Innovation in Practice

The Voice of the Product

2010-09-06T08:55:40-04:00

Could the greatest innovation of all time be a method of innovation? Roger Smith proposed this in The Evolution of Innovation. Is such a method out there? The answer is yes.

Suppose you want to come up with a new product idea. Where do you begin? What method would you use? Conventional thinking suggests three possible directions. First, we could seek insights from our customers through research and observation (Voice of the Customer). Second, we could emulate what inventors like Edison and Disney did to create new ideas (Voice of the Expert). Or we could seek ideas from competitors and other sources using the "open" mindset (Voice of the Market).

There is a fourth source - The Voice of the Product¹. Jacob Goldenberg and his colleagues discovered the surprising insight that innovative products tend to follow certain patterns. It is similar to the notion of TRIZ which is a set of patterns for solving problems. Innovative products share common patterns because their inventors unknowingly follow patterns when generating new product ideas. These patterns become the DNA of ideas². If you can extract the DNA and implant it into other products and services, you can innovate.

A majority of new and inventive products can be categorized according to only five patterns:

Subtraction: Taking an essential component away
Task Unification: Assigning an additional job to an existing product
Multiplication: Making a copy of a component but changing it in some way
Division: Functionally or physically dividing a component or product
Attribute Dependency: Creating new (or breaking existing) dependencies between attributes of a product or service and its environment

A systematic process called S.I.T. has been developed to apply these patterns. The patterns become “thinking tools” to identify new ideas. This process is called function follows form (FFF), a term coined by cognitive psychologist Ronald Finke. Instead of innovating by identifying a “function” or need and then creating a product, one first manipulates the existing product and considers how the new form could be beneficial.

Yoni Stern and Amnon Levav describe it as follows:

"Using FFF, one develops products in the reverse order to the market research process. One begins with an existing concept or product — a list of the product’s physical components and its environment. Then one of the five thinking tools is used to theoretically manipulate the product. These new “virtual products” are immediately assessed as to their value and feasibility. If the virtual product has market potential and falls within existing company and technological constraints, it undergoes needed minor adaptations and is considered worthy of follow-up. Market knowledge is used as a filter rather than the starting point; ideas generated are likely to be different from those of competitors."

People find it difficult to believe that innovation is a skill, not a gift. With a method like S.I.T., anyone can learn to innovate anything, anytime. If a better method evolves, I hope to be among the first to hear about it.

1. Goldenberg, Jacob and David Mazursky. "The Voice of the Product: Templates of New Product Emgergence". Creativity and Innovation Management September 1999: 157-164.

2. Stern, Yoni, and Amnon Levav. "The DNA of Ideas". BIO-IT WORLD April 2005: 56-57.

The LAB: Innovating Website Design with Attribute Dependency (August 2010)

2010-08-30T03:00:00-04:00

Imagine a website that changes depending on the visitor. Researchers at M.I.T. describe such a website that learns a person's thinking style based on preliminary clicks so it can present information in an optimal way. Purchase intentions increased 20%!

This is an example of the Attribute Dependency tool of the corporate innovation method, S.I.T.. It's great for creating "smart" products and services - those that adapt to user preferences or environmental conditions. For this month's LAB, let's apply Attribute Dependency to other aspects of websites to create new, innovative designs or features.

To use Attribute Dependency, make two lists. The first is a list of internal attributes of a website. The second is a list of external attributes - those factors that are not under your control, but that vary in the context of how the product or service is used. Then create a matrix with the internal and external attributes on one axis, and the internal attributes only on the other axis. The matrix creates combinations of internal-to-internal and internal-to-external attributes that we will use to innovate. We take these virtual combinations and envision them in two ways. If no dependency exists between the attributes, we create one. If a dependency exists, we break it. Using Function Follows Form, we envision what the benefit or potential value might be from the new (or broken) dependency between the two attributes.

Here are the variables that I put into the matrix (which you can download here).

Internal Variables:

color
design
graphics
information
link locations
page loading speed
contact information
length of text

External Variables:

number of visitors
type of visitors
location of visitor
SEO page rank
search requests
type of browser
type of computer

Here are three ideas developed by Andrew Nudelman, a graphic website designer for an industrial supply company in the Chicago area. He suggested the topic of this month's LAB.

1. TYPE OF COMPUTER/CONTACT INFO: As type of computer (of the visitor) changes, the contact information changes. Perhaps the user's webcam and microphone recognizes when a client says "I want to contact this company,” or “Geez! I'm only looking for a phone number!” The website recognizes keywords as they are spoken and creates a five second lightbox which shows the contact information page and encourages the user to click on it.

