Day 1
Start Before You Need To

If you’ve started the twenty-eight-day innovation program, the odds are pretty high that you recognize the importance of innovation. But still, you might be thinking, “Do I really need to go through all of this? Innovation seems hard. How can I tell if I truly need to innovate?”

It’s a reasonable question. My answer begins in a nonobvious place. Pause for a minute to think about the wonderful efficiency of the modern post office. Seems crazy, right? But this is a business that in most countries visits every single address at least five days a week, if not more. While everyone has stories of losing something in the mail, the overwhelming majority of mail comes on time and unharmed. It really is quite miraculous.

Of course, in a digital era, it also feels dangerously antiquated. The rise of modern technologies has placed severe pressure on the post office. Here’s the problem, however. Exactly when was it clear that the U.S. Post Office was in trouble?

One natural point would be in 1994, when Netscape introduced its browser, marking the beginning of the modern Internet era. That’s fine, but the volume of mail didn’t slow down as e-mail and other forms of instant connections increased their penetration. In fact, along some dimensions, the rise of the commercial Internet increased demand for traditional mail service. After all, e-commerce of physical products requires delivery (in 2010, Netflix shipped two million DVDs a day, a number that has since plummeted as Netflix has shifted to online streaming). And new technologies allowed companies to fine-tune their direct-mail marketing campaigns, making these efforts more economical.¹

So perhaps it wasn’t clear that the U.S. Postal Service had to change until about 2007, when the volume of mail actually started to decline. Here’s the problem—by the time it was clear to everyone that the post office had to change, change was much more difficult. I call this the innovator’s paradox. When times are good, you have the ability to do things differently, but not much urgency or desire. When times are bad, you urgently need to do things differently, but it’s punishingly hard. Why? Companies end up spending most of their time dealing with what appears to be a sudden crisis in their core business. The cash flow that would support new efforts has dried up. New-growth efforts look too small to address today’s problems. The company needs to do something dramatic, but dramatic efforts rarely work. Innovation master Clayton Christensen calls this the “growth gap death spiral,” meaning the efforts that companies take to plug growth gaps actually result in larger, not smaller, gaps.

This pattern, punishingly, repeats itself in industry after industry. In the summer of 2006, I was doing a workshop for senior leaders in a large media company. I was talking about potentially significant changes in the industry and brought up YouTube, then a fledgling service mostly populated by pirated videos.

An audience member challenged me. “If you add up every video ever watched on YouTube, it is less than the viewership of even low-rated television shows on obscure cable networks,” he said. “We don’t have to worry about this garbage.”

Of course, the audience member was correct at the time, but YouTube’s rapid growth—further powered by Google’s acquisition of the company in 2006—has transformed YouTube into a powerful force in the television industry. And in 2010, Google itself began inching into the television market.

Kodak president Philip Faraci compellingly described the innovator’s paradox during a panel discussion I moderated at a newspaper industry convention in 2008.² Of course, Kodak was well aware of the transformational potential of digital imaging. But, in Faraci’s words, “the core business just kept growing.” In 1999, its photography business peaked at $10.3 billion. The business looked stable in 2000, with sales a robust $10.2 billion. Sure, it shrank 8 percent in 2001 to $9.4 billion, but that was in the midst of a tough recession. Declines accelerated from there (revenues dropped to less than $1 billion by the end of the decade), but it was legitimately hard for Kodak leadership to square the story they kept hearing (“the future is digital!”) with the data (“the future is still in the future”).

It’s just hard to believe there’s a crisis when the data isn’t conclusive. And, as noted in one of my favorite lines, which is buried in the conclusion of Seeing What’s Next, “by the time the writing is on the wall, everyone can read it.”³

Every family has a variant of this story—the free-spending uncle who suddenly lost his job and got swamped by debt; the cousin whose chronic choice of work over family life led to divorce; the coworker whose bad eating and exercise habits led to a debilitating heart attack. Again, the pattern is the same. Everything looks OK, until the day when it doesn’t. And when that day comes, the degrees of freedom to do things differently have markedly decreased.

