Part 1 of this series introduced the concept of innovating within a business and explained the benefits of establishing an innovation mindset within company culture. For another look at Part 1: Why Innovate? click here.
A study on innovation by McKinsey found that “only 6% of executives feel satisfied with their innovation performance.” It doesn’t take a math genius to see that means that 94% of executives are not fully happy with their performance regarding innovation. What makes the path to innovation so difficult?
From my perspective as Innovation Facilitator, these are the 3 most common mistakes I have observed when companies try to develop something new:
- Using operational skillset in the Innovation World
- Not engaging consumers
- Lacking a good environment for innovation to flourish
Using Operational Skillsets in the Innovation World
Take a moment to write down a list of skills that you need to be successful in the operational world, and another list of skills needed in the innovation world. You will immediately notice that the skills on both lists are so different that they sometimes contradict each other. This occurs because the operational world is where we execute our ideas, while in the innovation world we think about possibilities and create solutions. This is an extremely important concept to understand before embarking on an innovation project – what works in the operational world might not necessarily work when trying to innovate.
This important lesson comes from the Synectics Innovation Framework, one of the most complete Innovation Frameworks that I manage in Partnership with Synecticsworld Consultancy in Boston (link https://synecticsworld.com/). They found that in the operational/managerial world success is rational. Decisions are made based on data and stats, analyses are more rigorous, and jobs are usually somewhat repetitive. On the other hand, the world of innovation calls for curiosity, speculation, making connections, experimenting, and making adjustments on the fly. An operational skillset on its own should not be used to solve the problems encountered in the Innovation World.
Not Engaging Consumers
Many people innovate from their own perspective. That is, they will decide what they think the end user wants or what will sell the most according to their own attitudes, then innovate based on that. However, empathy and being able to see from an alternate perspective is essential for the innovation to be adopted by the end user. A sure way for innovation to fail is to develop a product or service nobody wants to buy!
A simple approach to innovate is to ask yourself, what is your customer accepting that should be unacceptable?
One of the biggest problems present in the business world today is a blind trust in quantitative information for decision-making at the expense of capturing insights. Many people rely too heavily on quantitative research to get to know their clients’ needs. While quantitative research is better than no research at all, when it comes to innovation qualitative research is essential. It brings the story behind the numbers to life, and these insights can be quantified. The importance of having insights is that insights give the creative brain a more dynamic and invigorating problem to solve. Insights are a key component of innovation, precisely because they inspire solutions.
If you truly want to innovate, engaging your consumer must be a deliberate part of your process.
Lacking an Innovation Environment
Shifting employee mindsets to embrace innovation is a first vital step. I cannot stress the importance of creating a culture of innovation within an organization enough. One cannot expect employees to embrace a new mindset and begin working on an innovation project at the same time. The moment the innovation project starts, employees need to already embody the innovation mindset.
An innovative organizational culture should start early and slow for it to prosper organically. This allows employees to adopt the mindset (empathy, creativity, curiosity, collaboration, courage, experimentation, long-term commitment, etc.) necessary to become innovative thinkers. Once people are aligned internally, innovation becomes a breeze. Well, maybe not a breeze, but certainly a solid starting point that will allow the team to end faster.
Now that you understand the reasons why innovating can be so challenging and you have been able to identify areas of improvement for your own business, Part 3 will give you a detailed guide towards becoming a better innovator.
For the past few months, we have been navigating unprecedented times. By now, most of us would agree that uncertainty is scary, and the status quo feels much safer. I thought this might be the perfect time to talk about another intimidating subject – one that when not done correctly can also lead to tragedy – innovation.
To make this unique topic more digestible, this blog is organized into a three-part series:
Part 1 talks about the importance of Proactive (strategic) Innovation.
Part 2 explains why innovation might seem so daunting.
Part 3 will guide you through the steps you can take to become a better innovator.
Part 1 of 3: Why Innovate?
Any business that does not innovate runs the risk of falling behind and losing its competitive edge, subsequently losing its consumers and/or employees in the process. In an increasingly cutthroat and fast-paced environment, effectively adapting to change, being the first to navigate uncharted territory, and staying on top of the latest trends leads businesses to chase after innovation as if it were a race. It’s no wonder that economists estimate that 80% of business growth comes from innovation, and that innovation leads to 22% income growth.
While proactive businesses focus on anticipating trends and inventing the future, other businesses wait for the market to be disrupted, and then scramble to find a “me too” fixing. These businesses treat innovation reactively. The problem with this approach is that in order to respond to challenges, companies act under pressure and force innovation upon its employees (and purveyors). Innovation is not simply an end result or a one-stop effort taken to overcome an obstacle, and then abandoned in order to move on with business as usual. An innovation mindset should always be at the forefront of a business’s list of priorities.
Examples of reactive innovation techniques are waiting for customers complaints, sudden sales drops, or responding to a competitor’s most recent move. While there is nothing inherently wrong with these tactics, innovation should be strategic and less about last minute survival schemes.
