Pacific Innovation & Leadership

One goal in this blog is to show that an innovation system can be put in progressively over time, in a step-by-step fashion. So let’s consider what we do with our newly found, critical insights. The goal is to consistently generate exceptional ideas that can actually transform a part of our company’s value chain. In other words, while innovation can spawn new products and services, that is only the tip of the iceberg in terms of what can be really done to ultimately revolutionize the organization.

It’s not so much new ideas as it is new practices and methods that will revitalize your organization. That means you harvesting exciting new business models, processes, formulas, marketing approaches, and a dozen other key business components. It all starts with applying innovation to your understanding of the needs customers desperately want help with.

Innovation can be boiled down to the collective power of collaboration. Long-term, stable innovation teams must be part of any innovation system. These special teams exist to understand and create new customer insights.

Such game-changing flashes of insight can almost always be traced back to a team’s dedication, hard work and collaboration. It is almost always a story of group genius. Rarely, if ever, can such creative insight be traced back to a single lone guru.

Realizing full creative potential comes when widely diverse team members exchange perspectives in a safe, free-flowing, timeless state… as they combine and recombine what has previously worked for them in their very different worlds of the past. Simply put, innovation is all about recombination. In many cases, team collaboration results from “living together, eating together, and discussing their project constantly”, in a playful but almost obsessive way.

Ten Team Building Principles

How do we get these types of innovation teams working?

1. Encourage the best people to volunteer: the financial rewards, the status, the power, the promotions all seem to come from the company’s main existing business, the performance engine that fuels the rest of the company. Yet the really turned-on people work for more than the usual incentives. They want to make a difference. They want to create. They want to have impact. They want the self-satisfaction of knowing they are making the world a better place.

2. Populate the team with a cross-section of the company: Innovation teams need to be not only talented but also diverse. Not so much diverse by ethnicity (which can be quite important) as much as diverse by variety of business function and perspective. Understand that it is the recombination of successful ideas from different industries and domains that gives potency to an innovation recipe. Depending on the size and the nature of the organization, innovation team players can be part-time or full-time, rotational or permanent, single focus or multi project. In other words, the members of an innovation team can be drawn from anywhere in the company (or even from outside the company); they can be assigned to the team temporarily or permanently. They can work on the innovation projects full-time or part-time; they can work on one team or several teams; just one project or maybe three or four.

3. As much as possible keep the teams stable and permanent: like a fine wine, teams improve with age. Trust, harmony and synergy must be learned. Collaborative teamwork is orchestrated by combining personal knowledge-based skills, soft interpersonal finesse, and the humility to put team output above personal success.

4. Develop the team charter from both top-down and bottom-up: Direction from above – - which connects the team to the vision, values and passion ( or “fire”) of the organization – - can provide the discipline, focus and energy to build excitement into the innovation process. When a new group forms, everyone on the team is going to come with hidden personal agendas, fears, and certain character/personality flaws. In order to bring trust, safety and fun to their interactive processes, it is important that the team build their own set of protocols and rules. Attitude cannot be dictated but teams can learn ways to bring the best out in each other.

5. Make asking new and better questions a primary function of the team: breakthrough ideas come from reframing the way we think about problems. Good reframing is a result of better questions The way old problems were approached needs to be abandoned. Fresh perspectives will allow new problems to be posed and reframed as groundbreaking questions, questions that no one has ever thought to pose before. Quality questions lead to new exploration in potentially fertile ground.

6. Put a few collaborative techniques in place: teams need to be taught collaborative techniques. Theatre-type Improv and the “Yes, and…” method are two examples of such. The Improv technique brings out spontaneity as each team member is inspired to add to an evolving story (or idea); each builds on the previous member’s creation in the same way as improvising comedians perform on stage to deliver a completely original fantasy. The “Yes, and…” rule was developed by Pixar to deal with the delicate egos of people who had to be inventive and ingenious in their everyday work. By starting with the word “yes”, a critic delivering constructive feedback would first affirm the new creation, and then suggest a way it could be a little better. This device kept the artists in high gear on a day by day basis. Every innovation team has to improve their own methods and techniques that helps their ideas flow.

