Innovation Insights
by Stephen Shapiro

I previously started posting the 40 strategies from my Best Practices are Stupid book. But I completely forgot to include the introduction. So I am going back to that for this post. As you read this and the other chapters, please remember that this book was published back in 2011. Although the principles remain the same, some aspects have evolved since then. Enjoy!

Introduction

On April 20, 2010, the environment was dealt a horrific blow. On that day, the Deepwater Horizon oilrig exploded, spewing as much as 180 million gallons of crude oil into the Gulf Coast of the United States. It took 87 days to cap the gushing wellhead.

In the weeks following the explosion, scientists, movie stars, and concerned citizens tried to devise ways to slow the flow. But workable solutions were hard to find and implement, as the well was nearly a mile below the surface of the ocean. Repeated attempts failed.

In an effort to find better solutions, the Deepwater Horizon Unified Command, spearheaded by BP, launched a website where anyone could submit their ideas in an online suggestion box. According to USA Today, the website received nearly 125,000 ideas; 80,000 suggestions had to do with plugging the leak and 43,000 on ways to clean up the oil.

Of these ideas, 100 were deemed as having some merit and a couple dozen were tested.

On the surface, this might appear to have been a successful endeavor; BP was able to gather lots of possible ideas to help end the disaster.

For a company that stood to lose billions of dollars in cleanup costs, relief payouts, and lost sales due to bad publicity, this approach might indeed have been a good strategy.

But the resources necessary to respond to this type of disaster typically don’t exist within most organizations. Although a workable solution may have been found using this strategy, it is unclear if that was the case. Regardless, consider how many people it would take to evaluate thousands of ideas. If one person could evaluate an idea in 30 seconds (which is optimistic, especially for a technically complex issue like this) and could dedicate 40 hours a week to the task, it would take over a half a year to evaluate that many submissions, a significant investment for any company.

With an innovation strategy like this, finding a useful idea is like finding a needle in a haystack. Or more accurately, it is like finding a needle in a stack of other needles.

Unfortunately, this innovation strategy is what many well-intentioned companies use in their quest to be more innovative. They operate under the misguided belief that getting more ideas leads to better innovation. Organizations that use this approach spend a lot of their time sorting the wheat from the chaff. And sadly, most of the ideas are chaff.

As this book will reveal, you don’t want more ideas. You want to focus your energies on finding solutions to pressing problems that enable your company to be more innovative. In fact, I’ll teach you why the key to innovating successfully involves innovating efficiently.

The popular press and innovation gurus alike often provide well-worn examples that muddy the waters on how to approach the innovation process.

Continue reading >>

Here is the second half of tip 14 from Best Practices are Stupid. Be sure to read the previous post before reading this one.

Your Customers Don’t Know What They Don’t Know

Innovators looking for input from consumers must assume that consumers cannot always (and may not want to) explain themselves, their behaviors, their attitudes, and their decision-making processes. The average person is only aware of about 5% of their thoughts and feelings on any given topic. When asked outright, consumers will of course provide answers, but those answers may be incomplete at best and quite misleading at worst. How often have you heard representative consumers say in response to a direct question, “I will definitely buy this product” only to see the product fail? Innovators need to find ways to bypass the rational, explicit, conscious mind and tap in the subconscious.

One way to do this is through the use of metaphors and storytelling.  Humans think and speak in metaphors. Just try expressing yourself, your ideas, your emotions and attitudes without the use of metaphor. It is almost impossible and certainly makes for a very bland conversation.  Note that even the word bland is a metaphor in this context.  Metaphors are based on human experiences and help us make sense of the world.

When Oticon wanted to overcome the shortcoming of focus groups and other traditional market research techniques, they decided to use a metaphor-driven approach involving in-depth one-on-one interviews and helps consumers express their vision of how a product might fit into their lives, fill a need, or solve a problem.  The consulting firm (Olson Zaltman) that conducted Oticon’s research, found that wearing a hearing aid was like having “a neon sign on your forehead saying, ‘I’m flawed, I’m old.’”  Now, that’s a pretty powerful metaphor.

