3 Insights from an Idea Generation Program that Actually Works!

3 Insights from an Idea Generation Program that Actually Works!

Companies love to invest in idea generation – challenges, hackathons, software platforms to collect and sort submissions.

Companies do not love the ROI of these investments because they require a lot of money and time and the ideas rarely become real and create value.

But one company is doing it right and they are loving the early results.

This morning I chatted with a graduate of the Intrapreneurship Academy that I teach in partnership with The Cable Center.  It was the kind of life-affirming call that consultants rarely get to enjoy, one that is evidence that the work you do matters to both people and businesses.

During the program, he focused on solving a problem related to surfacing ideas within the organization, rather than relying on management to come up with new ideas and initiatives.  As he worked through the innovation process, he found other passionate intrapreneurs and champions within his organization willing to lend their time, energy, and political clout to developing a solution.

In May, the idea generation solution went live.

A mere 6 months later:

  • 20% of the organization submitted ideas
  • 2 ideas, on average, were submitted by each person
  • 60% of submitted ideas were presented to senior leadership
  • ~20% of the ideas submitted were approved for further development
  • 10% of ideas submitted are in the process of being launched

10% of ideas received funding and are being launched! 

VCs would kill for that kind of success rate.

Ahh, but what about ROI?  Launches do not equal market success. Value creation, specifically financial returns, are evidence of market success.

This was all done with $0 investment.

The team used internal resources for everything – existing software platforms and programs, design and marketing talent, and passionate staff and leaders to promote and participate in the program.

3 lessons learned on the path to success

Like all good innovators, the team prioritized moving quickly with “good enough” solutions and learning and adjusting rapidly based on feedback.  Here are three of their top insights:

1. It’s all about People.  People define organizations.  People create ideas.  People motivate and inspire other people. So, if you want to succeed, focus on people.

For example, every person who submits an idea receives personalized feedback about what worked or didn’t and how, if possible, they could make their idea more attractive to the business.  Originally, this feedback was given by email because let’s be honest, it’s a lot more efficient.  But people felt that the feedback was “cold” and felt discouraged and demotivated after reading it.  Now, all feedback is delivered in a quick conversation that feels more personal and leaves people feeling heard and motivated

2. Build a Habit, not an Event.  Early in the design process, the team spoke with a group in another region that was also creating an idea generation program.  The difference was that they were designing it as an annual event (and spending hundreds of thousands of dollars to buy and implement an idea management software platform).

But people don’t have ideas just once a year.  They have ideas all the time.  And the business needs new ideas for revenue generation and cost savings constantly, not just once a year.

So this team designed their program to be on-going – people can submit ideas at any time for feedback, senior management meets once every 1-2 months to review and approve ideas, and teams are started (and ended) based on data, not the calendar.

3. Imperfect Action is more important than Perfect Inaction – “Frameworks are great and really helpful, but….” As my former student’s voice trailed off, I couldn’t help but laugh.  He was trying so hard to be polite, after all, I’m the person who taught him the frameworks, but we both knew that the end of that sentence was, “…you need to actually do things in the real world to know what works.”

Yes, frameworks, theories, templates, best practices, are all useful AS STARTING POINTS.  They reflect what has worked in the past for other companies so, while they can help you avoid common mistakes or accelerate decision-making, they’re not perfect reflections of the current reality of your company and innovation.  To know what will work for your idea, in your company, in your market, in your geography, with your team, and your customers, you need to get off the page and into the real world.

The next challenge – how to scale

With such clear early success, there’s huge demand to expand the program rapidly within the region.  But premature scaling is the death-knell of many innovations.

So, the question facing the team is when and how to expand?

Should they expand laterally, rolling their country’s program out to other countries in the region, or should they expand vertically, moving the program up to be managed at the regional level?

Should they seek to increase participation in their current program, or should they expand their program’s offering to include trainings and challenges?

When should all of this expansion happen?  What should happen first?

The fact that these questions are being asked is a clear sign of success.  While there are no obvious answers, I do not doubt that the team will find them.

