Category Archives: Management

Personal Innovation – Shine Your Star

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Personal Innovation - Shine Your StarI had a nice conversation with a friend from London today that I haven’t spoken with in a while and we got onto the topic of careers. We started talking about my article on Personal Innovation and how in most professional occupations there are the stars and then there is everyone else.

We talked about how stars in certain professions might only be 5% better at something than their peers but get paid 5x to 50x more than the rest. There are certain professions like professional athletics where this is particularly true. But at the same time in many professions including lawyers, consultants, managers, speakers, even cooks and hair stylists, the stars are those who are best at marketing themselves. So if you really want to become a star, you have to hone the skills necessary to market yourself and/or your ideas.

If you read my article about The Commodity Marketplace for Employees you’ll get a lot more background on this topic. Today I want to focus on a good point that my friend brought up. He had consciously tried to build up an ‘aura’ (or a “reputation for greatness”) in his organization and had been somewhat successful in doing so. But after succeeding at building his ‘aura’, some coworkers who had previously been helpful in building it, suddenly stopped supporting him. Why did they do this? Well, they began to feel that his ‘aura’ had become stronger than their own, and a potential threat to their own career ambitions.

So, if you are really good at what you do, is building yourself into a star doomed to failure?

Definitely not!

This is one of the hazards of focusing your personal innovation efforts within your organization. While it is important to have a reputation for greatness within your organization of a certain level, it is more important to focus on expanding your reputation for greatness outside the organization and here is why:

  1. To build a reputation for greatness within your organization you are dependent on your peers and managers saying flattering things about you and throwing their support behind your efforts, but at some point this support will likely decrease or cease
    • The only exception is a company growing so fast that there is endless opportunity for all
    • This is because people eventually become threatened and will not want to be seen as inferior
  2. Building up a reputation for greatness within your organization really only helps you
    • It might help your manager if he/she can show their bosses that they are a great developer of talent and deserve to move up to the next level
    • It does not add value to the organization
  3. Making yourself a star outside your organization increases the awareness of other companies to your promise and potential
    • It also increases the profile of your organization as being a thought leader
    • Upper management will eventually recognize this thought leadership benefit
      1. Improved reputation
      2. Free advertising
      3. Free public relations

Let’s face it, becoming an internal star will probably only get you a 3% annual raise instead of a 2% annual raise, and possibly on the fast track for promotions (but only until you become a little too threatening to the wrong person). If you truly are a star, begin preparing yourself mentally for the possibility that you may have to leave your current employer to be compensated appropriately, continue to execute brilliantly and start polishing your star.

If you do a good job building up your self-marketing skills and show that you do have something unique and valuable to say, then you will become of greater value to another organization than to your current one, and to a sufficient level where the other organization is willing to campaign to acquire you.

So, the following questions remain:

  1. Are you really a star?
  2. Are you committed to the hard work and learning necessary to shine your star?
  3. Are you ready to leave your current employer when the time is right for a new opportunity or to create your own?

Well, are you?

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Are you the 10th person who innovates?

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Are you the 10th person who innovates?“For every nine people who denounce innovation, only one will encourage it… For every nine people who do things the way they have always been done, only one will ever wonder if there is a better way. For every nine people who stand in line in front of a locked building, only one will ever come around and check the back door.”

“Our progress as a species rests squarely on the shoulders of that tenth person. The nine are satisfied with things they are told are valuable. Person 10 determines for himself what has value.”

– Za Rinpoche and Ashley Nebelsieck, in The Backdoor to Enlightenment

As I’ve said before, innovation is achieved when something becomes valuable to the customer, instead of merely useful. Are you standing in line with your competitors, or are you creating the real value that will help you achieve competitive separation?

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Rise and Fall of Innovation at Yahoo!

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Rise and Fall of Innovation at Yahoo!Can people really innovate when they have to tend to all of their day-to-day responsibilities?

