineering education. In his mind, innovation was equated to technology, and only scientists and engineers could bring new technologies to life. While I agree that scientists and technologists can bring innovations to market, I’d argue that that definition of innovation is awfully narrow. It seems to me that innovation can occur in many avenues that have little or nothing to do with technology, engineering or science.

In fact we have recently worked with a financial services institution, a health care insurance firm, a life insurance firm and several other firms in the services industries where there are no physical products developed and few if any engineers or scientists. Yet these firms are innovating. Innovating their service models, customer experiences, processes and business models. Apple, held up as the ultimate innovator, is a technology firm but innovates instead more around user experience, linkages, partnerships and content.

There are a number of firms that innovate around technology and science, so I don’t want to downplay the importance of technology in innovation. However, we do need to understand the balance between product innovation and all other kinds of innovation, and the importance of engineering and science to innovation. It’s really a question of set theory. Technology innovation is a subset of innovation generally, and while all technology innovation is innovation, all innovation is not technology innovation. As much as it may pain my engineering friends to say it, there’s a lot of innovation happening that has little or nothing to do with technology. Conversely, there’s a lot of technological research that will impact our lives through new innovations as products and services.

This dichotomy also explains a lot of angst in the intelligentsia about the termination of NASA’s return to the moon program and the decreasing amount of federal research generally. The belief is, and I agree with this, that we learn more and capitalize on that knowledge when we explore space flight or invest in primary research. But curtailing space flight does not necessarily make the US less innovative. It leaves us in a situation where, from a governmental point of view we may become more dependent on the Russians or Chinese to put vehicles in space, or perhaps it makes available a private enterprise approach to space flight. But reducing investment in these areas doesn’t mean we are less innovative, it just spreads out the responsibility for innovation more broadly. But that had already happened in the 70s and 80s, as private enterprise took on more direct research and investment and the federal government’s role declined.

OK, enough of the tangent. Innovation depends on creating and developing new ideas. Some of those insights are based on new technologies or improvements to existing technologies. Some innovation, however, is based on insights about services, processes or business models, and don’t rely on technologists or engineers for insights. To claim that all innovation is technology innovation, and that without engineers and scientists no “real” innovation can be accomplished is to view the world of innovation with a very narrow lens.

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GUEST POST from Jeffrey Phillips

As always, we’d like to make our readers and clients happy. In that vein, I’d like to introduce how to spot people who are likely innovators. In this way, you can identify them more quickly, and choose to hire them if you want to be more innovative, or you can ignore and avoid them if the status quo is more your scene. Good luck with that strategy, by the way.

Identifying people who are innovators is actually relatively easy. They are the ones who don’t actually seem to belong the organization in the first place.

Innovators tend to:

• Reject the standard framing of a problem and restate the problem or opportunity. Rather than work within the given constructs or framing, many innovators want to toss out the framing and start anew. Just like Galileo, this may require working against an orthodoxy, yet nonetheless, it moves and so must we. Those folks who are so problematic about wanting to change or expand the framing of a problem? Probably good innovators.
• Be optimistic. They are almost always the glass half full people. Pessimistic people will focus far too much energy on the “problem” while innovators will acknowledge the problem and move on to find interesting solutions. They believe the problems are merely temporary barriers to more interesting solutions.
• Look to the future for signals rather than to the past. In most businesses, many people will ask “has this been done before” and “what can we learn from that success or failure. Innovators want to know “can we be the first” and what signals in the market or environment give us indications that we’ll be successful
• Care about solving unmet or poorly understood challenges. Often innovators are going beyond the obvious, ordinary problems to uncover deeper unmet or poorly understood issues. If your team is captivated by solving an obvious and incremental problem, they aren’t innovators.
• Network with people different than they are. Evidence suggests that the best innovators are people who read outside of their industry, interact with people from many different backgrounds and interests and seek to bring solutions from outside their industry to the table. People who are very deep in one industry but ignore signals and solutions from other industries are usually not very innovative.
• Are proactive. Innovators actively seek change while many executives are content to wait and react to what other firms do.
• Are dissatisfied with the status quo and willing to change it rather than simply accept the status quo and merely complain.
• Are very comfortable learning, trying and failing, and then trying again. They aren’t stymied by a single failure and are usually very determined to start again, reframe the problem and try a new tack or approach, learning from previous failures and incorporating that knowledge.

