3. The Art and Science of Business

Despite the pervasive view that innovation depends on serendipitous inspirations from creative individuals, today's innovative companies rely on disciplined research and procedures to achieve innovation. These procedures for creativity are fundamentally different from what we typically think of as “procedures,” but they are procedures nonetheless, and they can be learned, used, and adopted by anyone—anyone, at least, who is willing to intelligently take the uncertainty head on to risk and endure failure in the disciplined quest for a brilliant idea.

Villeneuve d'Ascq, France. Isabelle, a new owner of a pair of Adidas 1s, would not surface as an obvious candidate for this shoe according to demographic studies. She does run for exercise, but she thinks of herself not as a runner but as a mom, a tennis player, and an employee of local canner Bonduelle. She is healthy and active and has won and placed in multiple local tennis tournaments, but she has never participated in any competitive running event.

Isabelle blends into demographic groups; she could be used as a representative of the average educated 40-year-old married woman. She lives in a suburb of Lille, the second most densely populated city in France. The narrow and windy streets feel like walled corridors, passageways lined by a continuum of homes and storefronts that are partially clogged by cars parked half on the street and half on the sidewalk. Isabelle's house shares a wall with a small grocer, a convenient neighbor given her standard French penchant for fresh produce.

Not only is the location of her residence typical, she herself is quite representative in terms of household income and religious and political views. Unlike the few and the loud who end up portrayed on the American news, she likes America, not just its movies. Her dual household income is also typical, being ample for comfortable living while not allowing for abundance. She, like most, is careful in her expenditures, careful in her product choices.

Where this typical French woman is unusual is right there—in her product choices. For years, she drove a Dodge Grand Caravan, a great family vehicle but an unusual choice in France. Now she drives a PT Cruiser, for her two girls are older, and the still-roomy but smaller PT Cruiser fits her family's current needs. Although both of these vehicles arguably make sense as functional purchases, both also distinguish her family from others, which is one of her unstated reasons for choosing them in the first place.

Her real excitement in purchasing these automobiles is that they were cutting-edge products in France. What does not show up in a demographic profile of Isabelle is that she is an early adopter of new products. After all, her home was one of the first in the area to have a DVD player, and before that, she was one of the first few to have a Sony videodisc player. When she bought the Adidas 1s, Isabelle convinced herself that her feet needed them, because in truth they are increasingly sore after her jogs. Her shoes are far more to her than running comfort. She is more excited about these shoes than she would be about similarly superb inserts, because the Adidas 1 running shoes are the first of a new generation of products.

Launching the Adidas 1

Athletic apparel companies intensely compete for each customer. In fact, in some ways, their behavior is much like that of their most intense users, the hard-core runners. Many serious runners are slow to change in terms of their routines, training, diet, and equipment. Once they have found a system that works, they stick with it. It becomes their ritual, their passion. They have bought the same model and brand of shoes for years, and they are upset if that model is ever phased out. Other serious runners always look for an edge, even a micro-edge. They are willing to try any change as long as it promises to offer a fraction of a second.

The same goes for the companies such as Adidas, New Balance, and Nike, companies that make the shoes and clothing worn by these hard-core users. These companies simultaneously act like both types of runner. Each company has its core strengths in terms of techno-logy and loyal following. Change here is not an option. At the same time, each vies for a micro-edge relative to its competitors, and each looks to innovation to steal a fraction of market share. So far, each company has independently worked on similar innovation, so not one of them in recent times has put much distance between its own products and those of the competition. All are racing forward, picking up speed rather than tiring, not exactly sure where they are headed but working to stay ahead.

Now Adidas has a revolutionary product—not a micro-edge improvement, but one that promises a substantial lead in the race. The accomplishments of the Adidas 1 have always been a dream in the footwear industry, a fantasy idea on every shoemaker's wish list, because each individual has not just different-size feet, but different cushioning needs. Adjustable cushioning has been discussed in the industry for years, and the solution from Adidas is far superior even to what most have dreamed about. Even more importantly, it is the first of a new generation of products, the first of a new realm of inquiry and innovation.

