On Innovation (and why many companies lose the ability to innovate)

Part 1 - Terminology

A new product comes out and it is thinner and faster than the last generation. Is this innovation? Many people would say “yes” because it is new, but the answer is “no”. This is technology progression. Innovation is a new idea and it can apply to a technology, a product, a service, a business, a strategy, a marketing idea, a process etc… Even though the product is new, the idea isn’t and if it was possible to make the previous generation thinner and faster than it would have been designed that way. This technology progression may have been made possible by innovations at a component or process level but the term innovation should not automatically apply at the product level. An innovation really needs to have an innovative jump, something that represents a new idea. This is not meant to be nitpicking. Confusion over the definition of innovation is part of the reason why many companies lose the ability to innovate as they grow.

Technology progression is critically important to companies and in no way should it be seen as a trade-off to innovation. In fact companies should and do spend most of their R&D on technology progression. The problem comes when technology progression is referred to as innovation. As companies grow they start to become preoccupied with process and risk management. Corporate processes like things to be measured, roadmapped, and they want things to be predictable. Gates are established that only allow projects to proceed forward when analysis can show a project’s risks are minimized and the market for a product is clearly understood. Most importantly having some open questions and unknowns are usually enough to stall a project at a gate in the process. Technology progression can be very accurately managed, roadmapped (think Moore’s law) and budgeted for. Sometimes a technology innovation can accelerate or create a step in this progression but the benefits of the innovation can be easily understood and therefore become easily absorbed into the process. The processes most companies incorporate as they grow are designed to efficiently move technology progression forward.

Take the point of view of a CEO in a company where innovation is used as a term to describe any new product or progress, and this view is reinforced by customers and reviewers that claim the new thinner and faster product that was just released is innovative. The company has its R&D budget split 90%-10% between the development team and the research lab. The research lab produces concepts that can’t proceed through the process because they aren’t predictable, can’t be laid out on a roadmap and don’t look good with the traditional metrics. Even worse the concepts may create more questions than they answer when it comes to the target market, and traditional market research might show that the company’s current customers aren’t interested or don’t know what to make of the concepts. These concepts are considered innovative but so are all the new products that the company produces. In a budget crunch, resource crunch or a reorganization, this research lab becomes an easy target to be shut down or moved under the management of the development team. Companies know they need to be innovative but we need to start with the definition of what innovation is so we can bring some clarity to what is needed.

Part 2 - Types of Innovation

Let’s look at some examples of different types of innovation. First a few historical examples. The moving assembly line is a great example of process innovation that helped the Ford Motor Company grow to be at one point the largest automaker in the world. The Pears Soap Company has some great examples of marketing innovation from the 1800’s, one example is imprinting its name on French coins and releasing them into circulation in Britain. Innovation can exist in all disciplines and sometimes the innovation might blur the lines between existing disciplines. A company might have some dedicated innovation teams but it is much better for innovation to be seen as part of the culture in a company and it should be encouraged everywhere in the company.

Twitter is a great example of a service innovation, it doesn’t use any specific technical innovation but it is a unique service that broke out of the mindset of messaging where messages have clear recipients that are chosen by the sender. I like to think of Twitter as a way to speak out in public and people can decide who and what they want to listen to. It is unique, clever and hard to categorize. The innovation here is more subtle but it is a good representation of innovation that can happen by taking a different point of view on something.

I spent a long time trying to come up with a good product innovation example. There are so many that I really wanted to find something non-obvious and not something that necessarily launched a new industry but something with that clear a-ha moment where the innovative jump can be easily seen and understood. Something where the innovative thinking can be appreciated even if it doesn’t lead to a big revenue stream or a redefinition of a market.

This is what I came up with:

The Flowbee hair cutting system

The Flowbee is a hair cutting system that I remember finding very amusing when I was a teenager. It would come on TV late at night as an infomercial. The Flowbee attaches to your vacuum cleaner and uses the suction to pull your hair straight, a motor drives the cutting blades and the cut hair goes into the vacuum. Recognizing that you could use the power of something households already have to perform the steps of the hair cutting process is brilliant. The Flowbee did not go on and replace hair salons and barbershops but it’s a great example where innovation can be separated from a new high tech device with an ultra modern design. You can still buy a Flowbee today at www.flowbee.com. Full disclosure: I’ve never used a Flowbee or have actually seen one in person.