So, what do you do? If you want to understand the need for change, don’t just look at where things stand today. Instead, ask three questions:

1. What do the underlying trends suggest could be possible future states? In the post office’s case, the slowing rate of growth compared with historical norms could have been enough of a warning sign that serious change was necessary. We actually helped the media company mentioned above to do some straightforward scenario analysis to show what would happen if it ended up in a “perfect storm” of change. The results were scary enough—and some of the responses simple enough—that it motivated serious action. Clearly, financial planners and doctors play similar roles, showing—in sometimes very sophisticated ways—the impact of following a particular behavior.
2. Where is there a small but growing trend? When he reviewed a draft of this book, innovation thought leader Karl Ronn (who will be pivotal later in Day 6) offered this thought: “Anything that has doubled its size is a potential disruptor, regardless of size. They are running the test market we should have run. This is a simple way to not ignore small stuff.” Like most of Ronn’s suggestions, it is a good one.
3. What can you learn from analogies and metaphors? Kodak, the post office, and the media company faced a common threat—replacement by “good enough,” cheaper alternatives. They aren’t the only three organizations that faced this type of change. Christensen’s Innovator’s Dilemma provides similar examples from industries as wide ranging as hard disk drive manufacturers, excavators, and accounting software. It is always worth asking whether you see something that looks similar to a situation faced by a successful organization in its past.

You often need a keen eye and some creativity to spot signals of change before they are abundantly clear. It’s worth expending the effort, however, when the alternative is getting stuck in a death spiral or a paradox.

HOW-TO TIPS

1. Go to a popular financial Web site, and determine whether your current savings rate and your desired future lifestyle intersect.
2. Create a list of three signposts that would suggest that you or your company need to dramatically shift strategy.
3. Look at the ten highest-performing stocks for the last twelve months. Discuss with a friend whether any of them show signs of being stuck in the innovator’s paradox.

Day 2
Remember, the Consumer Is Boss

On March 7, 2000, Procter & Gamble warned that it would miss its quarterly earnings estimates. This event might not seem like that big a deal—after all, companies miss their earnings estimates all the time. But not P&G. The company had only missed its estimates once since World War II. The March 2000 announcement sent its stock price down a shocking 31 percent. Three months later, P&G chairman and CEO Durk Jager stepped down, and P&G’s board appointed innovation master A. G. Lafley to the role of CEO (he became chairman in 2002). P&G’s stock dropped another 11 percent that week.

As Lafley started the hard work of reinvigorating P&G, he made a critical decision to focus on winning through innovation—one that ultimately helped him earn a spot on the Mount Rushmore of Innovation. The decision resulted from Lafley’s core belief that innovation was a discipline that could be managed and mastered. He set about weaving innovation deeply through P&G’s culture.

As part of this effort, Lafley sought to get P&G employees to shift their focus. The company was world renowned for driving decisions based on deep customer understanding, but upon reflection, Lafley realized that the company had drifted away from that understanding.

A.G. Lafley

Courtesy of P&G

“We were all so busy every day,” Lafley told me. “We had our ears in our cell phones; we had our heads in our Black-Berries and PDAs; we had our heads in our computer screens; we were consumed in meetings of all kinds. When you thought about it, where was our behind? Our face was internal, and our behind was right facing the customer.”

Lafley is gifted at communicating complicated ideas in simple ways. He developed a simple mantra to refocus P&G: The consumer is boss. He would say something along these lines: “Fellow P&G-ers, I’d like you to meet your new boss. You may think that I, as your CEO, am boss. That’s not right. You might think that the Board of Directors to which I report is boss. That’s not right. You might think our shareholders are the bosses. That’s not right. You might think your line manager is boss. That’s not right. We have one and only one boss that matters. The consumer. The consumer is boss.”

Lafley urged P&G to listen to the consumer as the company never had before. P&G had to hear what the consumer was saying and, much more importantly, tease out what the consumer couldn’t articulate.

Lafley urged particular focus on the two “moments of truth”—the moment a consumer chooses a product, and the moment the consumer uses a product. P&G had to learn more about these moments of truth—where it was falling short, and where there were opportunities for innovation.

“The consumer is boss” wasn’t just an executive platitude. P&G increased investment in market research. It sought to get employees out of the building to spend time with consumers. It launched two programs, Living It and Working It. The basic notion is that everyone in P&G—from the chairman down—would spend time living with consumers, shopping with consumers, or working alongside consumers. Many products trace their inspiration to these kinds of efforts. For example, watching a woman grow frustrated when she spilled coffee grounds on her floor helped to inspire P&G’s Swiffer quick cleaning line.

If you happen to meet a P&G employee, ask him or her about a recent consumer contact. Odds are, the employee’s face will light up as the person describes what he or she has learned from spending time with a consumer. The company’s offices are blanketed with pictures of consumers. Marketing plans are littered with pictures and icons to bring consumers to life.

