driving innovation

March 16, 2018

Much has been written about innovation, but there is no clarity with respect to many aspects. How do we measure the ROI of ‘coming up with’ and ‘implementing’ a particular innovation?

Companies need a consistent way to determine which ideas or initiatives to invest in and which to pass on. Typically, they use some sort of financial forecasting to help guide this decision, but this thinking is often flawed as these models are filled with assumptions and you really do not know all the ways a breakthrough idea will impact the marketplace. There is no way to model out. Your best bet is to understand how an idea enhances customer experience. If your innovation results in the improvement of any customer experience, then you very likely have a winner on your hands. The Experience Delta (the difference between a present experience and a new one resulting from an innovation) is the currency by which you should view the impact of every new idea. If you cannot clearly articulate the Experience Delta, then you are not likely to be successful in your innovation efforts.

How can companies foster a healthy innovation biome? How can they choose the right set of actions to sustain it?

Innovation starts with leadership. If the leadership of an organization visibly demonstrates that innovation is a priority, that everyone is encouraged to innovate, that the company is willing to continually try new things, and not be deterred by failure, then you can develop a culture that lets you produce one great hit after another. Think of the most innovative companies. Every single one of them has had far more failures than successes, far more misses than hits. But the leaders of these organizations have instilled a culture where risk-taking and trying new things is encouraged.

The only way to become innovative is to understand what drives innovation and to establish conditions that let the drivers of innovation thrive. The most innovative companies do this instinctively—perhaps because of the culture instilled by superstar leaders, or the emergence of the right conditions after things just fell into place. But the fact is that every company can develop this innate innovation capability, by simply ensuring the conditions that catalyze innovation are present.

Could you elaborate on the ‘first-principles’ thinking?

First principles reasoning was used by Aristotle thousands of years ago. It involves breaking down an assumption or an argument into its most basic and foundational components. First principles reasoning can drive innovation in ways that conventional thinking will never allow. You are able to rise to a higher level of abstraction by going deeper and down to the most basic level. It provides a level of clarity that is not possible using incremental thinking. It brings into question every assumption we take for granted.

Your own innovation journey can start with first principles. Maybe you can start with simply asking yourself, what is best for the customer. Strip your product down to its most basic and essential components; question why each component or assumption is present; how is every component contributing to the customer’s experience; does it really need to be there, can it be replaced, or done differently? You will learn that assumptions made a long time ago do not hold true today. This is an incredibly effective tool for creating breakthrough innovation.

Does the quest for ‘the next big thing’ hamper the scope of creativity? Could an idea still be called innovative if it creates value only on a small scale?

Looking at the history of innovations, rarely does something become big right from the start. Few billion-dollar businesses started with a view to earning a billion dollars. The one thing they had in common was that they altered customer experience through a unique approach and, in the process, created an immense amount of value for their users through the creation of a large Experience Delta.

Google started off as an academic experiment, Uber started with three cars, and the founders of Airbnb turned their own loft into a lodging space to make some extra money. None of these started off as a grand big plan.

Keep in mind that the big opportunity you are chasing may actually appear as something quite small. The key is to learn to recognize the opportunities that alter experiences, and to understand and articulate how these customer experiences are transformed. Once you can do this, even on a small scale, the chances are high that you will find the right opportunities that will evolve into the big game changers we are all looking for.

“Every time we apply today’s thinking to tomorrow’s idea, we dilute its potential.” What can innovation leaders do to avoid interruptions and launch their products in the market (as in the case of Nestlé)?

The number one barrier to innovation within corporations is the people who shoot down good ideas. The people with the power to approve, impede, or reject an innovation are often not the innovators. They may not see the possibilities the inventor sees. We have seen this time and time again. We know the often-retold stories of Kodak not seeing the promise of the digital camera that was developed within its own walls, or Apple being the company that saw the potential in the ‘mouse’ that was developed by Xerox’s research center.