So, if you are in the market to hire someone and want to know if he or she is likely to be an innovator, look for these signs:

• Ask them about an existing problem that you have. See if they are perfectly willing to accept your framing, or if they request the opportunity to reframe or change the frame entirely. If the latter, a likely innovator.
• Ask them about existing societal problems or corporate problems or challenges. Listen to how they approach the problem and their willingness to suggest changes or alternatives and the possibilities they suggest for change.
• In the context of a problem, what information do they seek – external, future oriented or internal information about the past?
• Can they name a big failure in their lives and demonstrate what they learned and how that failure helped them gain more insight into an eventual solution?
• Can they name five people in relatively senior positions they interact with on a regular basis who are from different industries? Can they demonstrate an active network outside of their “home” industry?

The kinds of answers you get with these questions will tell you how strong the “innovation” force is within the candidate, and whether you should hire that person or turn the Force against them.

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GUEST POST from Jeffrey Phillips

I made what in hindsight is a fairly funny mistake recently. Working with a new client who wanted to become more innovative, we pressed ahead into a project only to realize that their definition of innovation was to have customers interact with their products in a technology showcase. When I think of “innovation” I think of teams using a number of tools and techniques to generate and bring to life new products, services and business models. When this team said “innovation” that’s what I thought, and what I assumed. What they were thinking was something else entirely, and that didn’t become evident until we developed a workplan. Then, the differences in the expectations and definitions were clearly exposed.

We failed at what should be an upfront discussion – that is, what does innovation mean to your firm? I’ve been around innovation so long that if I’m not careful I just assume that corporate executives that I’m working with have the same expectations and definitions as I do, and that can be very problematic. Definitions matter because they drive corporate expectations and commitment. If it seems “innovative” to have your clients interact with your products in a showcase environment, and that adds value to your organization, great. But in my mind that’s not innovation. And also not my client’s fault. It’s mine, for not taking the time to understand what the word “innovation” meant when they used it, and what their expectations and best outcomes were.

Innovation is one of those words like “pornography” that, in the immortal words of the Supreme Court can’t be defined, but we know it when we see it. Our client thinks it will be considered “innovative” if it allows customers to interact with its products in a high tech, high touch environment. They may be right. However, that’s not really “innovation” in my mind, because they are not trying to use the facility to generate new ideas or bring new products and services to market. The center may become a marketing program, meant to create good will and more openness to the market, but not ascertain ideas or seek consumer input. This won’t create new products and may divert funds from other efforts that would create new ideas, so it may be doubly risky, while seeming very innocuous.

The morale of this story is simple. As innane and obvious as it may seem, when the words “innovative” come out of your client’s mouth, stop and ask for an example or a definition. If they can’t provide one, then work with them to create a definition that you, and they, agree is correct, because there’s simply too much room for assumption, and error, when the word is taken at face value. Too many firms, and too many people are simply throwing the word around for advantage, which leads to misguided expectations and disappointed consumers.

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GUEST POST from Jeffrey Phillips

I’m constantly amazed by all the talk about innovation that I hear within many organizations, and how little real action is taken. It’s time, my friends, to gird up your loins and take action. Let’s borrow the motto from Nike and decide to “Just Do It.”

If you are waiting for the sign from above (by that I mean your executive management) that you may now go and be innovative, stop waiting. Even if the sign comes, it will be so watered down and so filled with misdirection and uncertainty that you wouldn’t act on it anyway. Act now, even in small ways to develop innovation activities and skills, so that you can then build on those activities and flesh them into new ideas, and new products and services.

When I say this to many mid and senior level folks I talk to, they want to know: what can I do to make a difference? There are a host of small actions you can take to start innovating, and as you do you’ll build credibility and will attract others who are interested and want to work with you. If you never start, you’ll never build the community or team you need to succeed.

Here are just a few things that are very easy to do, and very inexpensive to do, that just about anyone in any firm can do to add value and start innovating. Once you do these things you’ll build your credibility and get to do even more.