What Goldfish Can Teach Us About Killing Innovation Projects

What Goldfish Can Teach Us About Killing Innovation Projects

 “We are not good at killing innovation projects.”

In the past two days, three people in two different companies across two different industries said these exact words to me.

If Step #1 in solving a problem is admitting that you have one, then my clients should feel pretty good about making progress.

But what’s Step #2?

“Killing the project” is an obvious and fundamentally unhelpful answer.  But before we get to the less obvious and helpfully actionable answer, we need to acknowledge a fact about humans

 

We decide with our hearts, justify with our heads, and require guts to act.

As much as we would like to believe that we, as humans, are logical and fact-driven, we’re not.  If we were, we would not be swayed by brands and we would all agree on the best restaurant, music, and political candidate.

Beliefs, values, emotions, and connections (our heart) drive our behavior.  We choose things that help us feel a certain way, create a certain perception, or signal our belonging to a certain group.  As Clay Christensen would say, we choose things that solve emotional and social Jobs to be Done.

We then find or seek out facts and evidence that justify the decisions our hearts have made.  We want to be logical and rational, to make “the best choice,” and to be able to sway people with our arguments.  We use our heads to justify our hearts.

But that alone isn’t enough.  We don’t do things that we know we should (flossing, eating vegetables, maintaining long-term investments in innovation).  We do what we want even though we know we shouldn’t (eat a lot of sugar, drink too much, binge watch anything that starts with “Real Housewives of”).

We need motivation and courage (guts) to translate our wants and our thoughts into action.  Perhaps, even more importantly, when our heads and our hearts disagree, we need guts to make the decision and act.

Because without guts, when the head and the heart disagree, the heart always wins.

 

That’s why you’re not good at killing projects.

Here’s a common scenario: after working for several years on a new product you get data that shows that it won’t “work.” 

Perhaps it’s clinical data indicating that the product doesn’t provide the efficacy required.  Or market data showing that customers aren’t willing to buy the product at the current price or buy as much of it as expected to justify the investment.  Or benchmarking data that estimates that your product will be in the bottom 5% of products ever launched by your company.

Whatever it is, it’s not good and the data and logic all dictate that the project should be killed.

Instead, you deem it to be “strategic” and keep working on it.

This is because, in your heart, you believe in the project.  You were part of creating it.  You nurtured it from concept to concrete, guiding it through near-death experiences, and celebrating its successes.  You love this project.

Your heart says “keep going,” while your head says “make it stop.”

You need guts to make the decision.

It’s hard to decide, but Step #2 makes it easier.

If the first step is knowing in your head that the project is not viable and will not meet expectations no matter what you do, the second step is finding the guts to resist your every instinct and decide in favor of your head.

To find the guts to make the call, you need to acknowledge your heart and the feelings, emotions, and beliefs that are motivating you to try just one more thing.

(If you’re a Very Serious Business Professional and are super freaked out by the last sentence, imagine that I wrote, “you need to acknowledge your cognitive biases like the sunk cost fallacy, not invented here bias, or the IKEA effect” and keep reading) 

To acknowledge your heart and empower your guts, you need to say goodbye and create closure. 

How to do this effectively is determined by the culture of the team and company, but here are some examples I’ve seen and been part of:

  • Write the project’s eulogy
  • Hold a funeral (traditional, New Orleans, Irish, or Viking all qualify)
  • Have a “Reading of the Will” in which the project bequests mementos and silly awards to team members
  • Create a memorial like planting a tree or, taking a cue from Ben & Jerry’s, a graveyard
  • Establish an award in its name and give it out every year to a person who has shown the courage to preserve and the wisdom to know when to quit

Yes, I know this sounds silly but so does having funerals for goldfish and we do that.  We do it for the same reasons we struggled to kill the project – because we love it, and we will miss it.

Just as we feel very sad but know we did the right things when we flushed the goldfish, you will feel sad but know you did the right thing when you kill the project.

And while it will never be easy, it will get easier and you will get better at killing projects (just like I did after going through 23 goldfish my senior year of college).