Unfortunately, people don’t get promoted for being innovative, they get promoted for getting stuff done, developing people, and meeting or exceeding goals or stretch targets. If people are busy making sure they do all that, when are they supposed to innovate? And if they do come up with a good idea while they are in the shower (after all they don’t have time to do it at work), how many hours of sleep are they willing to give up to help move it forward?

This is one of the key problems established organizations have in making innovation happen in their organizations. First, people get rewarded for executing not creating. Second, everyone is so overworked that getting funding and staffing up a project team to make the business more profitable or to ensure its longevity, is incredibly difficult.

So, what’s the answer?

I came across an article in 2007 that showed that Yahoo! believed the key was a set of dedicated off-site resources charged with taking employee ideas and suggestions and developing them. In the article they cite a product development example in which the product was developed in a third of the time it would have taken within the normal Yahoo! reality. 65% faster than an internal project. What does that say?

What this article reinforces is that people must have time to execute new ideas. Top levels of management have to commit to ring-fence a portion of people’s time to develop new product or process ideas that will improve the efficiency and profitability of the enterprise OR they have to commit the resources to a group external to the normal operations of the company. 3M has its 15% time and Google has its 20% time (if your 20% time project is approved), but Intuit’s group-focused, aggregated percent time seems the most sustainable because it allows managers to schedule and plan for innovation time away like they do vacation.

Bringing in outsiders is a third alternative, but not that different from number two with the exception of a little more of an outside perspective that comes from working with multiple clients and living outside the political culture.

So, which approach are you prepared to commit to? Or, are you committed to driving the best ideas and people out of your company and seeing your competitors blow by you?

P.S. Yahoo! Brickhouse opened in 2006 and closed in 2008.

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Innovate Thyself (aka Personal Innovation)

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Innovate Thyself (aka Personal Innovation)Many people have written previously about how difficult it is to innovate within an established organization. Trying to transform oneself can be just as incredibly difficult. I wouldn’t call it a re-invention, per se, because of the distinction I draw between invention and innovation.

The distinction is that invention is all about coming up with useful products and services, while innovation truly occurs when a person or group of people take that useful invention the last mile to make it truly valuable. As a result, I like to call this incredibly difficult transformation “Personal Innovation” instead, because transforming oneself is also about more than coming up with a useful idea. Personal Innovation is more about creating a new existence that is even more valuable to you and those around you. So, why is Personal Innovation so incredibly difficult?

Well, it is difficult for the exact same reasons that innovation in established organizations is difficult:

  1. Limited Resources (money and time)
  2. Existing Jobs/Interests
  3. Resistance to Change

To achieve a Personal Innovation in the realm of employment, you first have to overcome the time and financial limitations caused by your current employment. We’ll talk about employment in the broad sense, so it incorporates starting a business. This is because in both cases someone owns the job and pays you to do it. In the case of starting a business, you own the job and pay yourself to do the job of running the business.

The challenge begins with finding the time to move yourself towards your dream job or business. Obviously you have to spend a lot of your time on the existing job or business just to keep the lights on. If you have a have a family finding the time to pursue your Personal Innovation is even more difficult (because, after all, you do want to spend time with them). If your new direction requires acquiring new knowledge (formally or informally), then that has to squeeze into the limited time available and may take a long time to complete as a result.

Quitting your existing job or selling your existing business will condense the time needed to acquire the new knowledge, but of course this comes at a financial cost. If your transformation involves starting a business then you also have to wait to begin until you can save or raise the funds necessary to get your venture off the ground.

If all of this isn’t difficult enough, then there is also the challenge you will face of truly moving away from the current job or interests that are the subject of your transformation. The job or interests you are pursuing now always have some kind of payoff, otherwise you would have transformed yourself before now. Maybe your current job pays better than the job you think you might want to do or the business you might want to run. Maybe your current job doesn’t pay enough and so you have to work two jobs to make ends meet (further reducing your time available to make a transition). You may also have to face the enticement of a future payoff in terms of a promotion (in the case of a job), or the temptation of delaying the transformation to some future date when it might be more “convenient” for you or your family.