1. Document trends and provide your sense of what they’ll mean for your business in the near future. Yes, I know this isn’t your job, but as it turns out it’s not anyone’s job in most businesses but everyone needs this synthesis. A well organized consolidation of trends, transitioned into a document that provides shape and clarity to a potential future outcome, is helpful to any organization. And, since no one else is doing it, you are now the expert. If someone disagrees, then you’ve attracted a compatriot who can work with you to provide a counterpoint. All innovation starts from recognizing an opportunity, issue or threat before others do. Trend spotting and synthesis can get your team there first.
2. Observe your customers. Go read the complaint letters. Read what people are writing about you online on Facebook or Twitter, or other blogs. Go watch your customers use your products. Become a customer of your products or services. Write down what you like, and don’t like, about your products. This is free Voice of the Customer and Ethnography. As you do this you’ll gain insights into unmet unarticulated needs, which are also a great opportunity for innovation.
3. Use brainstorming and other idea generation tools as frequently as possible, and use them in the right situations and contexts. Rather than pull a rarely used tool out of the toolbox ocassionally, use the tools regularly and effectively. In that way, idea generation doesn’t seem so artificial, but a natural part of doing business. And since you’re doing it regularly, you learn more about how to do it well.
4. Read the best books about innovation, to learn more about the best practices and tools, so when there are opportunities for innovation, you can recommend the appropriate tools and techniques. Learn to be a good facilitator, and understand the rules and techniques for idea generation. As your skills grow, you’ll be asked to lead idea sessions for other teams.

There’s always something you can do, and starting now is much better than starting when you finally get the OK. In many firms, the OK may never happen. Create a small innovation capability and generate ideas about the future, new product and service ideas, and help other teams generate ideas. You’ll attract others who have similar needs and interests and gain incredible credibility. Eventually you’ll be the go-to person for innovation. Don’t laugh, I’ve been in at least two organizations where the head of innovation was simply the person who started doing innovation and was eventually recognized as the expert.

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GUEST POST from Jeffrey Phillips

One of my partners, an electrical engineer, let out a loud cry a few minutes ago. He was responding to an article I sent him about a new electical gizmo that monitors eletrical usage in the home. He was upset because he came up with a very similar idea about a year ago, but he assumed it was safe to put on hold for a while.

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

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

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

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

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

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GUEST POST from Jeffrey Phillips

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

by Jeffrey Phillips

This question allows me to kill two or more birds with one stone. My recommended area most in need of innovation is the education system, for several reasons.

First, the primary and secondary education system in this country is based on learning models from the 19th century. While there has been significant change in almost all aspects of life, a 2nd grade teacher plucked from the late 19th century and returned to earth would be bewildered by most of what he or she encountered, except the pedagogy within the average classroom. Sure we don’t emphasize rote memorization anymore, but short of that the curriculum and teaching methods haven’t changed. One could argue that’s because there’s been so much success, but on any relative scale we can demonstrate that the educational system is failing miserably. So we have a rigid educational program steeped in tradition that is demonstrably failing. The educational system must innovate in order to be relevant.

Second, regardless of the tradition, we aren’t teaching kids how to learn, or teaching them relevant skills, and are often channeling all of the kids in an educational system into a collegiate experience. This one size fits all educational outcome, where in some schools over 90% of students have college aspirations, neglects the fact that many won’t complete college and will require other skills to generate income. Why do we continue to prepare the students for “knowledge worker” jobs when clearly there are many demands and opportunities, and proclivities for other skills? We need to resurrect the concept of apprenticeship and place more emphasis and value on learning skills beyond the classroom. We need better definitions about what kids need to know, and more importantly, we need to teach them how to learn and how to teach themselves and others.

Third, the disrupters are out in force. Since most educational systems are government monopolies rather than private enterprises, there’s little innovation and little incentive for new entrants. As it is, many states have begun to experiment with charter schools, for-profit schools and many parents are turning to home schooling. Given the difficulty of starting alternative educational programs, and the rigidity of the existing educational bureaucracy, these experiments are too little and may be too late. We are at risk of losing a generation of students who have been taught inadequately and are unprepared for many of the roles and responsibilities they must take on.

The state governments and localities must act to allow much more experimentation, and universities must require more from people who want to teach, and must create new teaching and educational paradigms. If we aren’t careful, businesses will go back to the beginning and create their own schools, to ensure a consistent flow of knowledgeable students with excellent experience. If you can’t get the right raw materials, you create or purchase your own sources.

At one point it was argued that home schoolers were the nut cases who for behavior or religious reasons kept their kids at home. Since home schooled kids have proven very adept at getting entry to prestigious colleges, more and more people are pulling their kids out of primary and secondary programs and teaching them at home. This runs the risk of weakening the social fabric, if we don’t have shared educational experiences, but these home schoolers are merely demonstrating that they believe they can innovate the educational model.

