Companies are forever talking about how they need a culture of innovation, or that innovation is a global initiative for the next important phase of the business, or that innovation will be the engine to drive the company to new levels, etc. I’m sure you’ve seen the word innovation thousands of times in business media in only the past month.
Innovation is nurturing growth
But, really, what is innovation? It seems to be an exciting concept with a lot of fuzzy edges and an elusive magical aura. Few companies could say they have a handle on innovation as a capability they manage like other aspects of their business. Those that do are amazing and powerful (check out this growth chart for Apple). Innovation makes an organization competitive because it is measured by growth in new products and services or growth in new users (or both).
More often than not, the World’s Most Innovative Companies are a flash in the pan (Groupon?), or have a short tenure at the top of the list and then gradually fade into normalcy. This makes innovation seem even more mysterious and slippery… something to admire, but too vague to manage. Something based on size or timing, not a sustained advantage directed at a market.
So how can organizations get this capability and why is it so elusive? Let’s start with the elusiveness first. Roger Martin, Dean of the Rotman School of Management, explains that many businesses have a hard time with innovation because it requires a different mindset than the way most business people approach problems. In his book, The Design of Business, he identifies three types of logic necessary for effective problem solving: deductive, inductive, and abductive.
The problem is, most of our schools and businesses teach and practice only inductive and deductive reasoning (abductive isn’t even in my spell checker). Frankly, most of us don’t chat about formal logic over coffee and donuts, so you can see why this makes innovation slippery. The less formal version of this logic is often called design thinking and was pioneered by IDEO. But that term is awkward because design is associated with fashion, graphics and art, while innovation is more about doing than thinking. So, I just call it the capability of innovation. I don’t disagree with Bruce Nussbaum’s focus on creativity, but that still feels incomplete to me.
The capability of innovation is a compound set of three skills that enable you to solve problems for your customers: rigorous observation, creative wonderment, and risk management. Whoa. Did you say wonderment? Yes, yes I did. (see Phineus and Ferb) Innovation is about coping with ambiguity and uncertainty while constantly moving forward to discover new opportunities. Since most business people haven’t developed these skills in their formal training, not knowing the best path forward makes them uncomfortable. So they stick with what they know, which keeps them locked in the present.
Three core skills of innovation
1. Rigorous observation. This is about being obsessed with your customers in action. This obsession involves asking questions, taking photos, and simply watching what they do (and don’t do) when interacting with a product or service. Ironically, many product managers defend their product deficiencies by saying customers didn’t behave as they should (at least they notice the gap!).
2. Imaginative wonderment. Instead of defending them with deductive reasoning, an innovative product manager would ask, “I wonder why that happened?” This is a moment of truth where innovation will live or die. If the leader shifts reasoning modes and becomes curious, the next step is to explore what could be happening instead of defending what is happening. This is not magical or fluffy, it’s a rational leap based on an observed pattern.
The exploration process that underpins imaginative wonderment is essentially the scientific method. It is the rapid iteration of possibilities that are tested against audacious goals (Like Thomas Edison and the light bulb). An emerging solution to a customer problem is driven by simple questions like, “Why not?” but is also constrained by feasibility (can it be built?) and viability (does it make business sense?). This exploration is both serious and fun. Systematic testing and elimination of ideas and options requires discipline, tenacity, and rigor. Generating an endless array of possibilities to test is playful, energizing, and empowering.
3. Risk Management. Overcoming the challenge of risk in innovation starts with a better understanding of the difference between innovation and invention. The dominant (but false) understanding that innovation comes from a blinding flash of insight, or from a lone genius that sees the world from a different angle, makes innovation seem untenable. How is a company supposed to plan for genius to occur? What’s the timeline? No wonder it’s not supported.
Innovation is not driven by breakthroughs in technology… it’s the opposite. Innovation is driven by commitment to satisfying customer’s needs and keen observations about what is and what is not working. These observations push the limits of technology and force the breakthroughs. Innovation in practice couldn’t be farther from being a lone inventor in a lab. Innovation is a collaborative, hands-on experience, taking place on the front lines with customers.
So the way to manage risk in innovation is first to stay very close to your customers, second to create a portfolio of innovation projects designed to solve their problems, and third to move very quickly to determine what doesn’t work so you don’t waste time and resources on unacceptable solutions.