Finally, change is scary. The thought of making a big change and moving away from the familiar might be too much stress for some people’s systems to keep pursuing the transformation. Those who stay the course will have to overcome criticism and even ridicule from those who they share their current job or interests with. There is also self-doubt to contend with. Sometimes, you will feel that you are not talented enough or smart enough or deserving enough to make the switch. You might find yourself unconsciously sabotaging yourself to avoid making the change. We all sometimes find excuses for why we are not doing the things we should be doing to realize a change. Sometimes we blow an interview because inside we ourselves don’t believe we are truly ready for the change.

All of these things that happen in a personal context are very similar to the reasons that innovation is difficult in established organizations. This is why startups sometimes catch established competitors off-guard, allowing them to disrupt entire industries (aka disruptive innovation). But, some established organizations still manage to innovate and stay ahead of the competition however, which begs the question:

What can we do as individuals to achieve the disruptive innovation in our personal lives that we seek?

Well, it all comes down to recognizing our limitations, both personal and circumstantial, and then being determined to succeed in spite of them. By acknowledging the challenges, we simultaneously provide ourselves with excuses, but if committed, also with exciting challenges to find solutions for. It has been proven time and again that difficult situations and daunting constraints often result in the brightest solutions.

Put yourself in the role of the underdog even if you’re not, and challenge yourself to find solutions to the things you see as limitations. Share these challenges with those you trust and enlist their help in finding solutions. By putting the message into your universe about the change you are trying to make, the efforts that you are putting forth, and the approaches you are taking to overcome the requisite challenges, you will be surprised by the unexpected answers that you receive from unlikely sources.

Be ready to listen when the answers come, and don’t be afraid to go over, under, through, or around any obstacles that get between you and achieving your Personal Innovation. Celebrate the little victories and don’t get discouraged if it takes time. In fact, expect it to take longer than you initially imagine. This may sound daunting, but we really are capable of transforming ourselves.

Are you ready to create your own Personal Innovation?

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Business Strategy Innovation Diamond (BSID)

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Continuing my quest to surface some classics that the Innovation Excellence audience will have never seen, here is another from 2007:

I would like to introduce a visual metaphor that the consultants use at Business Strategy Innovation. It’s called, predictably enough, the Business Strategy Innovation Diamond, or the BSID. There is another reason we use it, to “ID” the “BS” in an organization. Now a lot of people would represent strategy as the top of a pyramid, processes in the middle, and systems as the base of a pyramid, but that ignores two of the most important tools in any organization – policies and reporting. Business Strategy Innovation instead starts with a diamond that looks like this:

Business Strategy Innovation Diamond (BSID)

Here is an example of how the Business Strategy Innovation Diamond can help you structure an organizational analysis project:

  1. Strategy
    • We want to be the leading Internet retailer
  2. Policy
    • Free shipping on orders over $25
  3. Processes
    • Create marketing program to promote this benefit
  4. Systems
    • Modify shopping cart application
    • Build on-page messaging to alert customers of additional purchase $$$ required to reach the $25 threshold for free shipping
  5. Reporting
    • Establish any infrastructure required to measure orders above/below $25
    • Measure benchmark period
    • Create report measuring % of orders greater than $25 in current period versus benchmark period to measure effect

The BSID focuses your organization on making sure that the policies support the strategy, that the processes facilitate the policies, that the systems enable the processes, and the reporting measures the execution of the strategy. Not focusing on the BSID, may result in just BS instead of strategic innovation.

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Innovation Passing Lane Ahead

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Innovation Passing Lane Ahead

I noticed an interesting phenomenon the other day on a 200 mile drive back from the Oregon coast to Seattle that I would like to share with you and then discuss the potential implications for innovation success.

