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Venture Innovation

You can make money a lot of ways, but the only way to create wealth is to innovate. There are many ways to protect your intellectual property, but the only way to keep ahead of your competition is to innovate. Most businesses believe that their evolving their products to the next logical step is innovation, and couldn't be more wrong. This blog dispels the mysteries and myths about innovation and explores how to train, apply, and harvest innovation at a world class level.

Monday, October 17, 2005

Here's a funny little story.
A Day in the Life at CaveCo.

Gronk came to the meeting cave and wiped off the cave board as the CaveCo product team filed into the cave and sat on hides. "Gronk," said Kronk, "you ready? Gronk sent me some product ideas he's been working on, and some of them seemed interesting. Go ahead, Gronk."

"Thanks, Kronk. For example, everyone knows not to hit dark rocks together, because if you do, a little bit of fire comes out." He drew a living cave, with a semi-circle of hides and put a flash of red in the middle. "What if we used that on purpose? You could put a fire in the middle of your living cave. If you put a hole in the roof over it, it would warm up the cave and keep the ice out."
"I have a friend who had a company called Fire.com that had a cave fire product," said Kronk. "Someone caught the corner of their mammoth-hide boots in it, and ended up burning up the whole cave. Everyone was too afraid to buy them after that."

"Besides, Gronk," said Bronk, "everyone hates having to go outside in the snow to wait for the smoke to get out. Then by the time you go back in it's getting cold again."

"That's what the hole is for," said Gronk.

"That would just make it cold faster," said Bronk. "Okay, so what are your other ideas?"

"Uh . . . well. You know how hard it is to drag around your stuff on a hide. I thought if you took some sticks, and put them on top of round stones, like this, it might be easier."

"Like the gravel-ease product?" asked Gak.

"No, this isn't a spread of small stones, it's a few really big ones."

"I see what you're getting at, Gronk," said Gak. "and it might work. But that would really eat up our gravel-ease revenue, which is keeping the company alive right now. Gravel-ease is used up quickly and our customers have to come buy more. These big stones would be a one-time sale. And being more expensive, harder to sell too."

"But everyone is competing with gravel-ease because it's so easy to make," said Gronk. "If we did this, we could differentiate ourselves."

"That would be really expensive to research," said Kronk.

And so, a few months later, when the competition released Fire and Wheel, CaveCo was the last to catch on and the first to go under.

All because they didn't understood that, between the inception of an idea and analyzing it to death, should be the critical step of finding value.

Saturday, October 15, 2005

Brute Force

There is an innovation technique you can learn in about thirty seconds that is the method 90% of top innovators use. You don't have to do any magic or get a brain transplant to get the same results that the geniuses do. That's right, you can be a genius in thirty seconds.

Innovation is a search through concept space, with concept space being the set of all concepts that a human mind can conceive of. You're looking through this space for an idea you haven't seen before that has a lot of relevant value. Here's the difference between you and the Einsteins: they keep looking long, long after you gave up.

Joe Thinker might spend a day thinking of five or six ideas for a new product. Joe Einstein spends a few hours a day for a year, coming up with 2000 ideas.

Joe Thinker comes up with two ways to market the product, and documents the best one because he wants to get this done quick. Joe Einstein comes up with 400 ways to do it, and documents the top ten because he wants to blow away the competition.

Joe Thinker thinks up a new business process that improves on the old one. Joe Einstein thinks of 900 new business processes, most from scratch.

Here's the challenge to you: spend ten, no 100 times more time thinking, searching concept space for new ideas than you usually do. Never let a list of ideas have fewer than 200 items. Feel free to change your name to Einstein at any point.

Thursday, October 13, 2005

Innovation is Blasphemy to Cognition.

You heard me. Innovation works in the reverse to the way your mind naturally processes information. The mind is a self-organizing system, with each experience making a lasting impresson on how you will think in the future.

Think of a giant hill of clay with rain pounding it day to day. Each time it rains, the water cuts rivulets as it flows down the clay. The next time it rains, it will follow the same path. Eventually you have a gorge, or a canyon. Innovation is like trying to make water run up the canyon walls. Look at this:

The rain
in Spain stays
mainly on the
the plain.

Many folks will totally miss the second "the" in this sentence. Even at the perceptual level, you see what you expect to see. It's even harder at more abstract levels to think differently!

Am I trying to discourage you? No, try to see this a different way. Innovation is more of a unique competitive advantage than is obvious. It is really hard to do, and therefore most companies won't invest in it. Forget about you for a second. Your competitors' brains are hard-wired against innovation. Isn't that wonderful?

P.S. You're thinking about yourself again, right? What about how your brain is hard-wired? Don't worry about it, I know some short cuts, just keep reading the blog.

