Посты с тэгом: SIT

Innovation Sighting: The Attribute Dependency Technique in Pricing

Published date: April 8, 2013 в 6:37 am

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The airline, Samoa Air, sparked outrage with a new pricing policy of charging passengers based on how much they weigh. Chris Langton, the airline’s CEO explained its controversial decision: “People have always traveled on the basis of their seat but as many airline operators, know airlines don’t run on seats – they run on weight,” he said. “We have worked out a figure per kilo. This is the fairest way of you travelling with your family or yourself. You can put your baggage on, there are no separate fees because of excess baggage – a kilo is a kilo is a kilo.” Rates start at $1 per kilo (about 2.2 pounds), which includes the weight
of both the passenger and his or her baggage.  For longer routes, rates run
as high as $4.16 per kilo.

While not popular, it is a classic example of the Attribute Dependency technique. Attribute Dependency is one of five techniques of the innovation method called SIT (Systematic Inventive Thinking). It differs from the other techniques in that it uses attributes (variables) of the situation rather than components. Start with an attribute list, then construct a 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.

The essence of Attribute Dependency is “as one thing changes, another thing changes.” Setting prices for products and services is largely an exercise of using Attribute Dependency. The price of a product changes as its value changes. But value is not the only variable that you can link to changes in price. Consider these examples:

  • Price changes as age of the customer changes: senior citizen discounts
  • Price changes as quantity changes: quantity purchase discounts
  • Price changes as risk changes: this is how insurance and warranty policies are priced
  • Price changes as time changes: charging lower prices for drinks at a bar is typically called Happy Hour
  • Price changes as gender changes: while it may seem discriminatory, men don’t complain when bars let women in for free
  • Price changes as need changes: this one usually gets people mad because it takes unfair advantage of a situation.  Charging more for bottled water on hot days is an example.

The beauty of Attribute Dependency is you can define the way two variables are correlated, either positively or negatively.  Air Somoa, for example, might want to consider flipping the dependency to make it more acceptable.  Everybody pays the same amount, but if you are under a certain weight, you accumlate “weight credits” that you can apply to later flights.

You can also break a dependency that already exists. Restaurants do this when they offer a buffet at one price. You can eat all you want for the same price. The typical link between price and quantity of food has been broken. Of course, if you eat too much, you’ll pay for it later if other airlines adopt the Samao Air approach.

Marketing Innovation: Avocados and the Unification Tool

Published date: March 18, 2013 в 3:00 am

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The Unification Tool is a tricky but effective advertising tool. Unification recruits an existing resource and forces it to carry the advertising message. That resource can come from within the medium itself or within the environment of the medium. In other words, the tool uses an existing component of the medium or of its environment in a way that demonstrates the problem or the promise to be delivered.

The tool is one of eight patterns embedded in most innovative commercials. Jacob Goldenberg and his colleagues describe these simple, well-defined design structures in their book, "Cracking the Ad Code," and provide a step-by-step approach to using them. The tools are:

1. Unification
2. Activation
3. Metaphor
4. Subtraction
5. Extreme Consequence
6. Absurd Alternative
7. Inversion
8. Extreme Effort

There are two ways to use Unification. First, take the medium (television, billboard, radio, and so on) and manipulate it so that some feature or aspect of the medium carries the message in a unique way. The second approach works in the other direction – start with the message, then look at the components in the consumer's environment and recruit one to carry the message in a clever way.

Here is an example of manipulating the medium:


 

Here are two examples of starting with the message and recruiting a component into carrying that message. What is very innovative about these commercials is how they have "fused" the message with the product itself – the avocado.


 


 

Marketing’s Seat at the Innovation Table

Published date: March 11, 2013 в 3:00 am

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Where does your marketing department fit when it comes to innovation?  In their article1, “Improving Marketing’s Contribution to New Product Development,” these author’s offer a dismal view:

“The prevailing view in most companies is that marketing is not a distinct function, and therefore, everyone can do marketing.  As a result, the status of the marketing department is in a steep decline, which is especially observable within the NPD process.  This development is surprising because it seems that top innovators strongly involve the marketing department in the NPD process.  Hence, strengthening the marketing department’s position with respect to NPD should be a priority to improve innovation performance.”

I agree.  But I believe the authors fall way short of what is needed to do that.  Their research points to two recommendations.  First, marketing departments need to excel at market research skills and tools to translate customer needs into product specifications.  Second, marketers should have strong market knowledge and a good understanding of the firms product portfolio.

Seen this way, marketing becomes nothing more than a market research department in support of R&D.  This grossly underwhelms the potential of a strong marketing mindset within an organization and the potential for great innovation.

