(…continued from part two)

5. Since your book came out, what has been the reaction to the idea?

Generally, once people understand the fundamentals of what we are describing here, they love it – it has logical appeal. After all, we are simply saying that companies must uncover and prioritize their customers’ needs and use that knowledge to drive innovation. This has been accepted thinking for decades. Outcome-driven innovation is different in that it incorporates new ideas about just what a “need” is and how they are captured, prioritized and used to drive innovation. It brings needed precision to the process of innovation, transforming it from an art to a rules-based discipline.

6. Is there a particular sector/area where outcome based innovation is best applied?

For a theory to be sound, it must apply in all situations and circumstances. From our experience, outcome-driven innovation theory can be applied in all circumstances and situations as it is focused on the very fundamentals of innovation. We have achieved success in B2B and B2C environments, small medium and larger businesses and in nearly every industry you can image – from heart defibrillators and consumer products to bananas and insurance services – from enterprise software and printers to chemicals and ware washing equipment – the applications are endless. The thinking can be applied to any situation in which a person or a company is trying to figure out the best solution to satisfy a set of customer outcomes.

7. Some people I have talked to about the concept think that it’s Marketing 101
– understanding the customer. How have marketing teams reacted to the process?

Understanding the customer is Marketing 101 – but companies continue to fail to get it right. Why? Because most innovation processes lack standards and precision and instead breed variability – the enemy of predictable innovation. For example, to this day companies unknowingly collect several types of inputs as part of their VOC efforts, e.g., a mix of solutions, product specifications, needs, wants, must haves, exciters, latent needs, delighters, benefit statements, etc. In reality, these are all different types of inputs with different purposes, structure, content and format – and it is this inconsistency in customer inputs that breeds variability and failure throughout the innovation process. As a result, companies are not effectively addressing customer needs as evidenced by the dismal rate of new product successes.

Marketing teams that realize they can get more out of their innovations programs love our model – it addresses many of the challenges they have faced for years. If you look at our client portfolio you will see that it is the more sophisticated companies that realize that the process is broken and precision is the key to success. Many companies, however, still think that any customer input is a good input – this old thinking will change as the more sophisticated companies pull away.

(…continued from part one)

3. How would you describe your process?

In my recent book, What Customers Want, (McGraw Hill, 2005), I reinforce the theory that customers buy products and services to get jobs done. [Harvard Business School professor Clayton Christensen introduced this terminology in The Innovator’s Solution. He also cites my work in his book as we have been pushing this thinking for years.] If a company wants to think like a customer, it too must focus on the jobs the customer is trying to get done. This point has far-reaching ramifications.

4. What’s an example of an organization that has successfully used the process?

Over 10 years ago Cordis Corporation (now a division of J&J) used it to define a new line of angioplasty balloon products which drove their market share from less than 1% to about 20% in 2 years, placing them in the market leadership position. Bosch Power Tools used this approach to create the award winning CS20 circular saw – giving them a wining entry into a highly competitive and mature North American market. More recently, Microsoft has adopted this thinking and completed dozens of projects aimed at identifying and addressing opportunities for innovation. Other companies that have successfully used the approach include AIG, Kimberly Clark, HP, Chiquita International, Cargil, Allstate, MetLife, United Technologies, Dentsply, Ecolab, Unilever, and the Harvard Kennedy School of Government.

Over the next week I’ll be posting an email interview with Tony Ulwick – author of the fascinating book “What Customers Want.” I’ve not read many interviews with Ulwick, which is why I’m posting this. He has developed a thorough and unique framework for innovation which brings incredible clarity to an otherwise mis-understood process. In this interview he talks about why innovation can be a repeatable process, and what led Clayton Christensen to heap praise on his methodology.

It’s a multi-part posting as Tony has written full and thought-provoking replies to my questions.

Here’s the first part :

1. How long did it take to develop the idea of outcome-driven innovation?

It took about 15 years to turn outcome-driven innovation theory into a rules-based discipline. We have developed this unique approach to innovation to the point where companies can now uncover and prioritize hidden growth opportunities in any market with near 100% precision.