Designworks USA, a division of BMW, uses a different approach for capturing subconscious needs of consumers.  While designing cars and other products such as cell phones, computers, and tractors, instead of starting with the basic functions and features, the company has consumers tell them stories about emotion.  Their designers first meet with company executives, employees, and customers in order to capture the emotion that customers will feel when they use this product.  This is done using sketch artists rather than words.  Only after everyone agrees on these emotions will the design of the form and style begin.

According to an Accenture study of executives in 639 companies, the number one reason for innovation failure was that their products and services “failed to meet customer needs.”  Innovators tend to build solutions around the explicitly articulated needs of consumers, often based on numerical data.  But in doing so, the “real” consumer needs are missed.  As innovators, we need to tap into the darkest recesses of the mind in order to capture what the consumer really wants.

Tip 14 from Best Practices are Stupid…remember this is from over 10 years ago. Splitting this into two posts.

Imagine you are a hearing aid manufacturer and you want to develop the next generation of product.  You conduct surveys and focus groups and discover that nearly 80% of the hearing impaired population, despite the recommendations of their health care provider, refuse to wear hearing aids, mainly citing cost as the key reason. What do you do?

The obvious answer is to find ways of producing a lower cost hearing aid.  Or is it?

Oticon, a large global manufacturer of hearing aids, wasn’t convinced.  They realized that their market research only gathered information at a “conscious” level: what the consumers said to them in focus groups and surveys.  But the company wanted deeper insights.  So they employed a number of techniques for tapping into the subconscious minds of potential customers.

They eventually discovered the real reason people did not want to wear a hearing aid: it made consumers feel flawed, stigmatized, and old, especially those individuals with early stages of hearing loss in their 40s and 50s.

Although making the devices even smaller or nearly invisible might seem like the right answer, further research found that this would only reinforce the consumer’s negative feelings, as it confirmed in their minds that a hearing aid was something to be ashamed of.

Based on these new insights, Oticon took a very different route: they made large yet fashionable hearing aids that look more like earrings and are offered in bright colors and patterns, from the colors of ones alma mater to zebra stripes. During a trial study of people who wore the device for a few weeks, some users said their friends mistook their hearing aids for Bluetooth headsets. In the end, the product was a hit with consumers and it even won several design awards.

What Oticon learned was that what consumers say in surveys and focus groups often contradicts what they actually think and feel, and how they will ultimately act.  The key is to tap into the subconscious minds of your customers because it is the subconscious mind that really drives behavior.

The Next Post: Your Customers Don’t Know What They Don’t Know

Tip 13 from Best Practices are Stupid. Here I explore the lessons from one of my favorite movies of all time.

In 1989’s “Indiana Jones and the Last Crusade,” the nerdy archeology professor Indiana Jones advises students to “forget any ideas you’ve got about lost cities, exotic travel and digging up the world. We do not follow maps to buried treasure, and ‘X’ never, ever marks the spot.”

In today’s world of data mining and customer analytics, it can be easy to study your customers from the comfort of your desk. But most likely you are only gathering data about YOUR customers. As a result, you are missing the data of former customers and people who never were customers.  As for your current customers, you will only be able to analyze their activities associated with your existing products and services; you won’t be able to identify unarticulated needs.

The real treasure can be found when you leave your office, don your fedora and bullwhip, and study customers with your own two eyes.
Anthropologists and innovation experts call this ethnography, a term used to describe any research where the purpose is to provide an in-depth description of everyday life and practices.

Instead of asking your customers questions or analyzing data, you observe them. By doing this you can find their unarticulated wants and needs.

These studies can also lead to interesting process improvements.  A manufacturer of copying machines wanted to speed up the time it took for a technician to perform copier repairs. While observing customers using their equipment, the company discovered that most repairs were relatively simple, but customers were clueless as to how to fix the problem on their own. The solution?  They supplied customers with detailed instructions on how to fix the most common jamming problems so that the customers, not technicians, could solve those problems immediately.

Whirlpool developed pedestals and storage units for its Duet front-loading washers and dryers by observing a woman who had placed her dryer upon cinderblocks to make it easier to load and unload without having to bend over.  Although the primary benefit of pedestals is to raise the appliances about a foot off the floor, making it easier to load and unload, the additional weight also helps anchor the machine, minimizing “washer walk.”  In addition, the drawers that slide out from the pedestals provide an out-of-the-way space to store bottles of laundry detergent, bleach, and fabric softener.