Wednesday, October 12, 2005

Innovation Myths

  1. It's a gift, one that can't be learned. Oh, yes, the idea fairy must visit you as a baby or you can't innovate. Bull. Yes, I know that your brain-storming sessions tended to visit old ideas. I know that you finally realized that the ideas you thought were so cool were actually invented by some jerk in Greece 3000 years ago. Get off your cynical ass and get to work. Just learning to cook or juggle or play the piano like a world-class player would take years, even decades. Learning to innovate at a world-class level may take a bit of time and energy. Invest in the skill and it will repay you many times over.
  2. We're an innovative company. Well, maybe. Just tell me a couple of things. How many patents have you filed? How many of your own products have you cannibalized in favor of a new one? How much time are employees given on an official, planned basis to focus on innovation? How many times have you rebuilt a product or service from the keel up to incorporate a revolutionary change to the way it operates? How many options do your customers have to buy your product or service? Do you play leap-frog with your competitors? Want to rethink your answer?
  3. Innovation is a fluffy word that everyone pays lip service to but has no substantial effect on business. The very definition of innovation is "unique value." The value is built in. If you keep getting unique ideas that have low value, you aren't innovating yet, and if it's still just a buzz-word, you're a total innovation newbie. That's okay, the literature on the subject is flooded with half-baked mush that is the equivalent to abacus training when you're looking to learn how to integrate Excel with Mathematica. Part of the work is getting past the slush.
  4. Execution is more important than innovation. This creates a false distinction. Innovation is part of your execution, just like sales, production, marketing, and financing.

Tuesday, October 11, 2005

Benefits You Didn't Know

You know that innovation gives you a competitive advantage. You know it differentiates your company and your brand. Did you know that:

  • Innovation intoxicates your employees. Now I know this is normally something you want to avoid, but in this case I bet you will be willing to make an exception. You see, when employees take the time to innovate, they are taking time for "peak experiences" while at work. Innovation is closely tied to the peak experience phenomenon, also known as being in the "zone." Peak experiences often seem like time has stopped and a sensation of wholeness, a vivid sensation of being totally alive takes you. It's addictive and exhilirating, and if you make the office a place for innovation, you'll make it a place that your employees associate to that experience.
  • Innovation shifts performance up to high gear. Peak experiences are also associated with a zen or trance-like state in which you have lucid, flowing concentration. Performance during a peak experience jumps up a level to something almost super-human. Even once you start working on something else, your mind will still be in high gear. The high performance state will last beyond the innovation work and spill into your other tasks.
  • Innovation cannibalizes your product line. This is another one of those things I think you'll love once I explain it. Substitute products are usually the blind side of a company. You may be right on the ball keeping ahead of your competitors, but a substitute product from another industry will usually be a nasty surprise. You can't watch everything, even though you know it's only a matter of time. Being an innovative company means that you produce substitutes for your own products, before anyone else does. Sure it means you don't milk all the cash you can out of a product, but you've traded that for the priveledge of owning your market. Your competitors have no chance of keeping up with this kind of behavior.
  • Innovation reduces risks. Counter-intuitive? Only if you box your innovation into a tiny little area. Maybe your revolutionary product idea never takes off in the marketplace? An innovative company applies new thinking to strategy, to planning, to marketing, and to sales. An innovative plan has five ways to market the product instead of one, ten channels instead of five. An innovative strategy has six contengencies instead of three. Innovative sales has five ways to strike a deal instead of just cutting prices. Innovative planning has new ideas for switching between the alternatives at minimum cost. Innovative business processes finds ways to spread or absorb risk, launching lots of small things and running with the winners, or finding ways to recycle every bit of effort in new ways.

Monday, October 10, 2005

Not Your Parents' Innovation

Things called innovation that aren't:

  1. The next version of MS Word that has 22% more features buried in the menus that you'll never use.
  2. The Big Mac meal with even bigger fries and a bigger drink.
  3. Your new PC that has a faster processor, more memory, and a bigger disk drive.
  4. Your company's next product that has all the features of your competitions' plus faster/better gizmoing than ever before.
  5. Your company's new marketing campaign that has the funniest joke ever.
  6. Your company's "new" business process that combines the most meticulous approach from every team into one giant heap of Dr. Frankenstein's documentation.
These things are evolution, not innovation. They certainly can be useful, shoot, there are some companies that absolutely thrive on "me too" products positioned as the value alternative.

There is a magic that moves from evolution to revolution. It doesn't beat your competitors, it defines a whole new playing field that you own. It doesn't optimize your business process, it defines a new category of business. Most company leaders will never realize just how close the keys to that treasure are.

Start by learning the true definition of innovation. Innovation is simply something unique and valuable.

Unique differentiates from the evolutionary path. It differentiates from competitors. It sets barriers to entry and creates intellectual property. It makes a unique selling proposition. It sets you apart.

The value is intrinsic to the difference. You can create value through superior execution, better margins and lower costs, better financial models, more flexibility, focused market niches, or whatever, but these are running in the same horse race as everyone else. Value from innovation flows from its uniqueness, providing an advantage beyond those other things.

Sure small innovations are possible, and yes there is a fuzzy border between evolution and small innovations. Make the distinction this way: are you looking at the next logical step, or something different from the previous thinking?