The IKEA Effect is Creating Zombies.  Here’s How to Fight Them.

The IKEA Effect is Creating Zombies. Here’s How to Fight Them.

When I was a senior in college, I took a pottery class. 

One of our assignments, before learning to throw on the wheel, was to create a functional piece using slabs of clay.  I designed an Alice in Wonderland-inspired vase and built something that somewhat resembled the design.

Obviously impressed by my innate talent, the instructor offered to teach me a special glazing technique that used highly toxic chemicals to create…well…I stopped listening as soon as I heard “toxic chemicals.”  It was dangerous, so I was in.

The result was a rather misshapen (not Alice in Wonderland-inspired) vase that looked like it was made out of chunks of rusted metal.

I loved it!

My roommate hated it.

She declared it the ugliest thing she ever saw and forbid me from placing it anywhere in the apartment where she might have the misfortune of laying eyes on it.

To this day, she swears it’s the ugliest thing she’s ever seen.

I display it proudly on the bookshelf in my office.

It would be easy to explain our different reactions to my work of art as simply the result of different aesthetic preferences.  And while there may be some truth in it, I suspect the better explanation is the IKEA Effect.

The IKEA Effect

First identified and named in 2011 by professors from Harvard Business School, Yale, and Duke, the IKEA effect is a cognitive bias in which people place a disproportionately high value on products they partially create. 

Think about it.  We all have that piece of furniture, art, craft project, or home improvement effort that we assembled, designed, crafted, installed, or built that we absolutely love and refuse to part with.

No one understands why we won’t let go of that broken, worn out, dust collecting, out of style, money pit but, we believe, it’s simply because they don’t understand or see what we do and that, once they do, they too will see it for the treasure it is.

The same behavior happens in innovation.  Teams invest months, even years, developing, testing, and launching new products and services, and yet, when the market doesn’t respond (i.e. there’s no demand, meaningful revenue, or potential profit), the product or service continues to be offered.

This is the IKEA Effect in action. 

And the result is Zombies.

IKEA Effect Zombies

As evidence mounts that the project will not achieve market success, innovation teams invest with urgency, believing that more marketing, more sales calls, and more discounts will attract the customers that are surely out there.  When the increased investment doesn’t produce the desired results, resources are slowly “reallocated,” the project is “deprioritized,” and a skeleton crew is left to make it work.  The project is a Zombie, the living dead incarnation of an innovation project.

Given the commonality of this behavior, you might think it would be easy to spot Zombies.  You would be wrong.

While the IKEA effect is believed to contribute to both the sunk cost effect and to “not invented here” syndrome, it is a far more fundamental effect, deeply rooted in people’s emotions and identity, and likely to manifest in “logical” arguments based on carefully selected data.

This makes spotting an IKEA Effect Zombie almost as hard as killing one. 

Which is why it’s important to know your Zombies:

HiPPOPs – Highest Paid Person’s Opinion Projects (HiPPOPs) are envisioned, developed, and driven by a senior executive.  When data counter to the executive’s opinion surfaces, the executive finds another piece of data to support their opinion. The project lurches on for years, fed by the executive, as people throughout the organization watch it slowly rot.

Perennial Pivoter – These projects are always just one pivot away from success.  Created by a team of eternal optimists, there’s no such thing as failure, there’s only learning what not to do and what to try next. 

Windfall Walker – When you hear “It’s a small investment and the upside could be huge,” a Walker is not far away.  Often the brainchild of a single individual, the promise of these projects is far greater than their return.  But they live on because everyone silently agrees that it’s easier to live with the Zombie than kill it. 

Hope Hunter – Perhaps the most dangerous and cruel of all the Zombies, these projects always offer a glimmer of hope that the hockey stick of success is just a quarter, a customer, or a PR moment away. Convinced that staying the course and investing just one more dollar, month, or customer call will bring the project back to life.

How to Deal with IKEA Effect Zombies

Just like all other adventure stories, the source of the problem is also the solution.  In this case, IKEA created the effect and their stores point to the solutions.