Get out from behind your computer and see the world – and your customers – with fresh eyes.  In doing this you are sure to discover opportunities you never expected.  And in the process you might just find gold.

Tip 12 from Best Practices are Stupid…

Imagine you are the former Governor of California, Arnold Schwarzenegger.  Your state is struggling with myriad issues ranging from a perpetual and growing deficit to a decaying education system to an infrastructure that can’t handle the ever-increasing population.

What do you do?

Like any good innovator, you turn to crowdsourcing, just as Governor Schwarzenegger did. He created a site designed to allow anyone to post their suggestions and comments, and vote on the best ideas.  Thousands of people participated. Which idea received the greatest support?

Did it involve reducing government spending? Did it help improve traffic and other infrastructure issues? Did it tackle educational issues? No. The winning idea was…

Legalize and tax marijuana.

Although the crowds felt that this might be the best way to solve many of the state’s woes, it didn’t solve any of the problems that the government wanted to handle.

In August 2009, a New York Times story detailed a similar effort by President Barack Obama to elicit ideas from the American public.

“The White House made its first major entree into government by the people last month when it set up an online forum to ask ordinary people for their ideas on how to carry out the president’s open-government pledge. It got an earful — on legalizing marijuana, revealing UFO secrets and verifying Mr. Obama’s birth certificate to prove he was really born in the United States and thus eligible to be president.”

Asking people for their opinions and allowing them to vote is not always the best way to run your innovation efforts.

What can we learn from all of this? Continue reading >>

The final section of Tip 11 from Best Practices are Stupid. Please read the first two sections before reading this. Remember, this book was written a dozen years ago, so some concepts have evolved. The first two posts talked about competition vs collaboration, and the three downsides of traditional brainstorming. Now we move to some examples.

Several years ago I wanted a new logo for my website and decided to crowdsource a design using 99 Designs. After posting a “brief” describing what I wanted, I had a choice: use a collaborative or competitive approach. With the collaborative model, every designer could see the submissions of the other contributors along with my comments on the designs. With the competitive approach, I could use blind submissions where the designers couldn’t see anyone else’s work. I chose the collaborative design approach. In the beginning, the designs trickled in slowly; many designers sat back and waited until there seemed to be a convergence around one idea. The variety of designs was relatively low.

I used a different approach when it came time to design the cards for my third book, Personality Poker. I first used the competitive model (i.e., blind submissions). What I found was a much greater variety of submissions right from the start, but there was no opportunity for people to build on the ideas of others. Therefore, after running the competition, I followed it up with a collaborative challenge. This process yielded a wide choice of initial designs followed by a high level of collaborative refinement. The final result was better than anything a single designer could have developed.

The most successful model, from this experience, was competition followed by collaboration.

Of course there are other factors that will influence when you should use a competitive versus collaborative approach. For example, if intellectual property issues are critical, blind competitions work better since they provide greater protection for the designers. Of course, even in that situation, you can have groups work together to submit a competitive solution. Or, when allocating prizes (monetary or other) competitions are easier to manage as submissions are clearly delineated. But even with collaborative solutions, there are creative ways of divvying up the winnings. It does not need to be winner-takes-all.

For social issues pertaining to the public good, collaboration often works well because you can take the pulse of a variety of people. Just don’t fall into the trap of believing that public opinion will lead you to the right solution (see the next tip).

Every situation is different, and it is up to you figure out which approach will work best for your particular challenge.

Here is the continuation of Tip 11 from Best Practices are Stupid. Please read yesterday’s post before reading this. In it, I talked about competitions vs collaboration. Now we go to three downsides of traditional brainstorming (there are actually MANY more).

There are several reasons traditional brainstorming sessions don’t work:

1. Serial Processing: If you have ten individuals in a group, only one can speak at any given time. This limits the “bandwidth” of ideas that can be processed. Ten people working individually could theoretically generate ten times more ideas in the same amount of time. However, using collaboration tools can eliminate this problem as people can work in unison, allowing everyone to “speak” at the same time.