Other companies follow derivations of the consumer-is-boss mind-set. Best Buy doesn’t rely on dry customer-segmentation models. Rather, it gives names and personalities to segment archetypes to help bring them to life. I even once heard a story—perhaps apocryphal, given that no names were mentioned—of a company that brought a mannequin into a key decision meeting to help make sure the consumer had a seat at the table.

The consumer-is-boss mind-set is useful whether or not you actually serve end consumers. After all, just about everyone has a “customer.” A salesperson has a sales contact. A member of the IT support team serves the company’s employees. And many companies have more than one “boss” that they must please. P&G’s most important customers aren’t individuals—they are Walmart, Carrefour, Target, and the millions of mom-and-pop retailers around the world. If P&G doesn’t figure out what will delight those retailers, it will have no hope of delighting the end consumer. Medical-device companies have to think about the doctors and nurses who use their products, insurance companies that pay for medical procedures, hospitals that purchase the product, government regulators, patients, and those patients’ families.

A consumer-is-boss mind-set trains you to look at the world through other people’s eyes. It helps you feel their hopes, dreams, frustrations, and desires. And that understanding provides absolutely critical input to spot opportunities for innovation, which, after all, is the goal of this week’s exercises.

Taking this mind-set can also help you defuse disputes at home and at work. It’s simple, but the empathy that comes from taking a different perspective can help you see things you might otherwise have missed.

For example, a couple of years ago, I was frustrated by upward feedback I received from one of our junior consultants. I spoke with my colleague Dave Duncan about my frustration. “This feedback is just empirically wrong,” I said. “I just don’t know how he could have this perspective.”

“You know,” Duncan said, “I received feedback that I felt the same way about in the last review cycle. At first I ranted about it, because the feedback literally bordered on lunacy. However, the person who gave it believed it fiercely. So I asked myself what I had done that led to a smart individual’s having such a warped perspective.”

I now try to always follow Duncan’s advice. After all, our perspectives are always right in our own mind. Step out of yourself and ask questions like “What assumptions was that person making when he or she made that statement? What else in this person’s life might have influenced what was said?”

After all, the consumer is boss.

HOW-TO TIPS

1. Bring your target customers to life—give them a name, describe what they do, and find images you associate with them.
2. Detail the amount of time you spent with customers or key stakeholders in the last three months. Find a way to triple that time.
3. Look back at a recent disagreement you had at work or at home—use a consumer-is-boss mind-set to try to identify what was behind your antagonist’s argument.

Day 3
Get the Job Done

One of the biggest challenges facing the would-be innovator is developing an understanding of the unsatisfied wants, needs, and desires that indicate opportunities for innovative approaches.

I can tell you how not to do this. Don’t go to a current or prospective customer and ask, “What do you want?” Most customers actually don’t do a very good job answering that question. And too frequently, that starting point leads to a more pleading, “Why won’t you buy more of what I am trying to sell?”

At Innosight, we use language popularized by innovation master Clayton Christensen. In The Innovator’s Solution, Christensen and co-author Michael Raynor described the notion of a “job to be done.” The concept is very simple. People don’t buy products and services; people hire them to get jobs done.

In his speeches, Christensen illustrates the example with a humorous story about a fast-food company trying to accelerate the sales of milkshake products. While the company thinks that the competition is milkshakes sold by other fast-food competitors, deeper investigation highlights two different jobs to be done. In the morning, drivers facing the prospect of a long, boring commute are looking for a “commuting companion.” They appreciate the milkshake’s viscosity (it takes twenty minutes to consume the milkshake!), the drink’s ability to be consumed one-handed, and its ability to provide caloric coverage for the morning. In the afternoon, parents who have been saying no to their kids all day are looking for a “simple placation tool.” The rub, Christensen notes, is that the features that delight the morning commuter infuriate the parent, who wants something less viscous and smaller.

Christensen’s language channels thoughts of other great management leaders. As described earlier in the book, innovation master Peter Drucker detailed a similar idea a half-century ago: “The customer rarely buys what the company thinks it sells him. One reason for this is, of course, that nobody pays for a ‘product.’ What is paid for is satisfaction.” Companies think they are selling products or services, but the customer doesn’t think of the world that way. Customers have problems, and the company has potential solutions. Harvard Business School guru Ted Levitt, who authored four award-winning Harvard Business Review articles, including my personal favorite, “Marketing Myopia,” allegedly told his students, “People don’t want quarter-inch drills—they want quarter-inch holes.”⁴

The simple question of “What job is the customer struggling to get done?” is a very powerful way to identify opportunities for innovation.