2. TYPE OF VISITOR/INFORMATION: As type of visitor changes, the information changes. Most of the visitors ordering for the first time might have trouble navigating a website with thousands of products. What if the end user holds up a picture of the product or picture of the barcode associated with product, or the product itself to the webcam and says, “Do you carry this?” The website than searches its database for the closest matches to that product and gives a list of results to the end user.

3. LOCATION OF VISITOR/INFORMATION: As location of visitor changes, the information changes. If the visitor is in a warehouse or manufacturing site with an iPhone or other smart phone, the visitor takes a picture of the product to ask, “Do you have any of these in stock?” or “Do you carry anything similar to this?” The website searches its database and lists the results. This is especially useful for visitors who don't know the name of products or have a serial number available. A more general use for the camera and microphone function would be for visitors who don't know anything about products but they know what they want to achieve so they look into camera and say, “I want to cut 100 metal pipes.” The website could then open up a dialog, “What kind of metal?” “What is the length of pipe that you will be working with?”

Here are three more ideas I came up with from the matrix:

1. NUMBER OF VISITORS/CONTENT: As visitors increase, the content changes. Many websites show how many visitors clicked into the site to demonstrate popularity (this blog, for example). More sites are connecting the way people click or link to parts of the site as a way show the "wisdom of crowds." Perhaps the design aspect of a website changes as visitor counts increase to convey compliance. Perhaps some of your customers need to show that certain products or parts were adequately shopped as part of a bidding process or contract. The website is designed to close the feedback loop in how a customer fulfills its obligations to one of its customers.

2. SEARCH/GRAPHICS: As search parameters change, the graphics change. Perhaps the site knows the name of the company that has browsed into it. The site graphics change to include the logo of the customer, to show special categories that this particular company needs or uses, and to share information about ordering and pricing that is unique to it. In other words, the website becomes a virtual catalog that is customized to the specific company that surfs into it.

3. TIME/INFORMATION: As time of day (or time of year) changes, the website information changes. This one may seem too obvious, so the trick is to imagine reasons for this dependency that are non-obvious. Perhaps information changes as it relates to seasonal items (still too obvious); perhaps information becomes more detailed earlier in the week and less detailed later in the week. Maybe this is beneficial because our visitors later in the week have learned more so that less information needs to be presented. In other words, this is a website that changes depending on how much the visitor already knows (with the variable, Time, being the intervening proxy for determining that).

2010 Outstanding Corporate Innovator

2010-08-23T03:00:00-04:00

Congratulations to Kennametal, Inc. as the winner of the 2010 Outstanding Corporate Innovator (OCI) award. The Product Development and Management Association (PDMA), a global network of product innovation professionals, announced Kennametal will receive the OCI Award at PDMA’s 34th Annual Global Conference on Product Innovation Management, October 16 – 20, 2010 at Rosen Shingle Creek in Orlando, Florida.

From the press release:

“Kennametal has demonstrated an impressive corporate commitment to innovation which has resulted in a successful track record of significant new product launches in the past five years,” said Sally Evans Kay, chair of PDMA’s OCI award selection committee. During recent turbulent economic times Kennametal has used its commitment to innovation to provide unique customer solutions and to gain a competitive advantage.

In 2009, 43% of Kennametal’s sales came from products less than five years old, up from 17% in the late 1990s. Key to the improvement was the establishment of a corporate innovation strategy to introduce new products at a market leading pace. Instrumental to implementing the strategy was the development of a robust and disciplined stage gate process.

Since being recognized as an OCI Finalist in 2007, Kennametal has shown its dedication to continuous improvement in innovation, including the establishment of the Innovation Ventures Group, a dedicated organization focused on emerging business opportunities which capture new sources of customer value.

A key highlight of the OCI award program is the opportunity for the winner to present the practices and processes instrumental to the company’s success, providing significant learning opportunities for the new product development and innovation community. John Tucker, Vice President & Chief Technical Officer of Kennametal, will present Kennametal’s principles and success stories at the PDMA Global Conference on October 20, including a case study on the company’s most recent breakthrough technology.

“This is a rare opportunity to ‘look under the hood’ of a successful company,” continued Sally Evans Kay. The learning and application from their presentation is undoubtedly a priceless opportunity for companies wishing to grow their innovative practices.”

42 firms have been recognized as Outstanding Corporate Innovators since the inception of the award. Kennametal joins an elite group of past recipients, including Apple Computer; BMW Group; Eastman Kodak; FedEx Corp.; Nabisco; Harley-Davidson Motor Company; Affymetrix; Herman Miller; Hewlett-Packard; Hunter Douglas; Mine Safety Appliance Inc.; DuPont and Pepsi-Cola.