2. Social Loafing: When groups work together, there is a tendency for individuals to put forth less effort. They assume that someone else will pick up the slack. Although this is true for group brainstorming sessions, when using other forms of innovation (such as open innovation), this factor tends to have a reduced impact.

3. Groupthink: Finally, it has been shown that if you start the process by working together, you end up with groupthink. That is, as soon as the first idea is thrown out, it tends to influence the thinking of the other contributors. This causes a convergence of solutions too early in the process and narrows the set of ideas that are typically generated.

It is this last reason why it is good to start the process – whether you are using face-to-face brainstorming or virtual crowdsourcing – through a “competitive” approach to problem solving. When conducting brainstorming sessions, it works best to have each person independently write down his or her own creative ideas. Only after everyone generates their own list does the group come together. When using a crowdsourcing approach, it is often useful to start with a competition to get the widest range of solutions, and then, only after selecting the best solutions, do you allow a collaborative community to flesh them out. This gives you get a much richer solution in the end.

Part 3 will be posted tomorrow.

TO COMPETE OR NOT TO COMPETE: THAT IS THE QUESTION (part 1 of 3)

Tip 11 from Best Practices are Stupid. This tip will be split into three posts. Remember, this book was written a dozen years ago, so some concepts have evolved.

Open-source software is a well-known collaborative community. Many developers participate solely in order to be part of the community, to contribute to the greater good, and to build on each other’s solutions. On the other hand, developers who work on creating apps for the iPhone operate in a competitive marketplace. Their contribution is largely, although not always, driven by a financial return, and they tend to work independently.

As we saw in the previous tip, innovation tournaments and bounties can be run either competitively or collaboratively. Cisco and LG Electronics ran competitive tournaments so that no one could see the rival submissions. GE, on the other hand, ran their ecomagination challenges collaboratively, allowing anyone to comment on or vote for any submission. The Netflix Prize and X Prize (both innovation bounties) were run as competitions, yet allowed for collaboration within each submission.

This raises an important question. Which approach yields better solutions: competition or collaboration?

Kevin Boudreau and Karim Lakhani wrote an article on this topic in the MIT Sloane Management Review that examined the merits of each form of open innovation. They found that collaboration is useful when problems require “cumulative knowledge” and involve “building on past advances.” On the other hand, competition is most effective when “an innovation problem is solved by broad experimentation.”

They also found that collaborative “communities often are more oriented toward the intrinsic motivations of external innovators, whereas (competitive) markets tend to reward extrinsic motivation.”

For your corporate innovation efforts, should you use competition or collaboration?

The answer is you should use both. In fact, you may want to use both approaches for a single challenge. However, it is important to go about it in the right sequence.

Let’s first address a few psychological issues related to creative thinking in humans.

Consider your typical group brainstorming session. Although this is a common way for organizations to innovate, is this approach effective? Interestingly, research suggests that individuals working on their own actually produce a higher quality and quantity of ideas than when they work collaboratively with others. There are three reasons for this:

Tip 10 from Best Practices are Stupid. Keep in mind that this was written 12 years ago.

American Idol remains a popular television shows. Why?  Partly because it is entertaining and partly because the show is able to uncover previously undiscovered talent.

It is this latter reason why many organizations are employing the American Idol approach to innovation. Their objective is to uncover some truly amazing ideas or solutions that were previously hidden.

Innovation Tournaments

In the innovation space, these events are sometimes referred to as “innovation tournaments,” a term coined by Christian Terwiesch and Karl Ulrich from Stanford University.

With a tournament there is ALWAYS a winner, although it is not necessarily winner-takes-all.

Cisco, LG Electronics, and GE have all used the “find a winner” model as a way to develop ideas.

The Cisco iPrize (2010) had a total of 2,900 participants who submitted 824 ideas who competed to get $250,000 to launch a new business idea.

LG Electronics (2009) was looking to “design their version of the next revolutionary LG mobile phone.” Their tournament had 835 submissions from 324 individuals. They shared with me the fact that about 75% of the ideas were things they had thought of in the past; only 25% had innovative elements.

GE ran their “ecomagination” challenges.

With tournaments, there is always a winner. But just because someone “wins” does not mean their idea is good or useful. I know from inside-information that the results are often less than stellar. Continue reading >>