Now let me first say that I am not a trained human psychologist, but I am a student of human behavior, and I believe that if we watch and listen in other contexts, we can learn amazing things about human behavior that have profound implications for the innovation context. So without further delay, here’s the situation I encountered:

I was driving back along the Columbia River on the Oregon side on a road that was predominantly a two lane road (one lane of traffic in each direction) with passing lanes at various points, typically for the direction of traffic going uphill to give cars a chance to pass slower moving vehicles. Nothing too interesting in that description. Here is where things get interesting…

I noticed that every time I was following a car or truck and approached a passing lane, without exception, the car or truck I was following instantly sped up a minimum of 10mph AND when we reach the end of the passing lane area, they pretty quickly slowed down 10mph.

Now, why would every driver I encountered in front of me (without exception) speed up when the passing lane approached and slow down when it ended, even though the speed limit was unchanged? What’s the psychology behind this behavior?

Here are my observations:

  1. On a two lane road there are leaders and there are followers. When you are a leader the whole road is before you and you set the speed, when you are a follower you are at the mercy of the person in front of you to set the speed and all you see is the back of the vehicle in front of you. People enjoy having the open road in front of them and even if they are not fast drivers, they are willing to drive a little bit faster to try and retain this privilege (about 10mph faster).

  2. Passing lanes represent a limited window of opportunity for people seeking to pass, and a limited duration of resistance for those looking not to be passed. Because the duration is limited, the leader perceives a threat and a scarcity that they would not perceive on a road that was always two lanes in their direction. As a result, their behavior is different.

  3. If you want to pass someone as a passing lane approaches, you must be prepared to drive 20mph faster to execute the pass before the end of the passing lane, knowing that the person in front of you is not going to stay constant, but will actually speed up.

What are the implications for innovation?

  1. There are always going to be people coming up behind you, seeking to pass you. Innovation is one way to stay ahead of the competition. Incremental innovation can be your 10mph acceleration that reduces the chance of being passed when the passing lanes appear.

  2. You must be aware when the passing lanes will appear. This is often when new technology makes things possible that weren’t possible before or when customer priorities and value assignment changes. Market leaders must recognize the conditions that create passing lanes and form a plan for how to protect themselves, while new entrants must recognize when their opportunity is greatest and move quickly and decisively before the passing lane comes to an end.

  3. You must provide the conditions necessary to make people want to rush into the widening road and seek to accelerate innovation and overtake the other drivers, instead of embracing the safety of the shoulder of the road as others rush by.

  4. People won’t push harder forever. This is the psychology around creating a burning platform. People will fight the fire on a burning platform, but if they feel that the whole house is on fire, then they will look for a new house. As a result a burning-platform approach to innovation is not sustainable, you must instead be much more systemic in your approach to innovation if you are going to use it to help protect your market leadership position.

  5. When a passing lane appears, market leaders must take a careful measurement of the situation and identify how best to react to the factors that have created it. At the same time, market leaders must also identify how long they must push to kill off potential new entrants.

  6. If you’re trying to innovate your way into first place, you must expect the leader to react, and anticipate the way in which they will react and account for that. You must know that the market leaders will look for how to starve you of your oxygen, and will look to accelerate away from you. This is why the most successful passers are those organizations that recognize the passing lane first, are mobilized to accelerate when it appears, and choose to react to the passing lane in a way that will be difficult for the market leaders to react to given their position and psychology.

Competition in a free market economy is not fair, and the playing field is not level, and the road ahead is not an open highway but a two lane road with occasional passing lanes. The organizations that do the best job at identifying when the passing lanes are going to appear and the factors that are going to allow them to accelerate are the ones that will either leapfrog the existing leaders, or maintain their ongoing market leadership.

What kind of organization are you going to be?

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Think ‘Out of Four Walls’

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Think 'Out of Four Walls'I had coffee with a clever marketing and sales consultant recently and one of the topics we discussed was the impact of location on a group’s ability to innovate. At the time we spoke about getting people to think in new ways by getting people to think in new places. That is to say that if you always meet in the same places to try and be creative as a team, don’t you ultimately get the same types of thinking? In other words, do you hit a creativity plateau by meeting in the same places all the time?