Most companies have great ideas and developments. However, they are structured in a way that inhibits innovation. Every new idea must go through several layers of management. And even one ‘no’ along the way can kill a potentially brilliant innovation. If companies want to be innovative, this must change. Just because a manager does not see the promise of a good idea, does not mean it is not there. You have to put many reasonable ideas to work and while you do not know in advance which ones will break through, you are increasing your odds.

1369-2The ‘CARE Model’ talks about employing skills and tools for innovation. How effective is this model in helping companies survive and reinvent themselves?

The most innovative companies in the world have a systematic approach to innovation. This approach and culture is widespread across the organization. In most cases, however, innovation is an almost random approach where companies try the innovation ‘flavor of the day’ and if that does not work, move on to another approach. There are many tools and approaches in vogue today, but we need to realize that if there was a single approach that worked, we would all be using it by now.

The CARE model is a framework that I have introduced in my book. It calls for understanding the types of innovation activities you are undertaking, and matching your tools and activities to specific outcomes. A mismatch between innovation activities and outcomes is like fitting a square peg in a round hole.

There are different tools to use in the case of  incremental innovation, or if you are attempting to develop breakthroughs or new customer experiences. Using a ‘one-size-fits-all’ approach is not likely to succeed.

You have said there are several misconceptions about corporate culture. What can organizations do to break out of these myths and unleash creativity?

Creativity has two distinct components, creative potential (the ability to come up with new ideas) and creative achievement (the ability to follow through on those ideas). Both are necessary and one without the other is simply
not enough.

Companies very often assign innovation to individuals who are star performers or have been successful in other areas of the business. However, if a person with high creative achievement skills is placed in a situation that requires high creative potential (or the other way around), then the initiative is doomed from the start.

It is important to understand some of these things before kicking off an innovation initiative. These problems are not hard to solve, you just need to be aware of them so you can effectively curate and assemble the skills required for success in innovation.

Why do you say brainstorming does not work?

An all too common approach to developing innovative ideas is to assemble a group of high achievers and smart thought leaders, and assign them to a small group to brainstorm creative ideas. This may actually impede the innovation process.

Brainstorming sessions tend to focus on information that group participants have in common instead of bringing out unique expertise. Additionally, some participants are afraid of sharing ideas at the risk of appearing foolish. Others may coast because they do not feel accountable. Some people may have social and cultural barriers preventing them from sharing ideas. Or, they may simply be introverts who have great ideas but are unable to share them effectively in a group setting. Sometimes participants cannot express their thoughts because others monopolize the conversation. As we have all experienced, many of these brainstorming sessions are often dominated by the highest-paid people or vocal participants who most want to make their presence felt. Certainly, all of these factors create an unwelcome setting that discourages creative thinking.

While there are techniques you can use to overcome these flaws, simply understanding them will help you develop approaches that are more likely to enhance the rate of innovation.

Besides Facebook and smartphones, which other innovations follow the diffusion model? What factors contribute to the increasing rates of adoption of innovations?

Every innovation follows the diffusion model, the familiar ‘S’ curve where adoption of an innovation starts slowly as early adopters use it, then accelerates as it becomes mainstream and finally slows down as the laggards become the last to adopt it.

The factors that contribute to increasing the rate of adoptions are: the relative advantage the innovation offers over other alternatives or the Experience Delta; the degree to which it is consistent and compatible with past experiences; low complexity; the ease with which it can be trailed; and the degree to which the benefits are observable to others.

The most important of these is the Experience Delta. When the automobile was first introduced, driving a car was a complex undertaking, with recurrent breakdowns, unsuitable roads, lack of fuel availability, and flat tires being a near-daily occurrence—not to mention the learning curve required to understand how to drive it. But the advantage a car provided over walking, or riding a horse was so huge that there was no doubt this innovation would change the world.

(As told to Melissa Fernandes)


* https://www.uspto.gov/learning-and-resources/outreach-and-education/science-innovation-video-series#overview