For marketing to lead the innovation effort, I recommend the following:

1. Develop an Innovation Competency:  Innovation is a skill, not a gift.  It can be learned by anyone and applied systematic.  Innovative companies treat it as just another core skill by creating a well-defined set of innovation competencies and embedding them into employee’s competency model along with other required behaviors such as ethics and leadership.  A innovation method such as SIT, for example, gives a marketing employee the ability to “innovate on demand.”

2. Link Innovation to Strategy:  Marketing is the battle arm of any company, and it should lead the development of strategy.  When it links strategy with the innovation efforts inside an R&D department, it becomes more influential in what gets put through the NPD process.

3. Drive Innovation as a Process:  Defining innovation as just the NPD process is too limiting.  Marketing needs to sponsor cross-functional teams using systematic innovation tools that feed concepts into the NPD process.  Marketing needs to eliminate the “fuzzy” in the front end and make it crystal clear with a routine, sustainable process of generating new opportunities.

4. Innovate Under the Radar: In this month’s Harvard Business Review, Paddy Miller and Thomas Wedell-Wedellsborg make a great point in their article, “The Case for Stealth Innovation.”  Savvy marketers know how to operate under the radar and nurture innovation programs through complex bureaucracy.  Thomas Bonoma’s classic HBR article from 1986, “Marketing Subversives,”said something similar:

“I
found that under conditions of marketplace change, success depended
heavily on the presence of marketing subversives in a company.
Subversive marketers undermined their organizations’ structures to
implement new marketing practices….And no matter what higher
management had decided to allocate to various marketing projects, the
subversives found ways to work around the official budget.  They
bootlegged the resources they needed to implement new, more appropriate
marketing practices.”

The same can be said about innovation.

1Drechsler, Wenzel, Natter, Martin and Leeflang, Peter S.H., “Improving Marketing’s Contribution to New Product Development,” Journal of Product Innovation Management, Volume 30, Number 2 (March 2013), 298-315.

Start at the End

Published date: March 4, 2013 в 3:00 am

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Dave Lavinsky is a serial entrepreneur who built his own company from the ground up. His book, Start at the End, was a #1 Bestseller on Amazon just one week after it was released. The goal of the book is to learn how to work fewer hours and be efficient when working at a new job or starting a business.

For innovation practitioners, here are his top 12 tips:
1. Start at the end – if you don’t know where you want your business to go, you’ll never get there.
2. SWOT analyses are obsolete; realize there will always be threats and company weaknesses that don’t warrant fixing. Rather, focus on opportunities that leverage your strengths (SO analysis), and build your strengths further so they give you sustainable long-term advantage
3. Forget your P&L; that’s short-term thinking; need to also think longer-term; building business assets that allow you grow your business and reap better P&L later and forever.
4. If your business doesn’t have a scorecard, you will lose EVERY time. Your scorecard needs to include the detailed KPIs that underly your revenue and profit results.
5. If your business doesn’t operate without you, it’s not a business; it’s a miserable job. You must systematize your business so it works for you, not vice-versa.

Innovating the Weakest Link

Published date: February 18, 2013 в 8:14 am

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Responding to an article on why innovation is difficult, Tim Josling from Leura, Australia, wrote this to the editor of The Economist (January 26, 2013):

Another useful insight is provided by something akin to Amdahl’s law in computer design, which holds that even if some components of a system are improving, the parts that are not improving will eventually dominate the performance of that system.For example, for flights that are under 2000 miles a person will spend more time traveling to and from the airport, checking in at the airport, going through security and waiting for his bags than time spent up in the air.  Increases in aircraft speed would have less benefit that shortening the other bits of the journey time.

Well said.  In essence, this insight helps you think about the right target for your innovation efforts.  Rather than try to improve the performance of you primary component, think instead about the supporting components and subsystems around it. These parts may be holding overall performance down.  The customer realizes value from your main component, but then suffers from a lack of innovation in all the other activities around it.

This goes against conventional wisdom.  Companies like Samsung cram more and more features into their products to improve performance, a phenomena called “feature creep.”  Instead, they could be differentiating themselves by focusing on the ecosystem around their products – within what we call “The Closed World.”  In doing so, they find new, unrealized value for the consumer which they will appreciate and perhaps pay for.

The bottom line: innovating the weakest link in your product or service may deliver the most value the fastest.

Marketing Innovation: The Metaphor Tool Using the Division Pattern

Published date: February 11, 2013 в 3:00 am

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The Metaphor is the most commonly used tool in marketing communications because it is a great way to attach meaning to a newly-launched product or brand. The Metaphor Tool takes a well-recognized and accepted cultural symbol and manipulates it to connect to the product, brand, or message.