To Kill a Zombie, Stand Your Ground.

Zombies appear when you lose focus on creating and delivering something desirable (solves a customer’s problem), feasible (can be created), and attractive (meets or exceeds key strategic and financial targets).

Because Zombies are a sign that you’re lost, you need to do the same thing you do when you get lost in IKEA – stop, pull out the map, and re-orient yourself.

Go back to your original criteria for pursuing the project.  Does the project still meet the thresholds or has something, like the company’s strategy or the project’s results, changed? How does the change impact the project’s desirability, feasibility, and attractiveness?  What is the right thing to do for the business based on these changes?

Try to be objective as you re-orient yourself and avoid the urge to blame others or beat yourself up.  What matters most isn’t how you got here, it’s where you go from here.

To Avoid Zombies:

Focus on the Meatballs.  Let’s be honest, the best part of every IKEA trip is the meatballs (and lingonberry jam) in the café after you checkout.  Every distraction and double-back in the Showroom delays the gratification of eating meatballs (and lingonberry jam).

When you start an innovation project, set a clear, objective, and measurable goal at the beginning.  That’s your meatball.  At every project milestone, revisit the goal.  Is it still a desirable goal or has something in the business fundamentally shifted, requiring the goal to change?  Is it still reasonable to believe that the project will achieve that goal, or have you learned something that makes the goal improbably or even impossible?

Staying focused on the goal and objectively evaluating your odds of achieving it makes it easier to let kill a project that can’t get you to where you need to go.

Follow the Arrows.  IKEA Showroom maps are often as helpful as the assembly instructions that come with their furniture.  Not at all.  That’s why there are arrows on the floor and signs hanging from the ceiling to guide you through the shopping experience and, ultimately, to the meatballs.

A project process with clear governance is the innovation equivalent of floor arrows and ceiling signs.  Before starting an innovation project, identify the activities required, thresholds that must be met for additional resources, roles and responsibilities of team members, and decision-making criteria. 

As you do the work of innovation, you’ll refine the process and governance.  By your third project, it should be 80% set and by your fifth, it should be 90% set (you never want it to be 100% because innovation does need a bit of flexibility).

Creating and following a standard process and objective governance model helps to remove the emotion that drives the IKEA effect and creates Zombies.

A Zombie and IKEA Effect Free Innovation Zone

By acknowledging the Innovation Effect in your organization, identifying and killing the Zombies it creates and putting the goals, processes, and governance in place to prevent a Zombie recurrence you’re on your way to more efficient, effective, and successful innovation efforts.

I recommend celebrating with meatballs (and lingonberry jam)!

How to Get Corporate Executives to Walk Their Innovation Talk

How to Get Corporate Executives to Walk Their Innovation Talk

Things we know we should do because they’re good for us:

  1. Eat 5 servings of fruits and vegetables each day
  2. Floss twice a day
  3. Get 10,000 steps a day
  4. Buy insurance
  5. Consistently invest in innovation

Let’s be honest, the above list could also be titled, “Things we know we should do but don’t.”

Why?  Why do we choose not to do things that years of research prove are good for us and for which solutions are readily available?

Because they’re inconvenient, uncomfortable, expensive, and, most of all, because we have not yet been burned by not doing them.

Experience is a better motivator of change and driver of behavior than knowledge. We don’t floss until we’ve had one (or more) painful and bloody dentist appointments.  We don’t buy insurance until we have to deal with a break-in.  We don’t invest in innovation until we’re desperate for revenue, profit, or growth.

The good news is that, at least when it comes to innovation, we don’t have to wait to be desperate or to get burned before we do what we know we should.  We can create experiences that motivate change.

Borrow relevant experiences

Experiencing success, even if it’s vicariously, is key to getting people to do what they know they should.  One way to do this is to find proof that the change is possible and do-able.  To do this you need to find relevant and recent examples (i.e. not a field trip to Silicon Valley and not stories about Steve Jobs). 