7. Between meetings keep the communication flowing with a few simple tools: e-mail and telephone work best; there is a variety of project and idea-organizing software out there which can be very helpful. Be careful though because such software can also cause the work to bog down. What goes on between meetings is at least as important as what goes on in meetings. “Eat, drink, breathe the project”, alone and with each other; that’s what can develop… and that’s a good thing.

8. Teach the team to listen to each other on a very deep level: The usual team behavior sees the participants primarily engrossed in planning their own words and proposals. That’s the ego at work hoping to soon show how smart it can be. True listening has to do with a very high level of respect, admiration or even awe, for the person-hood and unique importance of the one advancing some type of relevant information. From listening comes trust, from trust harmony, and from harmony comes flow.

9. Make the goal to be constantly building on each other’s ideas: that’s what makes the whole team go. Deep listening extends the ideas (that have just been proposed) into a new combination, a new joint creation. The teamwork required to do this is often unacknowledged or even invisible, yet there is always a common focus and dedicated goal that is always at the forefront. Lots of small ideas lead to a series of sparks; no one comes up with that single flash of insight because the overarching critical insight is built from those sparks over time.

10. Let the team know they have the luxury of time: when it comes to innovation patience is a virtue. It’s called incubation. The unconscious mind needs time and space to yield its brilliant output. No one may demand of it constantly. Each member’s current creative action will only take on special meaning later, after it is been woven into different ideas, created by the other team members. Meaning comes from better and better context. Ideas, and later insights, become more important as they are considered, reinterpreted and applied by the rest of the team. Team dialogue builds trust as a sequence of small ideas leads to new thinking spaces; eventually, a long chain of small incremental ideas leads to a critical insight. The combination of key insights is what leads to the breakthrough innovation. So given time and incubation, the team can help the business combine just the right ideas in just the right structure.

So what can your innovation team do with newly found, critical insights about the customer’s pressing and very important needs? Here is a place to get started:

Suggested Innovation Exercise

Develop New Value Propositions:

If you don’t have an innovation team assemble one. If you already have one, reorganize it so you feel like you are starting from scratch. Then start applying the 10 principles above; use a diary to record your observations about the new team’s developing dynamics.

Give the team a specific challenge to tackle: have them pick a frustrating customer problem – - one that you know they will pay premium money for a solution. It must be something you and your competitors are partially solving at the moment, but not all that satisfactorily. Have the team list all the consequences – - good, bad or otherwise – - of the existing solutions.

Next to each consequence, get them to generate an ideal or fantasy solution; let them be very creative here. What they are going to do is start with the most perfect solution they can imagine and work backwards from there. Then the team compares the existing solutions to the imaginary ones, looking for the biggest gaps. They are looking for the biggest increase in value or satisfaction for the customer.

The team then picks three value gaps to begin investigating as innovative opportunities. Each needs to be feasible and robust. Each can be eventually solved by the expertise within your company. Finally, from these gaps, the team begins generating exciting new value propositions for these customers. If the team utilizes all ten principles, their output will provide extraordinary new insight.

One place where innovation tends to get stuck is in accurately “defining user needs”, their struggles and drudgery, what they really want even if they don’t consciously know it. Usually, customers are not qualified to know what solutions are best – - that’s the job of the innovator. In fact, customers have a very hard time articulating what tools, products or services they want; but, with the guidance of the innovator, they can become very good at specifying what they are trying to do and what “outcomes” would make them happy.

To avoid confusion in how we are using these terms, consider what “needs” are not. Needs are not solutions. Solutions are the outcome of innovation; solutions are the means by which unmet needs are satisfied. Neither are needs specifications, for specs define outcomes. In the same way, needs are not a technology, or a product or service’s feature-benefit.

In the context of innovation, needs are best described as the “requirements”, the job they are trying to get done or done better. We are being very precise in our definitions here because clarity on these distinctions is foundational to the innovation process we are describing.

