Matt Chase
Hear the word “innovation,” and you might think of an R&D lab, a
design group, or a start-up venture. But today innovators are in demand
everywhere—from the factory floor to the salesroom, the IT help desk to
the HR department, the employee cafeteria to the C-suite. Innovation
isn’t a department. It’s a mindset that should permeate your entire
enterprise.
No matter the venue, the feedstock for innovation is insight—an
imaginative understanding of an internal or external opportunity that
can be tapped to improve efficiency, generate revenue, or boost
engagement. Insights can be about stakeholder needs, market dynamics, or
even how your company works.
Several
Fortune 500 companies have
been founded on a single insight about what customers want. Starbucks
brought a little bit of Italy to coffee shops. Home Depot gave
do-it-yourselfers access to professional supplies. The Body Shop was
built on the notion that buyers of beauty products care about humane
animal-testing practices. Inside your company, insights can lead to
more-efficient operations, simplified processes, or leaner structures.
Insights can be powerful, but how do you find them? Should you
brainstorm with colleagues? Sift through masses of data? Simply
introspect? Or carry on as usual and wait for the proverbial apple to
fall on your head?
In our combined half-century of working with innovators at start-ups
and within large corporations, we’ve found that the best insights tend
to come from sources that can be categorized. We recognize that many
people arrive at great ideas more or less serendipitously, but we
nevertheless believe that it’s possible for individuals to approach
innovation in a more systematic way.
On the basis of our experiences with and research into
entrepreneurial ventures and product-development groups in varied
industries around the world, we have outlined seven “insight channels”
that can be used by would-be innovators in any function or role. They
are listed below. By periodically tuning in to these channels and
methodically running through them, you can focus your imagination,
organize thinking, spur creativity, and find valuable ideas for growth.
________________________________________________________________________________
Anomalies.
Businesses today are awash in data. Innovators pore over this
information looking for promising ideas, but often they focus on means
and averages, which lead to broad conclusions. Sometimes the real
opportunities lie in the results that deviate from business as usual.
Consider an anomaly in global e-commerce. One might think that
Russia, with more than 100 million middle-class consumers and 75 million
internet subscribers, would be an attractive market for online retail.
However, e-commerce accounts for a paltry 1.5% of total retail sales in
the country. The entrepreneur Niels Tonsen recognized why: The Russian
postal system is very unreliable, and few consumers have credit cards.
This insight led Tonsen to create an online clothing store, Lamoda,
which employs an army of couriers to deliver customers’ purchases to
their homes, pick up cash on delivery, and even offer fashion advice. By
providing an innovative experience that effectively brings the store,
the style consultant, and the cash register to the customer’s front
door, Lamoda built a very successful e-commerce business, uniquely
suited to the Russian market. (See also
“The CEO of Ozon on Building an e-Commerce Giant in a Cash-Only Economy,” HBR, July–August 2014.)
The smart innovator knows to notice and then follow up on surprising
data. To look for anomalies, ask questions such as: Is your market share
or revenue abnormally low or high in a geographical market? Are you
having unusual success with a specific customer segment? Are some of
your salespeople unusually productive? Are some of your suppliers able
to deliver unusually quickly? Then dig deeper. The deviant numbers may
be the tip of the iceberg, hiding a valuable insight below.
Confluence.
When several trends come together, their intersection can be fertile
ground for insights. For instance, the confluence of mobile telephony
growth, social networking, and increasingly short attention spans has
spurred the creation of social media applications including Vine, which
allows the sharing of short videos; Tinder, a GPS-linked matchmaker; and
Snapchat, which deletes anything sent through it from the receiver’s
phone in a matter of seconds. Evan Spiegel and his Snapchat cofounders
built on two more-specific social media trends: the urge to broadcast
life as it happens and growing concerns over privacy. People express
themselves spontaneously on Snapchat without worrying about
self-censorship.
New social habits, technologies, and areas of interest are forming
all the time across all facets of life. The smart innovator looks at how
they fit together. Ask yourself: What are the major economic,
demographic, and technological trends affecting my organization,
industry, or market? How do those trends intersect? For instance, if you
combine an aging population (a demographic trend) with mobile
connectivity (a technology trend) and rising health care costs (an
economic trend), you can mine the intersection to create services such
as remote health care monitoring for seniors. Similarly, if you combine
the rising costs and difficulty of sourcing talent with the widespread
availability of mobile video, you can see an opportunity to create a
video-based recruitment application to screen a large number of
candidates at a low cost.
Frustrations.
Life’s irritations are often a terrific source of ideas. In the late
1990s Mark Vadon, a young consultant, went shopping for an engagement
ring and found the experience intimidating and difficult. The system for
categorizing and valuing diamonds is complicated, and eager salespeople
only add to the pressure. Vadon reasoned that many other men were
equally put off—an insight that led him in 1999 to found Blue Nile, an
online jewelry dealer that offers useful tutorials and information on
gems. Today the company is the largest online retailer of diamonds and
sells some $250 million worth of engagement rings a year—more than 4% of
total sales in the U.S. market.
Many people arrive at great ideas more or less serendipitously—but
it’s possible for individuals to approach innovation in a more
systematic way.
