Innovation Probably Doesn’t Work How You Think It Does
We tend to think of innovation as a series of “Eureka!” moments. Flashes of inspiration. Lightning bolts to the brain. Newton being struck by an apple and suddenly understanding the basics of gravity.
Or we think that innovation comes from the lone-wolf, eccentric geniuses who hole up in their office for days, only emerging when they’ve solved the mysteries of the universe. (Think Christian Bale in The Big Short, listening to heavy metal at incredible decibel levels while simultaneously dissecting the stock market.)
And while these ideas may make for great folktales and movies, they have very little connection to reality and how innovation really works.
The truth is that innovation begins with something simple.
Innovation comes from understanding your company, understanding your customers, and being willing to make a lot of mistakes.
It may not feature many flashes of insights or musical montages of someone furiously scribbling hundreds of calculations on a blackboard.
It’s exciting because innovation it’s accessible to everyone if you know how to make it happen.
Let’s dissect this a bit further.
Innovation Comes From Understanding Your Company
One of the biggest mistakes that companies make when trying to innovate is deviating from their core company values and strengths. Management guru Jim Collins calls these core competencies the “Hedgehog Concept”.
It’s the intersection of:
- What a company is deeply passionate about
- What they can be the best at
- What drives their economic engine
There are dozens of examples of companies making colossal mistakes by trying to innovate away from their core identity:
- Coke tried to be Pepsi by making “New Coke”.
- Pepsi tried to target the coffee market with “Pepsi A.M.”.
- Coors released a line of spring water
- Google developed “Lively” (their version of the game “Second Life)
- HP went after the tablet market with their “Touchpad”
- GoPro spent 2 years chasing the drone market and nearly bankrupt the company
The list goes on and on. In almost all of these massive failures, the common denominator is that the companies tried to be something they weren’t. In an effort to steal customers from their competitors, they ventured outside their strengths — only to fail miserably.
If you want to be innovate successfully, it’s critical that you build upon who you already are as company. What are your core competencies? And how can you leverage those strengths to move into new markets or seize on new opportunities?
When you have a fundamental understanding of your company’s core and what your strengths are, you can then begin to innovate out of that identity.
Consider the iPhone. While it certainly was incredibly innovative, every aspect of it aligned with Apple’s identity. They were already known for gorgeous products that worked exceptionally well. They had established themselves within the handheld device market with the iPod, and existing cell phones were clunky and difficult to use.
Steve Jobs saw an opportunity for innovation that would tap into Apple’s key strengths. In fact, many of the best features of the iPhone were the result of Jobs’ relentless commitment to his ideals, such as elegant product design.
As Walter Isaacson writes in his book Steve Jobs:
A lot of features that seem simple now were the result of creative brainstorms. For example, the team worried about how to prevent the device from playing music or making a call accidentally when it was jangling in your pocket. Jobs was congenitally averse to having on-off switches, which he deemed “inelegant.” The solution was “Swipe to Open,” the simple and fun on-screen slider that activated the device when it had gone dormant.
The point is simple, yet incredibly important.
If you want to innovate successfully, don’t start by thinking “outside the box.”
Start with your business. Identify your strengths. And understand how those strengths can be applied to push the market or product forward.
Innovation Comes From Understanding Your Consumers
Another mistake that companies often make when trying to innovate is developing a product that nobody wants.
The original Amazon Fire mobile phone is a prime example of this.
One of the key selling points of the phone was the ability to point it at any item and then locate that item within the Amazon store.
What Amazon failed to consider is that their customers didn’t need or want that feature, or any of the other Amazon-related features baked into the phone. As a result, it ended up as a colossal failure and caused Amazon’s stock to fall significantly.
The reality is you can only innovate successfully when you understand what your customers really want. When you understand their pain points — the things that frustrate them endlessly and keep them up at night — then you can develop solutions that solve those problems.
In the Harvard Business Review, Jeffrey H. Dyer, Hal Gregersen, and Clayton M. Christensen write:
Innovators carefully, intentionally, and consistently look out for small behavioral details — in the activities of customers, suppliers, and other companies — in order to gain insights about new ways of doing things. Ratan Tata got the inspiration that led to the world’s cheapest car by observing the plight of a family of four packed onto a single motorized scooter.
In other words, innovation is almost always the result of observation.
If you can identify a significant unmet customer need, that’s an area ripe for innovation.