The key to success in innovation is knowing precisely and in a standardized way what buyers and users are trying to do. Proper interviewing and mapping techniques with accompanying structured, stereotyped feedback can make all the difference in the world. It can turn a 70 to 90% failure rate for new product introductions to a plus 80% success rate for all types of innovations. (When was the last time Apple brought out a product that wasn’t wildly successful?) The reason this can be done is because (1) individual needs can be isolated and classified (as “jobs-to-the-done”) and distinctly rated from unimportant to very important, and (2) the degree those same needs are being fulfilled can also be ranked from satisfactory to very unsatisfactory. This means innovators can accurately identify very important customer needs that are going unmet. In other words, we go from flailing around in the dark to intimately understanding where we can help right now and possibly in a very big way.

The innovative “breakthrough” comes because resources can be focused on a desperately crying need or set of needs. This way we focus on meeting a big need and avoid focusing on small needs. Demand is certain and the only critical variable is the skill set of the innovator. Most reasonably successful companies are highly skilled organizations. If the company’s old performance engine worked well, then the new performance engine based on innovation should work even better.

According to two decades of pioneering work done by Anthony W. Ulwick and Lance A. Bettencourt, there are essentially three critical functions: (1) Mapping User Needs, (2) Structuring Standardized Statements on (a) jobs-to-be-done (b) desired outcomes, & (c) constraints, and (3) Quantifying same with a very simple formula. Put another way, you deconstruct into its elements what the buyer is attempting to do; then you break down those elements into a series of very simple but precise questions; and finally, you put the responses to those questions into numbers (metrics) that will make it obvious what to prioritize as innovation projects.

A New Way To Identify Unmet Needs

People “hire” a service or product to get a job done. By doing a detailed analysis of “getting the job done”, it is possible to discover many opportunities for innovation. The Customer Centered Innovation Map (Harvard Business Review, May 2008) focuses on Job Mapping that deconstructs any given job from beginning to end. It breaks down the central task a customer wants done into a series of discrete process steps. The purpose of Job Mapping is to get a complete view of all the points at which a user, at each step of the job, might hope for more help from a particular service or product. One goal of the Job Map is to gain insight about the biggest drawbacks of each particular service, tool or product being used at a certain point in time. The opportunity to innovate exists in eliminating the drawback by making the job simpler, easier, or faster.

A skilled interviewer is needed to generate a Job Map and the corresponding statements (job & outcome). For any given innovation project, about 15 separate interviews are required: a combination of one-on-one and small group interviews. Each small group counts as one interview. Clients or prospects can be the target, but in each case it is best if they are as distinct and diverse from each other as possible. The interviewer can usually capture 20 to 30 high-quality job (tasks steps with a defined purpose) or outcome statements (measures of success) in a single hour. After 15 interviews, it is not unusual to have uncovered 80 to 100 unique and important customer needs. These needs can later be evaluated and prioritized.

Ulwick and Bettencourt have pioneered a comprehensive discipline for understanding the unmet needs of customers. The process involves following a structured approach for the creation of a Job Map. Before beginning the eight steps used for creating such a Job Map, it is useful to ask context questions that will get the users talking: “What makes this job challenging, inconvenient or frustrating? Time-consuming? What are the pitfalls? What causes the job to go off track? What aspects of this job are wasteful?” In other words, they become focused when asked about what they know best and what the “job” is which they use a product or service to do. At the same time, it is vitally important to steer away from talking about solutions, possible improvements, features and benefits. Going there confuses the issue of what is the actual job and its outcome.

In creating a job map, the purpose is NOT to find out “how” the user is executing a job; rather the aim is to discover “what” a user might be attempting to get done at each point in executing a job AND what has to happen at each of those junctures in order to successfully complete the job process. Following the Ulwick Bettencourt “Universal Job Map” reduces the likelihood a certain job step will be overlooked or incorrectly combined with a different task. Missing a step in the map means a critical corresponding outcome may not be seen; dissatisfaction with any outcome is where each innovative opportunity lies.