Find a company in your industry (or a similar one) that has successfully achieved the goal you’ve set.  Tell their story to people within your organization.  Set-up a conversation between a current or former member of their team and a key stakeholder in your organization.  Buy their product and display it as evidence that success is possible.

Create experiences of success

Innovation takes time, especially if you’re working on something breakthrough.  But people lose interest and faith quickly, especially in organizations that are judged by quarterly numbers.  As a result, the worst thing you can do is to go into “stealth mode” and try to “fly under the radar” until you have a huge, earth-shattering success to announce.

Instead, spend time learning about your decision-makers’ and stakeholders’ doubts at the same time you’re learning about your customers’ problems.  Then, when you prove those doubts wrong, celebrate the win…politely, and publicly.

Does your boss think Legal will never approve your idea?  Work with Legal, ask them what it would take to get an approval, and when you do that and get the Yes, tell your boss.  Does Finance think no one will ever pay the price for your solution?  Open a “lemonade stand” to sell the product and then take Finance out for drinks, using your first dollars of revenue to pay for the first round.

Small and steady wins give people experience with success and buy you the time, resources, and support you need to achieve the earth-shattering ones.

Immerse everyone in the experience

While borrowing and creating experiences can be powerful, nothing is as convincing or compelling as actively engaging people in achieving success.

Involve innovation leaders, decision-makers, and key stakeholders in the hard work of customer discovery, solution design, and business testing.  Make them listen in live to customer interviews, hand them the sharpie (or the mouse) during ideation sessions, and “hire” them to staff your “lemonade stand.”

By making people lean in, roll up their sleeves and do the work, they’ll experience how hard innovation is and why it takes longer than they think.  They’ll be invested in your work and your results.  They’ll feel the rush of the small successes.

Innovation is a Head, Heart, Guts endeavor

People decide what to do with their hearts, justify their decisions with their heads, but it takes guts to take action.  Knowledge feeds the head, but it takes experience to have guts. 

The 5 Gifts of Uncertainty

The 5 Gifts of Uncertainty

“How are you doing?  How are you handling all this?”

It seems like 90% of conversations these days start with those two sentences.  We ask out of genuine concern and also out of a need to commiserate, to share our experiences, and to find someone that understands.

The connection these questions create is just one of the Gifts of Uncertainty that have been given to us by the pandemic.

Yes, I know that the idea of uncertainty, especially in big things like our lives and businesses, being a gift is bizarre.  When one of my friends first suggested the idea, I rolled my eyes pretty hard and then checked to make sure I was talk to my smart sarcastic fellow business owner and not the Dali Lama.

But as I thought about it more, started looking for “gifts” in the news and listening for them in conversations with friends and clients, I realized how wise my friend truly was.

Faced with levels of uncertainty we’ve never before experienced, people and businesses are doing things they’ve never imagined having to do and, as a result, are discovering skills and abilities they never knew they had.  These are the Gifts of Uncertainty