Not every idea will evolve into an innovative solution (either attracts new customers or more engagement from current customers). An effective innovation portfolio should work much like an effective stock portfolio. There should be a mixture of incremental improvement ideas, evolutionary ideas, and revolutionary ideas. Investing in a balanced portfolio of several ideas mitigates the risk across all of them instead of placing “all of your eggs in one basket.”
Innovation is not whimsical, magical, or fluffy. It’s not accidental or even unpredictable. The problem with innovation for some companies could be that it’s more about nurturing than managing, a human-centered style not often associated with the titans of business.
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Tags: creativity, innovation, invention, Organization Design
Great post yet I think the lack of “imaginative wonderment”(love it by the way) is not a result of business people not developing the skill. It’s a result of business people(really all people) LOSING that skill. Children are inherently dreamers and come up with wonderfully unique ideas. Adults, on the other hand, constantly put up walls as we accumulate more experience and education. The challenge for us as we age is to keep these walls down and think more like a child.
Hey Alex:
Great comment, and I totally agree with your point. I think humans are naturally creative and our education and business practices have constrained those natural skills. But all natural skills can be improved with experience and training.
“But all natural skills can be improved with experience and training.”
Spot on. The best is to be able to leverage all the experience and training we’ve accumulated while still keeping those walls that block creativity down. The master of this was of course Steve Jobs.
But your customers don’t know what they want! – Steve Jobs
Interesting article indeed. Even so, while innovation is not necessarily whimsical, magical, or fluffy, as you say, the problem is that most businesses can’t be too bothered to invest the necessary time, energy, effort and money required to nurture growth or for innovative thinking to flourish. The short cut is rather preferred whereby it’s more about copying what has been tried and tested and embracing the methods known to have worked elsewhere.
You could say ….”That’s the kind of music that sells, the kind of movie people want to watch or the the kind of products people want to buy, so lets jump on the bandwagon!”
This supports your argument on “Observation”….observing the success stories elsewhere. It’s much easier and cheaper to follow Steve Jobs. In the end, not every organisation will the leading lights at the forefront of innovative thinking, or capable of “thinking outside the box”.
Innovation is thus relegated in the pecking order.
Anil:
Good point with the Steve Jobs quote, but great designers know that paying attention and listening are not quite the same thing. Customers rarely know what they want, but are often quite capable of letting you know what they don’t want or when they are not getting what they need. That is the beginning of an insight and still requires much work from there. It’s also true that if you ask a bunch of people what they want you’ll have to use “majority” results to determine a path forward. This is often what happens in traditional product marketing research where people are polled or research groups are asked a series of questions. That type of research is not likely to show you an innovative path forward.
Symeon:
I agree that not every company will be good at innovation… that’s why it’s a great competitive capability. Being able to harness the core skills and apply them to a market is rare, and therefore provides a great advantage to those who can pull it off.
John, thanks a lot for a interesting post. I see things slightly differently in the following respects:
1) in my experience most companies don’t agonize over the semantics of innovation as much as consultants and commentators like us do. They just get on with delivering improved and new products to market using tried and tested marketing skills and processes. Defining innovation is one thing: explaining the practical implications of your definition in terms of changes companies should make to their approach to innovation is another.
2) observation in the sense you describe it (watching consumers use products) only goes so far: in some cases, e.g., industrial BtoB the product or service cannot be directly observed. Secondly, observation places a boundary on the need definition and the solution. The design school that you refer to would say we need to go beyond what can be observed to make ‘proposals’ based on a non-observational, total understanding of consumer and society.
3) you say that ‘innovation is not driven by technology breakthroughs’. I’d argue that most innovation does originate at some level in technology push albeit what we eventually see in the market also coincides with consumer demand, and the technology originator may not be the exploiter.
4) I really like your notion of ‘nurutirng’ innovation: in my experience this is really what many companies struggle with. The reason is that they want results fast and managers assume they can apply exclusively analytical methods to the problem – whereas it needs creativity and inference.
Thanks again.
Hey Brian:
Great points, I agree that refining a definition is all academic if it doesn’t help someone practically advance and get better at something!
[...] her), because in those dreams we find the seeds of ideas we can actually implement. Check out my previous post for a definition of these core [...]