When a buyer hires a service to get multiple jobs done, it is usually obvious what the core job is – - it’s the foundation for achieving all the other jobs. So start by mapping your customer’s core job associated with your product or service; micro mapping can be done later as needed. In the lumber business, the core job may be building a home, putting up a fence, refurnishing a kitchen, adding a garage, painting a chair, buying a drill, cutting a board, etc. Begin defining the execution step by deconstructing the most central tasks to the job. Then define pre-execution steps (what must happen before the core execution step) and post-execution steps (what has to be done to know the job is successfully completed). Defining isolates the role each step plays in the process of getting the job done.

After the steps are identified, the innovator can often create value by (1) improving the execution of a specific step; (2) eliminate the need for certain work inputs or outputs; (3) remove an entire step or transfer the step; (4) address an overlooked step; (5) re-sequence the steps; (6) change the physical location of a step; (7) alter the time a specific step is carried out. Once you have defined the context of and the job you are focused on, the Universal Job Map (as defined by Ulwick and Bettencourt) has nine main components or steps:

1. Define: plan, select, determine. What has to be known and decided before starting a job. Determine the objectives of the job. Assess which resources are necessary and available. Plan the approach for each task to be done. The innovator can help customers understand their objectives better, simplify their resource planning process, and possibly modify the amount or type of planning needed.

2. Locate: gather, access, retrieve (needed items or inputs). What items have to be located before doing the job. Is there a checklist for both tangible and intangible requirements? Innovators may focus on streamlining this process by making components easier to identify and gather, or more available, or by eliminating the need for some items altogether.

3. Prepare: set up, organize, examine (the environment and materials to be used). What preparation work is needed before doing the job? The innovator can find opportunities by looking for ways to make set up less difficult by creating checklists, guides and safeguards, perhaps by automating preparation processes or organizational tasks.

4. Confirm: validate, prioritize, decide. What checklists or verification steps are needed to ensure successful execution? This involves verifying before proceeding that the working environment and materials required are proper in quality, function and capacity and that the particular job-to-be done is still the top priority. Innovators might help buyers gain better information and feedback that they need to confirm potential delays, readiness, and decide among execution alternatives; they might also find ways to build confirmation into the locating and preparing steps.

5. Execute: perform, transact, administer. What is the customer going to do to get the job done successfully and consistently? The usual goals are to achieve optimal results while avoiding problems and delays. The most fruitful area for innovators is to provide the know-how by which customers can gain real-time feedback and automatically correct execution problems.

6. Monitor: verify, track, check (whether adjustments need to be made or unexpected problems need to be resolved). What needs to be monitored to ensure successful and consistent execution? Innovators need to pay attention to the costs of poor execution. When time consuming or demanding monitoring can be made more passive by solutions that call attention to problems or relevant changes, very significant value can be created.

7. Modify: update, adjust, maintain. What modifications need to be made as a result of monitoring the quality of execution? Modification is often uncharted and dangerous territory for the customer as the search is made for the right adjustments; it can be very time-consuming, costly and frustrating. Innovators will find ways to help get execution back on track and keep it on track. Anticipation actions in support of predictable problems can be most valuable.

8. Conclude: store, finish, close. What steps need to be followed to properly conclude the job. Many things must still be done when the core job has already been completed. Users often find such steps burdensome because they want to move on to the next job. Innovators can find opportunity by helping users to simplify their closing processes; other value can be created by helping to integrate some of the closing tasks into earlier steps.

9. Troubleshooting: What types of problems need troubleshooting during the course of doing a job? Look for ways to speed up the troubleshooting process. Can root cause be more easily identified? Are symptoms often mistaken for root cause? What type of troubleshooting happens over and over again? Can it be eliminated?