The Adidas 1 was developed in secrecy in the German company's U.S. headquarters in Portland, Oregon. The Adidas 1 is an intelligent shoe, with a 20-megahertz computer embedded in the arch and linked to a sensor in the heel cushion. Taking up to 20,000 readings every second, the computer-powered shoe constantly measures the impact on the sole. It re-tensions a tiny screw- and cable-system to optimize the shoe's cushioning not only to the runner's size and stride but also to the runner's current speed and terrain, whether concrete or grass. The shoe adjusts itself every fourth step, and all the shifts occur mid-stride so that the runner doesn't feel them and so that the shoe conserves power, extending battery life. If the terrain is too soft, a motor adjusts the cushion so that it is less springy when the runner steps down. If it is too hard, it allows the cushion to expand.

Stephen Pierpoint heads up the marketing of the Adidas 1 in Germany. He grew up a fanatic of consumerism and was keenly brand-oriented at an early age. He studied business at Sheffield University in his home country of England, concentrating primarily on marketing. He took advantage of the range of courses the university offered to not only expand his business knowledge but also to further his interest in the human side of marketing, because he especially enjoyed the creativity of advertising appeal. Both when growing up and later at the university, much of his interest centered around sports, so his marketing role at Adidas was a realization of a lifelong dream.

As of autumn 2004, Pierpoint was in the midst of planning for the March 2005 product launch of the Adidas 1. There is much to be planned, especially because the impact of this launch supersedes that of the product. It is a launch that affects the essence of the Adidas brand worldwide. Central to every product launch is the identification of target consumers. For the Adidas 1, Pierpoint talks about two broad consumer segments. One segment is simply those who would go out and buy the product. These are the early adopters, serious runners who look for new technologies to give them an edge. Adidas wants to make sure these early adopters are fully satisfied by the experience of using the shoes—so satisfied that they will never go back to any old-generation running shoes. So Adidas is being careful in its distribution, deciding not just which countries in which to launch the 1, but which stores in which countries, and how much inventory should go to each of these stores. The company wants to be sure to put the product in front of the right people first. For everything changes from this point forward.

The other segment is the brand audience, the listeners who will be influenced by the message of the product itself. This landmark product not only gives Adidas the ability to change the perception of its whole brand, but it also forces a change in perception, because this product puts Adidas at the forefront of innovation in the athletic apparel industry. The challenge for many product marketers is to think of ways to make the product as new and exciting as possible. The marketing challenge for Pierpoint is probably harder, because his marketing efforts must live up to the true greatness of this very new product.

To convey the story of this new shoe, one focus is how it will appear at the retailer. It is not a typical shoe, so use of the typical packaging would fail to communicate content differences. Another initiative is to write a user manual for the shoe. To those of us who are not writing that user manual, the task appears straightforward. However, this is the first shoe that comes with an instruction manual, so there is no template to follow. Remember how bad the first computer manuals were? Adidas knows that even the simple task of an instruction manual can have a major impact on the image of the whole company, so the manuals are being crafted as carefully as the shoe was designed. One of the reasons why Adidas launched the publicity more than six months before the product was released was to get the idea out there so that it could work with focus groups that were already aware of the product and could read the opinions in chat rooms and on Web sites. Pierpoint wanted to see the types of words used by consumers, to identify any fears that exist so that his team could properly address them. How consumers reacted to the shoe's announcement gives his marketing team a sort of test market to use so that the real product launch goes smoothly.

Pierpoint is not stopping at launch; the planning continues. Adidas has marketing plans beyond the launch for the Adidas 1 and for other shoes. It is already planning the next level of intelligence, laying out a map of how it intends to strategically evolve the product and its extensions.

The Role of Marketing in the Early Stages of Product Development

In the companies that we have worked with, marketing professionals are often not involved directly with innovation. They are involved prior to innovation by setting strategic directions, and they are involved after products are developed to take the product to market. Adidas likewise sets up small innovation teams composed of engineers and designers. Many of their outcomes do not see the light of day. Whenever they are ready to come to life, however, the innovation team is integrated with a marketing team. The teams typically unite smoothly because of their unified focus on the athlete—how to make a difference to the individual athlete, ways to innovatively reach and meet the athlete, recreational or serious.

