Usually the question comes right after I tell an audience that I put former Procter & Gamble CEO A.G. Lafley on my “Innovation Mount Rushmore” as a reminder of the importance of investing time and energy to understand the target market.
“But how do you square that with Steve Jobs?” an intrepid audience member asks. “After all, Jobs said, ‘It isn’t the customer’s job to know what they want.’”
2012 has not gotten off to a great start for Eastman Kodak. Three of the company’s directors quit near the end of last year, and word recently emerged that the company was on the brink of filing for Chapter 11 bankruptcy protection.
The easy narrative is that Kodak is a classic case of a company blind to the disruptive changes in its marketplace. Like many easy narratives, this one is not quite right.
My last post described how Innosight follows a three-stage process to evaluate investment proposals from outside entrepreneurs. But deciding how to invest in ideas at a corporation is a different beast. In The Innovator’s Guide to Growth we suggested that companies should create one-page “Idea Resumes” that capture the essence of an idea on a single PowerPoint slide.
After this starting point, however, our VC process holds pretty well. The first decision is whether to explore an idea more deeply. Consider some combination of the following criteria:
“Make sure you ask the right questions at the right time.” That’s one memorable piece of advice from a leader at a global innovation powerhouse. Unfortunately, it is a piece of advice that is heeded too infrequently inside large companies.
At many companies, the idea evaluation process revolves around detailed Excel spreadsheets, comprehensive PowerPoint documents, and an orchestrated sequence of pre-meetings leading up to a decision meeting. This kind of disciplined approach works very well when companies have knowledge that lets them be precise in their analysis, and executives have the relevant domain experience to make informed decisions.
We entered the EMC Club at Fenway Park on a crisp December evening, about 10 minutes before the scheduled start of Innosight’s year-end party. We gaped like little kids at what John Updike memorably called a “lyrical little bandbox of a ballpark” illuminated with wreaths. Then we turned to the scoreboard and saw what seemed a 300-foot-tall sign saying, “Fenway Park welcomes Innosight” (they even had our new logo!).
Why am I writing about Innosight’s holiday party? Because Fenway can show us some novel ways to grow a seemingly mature business.
I recently participated in a panel discussion hosted by the Economist Corporate Network in Singapore about innovation in Asia.
I started my portion of the discussion by sharing three observations about what I had found unique about innovating in Asia: its unbelievable diversity, both between and within countries (and sometimes even cities); the historical focus of many Asian organizations on replication and cost reduction; and Asia’s inconsistent infrastructure (Singapore is amazing, but don’t try to schedule more than two meetings a day in Mumbai).
My first blog post for HBR.org went live in February 2008, when the platform was still in its infancy. Here’s what I’ve learned about market demand in three-and-a-half years and (now) 200 posts. While I thought that a reflective post might be a little self-indulgent, I think these lessons transfer to other domains, so I wanted to share them with my readers.
1. Distilling ideas down to straightforward lists can help bring clarity to murky situations. At the end of 2010 the combination of an unusual presentation and work on The Little Black Book of Innovation inspired a post that was a long list of one-sentence answers to common innovation questions. When the post appeared on December 27, I figured it would land in a holiday wasteland. But strong readership in December carried into January, and turned “31 Innovation Questions” into my most popular post.
Keep the faith. That’s what I said to a client who is going through a crisis of confidence. Over the summer he had put together the underpinnings of what on paper looked like a promising growth business. But — as is usually the case — the more he analyzes, the more he doubts; the more he shows the results of his analysis to senior leaders, the more questions they ask, and the more they doubt.
If you are doing something that hasn’t been done before, careful analysis will by definition highlight reasons to not proceed. Market demand can’t be validated. Experts dismiss technological assumptions. Partnership discussions stall. There is always something that causes this crisis of confidence. Harvard Professor Rosabeth Moss Kanter has seen this so frequently that she coined Kanter’s Law: Everything can look like a failure in the middle. When you first formulate an idea, excitement peaks. But the more you study that idea, the more you realize the challenges that lie in front of you.
In 1995, a young Harvard Business School Professor co-authored an article in Harvard Business Review, “Disruptive Technology: Catching the Wave.” He and his co-author proposed a new causal mechanism that explained the surprising failure of highly-regarded companies. The most punishing innovations, they argued, were the ones that were easy to dismiss at first blush — simple, affordable solutions that took root outside the mainstream market. The authors called these “disruptive” solutions and provided a straightforward prescription for leaders looking to turn disruption into an opportunity. They suggested that companies should find a customer who loved the disruptive solution despite its limitations and create a separate organization to commercialize it.
Of course, that young HBS professor was Innosight co-founder Clayton Christensen. Since then, he has written over a half-dozen books and many more Harvard Business Review articles, almost all of which touch on disruption in some way. Academic journals have dissected the disruptive innovation theory and hundreds of thousands of students around the world have seen Christensen’s famous model.
Over the past year I’ve shifted my presentation materials so they include mostly pictures and 96 point font. That’s good for audiences (at least, I think it is), but bad when I get the kind of request that landed in my in-box last week.
“I’m doing an innovation update at one of our meetings and I’m hoping you can assist me with some conversation starters,” a senior leader said to one of our clients. “The main point of the presentation is to get the audience thinking proactively and positively about how they can contribute to innovation.”