Once a Universal Job Map has been completed, each step can be broken down into sub tasks or component jobs-to-be-done; with each comes a clear purpose of achieving a desired outcome. 50 to 150 outcomes are typically generated from the one core job process. Think of each job and desired outcome as an opportunity to innovate: the devil is in the details and so is the innovator’s reward (as well as the eager customer’s satisfaction). That’s why it’s important to list all possible outcomes of each job so a key opportunity is not missed.

The next step in the Customer Centered Innovation Map is to turn the jobs-to-be-done into brief, simple “Job Statements”, “Outcome Statements” and “Constraint Statements” (what’s blocking job effectiveness – we do not provide details on developing Constraint Statements here since they are quite similar to Job Statements). In these statements the opportunities can be numerically identified and prioritized, taking the guesswork out of finding deep customer needs.

Structuring Standardized Statements

The goal of uncovering real user needs is pursued by considering the jobs they’re trying to get done and the outcomes they’re hoping to achieve. A job statement defines (1) an action (the “verb”), the reason a service is hired. It also contains (2) the “object” of the action, i.e. “the what”, as well as a (3) “contextual clarifier” that might give the “where” or “when”; optionally, an illustrating (4) “example” or two can help remove any vagueness about what is meant. For instance:

Determine (action verb) where your car is parked (object of action) when at a public event (contextual clarifier) such as “write down the parking lot section letter when going to a football game”(example).

The statement should not contain any proposed improvements, solutions or possible features and benefits. They only cloud or confuse what the vital action might be. The purpose is to isolate and identify each elemental action. A good statement fleshes out what the user is really trying to accomplish, not just list a task that gets them there. Getting down to the root action is known as “validating”. It is the difference between an invalid step, “check the monitor”, and a valid step “get the patient’s vital signs”.

An outcome statement defines (1) the direction of improvement (universally stated as the two words “minimize” or “increase”), (2) a unit of measure (a category such as time, frequency, number, probability – - not the specific metric or measurement taken at a certain point in time), (3) the object of control, or desired outcome (what is hoped to be accomplished), and as in the job statement (4) contextual clarifiers & (5) optional examples. For instance:

Minimize (direction of improvement) the amount of (unit of measure) paint wasted (object of control) when it is poured from one container to another (contextual clarifier) – - roller pans, smaller cans, and sprayers (optional examples).

The outcome statement helps the user to judge how well a particular job is getting done. The collective set of outcomes personifies the users’ value model (the overall level of satisfaction for the core job). Knowing what outcomes users are trying to achieve gives the innovator short-term and long-term direction in choosing specific ideas and technologies to pursue.

Following a standard structure for the format of each statement is critical. Otherwise, inconsistencies between statements will bias and confound the results; such skewing may mean missing the best opportunities. Statements need to be as brief as possible, exact words should be consistently repeated as much as possible, and language must be simple and obvious to all involved. Variety in word and format is the enemy here. Statements should parallel each other in a consistent ordered structure. The more uniform the statements are, the easier it will be to pick out important variables and identify focal points.

Once job and outcome statements are completed, then the importance of each job and the satisfaction of each outcome can be investigated. This is the primary reason a core job is mapped and broken down into individual statements. When important jobs are not well satisfied, there is a screaming need and a breakthrough innovation opportunity. The need intensity can be mathematically calculated.

Prioritizing Unmet Needs

Tony Ulwick developed an effective formula for quantifying and prioritizing unmet needs. The following section provides you with a simple way to take gathered data and create measures that identify the ideal target opportunities. While valuable information comes out of the interview process, a survey of a larger population is often valuable for validating whether your findings are valuable to a larger market. The process of creating metrics would work for either the initial 15 interviews or for a targeted larger population.

The job and outcome statements - – usually 50 to 150 – - are now put into a survey instrument (a questionnaire). A statistically valid (a well diversified customer and prospect cross-section) representation of the innovation target pool is now polled. Typically a number between 180 and 600 people is best. The participants are asked to rate “the importance” of the each job and outcome statement. A scale of 1 to 5 is employed where 5 means critically important while 1 means not important at all. Then the participants rate “satisfaction” where 5 shows total satisfaction and 1 complete dissatisfaction. The answers are tabulated and scored.