However, there are also benefits to including marketers on the original innovation teams, not just after the idea is judged a “go.” In fact, many marketers do not even perceive that they have the needed skills for innovation and product development. During their studies for their MBA, marketers receive excellent training in how to solve problems, and they are well equipped to recognize ramifications of various solutions and strategies. In the early stages of product development, however, the issue is not to solve a problem but to define it, to recognize and understand the opportunity. Thinking in terms of the case studies used in business schools, business students are taught to analyze case studies, not to write them. Early product work is more like writing the case than analyzing it, of setting up the opportunity rather than deciding how to meet it, of identifying a problem to solve rather than actually solving it.

An emerging trend in business education is to require students to wrestle with ambiguous situations where the facts and issues are not neatly organized into a case study, to practice the kind of skills needed in the fuzzy front end of product development. But even if there is a person with a marketing MBA who is trained only to solve problems and never to define them, even that marketer already has skills that are useful for early product work—skills that help define the opportunity to explore.

Marketers have been trained to study people, to think about why people purchase products. Marketers have learned how to identify segments of consumers, they have studied quantitative methods that describe large groups of potential and real customers, and they have developed measures of advertising reach, brand recognition, and promotion reaction. Traditional marketers' practice of thinking about people is transferable to the type of research needed to identify and explore product opportunities. They just have to learn to see the problem differently, to be comfortable with uncertainty and missing information. They have to make decisions based more on insight and less on irrefutable fact, because the facts simply are not available at the early stages of innovation.

Another beneficial characteristic of marketers is that they tend to keep close tabs on business needs, even while they are busy in the field of understanding customers. When marketers are involved in the early development process, their constant attention to business perspective aids alignment of product and brand, of product and corporate strategy. Built in to the marketing discipline is an economic perspective, that consumers are economic agents whose purchases balance costs with benefits. Engineers have a keen mind toward what is possible, regardless of need. Industrial designers bring in those strong forces that cause double-takes, such as beauty, and create features that ease implementation and pleasure of use. The cross-functional synthesis of all of these perspectives leads to a workable and exciting solution.

The Ambiguity of Figuring Out Winning Products

Early product development entails numerous choices, and it seems at first glance like these choices could be 100 percent left brain or analytical activity. For instance, the product development team at Adidas had to choose whether to bring out separate men's and women's shoes or to make a unisex shoe. They could have made this decision an analytical activity by surveying potential consumers to see what customers want, just like U.S. presidents have been known to use focus groups to test policy ideas. Similarly, a product development team makes many other decisions, questions that they answer one way or another. In the Adidas 1, the sensors assess the sole's compression, affected by weight, terrain, and runner's speed, but the design team could also have incorporated a pedometer and calorie counter, as Puma AG considered doing back in the late 1980s. Should the Adidas 1 include a pedometer? In other words, would sales be higher if the model had a pedometer, or lower, or would it even matter? Until this is tested, the answer is unknown. Although the current shoe is not equipped with a link to a desktop or laptop, the in-shoe computer could conceivably have an outlet to download information into a laptop. What would happen to sales? Or the shoe could have a wireless transmitter to send data to a handheld PDA. Would sales be higher? Similarly, the design team has chosen to show off the circuitry via a clear plastic panel, but that, too, was a factor that could have been optimized. How are costs affected by the clear panel? Will sales be higher? Adidas's first smart shoe did not need to be designed for running—it could have targeted soccer, a sport Adidas has long dominated and a core area of its expertise. The possibilities are seemingly endless. Each decision can be tested in an experiment, like a test market. But not all decisions can be tested; there are just too many.

Without market tests that would show which integrated features are the best combination for the marketplace, it is not clear what exact product the company should develop to achieve the greatest improvement to the lives of customers and to the company's bottom line. The answers to the choices (exact product specifications) are ambiguous rather than clear. Answers are ambiguous because information is lacking, but decisions still must be made. Decisions here are not safe, and ramifications of decisions are unpredictable.