The educational system in the US is clearly failing – failing the students, failing the teachers and failing to create people who can join the workforce or create their own companies. In most factors the US ranks well down the list in terms of educational achievement. Only greater demand and political pressure will encourage more experimentation and more innovation. At this point we need disruptive innovation – a complete rethinking of the pedagogy, curriculum, technology and intent of education, followed by a restructing of how education is offered and consumed. If we can completely rework the health care system in the US in just over six months, with the right focus we can rework the educational system and create a more powerful, relevant educational experience for our children and grandchildren. We need to do this NOW.

Recently there was an argument about whether or not a school voucher program in Washington DC should continue as a pilot program. Only 1,700 kids were receiving vouchers to go to private schools, and by most accounts were doing very well. That program was threatened with termination, not because the funds were lacking or because the students were doing poorly, but because the program threatened the educational monopoly. For those of us who care about better education for everyone, in every program at every level, we need more innovation, faster than ever, in order to overcome the entrenched bureaucracy.

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

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GUEST POST from Jeffrey Phillips

After all I read on the blogs and on Twitter, and all the new innovation programs and initiatives in state and local governments, I feel the need to revisit the definitions of these key words. While innovation, invention and entrepreneurs are important and somewhat interconnected, they aren’t synonyms and they have different needs, intents and purposes. Whether accidently or on purpose, we can’t allow them to mean the same things.

First, the definitions:

An entrepreneur is a person who starts a new business. That’s not necessarily innovative, but it can create new jobs and new wealth, so it is valuable. Sometimes, entrepreneurs create new businesses based on new ideas, either inventions or new innovations. However, a person running a McDonald’s is also an entrepreneur, but not necessarily innovative.

An inventor is someone who creates a new to the world product or solution. Inventions become interesting when they create value for the inventor or consumers or the world at large. Inventors are often innovative, but innovative solutions don’t have to be inventions. Many innovations are new business models, new services or new experiences that aren’t necessarily “inventions”.

An innovation is a new idea that is put into valuable or profitable action. An innovation can be created by an inventor who then licenses her invention to others to commercialize, or commercializes the concept herself as a small business person – in this case as an entrepreneur. An innovation can (and often is) created by a large organization to disrupt an existing market space or create an entirely new market (the iPod or Flip Video recorder are two good examples). Innovation can happen in any organization, of any size. Additionally, there’s innovation in governments, in academic institutions, and in not-for-profits. We typically don’t think of these organizations as entrepreneurial or as inventing new things, yet they can be innovative. Further, innovations can be new products, but can also be new service models, new business models and new customer experiences.

The reasons the distinctions are important are hopefully obvious. There are a number of state governments, as well as the federal government talking about innovation policy. Read the fine print and they are really talking about funding and sponsoring entrepreneurs and technology transfer from institutions and universities. This may have some aspect of innovation, but doesn’t really consider organizations outside the start-up realm. A vast majority of disruptive and incremental innovations come from larger, commercial organizations, and these organizations can become more innovative as governments adjust tax policies, intellectual property rights and a number of other components of regulation and legislation. Yet most of the state and federal initiatives are really targeted at starting and funding new entrepreneurs and small businesses.

Interestingly, if you stop to consider the most “innovative” locations in the US (Boston, Research Triangle Park, Austin, Silicon Valley as a few) you’ll note that they have all three things in common – government, education and technology are closely linked and vital to all of these cities. Innovation thrives in an interlinked, internetworked community. The same isn’t necessarily true of inventions or entrepreneurs.

The overwhelming focus as well is on product innovation, yet we see consistently that business model innovation and customer experience innovation are much more compelling. After all, the icon of innovation, the iPod, is simply another MP-3 player unless iTunes is attached. It was the radical change in the business model and customer experience that made the iPod a true disrupter. Yet we don’t find too much focus or government initiatives in these areas. And almost no policy or funding for the organizations that need innovation the most – governments and educational institutions and bureaucracies.

Another thing – having been a founder in a start-up, most entrepreneurs don’t need or want a lot of help from an “innovation” perspective. They are betting the farm on their one great idea. For them, its all a matter of execution to bring that one idea to life, and then successfully scaling that idea. In contrast, larger organizations which have lost the passion and initiative of the entrepreneurs need a great deal of help and encouragement to innovate, since they have much to lose if a new product or service fails. In larger firms there is almost never a shortage of ideas, but a shortage of risk-taking, passion and resources to develop the new idea. Interesting that the problem the small firms have (scaling) is one the larger firms can offer, and the challenge the larger firms have (risk-taking, passion) is one the smaller firms can offer.