Here’s an example of how this question helped refine Innosight’s service offering. At its core, Innosight is a strategy consulting company. This means that we get hired to help solve a problem that a company doesn’t think it can solve on its own. Our specialty is innovation, so typically clients will ask us about creating work processes to support innovation, coaching executives to make them more innovation friendly, helping them identify opportunities, and so on.

During a strategic review in 2010, we reflected on a project we did a few years earlier with a major beverage company. The client had asked us to identify new growth opportunities. We thought it was a great project. We developed compelling, creative ideas. Our final meeting ended in a standing ovation. One of the ideas we highlighted ended up being the basis for a billion-dollar brand.

Was the project a success? We did what the client asked us to do. We earned a standing ovation. However, our client didn’t do anything with our insight. A different company launched that billion-dollar brand.

So, we asked, why did the client ask us to identify new growth opportunities? Our task wasn’t to earn a standing ovation, conduct analysis, or put together a beautiful PowerPoint presentation. The client’s real job to be done was to achieve growth that was otherwise out of its reach. By that measure, the project was a failure.

This insight led us in two directions. First, we had to improve our ability to move an idea from paper to reality. Second, we needed to improve our ability to make sure corporate systems and structures supported innovation. The resulting expansion in our service offering helped to amplify our impact.⁵

The job-to-be-done lens is critical for any challenge that requires innovation. For example, if you work for an IT department, ask what job the end user is really trying to get done (in many cases, it is to not think about IT at all). If you are trying to sort out a difficult relationship with a coworker, ask what job he or she is really trying to get done.

Now, of course, if you go to your customers and ask them what job they are trying to get done, you are likely to be met with a blank stare. One of the easiest things to do is to just keep asking “Why?” until you start to get to that fundamental problem. For example:

• Why did you buy a drill? I needed to drill a hole.
• Why did you need to drill a hole? I needed to hang a picture.
• Why did you need to hang a picture? I wanted to make the living room look nicer.
• Why did you want to make the room look nicer? My mother-in-law made an offhand comment about the room last time she was here, and I don’t want that to happen again.

And so on. Careful analysis goes beyond functional consideration to get at emotional (how someone feels about himself or herself) and social (how someone relates to others) areas as well. The goal is to move from the solution to the problem, because deep understanding of the problem can make the solution obvious.

Simple questions can lead to powerful insight. Whenever you are looking for opportunities for innovation, remember to ask, “What job is the customer struggling to get done?”

HOW-TO TIPS

1. Keep asking “Why?” to determine the job your current offering or innovative idea gets done.
2. Keep a diary for twenty-four hours, noting the points of frustration you encounter throughout the day, to train yourself to spot signs of frustration.
3. Get out of the building (you’ll be doing this again later this week). Watch a prospective customer go about his or her day. Write down three jobs this person is struggling to get done.

Day 4
Compete Against Nonconsumption

Back in 2006, an Indian conglomerate called Godrej & Boyce came to us with a question: “How can we break out of our refrigerator death match against General Electric, Whirlpool, and LG?” For years, the company had been fighting fiercely against global powerhouses with trusted brands for the very small portion of the Indian market that purchased a standard Western refrigerator.

We flipped the problem on its head. Instead of competing against the powerhouses for the 15 percent of the market that purchased refrigerators, what about the 85 percent that did not purchase refrigerators?

We were following guidance—guidance worded in different ways—from innovation gurus Clayton Christensen (“compete against nonconsumption”), W. Chan Kim, and Renée Mauborgne (“find blue oceans unpopulated by powerful competitors”), and C. K. Prahalad (“target the fortune at the bottom of the economic pyramid”). Whatever name you want to give it, if you are trying to discover an opportunity for innovation, one time-tested innovation trick is to look for people who face some kind of constraint that inhibits their ability to solve a pressing problem they are facing in their lives. Specifically, look for people who find existing solutions too complicated, expensive, or difficult to access.

Photo by Soumik Kar

Why did 85 percent of the Indian market not buy refrigerators? It’s not rocket science. Refrigerators are relatively expensive. Many Indians considered them unaffordable luxuries. Even if Indians could afford the refrigerator itself, the expensive electricity required to run the power-hungry appliance made the total cost of ownership high. Unreliable electricity rendered plug-based refrigerators worthless. Finally, for the many Indians who lived in small shacks in crowded slums, a refrigerator was simply too big for their dwelling.