A Sound Basis for Vision (Yes, You Can Go with Your Instinct)

Ambiguity is common, especially in innovation, and it is the uncommon individual who has the vision to make good decisions when dealing with ambiguity. These individuals must be willing to take a stand in spite of lack of hard evidence, and they personally shoulder the risks of their choices. These are managers like Dee Kapur, Chuck Jones, Edith Harmon, and the others mentioned in other chapters in this book. Rather than relying solely on results of experiments, they arm themselves with vision. Rather than waiting for overwhelming evidence of a correct path before moving forward, they use existing knowledge, experience, and resources.

By necessity or by training, innovators are comfortable with uncertainty. But not all of us are. Think about yourself. How comfortable are you making decisions without hard evidence? Would you defend human judgment as scientifically valid? Suppose, for example, that you and a friend cannot remember who paid for lunch last time, so you decide to flip a coin to see who pays today. You pull a U.S. quarter from your pocket, and you notice that it is one of the new quarters, each of which features a different state; this one is from Texas. If you are typical, you would not think twice about using that coin to decide who pays for lunch, even though you have never flipped any of the new Texas quarters before. If someone asked you whether you knew for certain that the coin was “fair,” you would have to agree that you do not know the exact probabilities, that one outcome may be slightly more likely than the other. Should that coin be used without further investigation? Should you first test it, maybe flipping it 1,000 times to see whether you get around 500 “heads”?

Most of us would use the coin without ever thinking about testing it. Put another way, we would simply assume that coin has equal chances of heads and tails. Would you be able to justify such an assumption? If you strictly apply the teaching of the typical required college statistics class, you would argue that you have no idea of the probability of a heads on a Texas quarter until you see some evidence. Yet, even while reading this, you probably still think it is close to being fair. Why? Is it not equally plausible that heads will show 9 times out of 10? The quarter could be more heavily weighted on the side that shows the state—everyone know that Texas is a really big state!

Science does support your gut here—that you can reasonably believe the coin is “fair” even though you have never tested it. How so? A relatively new statistical system, Bayesian statistics, supports the use of past information (such as experience) to help current decisions. You have probably flipped many coins over your lifetime, even though you have never flipped a Texas quarter. Because coins in your lifetime have been fair, or close enough to fair, your natural reaction with the new coin is to believe it also is fair, at least until proven otherwise. The formal, simple framework of your college statistics class would say you know nothing about the Texas coin until testing it. The Bayesian statistics framework would say that your wealth of experience with coin flipping is exactly what you should believe about this coin until it proves to be any different. The Bayesian statistics framework has revolutionized modern research methods. It is used as the basis for Internet search engines, e-mail spam filters, artificial intelligence systems, pharmaceutical tests, and much more.

Certainly, the Bayesian framework does not give you license to unbridled opinion and postulating. It does not toss out scientific rigor. You need the rigor of the Bayesian, the recognition of valid data, the discipline to throw away the irrelevant, the willingness to dive into the uncertain, and the care not to become overconfident. But it also tells us that educated insight has merit, just like statistical validation.

This world is that of the innovator—the simple acceptance of uncertainty, a willingness to make decisions in spite of a lack of information that reveals the “right” decision. The innovators' familiarity with ambiguity has shaped their mind-set, has led them to see ways to improve their world that may be missed by others.

A Process for Pragmatic Innovation

The natural question, then, is how to innovate. As Peter Drucker and others have written before, innovation is not serendipity but the outcome of disciplined activity. What is the nature of that disciplined activity? What kinds of procedures can be adopted that can and will yield good ideas when so many decisions must be made—too many to answer via experimentation?

In his book The Sciences of the Artificial,¹ economics Nobel Laureate Herb Simon describes the science of design. He recognizes that “exact solutions to the larger optimization problems of the real world are simply not within reach or sight. In the face of this complexity the real-world business firm turns to procedures that find good enough answers to questions whose best answers are unknowable.” Simon invented the word satisficing to describe this situation, in which a person “accepts 'good enough' alternatives not because he prefers less to more but because he has no choice.” Product innovation is not about optimizing but satisficing.

The procedures he suggests are to set goals and make decisions relative to those goals. Rather than the impossible task of optimization, in which one would ask, “Of all possible worlds, which is the best?,” the question in innovation is, “Does this alternative satisfy all the design criteria in a preferred way?” A challenge for satisficing in innovation, then, is to define the criteria for success.