The tool is one of eight patterns embedded in most innovative commercials.  Jacob Goldenberg and his colleagues describe these simple, well-defined design structures in their book, "Cracking the Ad Code," and provide a step-by-step approach to using them.  The tools are:

   1. Unification
   2. Activation
   3. Metaphor
   4. Subtraction
   5. Extreme Consequence
   6. Absurd Alternative
   7. Inversion
   8. Extreme Effort

The trick is to attach a metaphor in a non-obvious, clever way.  The process is called fusion, and there are three versions:  Metaphor fused to Product/Brand, Metaphor fused to Message, and Metaphor fused to both the Product/Brand and Message.  Here is an example metaphor fused to the message:

What's clever about this commercial is
its use of the Division pattern, one of five that form the basis of the
product innovation method, Systematic Inventive Thinking. 
Division works by taking the product and/or one of its components and
dividing it physically, functionally, or in a way we call 'preserving'
where each portion maintains the characteristics of the whole.  By
dividing the news about her affair with her husband's best friend into
one word at a time, the wife softened the impact.  Banco Continental uses
this little story as a metaphor for breaking loan payments into smaller, more
manageable amounts.

To use the Metaphor Tool, start by
defining the message. Then create a list of symbols (objects, images, or
concepts) that are directly related to the message (a metaphor). Next
make a list of the product's components or components near the product
(Closed World). Finally, choose a symbol and a component and fuse them
together. Create various combinations of metaphoric symbols and
components to find candidates that have that element of surprise or
cleverness.

Innovation Sighting: Apple’s Smart Shoe

Published date: January 28, 2013 в 3:00 am

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A tell-tale sign of the Attribute Dependency Technique is the word “smart” in any product description. Apple’s new patent for ‘smart shoes’ is a case in point.  As reported by PSFK:

Apple has patented ‘smart shoes’ that would come with embedded sensors
to track your activity and tell you when you needed a new pair. Instead
of wearing an additional sensor, people would just have to wear the
shoes, where the technology would be less visible and be a more seamless
part of your lifestyle than an external tracker.

Apple’s shoe wear-out sensor would either feature as a thin built-in
layer or be located in the heel. It would include a processor configured
to measure the use of the shoes and determine whether they were worn
out, and an alarm that informed the wearer when they were no longer
providing adequate protection for their feet.

As first reported by AppleInsider, the patent described three main
components: a detector for sensing how worn-out the shoe becomes, a
processor to measure the shoe’s use, and an alarm to inform the owner
when the shoe’s time is up. The chosen sensor could be anything from an
accelerometer or pressure sensor to a pedometer or piezoelectric flexing
sensor.

Attribute Dependency is one of five techniques of the corporate innovation method called SIT (Systematic Inventive Thinking).  It differs from the other techniques in that it uses attributes (variables) of the situation rather than components. Start with an attribute list, then construct a 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.

This isn’t Apple’s first (or last) use of this powerful technique.  Apple earned a patent described as an “apparatus and methods for enforcement of policies upon a wireless device.”   It reveals a way to change aspects of a mobile device based on certain events or surroundings.  Given this pattern of using Attribute Dependency, it would appear Apple makes regular use of this technique and perhaps the full suite of SIT tools.

10 New Year Resolutions for Innovation Leaders

Published date: December 31, 2012 в 2:00 am

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“For last year’s words belong to last year’s language

and next year’s words await another voice.”

                                                                                     T.S. Eliot

In 2013, think inside the box and give your staff these precious gifts to drive innovation forward:

1. Give them Hope: Hope is defined as a positive motivational belief in one’s future; the feeling that what is wanted can be had; that events will turn out for the best. Without hope, tasks such as innovating become difficult if not impossible. Researcher Armenio Rego says, “Hope is important for innovation at work because creativity requires challenging the status quo and a willingness to try and possibly fail.  It requires some level of internal, sustaining force that pushes individuals to persevere in the face of challenges inherent to creative work.”

2. Give them Voice: Giving your employees a voice in matters boosts their creativity. Research shows that, over time, procedural fairness (giving people the opportunity to express their views) has a positive maintaining effect on creativity whereas stifling their views decreases creativity. Be consistent over time.  Don’t let distractions or a crisis cause you to change the rules. Give them a chance to speak about anything related to the innovation challenges you face – focus, methodology, budget allocation, team formation, and so on.  Most importantly, let them speak about the nature and value of their own ideas.

3. Give them a chance to Get Even: When managing individuals or teams, the time will come when you have to say ‘no’.  In that moment immediately after rejecting a person’s viewpoint, you want to let it sink.  Don’t try to minimize the impact by rationalizing the decision or by other means of making the person feel better.  Assign the rejected person right away to a new and important task.  Put them on a project where they can prove themselves and “get even.”  Let their creative juices flow.