The survey results will ultimately show which markets (as represented by individual jobs) are over-served and under-served. The extent of opportunity will also be revealed. The opportunity will be expressed as a specific number generated by a very simple calculation.
In his formula, Tony Ulwick shows opportunity to equal its “importance” plus the “difference between importance and satisfaction”. The difference can never be less than zero; this is because high satisfaction must not diminish the fact that any particular job is important. So as A + B = C (where B>=0):

IMPORTANCE plus (IMPORTANCE minus SATISFACTION) = OPPORTUNITY

IMPORTANCE is expressed as a percentage and restated as a number between 0 & 10. The percentage is the number of 4s and 5s, “important” and “very important”, divided by the number of responses (the total number of 1s, 2s, 3s. 4s and 5s). This number is then reduced by one decimal point: 99% becomes 9.9, 70% becomes 7.0, 33% becomes 3.3, etc.

Likewise SATISFACTION is expressed as a percentage of 4s and 5s and converted by one decimal point. If IMPORTANCE minus SATISFACTION is a number less than zero, it is stated as 0.

For example, when a statement is rated as 77% in importance and 23% in satisfaction, the formula is:

7.7 + (7.7 – 2.3) = 7.7 + 5.4 = 12.1

Likewise, when a statement is rated as 23% in importance and 77% in satisfaction, the negative number in “B” becomes zero and the formula is:

2.3 + (2.3 – 7.7) = 2.3 + 0 = 2.3

The 12.1 number represents a highly important but poorly satisfied job; the 2.3 number represents a fairly unimportant job that is executed with a high degree of satisfaction. These final numbers represent the opportunity score for any particular job or outcome. Opportunity scores of 15 or better represent compelling areas of opportunity that must not be ignored. While rare in mature markets, they are quite common in newer markets. Scores between 12 and 15 represent easy pickings for the innovator. Scores between 10 and 12 often prove to be worthwhile areas to investigate. Scores below 10 are generally unattractive but not always. There can be opportunity where jobs are both important and well satisfied. Obviously, the higher the score the greater the priority should be. The need to be served cries out.

High opportunity scores represent underserved markets. With existing customers there is the opportunity to get a job done better or to get more jobs done. New customers can be gathered by helping them do jobs others are already doing or by helping them do a job no one is doing yet. Of course this means stretching beyond existing distinct capabilities and core competencies into developing new and related skills. The stretch is the difference between stagnation and progress. Innovating companies are learning organizations.

The scores also reveal where markets are over-served. Over-served means satisfaction ratings are higher than importance ratings. When the market is over-served there are usually three courses of action to take: (1) move onto another possible innovation project and halt all effort in this area – - making additional improvements will just prove to be a waste of time and resources – - innovation will add cost but not additional value; (2) innovators can look at cost reductions i.e. remove costly functions to widen the market to those that would be happier with lower-priced “good-enough” solutions; (3) engage in disruptive innovation which means taking out costs along multiple dimensions by creating a lower cost business model that others in the industry might find difficult to match. Often new markets can be found by introducing a less-costly, lower-performance product.

Lead with Needs

Having a system to capture customers’ deepest and most pressing needs is critical to innovation. Usually, all critical needs can be identified with clarity and certainty. The needs can be prioritized for importance and opportunity. Key unmet needs in the marketplace become the focal point for aligning know-how, resources, people and strategy. The company’s current performance engine (way of making money) can be invigorated; new performance engines with brand-new solutions can be built to ensure a positive future.

With this clarity, core markets can be grown, opportunities can be capitalized upon in adjacent markets, new markets can be discovered, and existing markets can be disrupted. Success is never certain; but, the path towards it can be mastered in a way that creates substantial improvements in a company’s innovative advantage.