That of course is part of the reason that companies have off-sites, but I would argue further that the “same places” includes the typical locations for off-sites. I would argue that if you are trying to get people to think differently that you have to take people to an unusual, unexpected location. I would argue that you announce one location for the meeting that you have no intention of going to, get everybody to assemble there, and then go somewhere else. What this achieves is that in the time leading up to the meeting people start preparing mentally for what to expect and how things will go, but then when they show up and you announce you are going somewhere else, you will generate buzz and excitement, the walls of expectation will come tumbling down and you will get people to begin thinking in a different way than they were prepared to think.

That is only half the battle though. My next recommendation would be to pre-arrange for people to bring portable seating with them or bring it for everyone yourself. Then if you are trying to get new thinking, get radical but relevant. For the approach I am to suggest, you must keep the groups small, tailored to the venue you select (you don’t want to be asked to leave, or at least not too quickly).

For example, salespeople for BestBuy who are trying to figure out how to do things differently might go meet in an auto dealership, or a Nordstrom’s, or a 7-eleven. Find a place out of the way and start your meeting. If asked to leave, have your meeting on the sidewalk outside or in the parking lot (going back inside as needed). The site you choose should be related to your business but not directly related – notice Circuit City was not an example.

The site could also however be related to your topic. A meeting to talk about how to better understand what customers want could be held at a busy intersection with stop lights in case you wanted to ask real people what they think. Just please make sure to be careful and not get yourself run over when trying to ask people questions(stay on the sidewalk).

If you meet at someone else’s business, please try to choose a slow time of day and stay off to the side and out of the way. If you’re looking for more “natural” thinking, then meeting in the woods, by a river, or on a hill can also be good. Regardless of where you choose to meet, just be sure to debrief at the site, or literally just outside your own building before returning to work.

If you try this approach to uncovering new thinking I think you will be pleasantly surprised, and I would love it if you send in your stories and photographs of different unusual places you meet and what the topic for the meeting was. I look forward to seeing your “Out of Four Walls” thinking!

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Unlocking the Inner Child for Innovation

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Unlocking the Inner Child for Innovation

In the quest to unlock innovation in organizations, it may be beneficial or even mandatory to learn how to unlock the internal children in our employees.

I’m sure we can all remember as children being told “don’t” do this or you “can’t” do that, and the result growing up was to reinforce the idea that there is one “right” way to do anything. It has also led to the creation of a national psychosis of believing that many actions that would create positive change are too difficult to try.

How else would you explain the decline in electoral participation or in labor union membership? The majority of our nation believes that their ideas and their voice are too small to make things better. If it weren’t for those “crazy” entrepreneurs, our country would not continue to grow and dominate new markets.

So how could we create a whole nation of entrepreneurial thinking (or at least a whole organization)?

Well, by reducing the prevalence of “don’t” and “can’t” in our organizational vocabulary and replacing it with “how” and “when”. Here is how it works:

Currently we might say things like:

“Don’t be silly. We can’t build a spaceship that will go faster than the speed of light.”

When if we seek to innovate, we must say:

“How could we build something to travel faster than the speed of light? We can improve upon current methods of propulsion when we achieve the following advances to build upon:”

We must also always ask:

“How could we approach this in a different way?”

Innovation Guidelines Cartoon

This problem of believing there is only one “right” way is compounded by our organization’s inherent intolerance for risk and the accompanying preference to identify reasons not to do something or not to fund an effort. There are lots of ways to overcome this negative management reinforcement, but that is a topic for another day.

For now, we must stop treating employees like children and instead help them unlock and channel their inner child to uncover new “right” ways. Are you ready to democratize innovation?

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Checkbox Hiring Doesn’t Lead to Innovation

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Checkbox Hiring Doesn't Lead to InnovationWhen looking for a new job, it seems like 95% of the time people will only hire you to do the job you just did, and the other 5% of the time will provide an equal mix of once in a lifetime opportunities and jobs you shouldn’t take.

So why aren’t organizations more innovative in their hiring processes?

First, recruiters are tasked with providing candidates for interviews who meet certain education and experience requirements set out by the hiring manager. It quickly becomes a case of “you get what you ask for, not what you need.”