4. Give them Accountability: Hold people accountable for what they do to improve innovation activities.  It is tempting to judge employee performance and reward them for innovation output.  This leads to the unwanted rivalry between employees.  Avoid this trap by looking at how managers set up “cockpit indicators” and use those indicators to make changes.  Have they created a closed loop feedback process to improve innovation continuously?

5. Give them a Method: For thousands of years, inventors have embedded five simple patterns into their inventions, usually without knowing it. These patterns are the “DNA” of products that can be extracted and applied to any product or service to create new-to-the-world innovations. Systematic Inventive Thinking (SIT) is an effective, repeatable, and trainable innovation process for organic growth.

6. Give them Constraints: Research in cognitive psychology confirms that creativity is enhanced by constraints, not freedom.  By limiting the number of variables under consideration from infinity to a finite number, we amplify our potential to come up with a creative solution. To throw away all constraints would be to destroy the capacity for creative thinking. It may sound counterintuitive, but giving employees too much freedom of thought leads to “idea anarchy” and a poor level of inventiveness.

7. Give them Skills:  Innovation is a skill, not a gift.  It can be learned by anyone regardless of where they are on the creativity scale.  If you want a more innovative company, you must have more innovative employees.  Train them in innovation as you would train other skill such as leadership, six sigma, or business ethics.

8. Give them Teams: Innovating takes teamwork.  Properly selected teams using a facilitated systematic method will outperform ad hoc teams using divergent, less structured methods such as brainstorming.  Create innovation “dream teams” with diverse talent from the commercial, technical, and customer-oriented parts of your business.

9. Give them Strategy: Innovation that is linked to strategy is seen as more realistic and supportable.  Innovating is efficient because you avoid creating ideas that are out of scope.  Companies get better results from innovation by targeting initiatives at the right places.

10. Give them an Innovation Culture:  An innovative corporate culture is one that supports the creation of new ideas and the implementation of those ideas.  Leaders need to help employees see innovation in the right light and create support systems to make it stick.  As fellow blogger Jeffrey Phillips notes, “A culture that sustains and supports innovation is one that encourages reasonable risk and uncertainty in the goal of larger, more profitable products and services.”

Innovation in Practice: Five Year Anniversary

Published date: December 21, 2012 в 8:46 am

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This month marks the five year anniversary for Innovation in Practice,
and I want to thank my readers and supporters who follow it.  Blogging is rewarding, but challenging.  Most bloggers quit within two years for a variety of reasons: lack of motivation, lack of strategy, no one is reading, nothing to write about, or not enough time.  Fortunately, I have yet to be hit by any of these except perhaps the last one – time constraints – which will never go away.

My goal is to make this blog different from other innovation blogs and websites.  Instead of focusing on why innovation is important, I focus on how innovation happens.  My sense is corporate leaders realize already the importance of innovation, but they struggle with how to put it motion.  Calling a consultant is not the answer.  Learning the skill of innovation to be self sufficient is the answer.

The themes of this blog are:

  • Innovation can be learned like any other skill such as marketing, leadership, or playing the guitar.  To be an innovator, learn a method.  Teach it to others.
  • Innovation must be linked to strategy.  Innovation for innovation’s sake
    doesn’t matter.  Innovation that is guided by strategy or helps guide
    strategy yields the most opportunity for corporate growth.
  • Innovation is a two-way phenomena.  We can start with a problem and innovate solutions.  Or we can generate hypothetical solutions and explore problems that they solve.  To be a great innovator, you need to be a two-way innovator.
  • The corporate perspective, where innovation is practiced day-to-day, is what must be understood and kept at the center of attention.  This is where truth is separated from hype.

2012 was a special year for me.  My co-author, Jacob Goldenberg, and I completed our first book together (Simon & Schuster, June 2013), and we have two more in progress.  I am more engaged in innovation research and technology at the University of Cincinnati, and I continue to teach the SIT method there.  I am fortunate to continue working with various multi-nationals on their innovation programs.

2013 will be a year of change.  I plan to take this blog to the next level with a number of initiatives.  I plan to offer more resources for readers so they can learn the SIT method.  I hope to have resources for teachers and professors who want to include the SIT method in their creativity courses.  I plan to highlight and recognize the practitioners who put SIT to work in their organizations.

I want to thank Jacob Goldenberg, Amnon Levav, Yoni Stern, and the entire team at S.I.T..  Also, Christie Nordhielm and Marta Dapena-Baron at Big Picture Partners, Bob Cialdini at Influence at Work, Yury Boshyk at Global Executive Learning Network, the Washington Speakers Bureau, and my fellow faculty at the UC Lindner College of Business.

A special thanks to my family.

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