Confidence comes from having customer-defined metrics that serve as the baseline for investigation of any marketplace; that market can be more easily understood in terms of jobs-to-be-done (people buy drills to create holes – the job to be done). The job, not the product or service solution, is the most elementary unit for analysis and the basis for further exploration. The Job Map breaks down complexity and cloudiness into identifiable opportunities. Those opportunities can be prioritized with hard numbers instead of wishy-washy guessing and hoping. Practicing these well-practiced company disciplines ensures the needs of the customer becomes central to the innovator’s thinking, while personal opinion, intuition and past experience becomes secondary and subservient.

Most importantly, the mystery and most of the uncertainty disappears from the innovative process. The rigorous controlled approach based on customer-defined metrics enables the generation of valid breakthrough ideas at the right time and place. Formulating growth strategy becomes simple and effective; value creation becomes straightforward.

Without a solid understanding of the true needs in the marketplace, innovation is a gamble. The scattershot approach is a hesitant one that allows no focus, no concentration of resources and people, no “damn the torpedoes, full speed ahead!” It seems to be the pursuit of serendipity. No wonder for all the techniques, skill-sets and brilliance, so many innovation projects only have only a 10-20% chance of succeeding.

Would you like to boost your innovation success rate to four out of five, or even higher over time? The disciplines described in this study are the core elements to a breakthrough innovation discipline that is being applied with an above 80% innovation success rate. We hope this article clearly shows you that there is a much better path to innovation. Success improves and the risk of failure is reduced as you become more certain about the critical unmet needs in your marketplace. The value of these disciplines is only realized as they are embedded into the day-to-day practices and mind-set of an organization. The result is an innovative capability that is hard for anyone to match. Do you want a bigger market share? Fatter margins? Much happier customers…. Well?

Can innovation consistently lead to improved prosperity? Is there a simple path to a surge in business? Can you suddenly dominate your own little niche or category with a new product or service? Is there a reliable approach to innovation that will almost always lead to increased prosperity?

Yes, yes, yes and yes!

The purpose of this particular post (in combination with the next) is to provide you with enough information to know that the whole world of innovation is rapidly changing and that new highly-effective, proven methods have been developed that accelerate the pace and quality of innovation while radically reducing the risks traditionally associated with innovation. If you are in charge of an organization or department, you cannot afford to ignore the significance of these developments.

While the pace and effectiveness of innovation are changing competitive challenges as we know them, the traditional approach to innovation is often not worth the effort. The following highlights the scary statistics associated with traditional innovation approaches. First, though, consider this: 80% of new products fail on introduction to their market. And, about 60% of “new and improved” pre-existing products fail upon reintroduction. Second, finding a new service or product is not that easy. Dell Computer built an idea-soliciting website in February of 2007 called Ideastorm. Of the 12,483 ideas posted on the site, only 366 were implemented, less than 3%. Do you know how much sweat it was to get to just one usable idea? How much impact do you think that one idea had? Or all 366? Starbucks, with its My Starbucks Idea, had even more disappointing results with a scattershot idea generation approach: 75,653 ideas yielded only 315 implementable ideas. That’s less than half of 1%. What do you think the cost was for all the work involved in gathering, sorting, screening, evaluating, developing, testing, launching and nursing those 315 suggestions? Sadly, even major corporations can have poor innovation systems (statistics provided by “How to Fix Product Development”, Mike Shipulski, November 2011, Innovation Excellence blog).

Tinkering & Tweaking or Going Deep?

Customers, floor workers and sales personnel can generate a lot of ideas for innovation. However, most of these ideas tinker with what already is; only rarely do they show the path to a major change in the marketplace. Because customers are rarely professionals who are current on the latest advances in industry and technology, their ideas are usually confined to something they’ve seen before, perhaps similar or related products in the same or another consumer sector. In fact, developing customer ideas can be dangerous. They tend to generate bland, unremarkable, stereotyped, “me – too” solutions that are met with indifference upon launch; the waste of time, money and diligent effort can yield anything from discouragement to disaster.