Akin to the philosophy of Herb Simon, we will articulate a sequence of steps and procedures for the earliest stages of innovation that the best innovators seem to follow. This early part of the product development process is often called the “fuzzy front end” because it is counter to the precise facts known about the product in the later stages, where the product is detailed for production. In brief, the early tasks set up the criteria, not from irrefutable fact but from insights based on user observation, and the later tasks create product alternatives that meet those criteria. This process is equally useful in designing products as well as services. We highlight these procedures here, we discuss many aspects of them throughout this book, and we illustrate the details of this sequence of steps in the process in Chapter 9, “A Process for Product Innovation.”

Identify an Area of Strategic Importance

First, pick a general area of strategic importance to the company or target market. This could be a key market for your company, such as baby boomer males who run aggressively. This general area narrows down the scope of research and development, making it feasible rather than impossible. Of course, it also helps ensure that the work being performed is consistent with the company's goals.

Research People

Research the people and the social, economic, and technological factors (also called the SET factors) related to that area. We discuss SET trends in Chapter 4, “Identifying Today's Trends for Tomorrow's Innovations.” As for the people, innovators need to research real people, to get to know actual individuals of importance to their strategic domain. We emphasize “real” people in order to steer research away from aggregate statistics that describe groups of people. We hold no ill will toward statistics, but statistics generally provide answers to questions that have been important year after year. To a great extent, then, statistics answer old questions, and innovation is all about the present and the future. Another problem with statistics is that they provide simplified, summarized, arms-length knowledge of people. Without direct interaction with real people, innovators do not truly know these key individuals; they just know a limited set of facts about “typical” people in a target set.

Coincidentally, Simon was also a psychologist. He spoke of protocol analysis where, rather than studying the masses, one studies only a few people in depth to understand their process and approach to solving a problem. Extensive surveys provide a rich quantity of information, but the survey is only as good as the questions asked and the validity of the people as a cohort of the market who answer them. At the fuzzy front end, the innovator doesn't yet know what to ask and therefore cannot refine a questionnaire to identify who the masses are.

Innovation is all about people, not products. It is about the team inside the company that has the role of innovating as well as the people outside the company who interact with or are impacted by the innovation. Because people are central to innovation, we have filled our book with people. We began in Chapter 1, “The New Breed of Innovator,” with biographical sketches of a handful of innovators. Chapter 6, “The Powers of Stakeholders—People Fueling Innovation,” discusses analysis of product “stakeholders.” Also every chapter begins with a scenario of a prototypical individual using a product.

The rest of the activities in innovation are best learned by doing them. As such, in Chapter 9 we illustrate the steps described next in the context of an actual project. If you want to read more, we also have described these steps in detail in Creating Breakthrough Products: Innovation from Product Planning to Program Approval.²

Define the Opportunity

The dynamics of trends are constantly providing new opportunities in the marketplace, and the research and knowledge of key stakeholders will reveal multiple opportunities within the specified strategy area. Using an analogy, an opportunity is to a product as a problem is to a solution. The opportunity is a positive way to define a current state, and a product is the goal of the desired state. Here, the objective is not to think of products but of what products will achieve for people—what are the needs, wants, and desires of the opportunity. What do the people you researched value that is not currently provided?

Define Design Criteria

Based on that research, what characteristics does a product need to have (not what should a product look like) to fulfill the desired state of the opportunity? These characteristics are the design criteria.

Achieve the Criteria

Develop numerous product ideas that can potentially meet the criteria, and prototype the most promising ideas that do meet the criteria. Obtain feedback from target users about the prototypes, and iteratively redesign until the product design seems to be the best you can make it, or at least within the criteria you defined.

Go/No-Go Decision

The product now is specified well enough to make a go/no-go decision. At this point, if it is judged worthy to pursue, the product enters a new phase, into preparation for production and product launch. For some companies, this is the point at which the innovation team leaves this product and starts afresh on others. We like the approach of Adidas, which at this point integrates the innovation team with a marketing team so that expertise and momentum are not lost in transfer. One improvement to Adidas's already great innovation structure would be to have had marketers on the innovation teams along with designers and engineers.

