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Innovation Adjacencies

Published date: March 18, 2009 в 1:39 pm

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Finding adjacent market spaces is 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.  Adjacent means: lying near, neighboring, having a common border, touchable.  Although chasing adjacencies can be distracting, it is a much easier to sell internally.  Adjacencies seem more achievable than far out, ethereal white space opportunities.

Adjacent markets are even more appealing when you apply a systematic innovation method to it.  Giving yourself the gift of novelty in a new market space right next to your own seems like the best of both worlds.  The trick is finding the right adjacencies.

The starting point for thinking about adjacencies is to ask yourself, “Adjacent to what?”  It is much harder to find adjacent spaces when you don’t have a clear understanding of your existing spaces.  For this, I recommend a framework called The Big Picture developed by Professor Christie Nordhielm at The University of Michigan.  The Big Picture outlines four quadrants that, when properly constructed, completely define any market category.  Here is a visual of those quadrants.

Innovation Anxiety

Published date: March 8, 2009 в 5:46 pm

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Innovating is hard work.  Perhaps the most difficult aspect is dealing with the anxiety that comes with following a systematic innovation  method. The process forces innovators to start with uncomfortable, abstract concepts that seem silly and worthless.  These are called preinventive concepts because they occur right before the moment of innovating.  Successful innovators learn how to deal with and control the anxiety at this critical moment of invention.  But there is a catch: some are better at it than others.  Fortunately, there is a way to determine if you are more or less anxiety-ridden from these effects.

Anxiety is a natural part of the SOLUTION-TO-PROBLEM approach.  What causes it?  Finke, Ward, and Smith describe it in their classic book, Creative Cognition.  Once you have transformed an existing situation (product, service, etc), it becomes a hypothetical solution to a yet-to-be-found problem.  The trick to great innovation is to construct preinventive structures that have these properties:

Innovation Dream Team

Published date: March 1, 2009 в 7:26 pm

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Innovating takes teamwork.  Properly selected teams using a facilitated systematic method will outperform ad hoc teams using divergent, less structured methods such as brainstorming.  How do you create the “dream team” for an innovation project?  There are three key factors: team roles, diversity, and processes.

Roles

A carefully selected team for innovation will have specific roles that can make or break it, not just during the innovation sessions, but afterward too.  The most essential role, not surprising, is the leader.  The team “captain” is the one who gives momentum and direction to a team in terms of where it will innovate.  Here is the catch.  The team leader must be a full participant in the innovation workshops.  The leader cannot be an occasional, part time member who surfs in and out while attending other business.  That shows a lack of commitment.  The leader misses opportunities to reward team members and misses the sense of team direction and excitement around new ideas.  The leader also plays an essential role of being the “brakes”of the group – stopping ideas that he or she knows do not fit the vision of the franchise or company.  This prevents teams from wasting time on weak ideas so they can channel their ideation in more productive areas.

Abraham Lincoln: A Two-Way Innovator

Published date: February 23, 2009 в 6:09 pm

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Abraham Lincoln was a tinkerer.  He loved all things mechanical.  “He evinced a decided bent toward machinery or mechanical appliances, a trait he doubtless inherited from his father who was himself something of a mechanic and therefore skilled in the use of tools.”  Henry Whitney, a lawyer friend of Lincoln’s, recalled that “While we were traveling in ante-railway days, on the circuit, and would stop at a farm-house for dinner, Lincoln would improve the leisure in hunting up some farming implement, machine or tool, and he would carefully examine it all over, first generally and then critically.”  Abe was a man of considerable mechanical genius.  He had The Knack.  His patent, Patent No. 6469, a device for buoying vessels over shoals, makes him the only U.S. president to hold a patent.

What kind of innovator was Lincoln?  Was he a PROBLEM-TO-SOLUTION inventor?  Did he first observe problems and then create solutions? Or was he a SOLUTION-TO-PROBLEM inventor whereby he first envisioned hypothetical solutions and then connected them to worthy problems?  My sense is he was both.  He was “ambidextrous,” a two-way innovator.

The LAB: Monetizing Twitter with Attribute Dependency (February 2009)

Published date: February 15, 2009 в 3:10 pm

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Venture capitalists could increase the value of their investments by applying a corporate innovation method to those investments.  Take Twitter for example.  It just received its third round of funding – $35 million.  Yet it has no revenue, no business model…just the promise of such.  It is the perfect time to innovate.

I decided to take the challenge to create new concepts for the Twitter platform that have the potential to earn money.  Others are chasing this, too, including the Twitter management team.  It reminds me of the early days of Amazon when many (including me) wondered if the company would turn a profit.  The difference between Twitter and Amazon is an important one.  Amazon started with a business model in mind.  From there, it had to achieve economies of scale.  Twitter started with none.  Economies of scale do not matter until it can define a viable business model.