We need all three of these concepts work well to succeed. We need inventors to create new products and new processes, and we need entrepreneurs to disrupt existing markets and bring these new products and services to the market. We also need innovation from large existing firms, because without innovation they stagnate and die. When we talk about innovation, invention and entrepreneurs, and when we put policies in place to encourage certain types of activities or investments, we need to understand the implications and ramifications of those words and actions.

“While closely related, invention, innovation and entrepreneurs are not the same things, and should not be treated in the same fashion.”

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GUEST POST from Jeffrey Phillips

I’ve been thinking a lot lately about “creating a culture of innovation”, which is what a lot of firms suggest they want to do. Of course this is a very lofty goal. Changing a corporate culture doesn’t happen easily, and it certainly doesn’t happen overnight. Yet clearly one of the most significant barriers to innovation is the entrenched culture of effectiveness and efficiency, of risk-avoidance and following rather than leading.

So, that led me to think about when teams and groups within an organization can be innovative, and what the conditions were when that happened. We regularly lead teams on trend spotting and scenario planning exercises that create some really radical future scenarios, with little resistance, and often lead ideation and brainstorming programs that achieve a large number of disruptive or radical ideas. These small programs demonstrate that innovation can happen in any organization under certain conditions. Let’s first look at what makes these small programs effective.

We find that we can be most effective with these discovery and idea generation programs when we set very clear expectations about our goals and prepare the team carefully for the work, setting out specific rules and expectations. Typically when we go into the work, we’ll close the door and tell the team that anything that happens in the room is fair game, and open for discussion, and we aren’t bound by the “normal” rules. This helps get the team out of the “day to day” thinking and encourage their creative thinking. They know that no one will be allowed to ridicule an idea or submit challenges that will block the consideration of an idea. For those few moments or days, we have created a “micro-climate” for innovation, probably akin to a hothouse in the wintertime.

So, if we can create some assorted micro-climates where teams can spot opportunities and emerging trends, and effectively generate ideas, can we build on the “micro-climate” concept to create more areas where conditions are ripe for innovation? Using the flower analogy, can we move the ideas from one hothouse to another, gradually exposing the ideas to the elements and improving the chances for survival, while we try to change the conditions of the organization at large (change the cultural attitudes to innovation)?

I’d like to suggest the first step may be to create a number of “micro-climates” – safe locations to generate, develop and evaluate ideas that exist specifically to give ideas the necessary environments to grow. Some firms use a designated space for innovation. Perhaps the best way to change the culture is to start small, with several micro-climates that establish conditions for innovation and allow the process to prove its worth.

Eventually the idea needs to be exposed to the conditions, and planted where it will bear fruit. That is, it must make a transition from an interesting idea to a new product or service, and that means it must work its way through the product or service development process. There are two considerations here: either the existing product or service development process must be adjusted to accept and manage new, possibly more disruptive and fragile concepts, or new product and service development models must be developed for more radical ideas. To carry the plant analogy further, any farmer worth his salt will cover plants in the field that are susceptible to a killing frost or unexpected conditions. So, too, must an organization provide more cover and care for a radical idea as it moves through a traditional product development process.

The point here is that too many times we talk about “changing the culture” and immediately reject the concept, since it is such a Herculean task. Perhaps what we should do is establish small teams and locations where the conditions are beneficial to innovation – small micro-climates where ideas can succeed, and string them together. Once we’ve demonstrated success, we won’t have to worry about changing the culture, because slowly the organization will recognize success and begin to adapt to the best concepts that the conditions in the micro-climates offer them.

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GUEST POST from Jeffrey Phillips

I guess my kids are just too old for crayons anymore, so I missed the Crayon Maker when it was first released, but I’d like to use it as an example of understanding customer needs and identifying lead users, and how an innovation can open up an entirely new market space and revenue opportunity.

For years kids have had broken crayons and their parents have melted them down and formed new crayons, often by mixing the broken pieces. My wife did this for our kids just a few years ago using a muffin tin in the oven. I’m going to guess that Crayola was aware of this activity, neither encouraging or discouraging the activity, until 2003, when it released the Crayon Maker, a machine that allows kids to melt down their crayons and create new ones. Now, crayons have been with us quite a while, and parents have been melting down the broken pieces for quite a while. What took Crayola so long to respond to these lead users who were creating their own crayons?