It’s not that these consumers didn’t want some of the benefits of refrigeration. But it was out of their reach. The question for Godrej now was, what would delight these customers? What were some of the jobs they were trying to get done?

Godrej went out and spent time with customers to learn that it could address two important jobs. Many of the male workers in the household spent fourteen or more hours a day doing back-breaking labor in intense heat. “I wish I could give myself a simple reward. Just a cold drink at the end of a long day,” a laborer might say. The laborer’s wife had a different job to be done. “I’m tired of spending my entire life preparing food. Couldn’t I just store food for one extra day?” she might ask. Note how different these jobs are from a Westerner, who organizes meals in advance, visits supermarkets once a week, and so on.

With this insight, Godrej designed a very different kind of refrigerator. In 2009, the firm introduced a product called ChotuKool. The first version looked like a small cooler. It was battery powered and had a chiller that functioned a bit like a fan that cools a laptop’s battery. It was top loading, so power wouldn’t dissipate when the door was opened. The top of the refrigerator actually resembled a smile. And, most importantly, it cost about $70, sharply cheaper than comparable products. The product exceeded sales expectations during a trial launch in 2010. In early 2011, Godrej won an award from the Indian prime minister for its efforts, with sales accelerating dramatically.

This kind of “nonconsumption” existed in the Anthony living room as well. From 1978 to 2003, I was the quintessential consumer of video gaming technology. I had every video game system known to man. The first one I remember is the Atari 2600 and the classic game Star Raiders (my parents tell me we had a TRS-80, but I don’t recall playing on that). Then there was the ColecoVision, the Nintendo, the Sega Genesis, the Super Nintendo, the TurboGraphx 16, the Sega Dreamcast, the PlayStation, and the PlayStation 2. Then, in 2003, it stopped. The video game system went in the closet. What do you think happened in my life in 2003?

If you are anything like audiences during my talks, about half of you think I had a baby in 2003. Actually, our first child came in 2005. In 2003, I got married. That—and working to get Innosight’s consulting arm off the ground—was enough complexity in my life to kill the complicated video game system. You see, Sony and Microsoft had gotten caught in a death struggle for the most demanding video game customer—fast-fingered teenage boys who must have the most realistic game play and the most intense graphics. Chasing that target led to video games that were so complicated, so difficult to use, that it would take three weeks to figure out how to play them. And I just didn’t have that kind of time anymore.

So I, along with many, many other nongamers, eagerly awaited Nintendo’s Wii system. The magic of the Wii wasn’t the console’s beautiful graphics. It was the controller. The controller contained a chip called an accelerometer, which tracked motion along multiple dimensions. You picked the controller up and interfaced with the system in ways that were previously unimaginable. It was so simple, so intuitive, that by the time he was three, my son Charlie was an accomplished baseball player on the Wii. He could never mash buttons or master multiple joysticks, but he sure knew how to swing a clublike instrument.

Nintendo’s strategy was very conscious. It was trying to grow the market by appealing to people who were put off by the complexity of other systems. And the strategy was a massive success. Over the subsequent five years, the Wii outsold the competition by a substantial margin and, in so doing, created billions of dollars of profits for Nintendo. The company basically had the casual gaming market to itself for five years until Microsoft and Sony finally introduced competitive products in late 2010.

The great thing about this kind of strategy is that the target customer can be satisfied with something simple or straightforward, because, after all, something is better than nothing!

I’ve seen this concept applied inside organizations, too. The last thing many people want to do is call up human resources to ask a question about their benefits or spend hours with the IT department to figure out how to install new software on their computer. Think about how you can give people the tools to solve problems on their own.

It takes some mental discipline to look to markets that don’t exist, but the discipline can pay off in the form of exciting growth opportunities that are hidden in plain sight.

HOW-TO TIPS

1. Identify two things that you use every day and that competed against nonconsumption.
2. Write down five things that a coworker or friend can only do by relying on an expert or going to a central location. Think about ideas that would let these people do it themselves.

Day 5
Find Compensating Behaviors

In 2009, we were consulting to VF Corporation’s Jeanswear division, which sells popular brands such as Wrangler and Lee. The company told us that its goal was to become the “Procter & Gamble of the apparel world.” What did that mean? Most apparel companies are fashion or trend driven. They hire cutting-edge designers who in essence seek to always be one step ahead of customers. VF wanted to be market driven. It wanted to understand the customer better than any of their competitors and use that insight to drive the creation of innovative solutions.