Recruiters provide a set of potential recruits that tick the boxes and look very similar on paper. Time constrained hiring managers then interview the people they are provided with and figure they are a “smart” hire because they have the education and experience. This generally means hiring the guy or gal that has done the same job before, preferably at a larger or more respected company.

Need a JobFor example, a restaurant will hire a waiter who has been a waiter before, even if the only reason he is available is that he was a crap waiter every other place he worked. In our hiring system, someone who has experience almost always gets the job, regardless of ability and capacity for growth. Meanwhile the gal who dreams of being a waitress, whose passion for the profession would make her an amazing waitress as she strives to create the perfect customer experience, never gets hired. Where does this leave the person with amazing potential but no direct experience in the position they seek?

They are confined to finding that desperate manager with an entry level opening who just had three people turn down their offer and has nobody left in their pipeline.

We hire people the same way we hire an office chair:

  • Four wheels? – check
  • Tilt? – check
  • Height adjustment? – no
  • …and on to the candidate who might have a height adjustment built-in

Consequently we end up with amazing consumer marketers working as engineering firm accountants because they started out in accounting for an engineering firm straight out of university and now can only get accounting jobs. How much stronger would our economy be if we could find an innovative way to allocate our human resources to those places where their star potential would be unleashed?

Now granted, some companies will allow someone from accounting to move to marketing within the company, but even in those companies that do facilitate this type of movement, the great majority really occurs at the managerial level with individuals the organization views as skilled managers with the potential to move up in the organization. So where does this leave the staff accountant whose real talent is not management but something else like consumer marketing?

Frustrated Hiring ManagerUsually this person is doomed to remain an unhappy accountant, potentially seeking an MBA that may or may not successfully allow them to transition over to the world of marketing.

So why don’t we change the hiring process?

Well, change is hard, and checklists are easy. “I don’t have time to interview as it is, I’ve got work to do! I certainly don’t have time to think about creating a better way to hire. My list of questions works pretty well.”

The problem is that people can only look at how candidates perform that have actually been hired in terms of how long they stay, and similar metrics. We cannot measure how much more we would have benefited if we had hired someone else that we didn’t even consider.

But, if we continue to hire the same type of people that we’ve always hired in the same way that our competitors continue to hire, then we will never achieve a business strategy innovation.

So what’s the answer?

There is no magic answer, but here are some guidelines to consider:

  1. Have recruiters identify and provide at least one or two candidates who show passion but don’t have the experience or education tick boxes checked
  2. Don’t focus on what someone has done, have them show you what they can do
  3. Think about the key tasks and challenges of the position
    • Have the candidate tell you, or even better, show you how they would approach them (remember lingo and document formatting can be learned – do they understand what’s involved?)
  4. Ask them what job they would really like to do in the organization
    • Regardless of what job they’ve applied for
    • Maybe even go so far as telling them that the job they applied for has been filled and see how they react (What job would they choose to interview for?)
  5. Ask them if they think they are qualified to do that other job and if not why not
  6. Movie producers don’t interview actors, they have them audition
    • Use appropriate role plays
    • Have candidates present if doing presentations are part of their role
    • Give them a small piece of real world work to do to see both how they approach it and how well they execute it
    • Have candidates pitch you your product as if you were a potential customer (even if it is not a sales role)

Click here to download my new white paper on ‘Harnessing the Global Talent Pool to Accelerate Innovation’

Final Thought: There is one other side benefit to hiring people with the passion and capability for the job, but not the experience, they’ll usually take less money upfront and won’t be turned off by probationary periods.

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Are you good enough?

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Are you good enough?Unless you have invented a completely new product or service, it is very likely that there are large competitors already in your marketplace, established competitors that you will be trying to outwit and outmaneuver. Even if you do have a completely new product or service, customers still have alternatives. For example, the Segway entered the marketplace with a “revolutionary product with no competition”, but the truth is that it entered a marketplace with a smorgasbord of alternative competition (walking, bicycling, roller-skating, skateboarding, etc.). This alternative or substitute competition has proven far stronger than any direct competitor ever could. So what can a small firm do to outmaneuver the big guys or outwit the sneaky substitute competition that is easy to overlook in the passion of the startup process?