The Product Development & Management Association’s Outstanding Corporate Innovator Award is the only innovation award which recognizes sustained (5 or more years) quantifiable business results from new products and services. 2010 is the 23rd year in which PDMA has given this prestigious award, and the winners represent a group of global corporations widely recognized and respected for their innovation success.

The OCI Selection Committee uses a rigorous process to evaluate each year’s nominees and to select those companies which have proven themselves exceptionally capable of integrating strategy, culture, process and technology to consistently create and capture value through successful product and service innovation. The OCI Committee also looks for companies with disciplined innovation practices that can provide a learning platform for the PDMA audience – practices that are broadly applicable no matter the size of company or industry in which they compete.

Simulating Innovation

2010-08-16T03:00:00-04:00

People can improve their innovation skills by mentally simulating the use of innovation tools. Chip and Dan Heath in their book, Made to Stick, talk of the importance of mental simulation with problem solving as well as skill-building.

"A review of thirty five studies featuring 3,214 participants showed that mental practice alone - sitting quietly, without moving, and picturing yourself performing a task successfully from start to finish - improves performance significantly. The result were borne out over a large number of tasks. Overall, mental practice alone produced about two thirds of the benefits of actual physical practice."

Mental simulation is the imitative mental representation of some event or series of events. It is our brain conjuring up scenarios and imagining how they will play out. We do it all the time. We mentally simulate driving to the grocery store, talking with our boss, or getting a back rub. It prepares and sharpens us for things that lie ahead. Mental simulation can also be used to practice activities that you do or want to learn.

Here is how I use mental simulation to strengthen my innovation skills with the S.I.T. method:

1. Observe Novel Ideas: I take note of new and interesting things that I see throughout the day and I try to imagine how they were invented. I look for one of the five S.I.T. patterns that might explain the invention. If I can spot the pattern, I try to mentally simulate using the pattern to create the novel object. I make a mental list of the components. I select the component that might lead to the invention. I apply the template. I use Function Follows Form to work backwards to the new idea. The most interesting of these end up as a blog post in the monthly feature called "Innovation Sighting."

2. Pick Objects Randomly: I look for mundane things and try to mentally simulate applying an innovation tool to it. For example, I might select a bottle of ketchup or a mailbox. I also look at services like mail delivery or shoe shine. Then I mentally work through the steps of the S.I.T. method using one of the patterns. I break it into components (in my head), apply a template, etc.

3. Pick Tools Randomly: I pick one of the five S.I.T. patterns (Subtraction, Task Unification, Multiplication, Division, and Attribute Dependency). This is a bit tougher, but it builds deeper mastery of the templates. I look around my surrounding environment and imagine using that template on some activity that is going on at the moment. For example, if I am in an airport going through security, I imagine using Attribute Dependency to create a connection between two independent variables around me. What if the speed of the line varied with the experience of the security agents. Could they set up a line with just the most experienced agents and perhaps charge a premium to go through it (to save time)? Or, imagine using Task Unification. I create the Virtual Product: travelers have the additional task of screening other travelers. How would that work? What would be the benefit? Who might want such an invention?

Creativity is a cognitive task. Simulating the task in unfamiliar, random situations builds "innovation muscle" for when I need it in real situations. Practice makes perfect.

Green Field Innovation

2010-08-09T03:00:00-04:00

How should firms identify innovation opportunities and predict market potential at very early stages and in new areas (“green fields”) and ambiguous environments? Here are three approaches:

1. Find Innovation Adjacencies:

Adjacent markets are an attractive way to grow. Adjacent markets are not too far away from your core business in terms of channels, technology, price point, brand, etc.. To find them, I recommend The Big Picture framework developed by Professor Christie Nordhielm at The University of Michigan. The Big Picture outlines four quadrants that completely define any market category. To find "green fields", consider each quadrant one at a time and imagine extending beyond the bounds of the category in some close by, adjacent way. The key is to stretch, not leap beyond your inherent business model. Ask yourself these questions:

Quadrant 1 Adjacencies: What substitute products are non-category consumers using to fulfill the need. Where are they buying it? What complementary products go along with these substitutes?
Quadrant 2 Adjacencies: What other products do your loyal customers buy, perhaps at the same price point or to fulfill the same or similar brand promise?
Quadrant 3 Adjacencies: Why do multi-brand customers use several brands? Is it time-dependent? Situation-dependent? Why does it vary? What other products are used when the competitive brands are consumed?
Quadrant 4 Adjacencies: What other category of products does your competitor sell? How do those fit into their product line? How could they fit into yours?