Vadon’s experience shows the value of paying attention to what annoys
people and then fixing the problem. Put yourself in the shoes of
customers, colleagues, or suppliers and ask: What’s most frustrating
about your products, processes, or workplace? What bothers you
personally about your business? What work-arounds do people use to get
their jobs done? How could they be improved upon? Can you make
customers’ lives easier or company meetings less painful? Can you reduce
the hassles your suppliers face? If you feel people’s frustrations, you
can find valuable innovation opportunities.
Orthodoxies.
When something has always been done the same way on your team or in
your organization or industry, it’s worth asking if there’s an
alternative. Traditions often block potential innovations because people
are reluctant to abandon the tried-and-true. But when conditions
change, so must traditions.
In the defense industry, for example, manufacturers have long focused
on building expensive and sophisticated missiles, such as Raytheon’s
Tomahawk, that sell for more than a million dollars; even the cheapest
offerings, such as Lockheed’s Hellfire, cost upward of $100,000. These
missiles are developed with customer funding (from the U.S. Department
of Defense) and are custom-designed to be smart and powerful so that
they can take out tanks and other large targets. But at Raytheon (a
company to which Mohanbir Sawhney has provided consulting), the 25-year
veteran Steve Ignat and his team recently upended that status quo.
Knowing that the United States and its allies needed cheaper,
stealthier missiles to effectively target small groups of terrorists on
the ground, they created a low-cost manufacturing facility (dubbed the
Bike Shop) and, without even courting a single customer, used parts from
existing production programs to assemble exactly those sorts of
weapons. One of the missiles they built, the Griffin, is now in high
demand.
Orthodoxies hide in every organization, industry, and market. To
uncover them, ask yourself: What beliefs do we all hold sacred? Why do
things have to be this way? What if the reverse were true? What
opportunities would be opened up if we abandoned those assumptions and
beliefs?
Extremities.
Businesses, appropriately, spend most of their time concerned with
their mainstream stakeholders. But sometimes it is the “positive
deviants,” as Oxford University’s Richard Pascale calls them, who are a
rich source of ideas or insights, teaching us innovative ways to
overcome incredible odds or solve seemingly intractable problems.
In May 2014 the famous Harvard law professor and activist Larry
Lessig created Mayday, a political action committee to address the issue
of corporate money in politics. The PAC would use community- and
internet-based “crowdfunding” to raise similar amounts of money directly
from citizens. As of August 25, 2014, it had raised $7.92 million from
more than 55,000 contributors.
Positive deviants may be visionary customers who can help you see
trends before they become mainstream. They may be manic coworkers who
are passionate and don’t take no for an answer. They may be enlightened
shareholders who can help shape your company’s strategy. Innovators must
look at the fringes of stakeholder groups and ask: What can we learn
from those who are most intense in their complaints or enthusiasm that
we could apply to our company or our role?
Voyages.
When business turns stale, innovators get out of their own offices to
visit “customers”—whether that means employees they manage, colleagues
who rely on their work product, or the people who buy their goods and
services. These “voyages” into different worlds are necessary because
all behavior takes place within a rich sociocultural context; it’s
impossible to understand what others are thinking when you’re sitting
alone at your desk. Designers and product developers have long
understood how important it is to take this anthropological approach.
A few years ago, Jennifer Hargreaves, a manager at the financial
software company Intuit, was tasked with creating a new version of the
company’s popular QuickBooks product for nonprofit organizations. Her
first step was to volunteer at a local charity. After immersing herself
in the new context—helping to manage the organization’s accounts for a
few months—she noticed sharp differences between for-profit and
nonprofit financial management processes. The focus was fundraising, not
sales, and donors, not customers. This on-the-ground research helped
her brainstorm extra features—such as the ability to track donations,
pledges, and grants separately and to allocate expenses to particular
initiatives or programs—for the new QuickBooks Premier Nonprofit, which
she later launched to positive reviews and sales.
Anyone can make similar voyages. Learn how your stakeholders live,
work, and behave. Ask yourself: What are the social, cultural, and
environmental factors that affect their preferences and behaviors? How
can we create solutions that respond to those factors?
Analogies.
Sometimes other teams, business units, companies, or industries have
adopted useful ideas or systems that haven’t crossed the border, so to
speak. Can you import innovation—even from a place that seems far
removed or exotic?
Greg Lambrecht came up with his Coravin Wine Access System by
co-opting ideas from the world of surgery. An MIT-trained engineer and
an oenophile, he grew tired of uncorking bottles that he didn’t want to
finish in one night, only to have the fine wine start to oxidize and
deteriorate. Wouldn’t it be wonderful to be able to drink just one glass
while leaving the rest perfectly preserved? He knew that surgeons had
started using extra-fine needles to ensure minimally invasive surgery
and wondered if the same type of needles could be used to draw wine from
a bottle. He tested and developed the idea over more than a decade, and
despite a few setbacks, Coravin has been well reviewed and is now
widely available.
We advise innovators to study a wide range of unrelated functional
groups and industries to look for analogies that they can adapt to their
domains. After all, innovation is not about bringing something new into
the world. It’s about usefully applying something that is new to the
situation, no matter the purpose for which it was invented.
Our
list of insight channels has evolved over the years and will no doubt
continue to change and grow. Other observers could probably add a few
categories of their own. But we’ve consistently found in our research
and work that these seven are powerful drivers of innovation. Although
they’re most commonly used by entrepreneurs, developers, and designers,
they can help you in any role and any context where new thinking is
required. Few people find great ideas on a blank canvas. Most of us need
our imaginations channeled.