With this in mind, we guided the company to spend more time with current and prospective customers to find points of frustration. One trip to a local department store proved particularly illuminating. Executives watched as a prospective female customer shopped for a new pair of jeans. She wandered around the endless racks of clothes in the store, picking up pair of jeans after pair of jeans. She staggered under the weight of the jeans as she entered the dressing room.

As the team reflected on its observation, it highlighted two peculiarities. First, the sheer volume of jeans the woman brought into the dressing room seemed surprising. Second, the woman had picked up multiple sizes of just about every pair she was trying on.

Then came the most important part of the visit—trying to understand what was behind the woman’s behavior. The executives assumed that she must have recently experienced a weight change, so she was unsure of her size. Actually, it turned out that her experience taught her that the sizes that appeared on the labels of jeans only loosely related to what would actually fit. She had to bring in seemingly dozens of pairs of jeans to find one good fit. Even worse, after a couple of washes, the jeans wouldn’t fit quite the same, leaving the woman highly frustrated.

Illustrated by Alexander Rothman

Now, along some dimensions, this doesn’t exactly qualify as a blinding insight (especially to women). Research shows that women find shopping for jeans to be the second-most intimidating shopping experience, behind shopping for swimwear. But the experience helped the apparel company understand what customers did to work around the limitation of current products. And these were the customers who had chosen to come to the retail store—just think of the legions of customers who found the process so depressing that they wouldn’t even step foot in the store! These observations helped the company focus its innovation efforts on the jeans-buying process. VF changed the labeling on its jeans, developed innovative display mechanisms in retail stores, and launched an online campaign where noted style icon Stacey London helped women find jeans that would be most appropriate for their body type. In early 2011, VF Corporation reported that these and related innovation efforts had created $100 million in incremental revenue in its Jeanswear division.

Innovation master A. G. Lafley found a similar workaround when he was a young brand manager at Procter & Gamble working on Tide laundry detergent. P&G would regularly administer quantitative surveys to assess the quality of its product and packaging. Consumers frequently reported that they loved Tide’s packaging (at the time, Tide was packaged in cardboard boxes). Yet, when Lafley was interacting with a consumer, he noticed that she almost always used a screwdriver or scissors to open the Tide box. Lafley realized that the woman didn’t want to risk breaking her nails opening the cardboard box. She said she loved the packaging because she didn’t know of any alternatives, but in reality, she had to find a creative way to open the box because of its design limitations.

Careful observation can help to highlight these kinds of compensating behaviors, or ways people work around the limitations of existing solutions. Drilling into these compensating behaviors can help to unearth innovation opportunities. It is yet another reminder of how important it is to look at the world through the customer’s eyes when you are searching for opportunities.

Sometimes, a customer-first perspective highlights nonobvious opportunities; other times, it highlights nonobvious competitive threats. Consider a conversation I had with a colleague in India. One thing you can count on in India is that the length of a car trip is impossible to predict. A drive that is five minutes one day can be fifty the next. Weather plays a role, as does the migration pattern of animals, local politics, and what appears to be sheer randomness.

“Here’s a provocative perspective,” my colleague said in late 2009, when our “fifteen-minute drive” entered its second hour. “I think the Tata Nano is going to be a disappointment.”

I gulped. We had been heralding the transformational perspective of the Nano for some time. The story featured prominently in my colleague Mark Johnson’s then forthcoming book Seizing the White Space. It is a legitimately great story. Indian legend Ratan Tata—the head of the Tata Group of companies that touched every sector of the Indian economy and had total revenues of more than $70 billion—had the idea when watching a family of four struggling to traverse crowded Indian streets on a tiny scooter. He challenged his team with developing the “people’s car,” something that would sell for an unheard-of low price of one lakh, or roughly $2,500. He hoped people would trade in their unsafe scooters for much safer Nanos.

The team delivered on Ratan Tata’s promise. It followed innovative approaches to develop the Nano, like outsourcing close to 90 percent of the Nano’s parts and considering out-of-the-box options like semi-finished kits that rural entrepreneurs could assemble into fully finished cars. Tata had to make trade-offs as well; the most basic Nano model lacked working air-conditioning or power windows.

So why was my colleague skeptical?

“Look at it from the customer’s perspective,” he said. “These people could already afford to pay twenty-five hundred dollars for a perfectly good used car. Instead, they consciously chose the scooter.”