But let’s push through the existing Crayon Maker and think about the opportunities for new innovation. Right now Crayola is only positioning the Crayon Maker to melt down old, broken Crayons. Why not offer Crayon Shavings or Crayon Bits, built specifically for melting down? These would probably be cheaper to produce, and Crayola could probably charge more for them, giving kids two activities – making crayons and using the crayons. Next, why not let kids make Crayons in different shapes? Right now the Crayon Maker makes Crayons in the same shape as they come out of the box. Creating forms or molds in different shapes wouldn’t be difficult and could be more fun for kids.

Next, why not sell dies or additives that let kids make their own crayon colors? You could turn the creation of crayons into a science experiment, allowing kids to create their own colors, textures and perhaps even scented crayons. Simply by creating a machine that allows kids to create new crayons we can open up a lot of other product and service offerings. What’s taking you so long, Crayola?

Or how about a mold that allows you to make your own Legos? A firm such as Lego could easily create and sell molds that allowed children and parents to make their own Legos out of Play-Dough or bread dough or a host of other viscous material. Then the kids could create, and play with, their own Legos, perhaps creating Legos of different colors and textures. When they were done playing with them, they could easily dispose of them (or in the case of Bread Legos, perhaps eat them!)

These examples are simply thought exercises that indicate how innovation should work. A customer need or lead user is identified, a new product or services is delivered and it opens up an entirely new market opportunity. What customer insights are hiding in plain sight in your business? What lead users are creating products and services to simplify their lives based on your products or information?

Think this doesn’t happen in the “real world” of adults? Check out Mint.com, which is taking the financial world by storm. Mint simply helps individuals consolidate a view of their financial lives online. What we’ve been doing in spreadsheets is now done automatically for us by Mint. Why didn’t the banks see this opportunity? What new products and services could a Mint create by offering a consolidated view of your financials?

It’s important to interact with your customers and understand what they are doing and creating to improve your products. Sometimes you may discover customers who have created entirely new products or solutions based on your existing products. These lead users often point the way for new product or service development. Once that new product or service is developed, it can open an entirely new market for your firm.

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GUEST POST from Jeffrey Phillips

There’s an interesting and difficult conundrum associated with innovation based on the calendars and timeframes of most organizations. While many organizations want innovation, they are not able to innovate beyond their “headlights”, which to me means the span of time into the future they are willing to investigate.

Most businesses operate in approximately three timeframes: the quarter, the annual plan, and timeframes beyond one year out. These timeframes are dictated by the financial markets, not by any specific ebb and flow of business, and these time frames don’t align to or account for the interworkings of the organizations. The first timeframe, 90 days, is dictated especially to publicly traded firms. However, any firm of any size will frankly tell you that little can be changed in a quarter. The next time frame is the fiscal year, which is dictated again by the financial community.

Note that neither of these timeframes has anything to do with the internal workings or operations of the business, especially when it comes to innovation. If we are honest with ourselves, we’ll be willing to admit there are at least three phases of innovation and new product development: idea generation and selection, new product development and commercialization and launch. In most organizations new product development and commercialization will rarely take less than 18 months to two years. Adding in the timeframe to identify opportunities and generate ideas, it’s easy to see that an idea generated today in most firms won’t be commercialized in less than 2 to 2.5 years.

This is where the concept of innovating beyond the headlights comes into play. If we have an idea to product or service lifecycle of 2 to 2.5 years, then we need a planning cycle and an investigation cycle of at least that length, if not more. If the business is not identifying opportunities 3 to 5 years in the future and has a idea to product lifecycle of 2 to 2.5 years, then it’s almost impossible for the firm to ever create a truly disruptive product, since it’s development time is longer than its runway. It’s not as if we compete in a market that has no other insightful, aggressive competitors and new entrants. Consumers aren’t simply going to wait for your firm to unveil products and services that have already been launched by competitors.

No, innovators need to identify opportunities that are further into the future, and that will cause consternation by many of the individuals tied to the quarterly plan or the yearly plan. Innovators need to push their visions at least three to five years into the future to identify emerging opportunities or needs, and begin to develop products and services to meet those needs. Given the elapsed time to bring a new product to market, even a three year planning horizon is probably too short.

Forecasting opportunities that are less than two years into the future doesn’t account for the internal development processes or the ability of competitors or disrupters to enter the market. Even incremental innovation is timeconsuming, so we may as well swing for the fences on a regular basis.

If these postulates hold true, then there are two conclusions. First, we need to make our idea to product or service launch process more compact and more efficient, so that we can identify opportunities and launch new products and services faster. In addition, we need to extend our trend spotting and scenario planning further into the future, to understand opportunities and provide enough runway so that we can create compelling and unique offerings and solutions as the market becomes aware of the needs.

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