Technology innovation is what many people associate most with the term innovation, in fact it’s very concerning that many people equate the term technology and innovation and use them interchangeably. A technology innovation that fits into the current model of a business or market will be adopted and may displace the previous technology. An example of this is OLED displays replacing LCD displays in smartphones. OLED displays generate their own light and therefore don’t require a backlight. This makes them have the potential to be thinner and more power efficient. The fact that a new model of a smartphone might use a technology innovation like OLED does not make the smartphone itself innovative. At the component level OLED is an innovation but at the product level, in an example like a smartphone, then OLED represents a technology progression. Now many technology innovations don’t have a product, service or business where it just can be integrated. A well known example of technology innovation where the application wasn’t immediately clear was the development of the Post-it note by 3M. The Post-it note adhesive was developed as an accident when Dr. Spencer Silver was trying to develop a strong adhesive. Silver knew he had something interesting in the adhesive but it needed a product innovation, the Post-it note came out 12 years after the adhesive was invented. Technology innovation can and is commonly one of the many seeds that helps create other types of innovations. E-Ink is an example of a company that was established around a new technology innovation. E-Ink went on to be a critical element in what became the e-reader industry being used in products like Amazon’s Kindle. However there is a cautionary note here as well since tablets and larger screen smartphones are having a huge impact on the sales of dedicated e-readers. E-ink is the company that loses in this market change and not Amazon, since Amazon also sells the eBooks and the tablets. Amazon’s Kindle business is not defined by the technology or the Kindle device itself. It is very common for a technology company to structure and define itself around a particular technology versus a higher order purpose or set of values and this can make it very difficult for a technology structured company to survive market changes if it makes their technology less relevant.

Part 3 - What is Needed

Ideally a company has a culture and has processes that allow it to innovate in many ways and also has the will to take some innovations to market. Unfortunately what you see in many companies is a culture that limits innovation to technology innovation that aligns with a product or service evolution or technology innovation that aligns with larger trends that are already established in the industry. This happens because limiting innovation to this narrow focus allows it to cleanly fit into a single set of processes and metrics that are designed for any product and service development work the company does. What is needed is for a company to have two development paths and a way to actively manage the balance between these paths. The traditional development path is the one that companies use to take evolved products and services to market. Having a dedicated innovation path is missing in many companies and it needs completely separate processes and metrics.

The reality is the processes and success metrics for innovation can make a lot of people in a company uncomfortable and can seem counter-intuitive. Here are some examples of what is needed for a concept going through an innovation process:

  • Innovative concepts need to have risk and unlike a traditional development path the goal is not to minimize risk, the goal is to balance innovation and risk.
  • Popularity of a concept isn’t a useful metric for an innovation but finding ways to measure emotion and how polarizing a concept is can be useful. Innovative concepts can threaten how people view an existing market or threaten an existing belief on how things should be and therefore strong negative reactions are common and often a good sign.
  • It is very common for an innovative concept to not fit into an established segment or category and it is okay for it to be not easily understood initially. As well the concept may be perceived differently by different people.
  • A concept may appear to trade-off one problem for another or open up new questions and this is a good thing. Innovative concepts don’t wrap up all issues cleanly especially during development. Sometimes the concept finds a new market where the new problem that was created is not relevant or a solution to the new problem may be found down the road. Many times you will see that an innovative product is two innovations. The first innovation solves a problem but ends up creating a new problem and then the second innovation is a solution to the new problem.
  • Measuring potential market size is effectively impossible and many times it’s uncomfortable to just not have a reference that is out in the market. With some innovative concepts it may be hard to identify who is the competitor.
  • Initial take up of a released innovative product or service may be slow as the market in general is figuring out how it fits. In this stage it is important to iterate and solve problems quickly in market. The work of the team may intensify after launch, tweaking and improving which can be very different than how an evolved product lands in the market when the expectations are easy to understand.

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Learn more about Snap Pea Design’s thoughts on design strategy, product development, innovation and our process at www.snappeadesign.com