Feb. 13, 2015

As businesses try to solve critical issues and stay one step ahead of the competition, the expectations of innovation are mounting across industries. While countless innovative ideas have the potential to become disruptive, most have not been developed or fully realized. The key for successful innovation is how one addresses issues that present a high degree of uncertainty.

The expectations of innovation are increasing across industries as businesses try to solve critical issues and stay one step ahead of competitors. However, countless innovative ideas have been buried without being developed or implemented. In many cases, no action is taken on new ideas for products or services because a company or innovator may not think an idea would be realistic or does not know how to take an idea to the next level.

In the past few years, opportunities for innovators to present new ideas have emerged. Crowdsourcing has become more popular worldwide as one way for companies to collect new ideas, which can lead to disruptive innovation in and outside of organizations. However, even the best innovative ideas may fail, and innovative businesses run by experienced managers may not succeed to become core businesses with high customer satisfaction. This raises the question, what makes innovation flourish?

Dr. Nathan Furr, an assistant professor of entrepreneurship at Brigham Young University’s Marriot School of Management, thoroughly researched the methods of successful innovators in his book, The Innovator’s Method: Bringing the Lean Start-up into Your Organization,*1 which is part of a series of bestselling books.*2,3 Dr. Furr will share his thoughts on to the steps for successful innovation.

Interview with Dr. Nathan Furr

Q.Why do many ideas fail or fall short? Can only a few new ideas truly be disruptive?

The first reason is that a company or entrepreneur can be trapped by very incremental thinking. This is especially true of established companies; because they have existing sets of resources and activities, they are reluctant to change. The efficient way to innovate is to try to stick with what you are already good at, and elaborate and use it in a novel way. Sometimes it works, but often it results in somewhat incremental innovation. For disruptive innovations, companies have to consider a bit more broadly about what they want to pursue. The second reason is that innovators often start building their solutions, such as products/services/business models, before they deeply understand the customers’ problems that they are really trying to solve. As a result, they run out of money, time, and patience before they discover any valuable opportunities. For successful innovation, you need to understand the customers, propose solutions, and match the solutions to their needs.

Q.What are the common traits of successful innovators?

Our research started with the question, “why are certain people very innovative and able to build, maintain and even revive their innovation capabilities, while others are not.” What we found was that management is trained to solve problems that present a relative degree of certainty, but not those with a high degree of uncertainty. So we were led to the hypothesis that the way you manage certainty is different from the way you manage uncertainty. As a result of researching both large companies and entrepreneurs, we extracted 4 steps for successful innovation (the so called “innovator’s method”). The first step is to capture insights and find something that surprises you, via questioning, observance, and networking. The second is to discover the job-to-be-done, which is to find out what customers want and to recognize that every job has functional, social, and emotional dimensions. The third step is to work toward solutions. Instead of developing full-scale products, develop a minimum viable prototype, along with a minimum awesome product. Also, run experiments and test your hypotheses about customer’s needs. The final step is to set up a business model, including strategies for pricing, customer acquisition, and cost structure.

Q.What do you think of using crowdsourcing for innovation?

In pursuing innovation, you want to start by searching as broadly as you can for insights, and then narrow down. Crowdsourcing is a very valuable way to go broad as you search for insights, and draw many more insights than you could possibly generate within your company. It can also be a useful tool for sorting those insights and deciding which one is worth pursuing. I do not think crowdsourcing solves everything, but it can lead us to the clues/symptoms that will help to discover the big disruptive innovations. In the book, I try to say that customers do not innovate for you. The truth is that innovators innovate, and customers validate. If you ask your customers what they need, they will give you very incremental innovations, which other competitors can easily imitate. As innovators, you have to interact with your customers to try to understand what their problem is, propose solutions, and then you can ask if these solutions match their needs.

Q.How useful and reliable is crowd voting?

Crowd voting is a powerful tool for bringing a valuable foundation of ideas to the surface. However, for example, if employees are voters, they might vote for the easiest idea to implement, or the most incremental solution. Also, for a more radical innovation, sometimes customers need to actually experience the innovation before they can understand it. For example, when Reebok introduced the Reebok Pump (which are basketball shoes that have air pockets around ankles), people thought it was a silly idea until athletes actually tried them. In this situation, the big challenge for corporations is how to create an opportunity for customers to actually try their innovative solutions without wasting time and money.

Q.What is management’s role in successful innovation?

Traditional management is very valuable for the execution-oriented part of the business: they know where their customers are and their main job is to generate the revenue and profit from that business. However, in creating a new business with a high degree of uncertainty, the role of the leader changes from the chief decision maker to chief experimenter. Instead of making a decision based on various analyses, management needs to help the team to phrase the most important questions they have about innovations and to design a rapid experiment for testing. The data from this experiment will help make a decision. Leaders are used to thinking in terms of yes or no, but the chief experimenter has to embrace the concept of “maybe.” “Maybe” is the experiment, asking the key assumption. When you face a high degree of uncertainty, you really need to identify your assumptions, and find a way to quickly test and learn about them and adjust them as needed.

Q.What is necessary to establish a sustainable business model for innovators?

Business models for existing companies are very powerful because they are how they have made money and survived. However, when companies innovate they need a different business model. It is tempting for companies to try to apply existing business models to a new innovation, but doing so can kill the innovation. For example, when I was speaking with an executive from Intel, they had over 100 interesting innovative ideas from a research and development lab they thought about commercializing but their sales department did not find these ideas interesting or realistic. So, the executive created a smaller, separate sales organization to support new innovation. Depending on the business maturity level, whether it is a core business, brand new innovation, or somewhere in between, you need to have different business models.

Q.How can the innovator’s method be applied to the recent trends of big organizations purchasing start-ups with new technologies to try to survive/try to make disruptive innovation?

Established companies have learned to excel at management and execution, but they may not be very good at searching, discovering, and creating new values. So when they buy start-ups, they use them as substitute rather than creating values by themselves. It can be a reasonable move but established companies usually pay high prices for such purchases. In order to be sure of whether a purchase is a smart move, I would use the innovator’s methods to assess how deeply the start-up identifies its key assumptions, test them through rapid experimentation, and what evidence they have from customers. If the customers love the innovation, it means the start-up has something valuable.

Notes

  • *1Furr N, Dyer J. The Innovator’s Method: Bringing the Lean Start-up into Your Organization. Boston, MA: Harvard Business Review Press; 2014.
  • *2Christensen C. The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business Review Press; 1997.
  • *3Dyer J, Gregersen H, Christensen C. The Innovator’s DNA: Mastering the Five Skills of Disruptive Innovators. Boston, MA: Harvard Business Review Press; 2011.