Proactive innovators, on the other hand, are intentional about innovation. These are the companies that disrupt the market and build the future. Those that strategize to create niches are more customer centric and as a result, grow faster. It has been noted that proactive companies have a higher rate of success than reactive companies. Research demonstrates that the main difference between proactive and reactive companies often lies in the company’s culture. The Corporate Innovation Imperative Report revealed that fostering an internal culture of experimentation and innovation that adapts to change is the top challenge faced by 57% of respondents.
Proactive companies encourage innovation mindsets that nurture creative energy, curiosity, and collaboration among their employees. These mindsets have also been shown to boost employee morale and job satisfaction. Instilling these mindsets is crucial because the longer that employees stay in their comfort zone, the more stagnant they become and the more difficult it will become for a company to innovate. The status quo is further analyzed on Part 2 of this series. For now, just keep in mind that a stagnant organization will kill innovation.
One classic benchmark for culture of innovation is Google. Bill Gates’ tech giant has been credited for popularizing the concept of “20% time.” They not only allow, but actually encourage employees to spend 20% of their time to work on any project they believe they could add value to. And while not all organizations have the resources to install such programs, those that want to innovate must undoubtedly embed innovation into their organizational culture.
Of course, you might think your business endeavor is a far throw from Google, but don’t be discouraged. Although innovation can be difficult for some, any business (no matter how big or small) can use the right tools to take itself to the next level. Part 2 will explain why innovating is so difficult for some organizations. You will find it surprising that lack of resources is not the main barrier.
I was recently on the client side watching focus groups moderated by a reputable research company. I was hired by the client as an Innovation Consultant to “grow the brand through product innovation”. This client contacted me after numerous unfruitful attempts to innovate and while I usually prefer getting involved earlier in the research process, I adapted. I have excellent relationships with my colleagues in the market research industry and I am always excited when Research is conducted prior to innovating. I passionately believe research guides better strategies, better ideas, and better solutions. However, research to move innovation forward is a tad different to regular market research.
While the focus groups where being conducted, I witnessed one of the clients moving uncomfortably. Forty-five minutes into the focus group, he left the client room and never came back. As he walked out, he voiced “I cannot keep listening to these appalling participants criticizing my brand” referring to some candid comments from participants who disliked the brand. The next day, he did not show up, which did not surprise any of us given that on that day we were going to talk to brand rejectors (clients who had tried our products and would not recommend it).
A week or so later, we gathered to get the research results and I noticed how the client’s biases dominated the room. Every time something “negative” came out, he would try justifying it “that is the perception of someone who had never used our brand”, “who said that?, it must have been a rejector”, or “that must have happened because of xyz”. So instead of paying attention, seek understanding and flipping threats into opportunities, this client was forcing the presenter to avoid deeper discussions of any negative comments that emerged during the research.
As the primary information user, I needed to understand the underlying meaning of how non-consumers and rejectors felt about the brand. This included, the good, the bad and especially the ugly. I wondered how I could use the information being obtained, if this person kept pushing the conversation towards the positive. As an Innovation Consultant, pain points create opportunities to innovate.
By the end of the presentation we were left with little information on how to “grow the brand through product innovation” but plenty of ideas to write this blog post.
I am narrowing the learnings down to the 3 things clients must be willing to do before deciding to conduct Market Research, especially if they want to innovate.
1. A client must be prepared to face the discomfort of consumers trashing their brand – Clients that turn a blind eye to negative feedback, hinder the effectiveness of any research initiative to innovate. Innovation is about fixing a consumer pain point, so it is extremely important that consumers talk about how your brand or product does NOT fit into their lives or might not fit their needs. If you are conducting research to give yourself a pat in the back and ignore any criticism, research won’t help you move your brand forward.
2. For research to be a good investment, clients must demand the market research agency to act as consultant, not just a provider of market information – Clients must be open and clear about what decisions will be made with the information gathered. Market research for innovation is very different to other types of market research. The research agency must understand this, because they will need to design the right methodology, ask the right questions and embrace new ways to gathering insights. Copy pasting old methodologies just won’t do it for product innovation!
3. Insights (the human problem, or the why, behind the business problem) not data is what leads to innovation – Getting to the insights requires a different kind of interaction with consumers. The tried and true focus group methodology might not be it. Don’t get me wrong, Focus Groups have a place in research but when you want to anticipate needs, you need specialized techniques. A moderator that asks respondents to rationalize why they do things will get superficial and often unsound answers in a group setting. People don’t know why they act the way they do, or even how to express what they want in the future.
To innovate, take the cliché and still highly relevant quote “If I had asked people what they wanted, they would have said faster horses” (H. Ford). A researcher should use tools to extract what the consumer future needs might look like — a faster mode of transportation. Customers might not have mentioned the need for faster transportation or a combustion engine, that is the art and science of anticipating needs.
If you want to discover, try something new; co-create with consumers, spend a few days with them, observe and ask question in the context of the consumer using the product and challenge consumer’s responses.