The Ground Rules: Understanding the Innovator's View of Procedures

These steps for satisficing-based product development are fundamentally different from what we typically think of as “procedures.” Even so, they are methods, and therefore they can be learned, adopted, and used by anyone. But because of how much they differ from other procedures with which most people are familiar, we here step back from the methods and discuss how they are to be used and what to expect from them. In particular, we cover four aspects of methods for innovation: 1) the methods require the user to work and think, 2) the methods cannot mass-produce ideas, 3) company investment should be in the process rather than the outcomes, and 4) the methods require not just intelligence but internal motivation. We contrast these four points with the “For Dummies” series of books so that you will understand the different nature of the decision philosophy and mentality of innovators.

Point 1: Thinking Required

Many of us prefer to improve ourselves and our world without risk, without uncertainty. We like step-by-step guaranteed procedures, such as those of the “________ for Dummies” books. Fill in the blank any way you want—someone has written it. You can buy Low-Carb Dieting for Dummies, Catholicism for Dummies, Guitar for Dummies, Japanese for Dummies, NASCAR for Dummies, and even Sex for Dummies. When we recently searched its Web site, Barnes & Noble listed 2,519 entries that are “for dummies.” These titles offer methods that eliminate uncertainty, procedures that are no-brainer methods for guaranteed success, improvement without risk.

Of course, the “For Dummies” type of procedure is widely embraced. Such procedures for risk-free improvement have yielded large profits and have benefited society for countless years. Consider technology available to farmers over centuries. An ox-drawn plow was certain to yield gains relative to a human-powered hoe. Then mechanized solutions (such as tractors) offered still greater profits; farmers could cultivate more land per hour and thus obtain greater revenues for the same hour of labor. There is no uncertainty—a farm with mechanical equipment will be able to produce a larger harvest, per labor hour, than a farmer using Amish-approved techniques. A more modern example comes from a mathematical research field called “operations research,” the science of optimal business decisions. Operations researchers provide schedules for airlines and baseball seasons, figure out the best locations for product warehouses, and devise inventory management policies so that retailers do not waste precious capital on items that sit on shelves for most of the year. These scheduling formulas, inventory management solutions, and other operations research techniques offer risk-free improvements, like tractors for farmers. The improvements can be worth vast sums to the company. For instance, John Deere recently saved $1 billion through the supply-chain tinkering of SmartOps, an operations research consulting firm.

With a “For Dummies” checklist, it is the process that does the work. The person implementing the process does not matter, does not need to think—hence the series title. But with the methods for innovation, the user of the methods is critical, for the methods aid but do not replace the innovator. They enable the innovator. They are a tool, like a hammer for a carpenter, and like computer-aided design (CAD) in the hands of an architect. The Freedom Tower in New York has been designed using the latest development in CAD tools, a 3D drawing and modeling program called Revit. Similar programs have long been used by engineers and designers in the design of motorcycles, airplanes, and other consumer products. The tool tremendously leverages the ability of the architect, but the architect still must do the work. Methods of innovation are tools that leverage the skills of the user, tools that take that person's productivity beyond what it would be otherwise.

Consider the work of Frank Gehry, the famous architect who designed, among other masterpieces, the Guggenheim Museum in Bilbao, Spain. Gehry's buildings are large-scale livable art forms that flow and curve in ways only imaginably drawn on paper or molded in clay. Yet these organic shapes that meet and multiply at many levels of complexity form the basis for Gehry's buildings. There is no repetition or standardization; no two forms or parts of forms on his buildings are the same. One can imagine what a nightmare to the traditional construction contractor must be the daunting task of constructing one of these buildings. Yet they are envisioned, designed, and then successfully built. The only way that this can happen is with the tool of CAD/CAM. The CAD system allows Gehry to represent and communicate his imagination. The CAM (computer-aided manufacturing) system allows each piece of material on the outside of the building to be individually manufactured and labeled for assembly. The CAD/CAM system, in this case one called CATIA, is just a tool, but in the hands of his engineers, it is a sophisticated enabler that allows Gehry's innovation to become a commercial and structural success.