Let’s see how innovation can help.

I used the Attribute Dependency template of Systematic Inventive Thinking, a method of innovation that works like no other I have found.  Attribute Dependency (or AD for short) differs from the other templates in that it uses attributes (variables) of the situation rather than components.  It is a powerful tool and more challenging than the others in some respects.  It yields amazing results.  You start with an attribute list, then construct a 2 x 2 matrix of these, pairing each against the others.  Each cell represents a potential dependency (or potential break in an existing dependency) that forms a Virtual Product.  Using Function Follows Form, we work backwards and envision a potential benefit or problem that this hypothetical solution solves.  Innovation!

Wikinnovation!

Published date: February 7, 2009 в 12:42 pm

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Visit the Applied Marketing Innovation Wiki to see a collection of inventions across a wide array of product categories as well as information about innovation consultants.  The information is from students at The University of Cincinnati taking the graduate course, Applied Marketing Innovation.  Here is what you will find:

The LAB: Innovating The Kindle with Task Unification (January 2009)

Published date: January 30, 2009 в 5:18 pm

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As we await the arrival of Amazon’s Kindle 2.0, it is a perfect time to begin innovating their next generation device.  Anytime is a good time to innovate, but it is especially meaningful to innovate just as you launch your latest innovation.  It tells the world you are serious about creating a sustainable pipeline of new growth opportunities.

This month’s LAB uses the Task Unification tool of Systematic Inventive Thinking to create new concepts for the Kindle.  The definition of Task Unification is: assigning an additional job to an existing resource.  The general idea is to break the current product down into components and then systematically give each component a new task or activity.  This creates an abstract “pre-inventive” form that we then take and discover potential benefits, target markets, and adaptations that would make the innovation very useful and unique.  This is what I call “Solution-To-Problem” innovation.

My goal is to come up with innovations that are not obvious or mere incremental changes in functionality of the current device.  If that is all we wanted, we could look at the iPhone or other electronic gizmo for ideas.  I don’t own a Kindle (yet), so I will work from the Kindle User’s Guide to make my component list.

  1. Screen Display
  2. Control Buttons
  3. Keyboard
  4. Cursor bar
  5. Select Wheel
  6. Dictionary
  7. Speaker
  8. Wireless
  9. Storage
  10. Battery
  11. Search (Software)
  12. Music Player

As I try to do in all LAB sessions, I created the following innovations in about an hour:

1.  SCREEN:  Kindle makes reading easier.  It tracks how fast you read and adjusts the scrolling speed to a comfortable level.  The screen resolution adjusts to your eyeglass prescription to optimize readability (brightness, contrast, text size).

2.  SOFTWARE: Kindle helps you become a better reader.  It keeps track of how much you read, the level of difficulty, when you read, at what intervals, and at what speed.  It becomes a “reading trainer” by suggesting ways to improve your speed and comprehension based on your patterns.

3.  STORAGE:  Kindle is a book management system.  It keeps a complete inventory of all books you own or have access to, digital and physical.  It relates the material you are reading now in a newspaper article or blog to books that you own so that you are aware of the connection.  It flags you to view material in books you own as it may be relevant to what you are reading now.  It connects context.

4.  CONTROL BUTTONS:  Kindle controls other things in your home.  It becomes a universal remote to control room lights, stereo, and TV.

5.  WIRELESS:  Kindle is a social tool.  It connects you with others who have a Kindle.  It alerts them on what you are reading at that moment in Twitter-like fashion.  It connects members of a book club who are all reading the same book, and it allows members to bookmark and comment on parts of the book, all shared wirelessly or perhaps via Instant Messaging.  Kindle sends what you are reading to your Facebook, LinkedIn, MySpace, or blog so that others can see what you are reading…now.

6.  SPEAKER:  Kindle translates words and speech.  It has Text-to-Speech function so you can highlight a written passage and then hear it spoken in words over the speaker.Google-maps-street-views

7.  WIRELESS:  Kindle enhances your imagination.  It integrates Google Maps with what you are reading so that you can visually see the location that is being discussed or described.

I can’t wait for Kindle…3.0!

Mapping the Innovation Gap

Published date: January 28, 2009 в 4:11 pm

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Once you have a systematic and routine way to innovate, you are confronted with a new problem – how to decide how much innovation is enough.  For many, this is an odd question.  If innovation is essential for survival and growth, most people would want all the innovation they can get.  But that is oversimplifying.  Too much innovation can overload the system, confuse the organization, and lead to ideation fatigue.  So how much is enough?