2. Where did the concept originate?

The initial concept came to me when I was working at IBM on the PCjr. The day after the product was introduced, the Wall Street Journal declared the product a flop. After overcoming the initial disappointment, I thought, “if we knew what criteria people were going to use to judge the value of a product in advance, we could design the product to meet the criteria and ensure its success”. Trying to figure out how customers judge value and how to capture that information from customers in advance became my top priority.

I first discovered how a customer “need” should be defined from the customer’s perspective when engaged in core market growth initiatives and how that definition changes in when working in the area of new market creation. Through the experience of hundreds of customer interviews, I then figured out what the standard structure, content and format of a customer “need” should be. Finally, I went on to create the best methods for capturing these unique inputs into innovation and new quantitative research methods to prioritize them. Most importantly, my team and I have, over the past 7 years or so, discovered how this unique information can be used to more effectively segment markets, position a product, communicate a products value, prioritize the development pipeline, brainstorm new ideas, conduct competitive analysis and perform many other tasks associated with innovation.

(Part two is here)

The Business Innovation Insider reports that two US business school professors are starting an MBA course focussing on systematic innovation.

One of the tutors, Glenn MacDonald, professor of economics and strategy at Washington University’s business school, describes innovation as :

a fairly analytical process, an ongoing management activity—not going out into the forest and thinking up crazy new ideas.

I wonder : as companies tire of pouring money into non-repeatable blue sky innovation iniatives, is the move into systematic and repeatable innovation the start of a trend?

Netflix is entering the crowd sourcing game with the ‘Netflix Prize.’ It’s all very Web 2.0 , and links into previous thoughts about the trend. With Netflix, innovation via crowd sourcing is possible because it’s dealing with software. This lowers the barriers for potential innovations, much in the same way that open APIs have opened the floodgates for a huge range of mashups with sites like Google Maps.

The Netflix Prize seeks to substantially improve the accuracy of predictions about how much someone is going to love a movie based on their movie preferences.

Thanks to PSFK

In the banking industry innovation is usually limited to printing customised pictures on credit cards. The most significant paradigm change in the industry in the last few years has come not from the mainstream banks, but from Zopa.

However The Royal Bank of Canada has started a fascinating competition called “The Next Great Innovator Challenge.” It is offering a CAN$20,000 purse for teams of Canadian students to tell the bank how teens will influence the banking environment in the next few years.

It’s interesting on several fronts. Firstly it taps into crowdsourcing – it’s likely that a plethora of ideas will flood into the organisation as a result of the competition. Even if the ideas will not fly, they will start people thinking in whole new directions. When you are encouraging innovation, divergent thinking is a necessary base for the process. From a company point of view, exploring ideas submitted via the competition also gives people in the organisation permission to explore thoughts that would otherwise be considered too fringe and therefore ‘off limits.’

Secondly the competition acknowledges that there’s a generation gap in technology use, and that teens now technology multi-task without a second thought. Contrast this approach to most C-level executives in the banking world who have yet to come to grips with T9 dictionaries to speed up texting.

Lastly because of the conservative nature of banks, and speaking from personal experience, getting a competition of this nature off the ground is damn hard, so I have to tip my hat to the Applied Innovation Team at RBC.

I’ll be watching the competition with interest.

Following on from the HBS article (see this post) which makes the point that for crowdsourcing to really work, the cost of development must be in reach of a single user, comes this example from Japan.

In Japan there’s an interesting trend in bookstores which give away from book jackets from colourful display stands. The catch – if you can call it a catch – is that the jackets are heavily branded. The idea is that when you are reading a book, the cover is open and therefore on display for the world to see. The benefit for the reader is that the cover protects the book. So where did this idea come from?

The jackets are the brainchild of the advertising company Setup Inc. “We noticed that on the trains, many women were reading books covered by jackets they had made themselves, so we thought that if we could make covers that were nice to look at and easy to use, then they might serve as a good advertising medium,” says Setup.

Get the full story from Web Japan here

HBS Working Knowledge has an article on user led innovation / crowdsourcing. There has been a lot of discussion about the trend, and I maintain that for a small-medium company the process is generally expensive and time consuming.

However this article – which focusses on white water kayaking – makes an excellent point about the concept :

For user innovation to be a force, the cost of creating a new design must be within the reach of a single user, whose reward is solely the improvement of his or her own experience.

This is an extremely important point which is missing from much of the conversation about crowdsourcing.