Point 2: Innovation Yields Differentiation

A second aspect of the methods is that they are not for mass production. Thinking again of the CAD example, a tour through Houston suburbs shows that houses can be mass-produced, through replication and permutation of components. But innovation is sorely lacking. The Houston suburb is no Bilbao.

It isn't the fact that these methods are difficult to understand that prevents mass production. Even complex mathematical equations can be reduced to a “For Dummies” framework; they can be simplified to the point-and-click of software, and any competitor in any country can then adopt that method. Methods for innovation have a nice advantage over those that can be mass-produced, because they require smart people. They are not “For Dummies.” If you are that smart person, your job stays with you. Your job cannot be coded into software that ships throughout the world to legions of replacements for you. If your company has a process for innovation, a greenhouse for organic growth, your innovations become competitive advantages, not commodities that spread quickly to imitators worldwide.

Point 3: Don't Stop at Success

A third aspect of the methods is that they should be part of a larger process, an incubator to grow ongoing innovations. Innovation is risky; the failure rate is high. Consider for a moment an industry that makes a business of risk: casinos. The big money of the speculative world comes from a system of speculations, not a single gamble. The “house” may lose any gamble—it never knows which ones will pay off and which will not. But the odds are in its favor, so repetition yields its lucre. Although the statistics on new product success rates reveal low winning probabilities, the lesson is the same—that repetition is important. With innovation, any particular project may fail dismally. It is repetition of the process that yields the payoff. You can, however, slant the odds in your favor; you can beat the house odds in the introduction of new products if you have the right tools and methods and diligently follow them. Certainly don't stop at success—keep the greenhouse intact in order to keep growing new ideas.

Many innovative companies do put mechanisms in place to constantly feed the innovation cycle. Lubrizol, a company that develops “fluid technologies for a better world” that we discuss later in this book, has a process by which every year two new technologies are developed into product possibilities. In the first chapter, Chuck Jones talked about a constant stream of product ideas that are in the pipeline at Whirlpool. Other companies support advanced R&D to develop new areas of growth. New Balance, also discussed in this book, has a strong advanced product group that constantly seeks not only new product opportunities, but also new approaches to determining those opportunities. Still other companies create divisions to support new growth. For example, Respironics, a maker of sleep apnea and support products, formed a division for “sleep onset” to recognize the emerging technologies and growing demand for products to help people sleep and sleep better.

Point 4: Motivation Needed

Finally, the methods for innovation are not a step-by-step guarantee for success, unlike the promise of the “For Dummies” series. In the hands of an unmotivated employee, the methods yield no benefit. As an illustration, compare Kate and Susan. Kate has the entrepreneurial spirit, that inward drive to maximize the possibilities around her. In college, she took pride in her work (for most classes, at least). For instance, for her case study analyses in marketing class, she read more on the company than what was presented in the preprinted case study. She put herself into the role of the decision maker, researched competitor companies and their strategies, and took the time to think seriously about the actual and potential customers of each company.

Susan also was diligent and hard-working in school, but her goal was mainly to get an A on each project. In her marketing class, she made sure to discuss each of marketing's “four Ps” (price, product, place of distribution, and promotion). Her motivation was external—to fulfill the letter of the law, to get the letter grade. For Susan, the instructions did the work for her; she basically filled in the blanks, and she got her A.

Both Kate and Susan have found jobs in which they are successful, but only Kate would be successful with the methods for innovation. Susan's approach to work is to fill in the blanks of a “For Dummies” process; Kate's approach is to use the process to gain deeper insights. The world of innovation is all about deeper insights. There is no forward and upward movement when the blanks are just filled in.

The innovators' methods that we describe are best practices, used by the successful innovating companies. They are like CAD for the architect, a framework and set of tools to improve innovation. They are insufficient by themselves for successful innovation, because they require the motivation like that of entrepreneurs, like that of Kate. The methods just become more paperwork for the Susans of the world, but the same methods allow the Kates to be ingenious, to make an impact, and to stand out from the fray. Overall, these methods serve as the early stages of product research, a repeatable process to find and develop successful innovative products.