Once you identify potential adjacencies, apply an innovation method to create new-to-the-world concepts.

2. Cooperate with the Competition:

Co-opetition is an idea described by Barry Nalebuff and Adam Brandenburger in their book, "Co-opetition." It means cooperative competition - when industry participants behave in a way that benefits all. They coopetate rather than compete. The trick is to apply innovation templates to the Value Net model of co-opetition. Here's how. List the activities of each Value Net participant (Company, Supplier, Customer, Complementors, Competitor). Rotate each specific company in the Value Net model so that each takes a new role (competitors become suppliers, suppliers become complementors, etc). Use each template on the new list of activities, starting with Task Unification. Using Function Follows Form, envision how the new role creates a "green field" market.

3. Listen to the "Voices":

Here are three less obvious sources of "green field" opportunity.

Voice of the Product: Products have enormous amounts of information coded into them through years of design improvement. A corporate innovation method such as S.I.T. lets you "interrogate" the product to find new, undiscovered market benefits.
Voice of the Brand: Brands also have information coded into them. The key is to extract the information and data that contributes to the brand promise to see hidden assets and market potential. For this I recommend the semantic search engine, Goldfire.
Voice of Serendipity: Many products are invented accidentally. Serendipity led to the microwave oven, corn flakes, Teflon®, penicillin, fireworks, Viagra®, chocolate chip cookies, and the most famous of all accidents...the Post-it® note. While serendipity is unpredictable, there is value if you can unlock its hidden secrets.

The LAB: Innovating a Service Delivery Model with S.I.T. (July 2010)

2010-07-31T09:29:36-04:00

A common question about structured innovation is can it be used on services. The answer is yes. A service is the same as a product in many ways, and the approach to using an innovation method like S.I.T. is the same. Let's consider a service example for this month's LAB. Imagine your company was a leading uniform and apparel rental service. You own a fleet of trucks and drivers as well as uniform design and fitting services. Your company delivers custom fitted uniforms to the client's location, picks up worn uniforms for cleaning, inspection, and repair, and returns them on schedule. In this highly competitive industry, the key to survival is to exceed customer expectations. The key to growth, on the other hand, is innovation. Let's use the Subtraction tool on this service to create new opportunities.

We start by listing the internal components of the service line:

uniforms (inventory)
fitting service
design service
fabric
trucks
drivers
billing
pick-up
delivery
cleaning
inspection
repair
tracking
contract
sales representative

We remove a component but keep all the others intact. Working backwards from this hypothetical solution, we consider what benefits it delivers or potential problems it solves. We try to consider possible benefits of the "virtual service" as is, without replacing the component with something else. Here are some examples:

1. BILLING: The uniform service is provided as is, but there is no billing for the service. (The money is still owed, but the tedious process of preparing, sending, receiving, checking, accounting for, and paying invoices is gone). Potential benefits include saving time, lowering cost, and reducing errors. Perhaps this service is offered to clients for a small premium given the time and cost saving they would experience. Or perhaps it is offered to certain top clients as a reward for loyalty. Payment transfers could happen at point of service via the tracking system (a replacement).

2. SALES REPRESENTATIVES: This one always gets people's attention. How could you possibly provide a service to corporate clients without having a capable sales rep to maintain the business? As with the billing ideas, this could save clients time they spend dealing with sales reps. It would also free up sales reps to find new customers rather than maintaining current customers. Perhaps this benefit is offered only to the most loyal clients who are least likely to need sales rep attention. Perhaps they share in the savings through discounts on their services. Create a new "platinum level" of clients who are so "special," they have "earned the right" to eliminate their sales rep.

3. REPAIR: Remove the uniform repair service. Perhaps the service still involves inspecting uniforms but just advising clients instead of making repairs. Or better still, perhaps there is no need for uniform repair because the garment is thrown away or recycled if it is damaged. Is there a fabric technology that can be fashioned into a uniform, worn once, then recycled over and over? Would the total unit cost be less than the traditional fabric uniform that is worn many times? This would allow the uniform company to make short term rentals to clients doing one-time events. The company could serve the low end of the market that cannot justify the cost of traditional garments. This might yield a new business model that disrupts the competition.