Why would consumers choose a scooter? It wasn’t that these people didn’t care about their family. Rather, they didn’t have the space to park a car, or they found scooters that fit into the tiny gaps on India’s chaotic streets a much more convenient form of transportation.

Indeed, early Nano sales disappointed (early production problems and bad publicity played a role, too). Further, initial customers tended not to be people who were replacing scooters; rather, the stylish car appealed to the up-and-coming middle class, which used the car to make a statement to friends and family. If the Nano continued to follow that path, it might be a commercial success, but it would fail to achieve Ratan Tata’s inspirational vision.

Remember, our goal in week 1 is to discover a high-potential innovation opportunity. Look at the world through the eyes of the target customers. Find out how they are getting the job done. If it is a messy workaround, you may have found a great opportunity. If they are perfectly satisfied with their solution, look somewhere else.

HOW-TO TIPS

1. Lead a round-table discussion to identify compensating behaviors that your company’s solution forces customers to follow.
2. Identify one compensating behavior you follow between the hours of 7 a.m. and noon. Discuss this with a friend or colleague.

Day 6
Get as Close to Context as Possible

Discovering jobs to be done and compensating behaviors can seem daunting. Many people assume this kind of discovery requires heavy-duty statistical analysis of large-sample quantitative surveys. That kind of research has its place. But it is just as important to be like an anthropologist who carefully observes indigenous peoples to determine their unstated needs and wants or to figure out the behaviors they are following but can’t quite articulate.

Perhaps the best example of insight through observation is Sony’s legendary Akio Morita, the man behind the Walkman, the portable compact disc player, and a range of other market-creating innovations. Morita was famous for avoiding quantitative market research. Instead, his research involved him and a small group of colleagues going out to just … watch … what people did, or didn’t do.

One of my good friends is Karl Ronn, who during the first decade of the 2000s was one of the leading innovators inside Procter & Gamble (he left P&G in 2010). Ronn is one of those rare people who can flip from explaining how P&G’s products work at a molecular level (he has a degree in chemical engineering) to describing the look in a mother’s eyes the first time she experienced the easy cleaning of Swiffer, one of the megabrands that Ronn helped to introduce.⁶ One of Ronn’s pet peeves about innovation is how much people rely on information gleaned from small-group discussions with prospective customers—the ubiquitous focus group. His verbal rant on the topic was so powerful that I asked him to write down his perspective. He wrote:

Karl Ronn

You can find detailed tools to “do the job of discovering the job” in other books—notably The Innovator’s Guide to Growth. That book has thousands of words on the topic. Or you could listen to five simple words from Steve Sharpe that echo Ronn’s advice. I met Sharpe in 2006 during a project Innosight was doing with the American Press Institute to help newspaper organizations navigate through increasingly turbulent waters. At the time, Sharpe was the head of research for Media General, which owns a collective of media properties in the southeastern United States.⁷ Sharpe led one of seven pilot projects we conducted with newspaper organizations to test some of the ideas we ended up recommending to the industry. We asked Sharpe—and the rest of the pilot participants—to describe the key lesson they learned from the project.

Sharpe’s advice to the industry was succinct and useful: “Get out of the building.” It’s hard to discover new opportunities when you are sitting at your desk; it’s harder to understand what customers can’t articulate if you don’t spend time with them.

HOW-TO TIPS

1. Spend an hour in a local coffee shop just watching how people go about their day. Write down three things you didn’t expect.
2. Ask your spouse or a friend to show you how they do an everyday task. Note two things that you see that you didn’t expect.

Day 7
Don’t Innovate Blind

The goal of this first week’s set of activities is to discover opportunities for innovation. The techniques described in the past six days should have helped you pinpoint a specific opportunity. But how can you be sure that you’ve actually identified something worth investigating further?

Sometimes it’s useful to describe what not to do. And I’ll use a Loony Tunes episode I remember from my childhood as a metaphor for the basic concept of avoiding blind innovation.

In said episode, Wile E. Coyote had a diabolical plan to get Bugs Bunny by inserting nitroglycerine into carrots. Bugs would take one bite of the carrot, and, boom, the end would be nigh.

Mr. Coyote was proud of his plan. “Wile E. Coyote, super genius,” he intoned. “I like the way that rolls out.” He cackled maniacally, unaware that Bugs had dragged the “laboratory” onto a train track. The train hits the shack, the nitroglycerine explodes, and the self-proclaimed super genius is left in his classic end-of-episode pose, holding on to a branch over an impossibly steep canyon.