Again, to quote Dyer, Gregersen, and Christensen:
Intuit founder Scott Cook hit on the idea for Quicken financial software after two key observations. First he watched his wife’s frustration as she struggled to keep track of their finances. “Often the surprises that lead to new business ideas come from watching other people work and live their normal lives,” Cook explained. “You see something and ask, ‘Why do they do that? That doesn’t make sense.’”
Of course, this raises the question: how do you identify customer pain points?
There are numerous ways to do this, but some tactics include:
- Using customer surveys
- Paying attention to common customer complaints
- Evaluating feature requests from customers
- Analyzing customer analytics
- Hosting focus groups
- Using social listening
The main point is to be regularly interfacing with your customers in a variety of ways. You simply won’t know what they’re struggling with if you aren’t engaged with them. As you interact with them and observe how they use your product, ideas for innovation will begin to emerge. You’ll begin to understand their struggles more thoroughly as well how you might innovate to alleviate those struggles.
Compare the release of Amazon Fire phone to the release of the Kindle. The Kindle was a smash success because it solved three massive problems for Amazon customers: the high cost of physical books, waiting for a book to be delivered, and being unable to carry around multiple books. In one fell swoop, the innovative Kindle erased all those problems.
Innovation flows out of knowing your customers.
Innovation Requires Willingness To Experiment
When you look at the most innovative companies, one thing is abundantly clear: they have a very high tolerance for failure.
In fact, you could even say they embrace failure.
Google is perhaps the greatest example of this. Yes, they’ve had some absolutely stunning successes, like Gmail, Google Drive, and G Suite. But they’ve also had some dozens of high-profile failures, including Google Glass, Google Buzz, Google Wave, Google Health, and Google Answers.
The same can be said for Amazon.
Along with their massive hits, they’ve also launched and shuttered Destinations, Daily Deals (their version of Groupon), Amazon Register, and Amazon Local.
This all points to the reality that attempts to innovate inevitably brings risk. If you have a low tolerance for risk, you simply won’t be able to do much innovating.
Amazon founder and CEO Jeff Bezos puts it this way:
One area where I think we are especially distinctive is failure.
I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.
Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there.
The question then, is this: does your company have space for uncertainty and risk?
This doesn’t mean that you’re pushing all the chips in on a single idea that could make or break the company. Rather, it means that you’re willing to dedicate some time and resources to pursuing ideas that are not guaranteed to be a success. You’re placing multiple bets — some of which won’t pay off.
Getting a fresh perspective on your company from someone on the outside can help you determine where you should be placing your bets. When you’re enmeshed in the day-to-day running of your business, it can be difficult to step back and look at your company from an objective perspective. There are probably numerous opportunities for innovation that you’re not even aware of.
A fresh set of eyes can give you clarity on who you are as a company, what you’re strengths are, and what unique opportunities you have for innovation.
You may know your company well and have a good grasp on your customers pain points, but until you’re willing to take the final step of embracing uncertainty, you simply won’t move forward with innovation.
The Innovation Roadmap
So let’s pull all this together. What does the way forward look like?
- Step #1: Know Yourself — Gather as much relevant information as possible about your company. Where are you succeeding? What areas are barely making it?
Also, where do you sit in relation to your competition? Where are they succeeding and are there any areas where you could surpass them if you doubled down on your strengths? Take the necessary time analyze your company, your competition, and the market. - Step #2: Know Your Customers — Dig deep into all available customer information. Take a long look at your website and email analytics to determine what’s resonating with your customers.
Gather and synthesize complaints and feature requests so that you understand what problems and pain points they’re encountering. If possible, also consider surveying your customers. - Step #3: Determine Areas For Innovation — Once you’ve gathered and evaluated all the data, it’s time to determine the most logical areas for innovation. What steps can you take that will simultaneously solve customer pain points, meet market demand, and build upon your existing company strengths?
It’s at this point that an outside perspective can be helpful. They can look at all the data you’ve gathered and then help you determine the best way forward.
Croscon works with clients at various stages in the innovation process. Some firms come to us with a clear idea for what they want. But others are just in the early stages — they need a clear picture of where they are, what opportunities exist, and which direction they should head.
This foundation of research is an absolutely critical part of the innovation process.
As I noted at the outset, innovation isn’t the property of the eccentric geniuses, which can take some of the luster out of the whole concept.
But the fact that anyone can innovate if they follow the steps above is actually fantastic news.To paraphrase Edison, it doesn’t require inspiration so much as perspiration.
If you’re willing to do the work of knowing yourself, knowing your customers, and embrace risk and reward, you truly can achieve remarkable things.