  1. Necessity of offering a vision – When we’re facing or doing something new, we don’t have all the answers. But we don’t need all the answers to take action.  The people emerging as leaders, in both the political and business realms, are the ones acknowledging this reality by sharing what they do know, offering a vision for the future, laying out a process to achieve it, and admitting the unknowns and the variables that will affect both the plan and the outcome.
  2. Freedom to experiment – As governments ordered businesses like restaurants to close and social distancing made it nearly impossible for other businesses to continue operating, business owners were suddenly faced with a tough choice – stop operations completely or find new ways to continue to serve. Restaurants began to offer carry out and delivery.  Bookstores, like Powell’s in Portland OR and Northshire Bookstore in Manchester VT, also got into curbside pick-up and delivery game.  Even dentists and orthodontists began to offer virtual visits through services like Wally Health and Orthodontic Screening Kit, respectively.
  3. Ability to change – Businesses are discovering that they can move quickly, change rapidly, and use existing capabilities to produce entirely new products. Nike and HP are producing face shields. Zara and Prada are producing face masks. Fanatics, makers of MLB uniforms, and Ford are producing gowns.  GM and Dyson are gearing up to produce ventilators. And seemingly every alcohol company is making hand sanitizer.  Months ago, all of these companies were in very different businesses and likely never imagined that they could or would pivot to producing products for the healthcare sector.  But they did pivot.
  4. Power of Relationships – Social distancing and self-isolation are bringing into sharp relief the importance of human connection and the power of relationships. The shift to virtual meetups like happy hours, coffees, and lunches is causing us to be thoughtful about who we spend time with rather than defaulting to whoever is nearby.  We are shifting to seeking connection with others rather than simply racking up as many LinkedIn Connections, Facebook friends, or Instagram followers as possible.  Even companies are realizing the powerful difference between relationships and subscribers as people unsubscribed en mass to the “How we’re dealing with COVID-19 emails” they received from every company with which they had ever provided their information.
  5. Business benefit of doing the right thing – In a perfect world, businesses that consistently operate ethically, fairly, and with the best interests of ALL their stakeholders (not just shareholders) in mind, would be rewarded. We are certainly not in a perfect world, but some businesses are doing the “right thing” and rea being rewarded.  Companies like Target are offering high-risk employees like seniors pregnant women, and those with compromised immune systems 30-days of paid leave.  CVS and Comcast are paying store employees extra in the form of one-time bonuses or percent increases on hourly wages.  Sweetgreen and AllBirds are donating food and shoes, respectively, to healthcare workers.  On the other hand, businesses that try to leverage the pandemic to boost their bottom lines are being taken to task.  Rothy’s, the popular shoe brand, announced on April 13 that they would shift one-third of their production capacity to making “disposable, non-medical masks to workers on the front line” and would donate five face masks for every item purchased.  Less than 12 hours later, they issued an apology for their “mis-step,” withdrew their purchase-to-donate program, and announced a bulk donation of 100,000 non-medical masks.

Before the pandemic, many of these things seemed impossibly hard, even theoretical.  In the midst of uncertainty, though, these each of these things became practical, even necessary.  As a result, in a few short weeks, we’ve proven to ourselves that we can do what we spent years saying we could not.

These are gifts to be cherished, remembered and used when the uncertainty, inevitably, fades.

Originally published on Mat 19, 2020 on Forbes.com

Why “Innovation” is Killing Innovation (Hint: it involves peanut butter and cats)

Why “Innovation” is Killing Innovation (Hint: it involves peanut butter and cats)

Innovation is not peanut butter.

You can’t smear it all over something and enjoy the deliciousness.

In other words, “Innovation” is not a one-sized-fits-all term.  If you apply it to everything new and different that you’re doing, you’ll be confused, frustrated, and ultimately left with very little to show for your efforts.

In a previous post, I defined Innovation as something different that creates value.  For companies to increase their odds of creating value, however, they need to develop a language and discipline around at least three different types of innovation.

Why do I need different types of innovation?

Imagine if we used the word “Cat” to describe every feline from a house-cat to a lion.  If you proudly proclaim that you just got a new cat, people might wonder whether that purchase was truly legal.  If you yell, “There’s a cat behind you!” people might not react with the level of urgency required.

Specificity enables rapid understanding which leads to better decision making.

Labeling everything new and different with the term “innovation” can result in dramatically under-resourcing some efforts and prematurely canceling others.  After all, launching an entirely new business model takes far more time, money, people, and patience than launching an improved version of an existing product.  You need a language that reflects that.  

Why do I need at least three types of innovation?

Because, after decades of research and application, academics and practitioners alike seem to agree that two is too few and, since three comes after two and three seems to work, you need at least three.  (Doblin said 10 but that feels like too many to remember).

Which three should I use?

The three that best reflect your company’s strategies, priorities, and culture.

I know that’s a bit vague, but the truth is that there is no one right answer.  The only “right answer” I’ve ever seen is the one that sticks, that advances key corporate strategies, and that enables thoughtful decision making.