The key to any startup outwitting or outmaneuvering the established players begins with strategic innovation. To create a strategic innovation you must first truly understand competition in your industry. Competition amongst firms in any marketplace is typically defined by a few key product or service features (value dimensions). In microprocessors the defining competitive feature in the minds of 90′s consumers was megahertz, while in assembled computers the keys were megahertz and megabytes. These two industries had yet to be fully commoditized so the arms race was along these dimensions of value. In a fully commoditized industry however, firms end up competing mostly on the value dimension of price. Why is this true?

The answer is that in a fully commoditized industry, consumers find the alternatives to be “good enough” on the value dimensions that matter to them and so the consumer generally selects the alternative with the lowest price. This behavior drives price competition and lower margins, and makes commodity industries generally not a nice place to be. So how do you avoid product commoditization or how do you create a strategic innovation in a commoditized industry?

Strategic innovations allow your organization to avoid or rise above commoditization. In addition to an in-depth understanding of your industry’s competitive environment, strategic innovation requires an intimate understanding of the customers. From this intimate understanding you are hoping to identify a value dimension that is incredibly important to the customer but woefully under served. This value dimension could be price, as Southwest Airlines proved in the airline industry, but most likely will be something else. Starbucks‘ strategic innovation was developed along the value dimensions of:

  1. A consistent and repeatable exceptional coffee experience
  2. A network of convenient locations

Strategic innovation requires that your product or service is “good enough” across the value dimensions that currently matter to customers, and creates “customer delight” on a value dimension that you identify through your extensive customer research as being incredibly important but woefully underserved (see Figure 1). Once you identify such a value dimension the difficult work truly begins. Now you must ask yourself how easy would it be for my competition (direct or substitute) to begin competing on this value dimension instead?

If it would be relatively easy for your competition to replicate your insights and the resulting product or service, then you have discovered a sustaining innovation – an innovation that takes the product or service to a higher level of value for the customer, but not capable of transforming your position in the industry. A true strategic innovation is powerful precisely because it will be incredibly difficult for the established competition to replicate. How did Southwest Airlines succeed by competing on price?

Southwest Airlines achieved strategic innovation not because they recognized that price was important to customers, but because they created an organization from the ground up that was capable of delivering low fares with great service. Their ground up organizational focus on people and cost ensured success where previous low fare carriers had failed. Established competitors have been unable to replicate their success. Delta with Song and United with Ted both crashed and burned in dramatic fashion. To get a better idea of what goes into a strategic innovation, look at Figure 2 to see a few of the key components of Southwest’s success:

Let’s shift back to you now. Once you’ve got that great product or service idea and possibly even a value dimension to build your company’s strategic innovation around, how do you get traction on that steep road to success?

Even if you have the greatest widget known to mankind, the likes of which nobody has ever seen before, you can’t just open a storefront and wait for the customers to walk in. You have to go out and effectively market your widget by first selecting who to sell to. Refuse to make this decision and you are doomed. Make the wrong decision and you will burn through valuable cash and potentially burn up any chance of creating success (no matter how good your product or service is). The key to gaining traction is identifying where the greatest customer pain solvable by you is, and for which customers are willing to pay a relative unknown to solve the pain for them (see Figure 3).

Encountering companies or consumers not willing to buy from an unknown is a key hurdle that some entrepreneurs never overcome, sentiment embodied in the popular phrase “Nobody ever got fired for hiring IBM.” This resistance may require you to seed your market by entering less than ideal arrangements with leading influencers in your target market. Being first is daunting for buyers and may require financial encouragement and hand holding, so that you have the opportunity to turn them into passionate advocates for your product or service in the future.

If you have created a truly valuable product or service, and ideally some level of strategic innovation to go with it, now hopefully you will have the time and opportunity to gain a foothold in your market and expand into other niches before the established competitors are able to replicate your success.

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