Here is a useful analysis that can tell you how many ideas are needed to reach your specific growth targets called “Mapping the Innovation Gap.”  The steps are:

  1. Determine your revenue goals in each year over a specific time horizon.  Base this on your firm’s strategic planning time horizon (usually 3 to 10 years depending on the industry).  Use the actual revenue targets from your company’s business plan.
  2. Break these annual revenue targets down over a mix of products, new and existing, in each year.  Some firms call this a revenue cascade or revenue waterfall.  It shows for each year how much of the revenue comes from existing products and how much comes from new products.
  3. Estimate your Innovation Yield (number of new ideas needed to produce one new product).  This varies by industry and by company depending on factors such as level of investment, core competencies, and access to technology.  Various think tanks and consultancies have estimates such as the curve pictured above.
  4. Estimate your typical idea-to-launch Lead Time (how much time it takes to develop and launch a product once it is conceived).  As with the Innovation Yield, this will vary.  Take a look at past product development experience and determine an average time (in years).
  5. Plot the number of new ideas needed in each year to produce the necessary new products in subsequent years.  Take the number of new products needed in a specific year and divide it by the Innovation Yield.  Then plot this number back in time by the amount of Lead Time to develop ideas.

What you end up with is the number of new ideas that need to be generated each year to have a realistic chance of achieving future revenue growth targets.  It can be a sobering number depending on how aggressive your targets are.  With this number, a general manager can then task the team to “schedule” innovation, and then hold them accountable for generating the necessary number of ideas.

The bottom line:  to grow, companies need a systematic innovation method, and it needs to be applied systematically.

Download “Mapping the Innovation Gap” here.

Applied Marketing Innovation

Published date: January 8, 2009 в 4:33 pm

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Learning a corporate innovation method begins with formal training, and there is no better place to do that than in graduate business school.  I am looking forward to meeting the 37 students enrolled in my MBA course at the University of Cincinnati this month. The course, “Applied Marketing Innovation,” is a full credit course.  It is a fusion of Systematic Inventive Thinking and The Big Picture marketing framework.  The Syllabus can be downloaded, but here are some details about it:

“This course focuses on how to create value and growth through innovation in new and existing markets. Students will learn the skills of innovation and how to apply those skills within the context of a marketing strategy framework. Students will apply innovation methods across the entire marketing management continuum including strategy, segmentation, targeting, positioning, and the 4P’s. The course will be taught using interactive workshop methods and techniques throughout. Students will first experience these facilitation techniques while learning innovation. They will then learn and practice these techniques so that they can apply them routinely throughout their graduate experience and beyond.”

Two aspects of this course are unique.  First, we don’t just talk about innovation…we DO innovation.  MBA students in particular are aggressive and skillful when learning and applying innovation. I am sure this group of students will be no different.  The other unique aspect is the creation of new products and services that are formalized in a hypothetical company catalog – The Dream Catalog.  This is a clever way to take new innovations and rationalize them into a coherent pipeline for growth.  Students work in teams to create an actual Dream Catalog within a business of their choice.  In past courses, some students have used this assignment for their own companies.  It is a graded assignment.  I will publish the results of this exercise here on the blog.

The final exam is scary!  Students will be given a product randomly (with no advance preparation).  They must use each of the five templates of innovation (Subtraction, Task Unification, Multiplication, Division, and Attribute Dependency) on that product to create new-to-the-world inventions.  They have to take each invention and plot what strategic quadrant of The Big Picture would be most suitable.  It is a tough exercise.  It demonstrates: 1. mastery of the skills of innovation, and 2.  the ability innovate within the context of marketing strategy.  I will also post some of the results from the final exam here on the blog. 

If you have a product that you would like to see innovated by my students on the final exam, please let me know!

I want to thank Professor Jacob Goldenberg at Columbia Business School and Professor Christie Nordhielm at the Ross School of Business at The University of Michigan for their support in developing this course.  It is intended to be a blend of their tremendous contributions.  It is a privilege to teach it.

The LAB: Innovating a Refrigerator with the Division Template (December 2008)

Published date: December 31, 2008 в 1:14 pm

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A corporate innovation method should be robust enough to produce incremental as well as disruptive ideas.  One of my favorite templates in the S.I.T. method is called Division because it does just that.  The Division template takes a product or service, divides it or its components, and rearranges them to form a new product or service.  It is a particularly useful template to help people see their product or service in completely new ways.  It helps people get unstuck from the “fixed” frame that we all have naturally about our products or services.

My favorite example of Division happened during an innovation training session.  One of the participants was a bit cynical about the method and using patterns to innovate anything.  To help him overcome this, I let him select any product or service that he was convinced could not be innovated further.  He chose the refrigerator, a concept that has been with us since 1000 BC.  What follows is how we used Division in this spontaneous exercise to change his mind.

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