However, internal and external suggestions from suppliers, buyers and curious employees can lead to some solid improvements to existing products and services. Such progress (incremental improvement) has been historically necessary to retain and grow market share. This incremental improvement is crucial only for maintaining and improving the current “performance engine” that is the lifeblood of the company. Sadly incremental innovation (or improvement) is not enough to compete in today’s aggressively changing marketplace. Incremental innovation seldom disrupts the product development cycle and only rarely leads to dramatically increased market gains.

So how do we get to BREAKTHROUGH Innovation? How do we instill GAME-CHANGING DISCIPLINES within our companies?

The new realm of breakthrough innovation is built on a foundation of corporate character which includes humility, servant mentality, and a deep, intense caring for the customer.

The opposite of humility is hubris or ego. The know-it-all, expert approach seen in too many senior managers – - and others in authority – - is what blocks discovery and turns creativity dangerous. Far too much innovation is divined from the boardroom without ever getting out and truly understanding what the users are struggling with and desperately need. There is too much assuming that they know more than the buyers about what the buyers really want. In other words, they are guessing. Those guesses are usually based on feedback (solicited or not) from customers about feature upgrades; the guesses seldom get at the unresolved problems a user would pay a great deal to fix. The net result too often is that such executives “try to create a need” by marketing some incrementally better feature that too few care about enough, at least to pay more (or any) money for. This is where many disasters happen. Humility assumes the opportunities for breakthrough are still unknown and hidden underneath the surface of casual observation. They are unknown to both the customer and the supplier. Getting to these gems requires a structured rigor to uncover what customers and suppliers have never thought about.

Secondly, a servant mindset builds on humility. It is needed to ensure the diligent effort and long, patient, hard work to approach and thoroughly, skillfully develop a deep understanding through interviewing many, many customers. Mainstream buyers need to be carefully examined. Fringe purchasers need to be identified and understood. Non-buying prospects will yield amazing insight. Potential customers – - who get their jobs done with products from other direct and indirect industry suppliers – - they give the most understanding and wisdom of all.

Further, this process of understanding the customer (driven by the interviewing process) and thinking differently about what the customer is really trying to do, cannot be delegated to underlings and especially not to salespeople who have the completely wrong agenda for this task. Steve Jobs is an excellent example of a CEO who saw this as his primary role. Interviewing seems like a low-level, laborious function but it is of the highest level of importance. It is central to a better understanding of the customer. It’s where true growth can be found. Much skill is required for the discovery. And… much caring.

When the motivation for growth is greed, power and fame, the perspective will always be warped. Those so disposed are never able to see quite right. By contrast, those that know their “why” (discussed in Step One, September 2011), their vision for a better world – - and their grassroots mission to make it so – - they are the ones who can provide leadership for the whole industry. They are the ones who become the most trusted advisor. They are the ones who can capture the hearts and minds of the people they serve.

Peter Drucker was such a visionary guru for the business community. He famously said:

“Because the purpose of business is to create a customer, the business enterprise has two – - and only two – - basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.”

Marketing and innovation, it turns out, are closely interrelated. Understanding the market means having an intimate knowledge of the people who collectively struggle to get their work (and pleasures) done in simpler and easier ways. Innovation is not as much about giving them what they want as it is giving them what they don’t know they want. Innovation is about finding the simple button: a way of simplifying what they are trying to “do”. The outcome should be an improvement in making the “doing” easy. Easy is the difference between taking an escalator and rolling a boulder uphill.

This type of innovation is a science and a systematic process for delivering new value to users.

Apple is an example of a modern organization that has made breakthrough innovation a part of everything they do. They don’t just do innovation for their products; they do it to everything, including their stores. Apple, who for a long time never had a retail store, has re-invented retailing, achieving $6000 per square foot sales in a market where only 5 public companies exceed $1,000 per square foot – $2,000 per square foot higher than any other publically traded company.

The targeting process begins with a selection of new markets and customers based on one’s unique and distinctive skill set, and most importantly, the identification and prioritization of opportunities. These opportunities are based on breakthrough understanding of what customers are trying to do. It ends with the delivery of new and significant “outcomes” in the form of a satisfying, need-based product or service.