|
||
 |
||
|
Virtually everyone says they know what the term “innovation” means. Yet when I ask for a definition, I invariably get a series of buzzwords: “new,” “out-of-the-box,” “creative.” People have no precise understanding of what innovation actually is, nor how it is achieved. What’s troubling is that this confusion reigns even though many folks believe that companies can prosper only by developing transformational ideas. The venerable management guru Peter Drucker has stated that “any business has two—and only these two—basic functions: marketing and innovation.” The need for innovation is even stronger in the midst of the current economic slowdown and the uncertainty created by the terrorist attacks on the U.S., because companies have to adapt to the changing needs of their customers and find new ways to generate growth. For many people, an air of mystery surrounds the development of breakthrough ideas, akin to a magician pulling a rabbit out of his hat. In truth, though, there is no magic involved. Masters at creating original advances know that the “trick” lies in viewing innovation as a system, rather than as a collection of random projects, processes, or creative exercises. Over the years, as I have helped companies create products and businesses, I’ve seen that the best results follow from a consistent regimen, which I call the “guaranteed innovation system.” It has seven integral, and intricately linked, parts. The four that seem to be reasonably well understood are: priority (having senior management make innovation a major emphasis), policy (creating a strategy for the way innovation programs will work), platoon (forming innovation teams), and process (laying out a program for innovation, step by step). The three that I’ll focus on here are the ones that executives struggle with most: problem orientation, platforms, and payback metrics. PROBLEM ORIENTATION: Most products are created through brainstorming. Many are flops. They simply miss the point. True breakthrough innovations—and those that are most successful—must squarely address real problems that customers face. They laser in on what people currently lack and fill the void. This should be blazingly obvious, but it isn’t, as you can see if you look at how successful companies are when they truly focus on solving customers’ problems. Consider the experiences of Boeing Corp. (www.boeing.com). During the development of its 777 airplane, Boeing engineers worked closely with United Airlines (www.ual.com) flight attendants to ensure that the plane offered the features and comfort that fliers clamored for. The airplane manufacturer discovered what people wanted—personal video and audio equipment, more lavatories, and better access to the aisles—and designed its planes accordingly. Boeing has become so sophisticated with its product development research that it tailors its 777 to fliers in specific geographic areas. For example, Boeing designed El Al’s model with chairs that swivel to allow for more interaction between passengers, because research showed that the average Israeli traveler likes to chat during flights. Because Boeing focused so clearly on customer issues, studies have found that 75% of passengers prefer the 777 to the comparable Airbus model. Capital One Financial Corp. (www.capitalone.com) also takes pains to meet unmet consumer needs. As part of a recent innovation program, Capital One had small-group and one-on-one discussions with consumers to gain insight into customer problems, issues, and frustrations with not only credit but also with financial and life issues. Understanding the broader context of its consumers’ high-intensity needs has allowed Capital One to develop a portfolio of solutions. With this focus on innovations that customers actually need, it is no coincidence that Capital One has had six consecutive years of 20% earnings growth per share and a 20% return on equity. By contrast, Miller Brewing Co. (www.millerbrewing.com) introduced “Clear Beer” in the early ’90s because clear alcohols were popular, not because customers indicated that they wanted such a drink. Consumers showed their indifference at the checkout lines, and Clear Beer died. PLATFORMS: Of the many approaches to product development, the most successful use existing core technologies and technical expertise as a launching pad, or platform, for other innovations. S.C. Johnson & Son Inc. (www.scjohnson.com) has used its home-cleaning and air-freshening technologies as platforms to introduce 17 breakthrough products that have brought in millions of dollars in incremental revenue. S.C. Johnson leveraged Windex and Pledge to create a portfolio of home-cleaning products, including Windex Outdoor, Windex No Drip, Pledge Electronics, and a series of dusting clothes and mitts called Pledge Grab-Its. With air fresheners, the company created scenting techniques such as Glade Candle Scents, a room-freshening candle, and Glade Spin-Fresh, an air freshener that activates when the toilet-paper dispenser is spun. Minnesota Mining & Manufacturing Co. (www.3m.com), which allows employees to spend 15% of their time searching for new technologies, has long applied its most compelling technologies to a wide variety of products. For instance, 3M took a breakthrough adhesive and used it as a platform to drive products as diverse as Post-it Notes, Scotch Magic tape, Scotch Glue Sticks, and 3M Spray Adhesives. PAYBACK METRICS: It is not enough to merely launch innovative products and ideas; innovation must also be quantified. Without measurement, true success can only be guessed at, and contributions remain suspect. Innovation metrics come in many forms, but they can be divided into two main categories: outcome measurements and system measurements. Outcome measurements can be financial results, customer satisfaction measures, or adoption rates for products and services that come from innovation initiatives. System measurements are process checks that could, for instance, be detailed evaluations of how well the company is doing on the seven elements that make up the guaranteed innovation system. Clorox Co. (www.clorox.com), maker of home-cleaning products, measures how much it has saved annually because of research and development efforts and uses the results to justify its innovation program. AlliedSignal, now part of Honeywell International Inc. (www.honeywell.com), which makes aerospace and automation equipment, says its ability to measure the progress of its innovation initiatives has reduced development cycle times, prompted developers to consider intellectual property issues sooner, and fine-tuned efforts toward developing ideas that have the maximum long-term potential. At its best, innovation transforms. It may uproot product categories or revolutionize the way people think about certain tasks. Great innovation may even create brilliant and unexpected opportunities, just as the personal computer has. But while the result of innovation has the potential to border on the mystical or magical, the road to creating breakthrough ideas is anything but. The path is paved with hard work and is based on a solid system of attack—plus, perhaps, a bit of luck.
|