4. TRUCKS: The temptation with this one is to replace it immediately with some other vehicle before fully creating ideas "as is." This is the hardest part of using the Subtraction tool. The benefits of removing the truck seem obvious - lower cost, environmentally friendly, safer, etc. But the trick is to push beyond the obvious. How would it work? Perhaps the truck is not removed entirely, but just part of the time. Here is how a leading company did it:

Marketing Innovation: The Extreme Effort Tool

2010-07-26T03:00:00-04:00

How do you create the most innovative TV commercials in the world? By using patterns embedded in other innovative commercials. Professor Jacob Goldenberg and his colleagues discovered that 89% of 200 award winning ads fall into a few simple, well-defined design structures. Their latest book, "Cracking the Ad Code," defines eight of these structures and provides a step-by-step approach to use them.

Here are the eight tools:
   1. Unification
   2. Activation
   3. Metaphor
   4. Subtraction
   5. Extreme Consequence
   6. Absurd Alternative
   7. Inversion
   8. Extreme Effort

Consider this example from Dairy Queen:

This commercial was created with the Extreme Effort tool. It works by conveying the attractiveness of the product or service by showing the extreme effort one must go through to use it. There are two versions: 1. what the customer must do to use the product, and 2. what the company must do to provide the product. As with all eight tools, Extreme Effort yields commercials that are highly innovative and memorable. This tool is particularly useful when your brand is well established and the category is well understood. It is an easy way to promote your product or service in a general sense when there is nothing more specific to say.

Try this exercise. Imagine you want to promote your blog site to attract new readers. You want to use the Extreme Effort tool. First, visualize three ways to show how current readers go to extreme efforts to read your blog. You have to portray it in a way that is absurd and so exaggerated that the viewer knows you are being funny. You don't want them thinking they really have to go to this effort to read it. Otherwise you will scare them off.

Now visualize three ways to show potential readers the extreme effort you go to write and produce your blog, again with the intent of being somewhat silly and exaggerated to make this point in a memorable way: "I want you to read my blog so badly that I go to this <exaggerated> effort to bring it to you each week.

To be most effective, select the simplest one to understand. For example, in the Dairy Queen ad, we see the mother on the hood of the car reaching out the Dairy Queen truck. We instantly "get it." There is nothing more that needs to be said or explained.

Also, look for ways to create fusion between the exaggerated effort and the brand promise. In the Dairy Queen example, the mom and dad are participating in the age-old kids game that their children were playing. Dairy Queen is about having fun. The ad fuses that idea with the parents acting like children and having fun thanks to Dairy Queen. Clever.

The Role of Business Schools in Innovation

2010-07-19T03:00:00-04:00

"Innovation is and will always be a major driver of business and societal success, and business schools are doing much to foster innovation worldwide. The opportunities to do more to support innovation are many and the potential to create value is high."

The Association to Advance Collegiate Schools of Business (AACSB) released a new report, Business Schools on an Innovation Mission. The report addresses what is meant by innovation, describes how managerial talent contributes to innovation, and outlines ways business schools support innovation.

Business schools must focus more on specific skills that support innovation, reinvent curricula to be more integrative, and convene executive programs that create new ideas and networks. Business schools must promote interdisciplinary research and recognize that innovation can come from advances in the theory, practice, or teaching of management. "Through outreach activities, such as business plan competitions, student consulting projects, and business incubators, business schools’ activities contribute directly to innovation in the communities they serve."

The AACSB report recommends the following:

1. Blend innovation with other themes, such as sustainability, vertical markets (e.g., health care), leadership, and ethics. Schools should not be afraid to combine themes to create new and valuable niches.
2. Do even ordinary things differently. For example, one way to support innovation is to break down functional silos and disciplinary barriers in learning and research.
3. Focus on developing skills to support innovation, not just on knowledge transfer. Think deeply about how best to develop these skills.
4. Give special consideration to non-degree executive education. These programs allow for more current, research-driven content consistent with innovation to influence management practice quickly.
5. Convene the key players in relevant innovation systems. They produce network benefits that boost creativity and facilitate the diffusion of innovation.
6. Understand and leverage the importance of alumni networks and engagement in driving innovation. Alumni organizations can provide the networks and trust to make innovation more likely.
7. Bear in mind that research does not have to be revolutionary to have an impact on innovation. Innovation also benefits from the testing, codification, and synthesis of what works and does not work.
8. Explore partnerships with other academic units to develop outreach activities that most directly impact the innovation capacity of relevant communities.

The report emphasizes that "business schools do not and should not support innovation in the same ways; what each school does should depend on its context, mission, and other factors—which can differ significantly among schools." It is clear that business schools should approach creating value at the "intersection of different perspectives and proactively advocate for their role in innovation."