Reinventing the future is no small task. Hopefully, this article will inspire a few folks to question whether the traditional research formula will give them the understanding needed to spark the innovation your business might need to adapt and grow. As a research client and a research vendor, I incorporate creative problem solving and design thinking techniques to gather the insights that will lead to better innovation. Whether through research or innovation consulting, let us know how we can help you understand, create and innovate.
WHY THE CLIENT NEEDED THE RESEARCH?
Our client had an Incentive program for employee’s referral and cross-selling of other company’s services and products. The system was “robust” (aka super complex). It was based on a point system where employees would sometimes accumulate point to redeem or cash out, and other times employees would enter a raffle. Lateral Strategy was hired to “simplify” the system and understand what would make employees become more engaged with the program.
WHAT WAS DONE?
We set out to interview high achievers, average and people who had disengaged from the program. We identified considerable differences in how each segment perceived and engaged with the program. Most notably, people’s awareness of their sales performance was far-fetched: average users thought they were high achievers, disengaged people felt “entitled” to incentives and high achievers were missing out on opportunities.
It turned out that low performers felt their effort entitled them to better incentives and high achievers had cracked the code to the high paying rewards and focused on consistently delivering on those (they had become somehow “specialized”). We also discovered that the lack of understanding on how the program’s incentives worked was killing its chances of success.
We decided to focus on giving employees a clearer understanding of the program’s potential income. A Program Report was designed to provide participants with comparisons with that of their co-workers. The report also suggested actions that employees could take to increase their earnings and showed them the results of those actions over time. The report did not give any negative feedback but gave tools to improve if their earnings were lower than those of their peers.
When participants learned they were making less incentives than their coworkers, they became motivated to increase their involvement with the program. High achievers organically started “training the trainers” and they were incentivized further through a customized development program.
WHY THE CLIENT NEEDED THE RESEARCH?
Sales for our client’s Insurance Plan had been declining for a while. Various initiatives, including increasing communication efforts and a considerable price drop had failed to move the needle. Lateral Strategy was hired to understand consumer’s perception of the plan and discover what could awaken interest in buying.
WHAT WAS DONE?
We set out to thoroughly understand Consumers perception and interest in the plan. It turned out Consumers loved the product features and found its price point very attractive. Many even had wished there was a protection plan for the product. When asked why they had declined the Plan, all were unaware that the company offered an insurance service. Moreover, there was real desire for the “insurance plan” as most consumers surveyed had spent more money fixing the product than the cost of the insuring it.
Had we solely been a Market Research firm, we would have given out client a report with the findings and walked away. But we felt that there was an inherent demand for this product in the market and we know market research is useless unless it provokes new thinking and new actions. We couldn’t just leave and make our client responsible for arriving at a solution by themselves.
We turned to the company’s sales database to understand what was going on and discovered the most recent hires were making the sales, whereas those working for over 2 years were hardly making any sales of the Insurance Plan. Digging deeper Lateral Strategy hit upon what was going on. It turned out that people working for the Company for a long time had discovered a loophole in the system and did not feel comfortable selling the Insurance Plan to their clients. They were more interested in developing a long term and trustworthy relationship with their clients, than in the incentive provided by the Company for selling the plan.
A new Plan was co-created with the sales people’s feedback, the loophole was closed, and sales went up 18%. Strikingly, the Insurance Plan had a price increase a year after the Research was conducted and sales remained intact.
WHY THE CLIENT NEEDED THE STRATEGIC WORK?
A new treatment for patients was being launched and the company was afraid it would cannibalize the sales of a current treatment. Lateral Strategy was hired to understand each treatment option, develop a consumer profile for each treatment and a differentiated communication strategic plan for both.
WHAT WAS DONE?
A thorough Research was conducted amongst- Doctors, Patients, Caretakers, Nurses and other stakeholders to bring insights on each stakeholder’s pains and experience.
Results were translated into various “patient journey maps” that highlighted the moments in a patient’s story that posed a fundamental question for everyone involved in the process. A strategy game was then designed where Decision makers had to make risky decisions for somebody else with limited information.
This “game” gave decision makers the forum to discuss strategic choices within a variety of high/low risk scenarios, clarify group think and set priorities based on understating the complexity of the problem. It also allowed them the opportunity to understand how different people assess risk and how their biases were shaping their reality. The client also recognized the complexity of prescribing a treatment to a patient.
Collaboration and creativity were stretched during the solution finding phase and the client recognized the limitations that the “one size fits all” approach to patient segmentation would pose. Instead of prescribing a treatment based on patient’s demographic profile, previous treatment response, how the condition was evolving, what the doctor felt was best for the patient, etc., it was determined that the treatment to be prescribed needed to be aligned with the patient’s and caregiver’s needs. This would allow patients to segment themselves based on their future desired state.
A patient assessment was designed to help Doctors and Caregivers have the difficult conversations that were being ignored. Armed with a better understanding of the patient’s desires, Doctors were able to prescribe the treatment option that aligned with the patient’s needs. The assessment eliminated speculation while facilitating basic conversations in a simple and relatable language.