Start Here

When one of my clients is at the very beginning of building their innovation capability, we start simple

  1. Core Innovation is improvements to what they currently do
  2. Adjacent refers to innovations which combine existing and new elements (e.g. selling an existing offering to a new customer, selling a new offering to an existing customer, or monetizing an existing offering in a new way)
  3. Breakthrough innovations change everything (e.g. new offerings to new customers, monetized and delivered in new ways)

We then develop a high-level innovation process that can apply to all three (this helps with communication across the company and reinforces that everyone can participate in innovation). From there, we create more detailed structures, processes, tools, trainings, and timelines for each type of innovation to ensure that we have a balanced innovation portfolio, allocate appropriate levels of resources, and set realistic expectations with regards to timelines and ROI.

But what about (fill in the framework here)?

Again, the two most important things about innovation types are that (1) you define them and (2) they are practical, actionable, memorable, and enable progress against your strategic priorities.

That said, there are other Innovation Type frameworks from which you can draw inspiration.  Here are three of the most popular

McKinsey’s 3 Horizons Making its debut in the 1998 book The Alchemy of Growth, McKinsey’s 3 Horizons frameworks remains a favorite amongst consultants and executives (but not Steve Blank, who thinks it no longer applies).

The book argued that for companies to kick-start growth or continue to grow rapidly, they need to simultaneously focus on three “horizons of growth:”

  1. Horizon 1 ideas drive continuous improvements in existing offerings, business models, and capabilities
  2. Horizon 2 ideas extend the core to new customers or markets
  3. Horizon 3 ideas create new capabilities or businesses in response to disruptive opportunities or threats

Clayton Christensen

In his 2014 Harvard Business Review article, “The Capitalist’s Dilemma,” Professor Christensen wrote that the terms he famously coined, “disruptive” and “sustaining” innovation, are not types of innovation, rather they describe “the process by which innovations become dominant in established markets and the new entrants challenge incumbents.” Innovation types, however, should describe the outcome of the innovation.  The three he identified are:

  1. Performance-improving innovations that replace old products with new better models
  2. Efficiency innovations that enable companies to sell existing products to existing customers at lower prices
  3. Market-creating innovations that combine an enabling technology that rapidly reduces costs with a new business model to reach new customers, resulting in the creation of (as the name implies) entirely new markets.

P&G

From 2000 through 2012, P&G, under the leadership of CEO AG Lafley,  improved its innovation success rate from 15% to 50% and doubled the average size of successful initiatives.

One of the first steps in achieving these dramatic results was to define 4 types of innovation.

  1. Commercial innovations that increase trial and use of existing products
  2. Sustaining innovations that make existing products better, faster, cheaper, or easier to use
  3. Transformational innovations that deliver a step-change improvement in a product’s performance, ultimately setting new performance expectations for a category
  4. Disruptive innovations (new brands or business models) that “win through simplicity or affordability”

 

OK, I’m on-board.  How do I start?

My clients and I follow these four steps:

  1. Put a stake in the ground and name 3 types of innovation. Don’t overthink it.  Just pick three types and go on to step 2
  2. Share the types (names and definitions) with people and see how they react. Do they immediately understand?  Do they look confused?  Do they recoil in horror?  Get curious about their reactions and ask for feedback.  Refine your types and their definitions until a majority of people immediately understand (note: you’re not going for 100% agreement because that never happens, you’re going for “good enough with no one violently disagreeing)
  3. Map your innovation initiatives to each type.
    • Are there types with no initiatives? Is that type critical to achieving a strategic priority or key metric?
      • If yes, you have a gap in your portfolio.
      • If no, get rid of the type.
    • Are there initiatives with no types? Is that initiative critical to achieving a strategic priority or key metric?
      • If yes, create a type to describe that (and hopefully other) initiatives.
      • If no, get rid of the initiative.
  4. Share your innovation portfolio with key decision-makers and start developing your innovation strategy.

 

Congrats, you have a working draft of your Innovation Types!  You’ve taken a crucial first step in your journey getting real results from innovation.  Reward yourself with some peanut butter!