Blind innovation occurs when innovators fall into the trap of believing that their sheer brilliance has allowed them to spot an opportunity that “lesser minds” have missed. This problem particularly afflicts managers in large, well-run companies. They look at other industries with a sneer of derision. “These guys are amateurs,” they’ll say. “We’ll show them how it is really done.”

For example, a couple of years ago, I was working with a project team that planned to create an infomercial to promote its product. The product was tailor-made for an infomercial, which is typically a thirty-minute interactive discussion led by an animated presenter like Ron Popeil or Anthony Sullivan on late-night television.⁸ Because it took a bit of explanation to understand the product, it really helped to see the product in action to appreciate its potential benefits.

As the team members started exploring what the industry calls DRTV (for direct response television), they began to think about ways they could also pioneer a new-and-improved approach to infomercials.⁹

“These commercials are so amateurish,” the team said. “We could produce something with much higher production values. Ours would be much more compelling than what is on the air now.”

Fortunately, the team was working with a consultant who had significant experience in the DRTV industry. He scolded the team.

“You think these ads are low production quality because the people aren’t smart?” he said. “It’s the exact opposite. These people are brilliant at what they do. The commercials are the way they are because they’ve tested every approach known to man, and the seemingly amateurish approach generates the most sales. The apparent roughness makes the pitch feel more authentic, which helps to drive sales.”

There’s an important lesson in this example. The DRTV amateurs saw amateur commercials. The DRTV expert saw an optimized revenue-producing machine.

It is always good to start with a degree of humility. Instead of saying, “Why are the idiots doing it this way?” ask, “Why did smart people come up with this solution?” Or “What is it about this that I’m missing? It looks crazy to a non-expert!”

Innovators have to avoid the trap of getting stuck in endless analysis. But there are simple ways to determine if an apparent opportunity is a real opportunity.

One simple technique is to just pick up the phone and call someone who knows more about a particular problem than you do. The truth is, experts are almost always happy to talk about their area of expertise. And through university, professional, and personal networks, all of us are truly closer than ever before. There’s simply no excuse for basing a business plan on an assumption that an expert could address in five minutes.

For example, we were helping a company develop a new business that involved selling to universities. The team assumed that it would take about three months for the company to close a deal with a university. That seemed kind of short to me. “Have any of you actually sold to a university before?” The answer was no. I suggested they might, you know, talk to someone who knew something about the industry. It took one phone call for the team to realize that the specific thing they hoped to sell would probably take three years to make it through the complicated purchasing process at universities. The telephone is a very much underrated research tool.

Another easy approach is to go on the Internet. This powerful democratizing force has reshaped a number of industries. It has given innovators an awesome wealth of tools and information. For example, when companies decide to issue stock to the public, the S-1 form they file with the Securities and Exchange Commission provides a wealth of data that can help anyone looking to innovate in similar industries. Reading through niche blog sites can provide tremendous information about the goings-on in an industry. Even company Web sites have lots of information about what companies will, and more importantly will not, do.

One final piece of advice. When conducting research, keep a running list of the things you don’t know or aren’t sure of. Those assumptions will come in handy in the third week of this book’s training program.

Innovation is all about doing things differently, but that doesn’t mean that innovators should be ignorant. Follow the advice of DNA pioneer James Watson and “never be the smartest person in the room”—humbly search out expertise to understand as much as possible about the areas you hope to explore, and most importantly, figure out the things you don’t know.

Don’t get me wrong; sometimes there is great value in bringing a new perspective to a problem. And we desperately need people who aren’t satisfied by the status quo. But never, ever assume that the reason something hasn’t happened is because of collective idiocy.

HOW-TO TIPS

1. Look at the publicly available information about a large company you admire. Write down three things you didn’t know.
2. Call a friend, and have him or her spend fifteen minutes explaining how your friend’s business really works.

Week 1 Wrap-Up

The focus of week 1 was discovering opportunities for innovation. Hopefully, the training helped you answer two critical questions:

1. What job is the target customer struggling to get done?
2. What evidence suggests that this is a real opportunity?

More broadly, remember three critical terms:

1. Job to be done: The problem facing a customer in a particular context
2. Nonconsumer: Someone who lacks the skills, wealth, or access to address a particular job to be done
3. Compensating behavior: A workaround that a customer follows to get a job done