Chapter 1
Rethink Innovation: Eradicate Lore, Substitute Logic
When it comes time to innovate, even executives who deeply appreciate the discipline that modern management science has produced in finance, marketing, or logistics seem willing to tolerate all sorts of nonsense.
Too often, innovation is reduced to a series of brainstorming sessions, where facilitators proclaim things like, âHey, thereâs no such thing as a bad idea!â (Actually, there really is such a thing as an indisputably bad idea.) Or innovation may be separated from the rest of the enterprise in a special lab or unit, a thin effort to quarantine the crazies. There, we feel like itâs only proper to crank up the creativity. We put people in a room, festoon the tables with toys, Nerf balls and guns, Post-it Notes, markers, and fun foodsâall because innovation is supposed to be playful. Our use of sticky notes and black Sharpie markers has become almost fetishistic,1 one of the many rituals in our collective cult of innovation.
Hereâs the problemâevidence shows that such techniques do not actually lead to better outcomes. A number of years ago, we researched innovation efforts in industries such as manufacturing and services. A full 95% of these efforts failed. A glance around at the state of contemporary innovation suggests weâve gotten a little better, but still do plenty of things that are more grounded in hope or habit than evidence. This is unacceptable. We are overdue for a revolution in the way innovation is diagnosed, developed, fostered, de-risked, launched, and amplified.
Our ambition is to make innovation a systematic approach, moving the field from a mysterious art to more of a disciplined science. The Ten Types of Innovation is part of the foundation of that ambition. We know we are not working on anything as fundamental as the Human Genome Project nor as empirically proven as the periodic table (though we were inspired by the latter). The last thing we are trying to do is to shroud innovation with a different cloak. We use scientific analogies throughout this book to help illustrate our ambition rather than mirror our claims.
Nonetheless, our work over the decades has shown us that using the Ten Types of Innovation demonstrably increases your innovation hit rates. It will help you generate innovations that earn disproportionate returns and that are more difficult for competitors to copy. Sure, itâs not foolproof. Innovation depends on many factors we couldnât possibly account for in one book (or actually any book). We canât promise that you wonât run into problems and we canât guarantee success (and anyone who does so is a huckster and a charlatan). But we are convinced that by thinking about innovation in a more systemic way, you improve your chances of building breakthroughs.
If youâre reading this book, you probably agree that the world needs more innovation now than ever before. We are going through one of the most intense periods of change our small blue planet has ever seen. During such times, the ability to innovateâto evolve, adapt, and improveâis indispensable. Indeed, in the midst of commercial globalization, shifting cultural and social norms, and increasing scarcity of natural resources, our continued success as a species may depend on it.
For enterprises, this means that companies must innovate in order to survive and thrive. Nothing lasts forever, and many companies that make a splash with one innovation fail to follow up on their success. As Jack Welch, the former CEO of General Electric, famously commented in December 1997, âI take absolutely no comfort in where we are today.â2 Meaning that if you arenât moving faster than the rest of the marketplace, youâre already dead; you just havenât stopped breathing yet.
Even companies with dominant positions can find themselves overtaken by firms playing by different rules. Once-mighty Kodak enjoyed a storied history before declaring bankruptcy in 2012. Whatâs sobering is that its executives were not, as conventional wisdom would have it, blindsided by the emergence of digital technology. Indeed, they were primary pioneers of the digital photography field. But, as is so often the case, these ânewâ areas were small and easily dismissedâwhile sales of photo and cinema film paid all the bills.
This relentless imperative for more effective innovation is our reason for existence. This imperative has driven us over the last 30 years to study what worksâto analyze innovation successes and look for patterns in their inputs and precursors. It has called for us to demystify our work as innovators and document, as plainly as possible, our practices and their outcomes. It has demanded that we establish a nuanced and precise taxonomy for innovation in all its forms and permutations. We share all of this so that we can all speak a more common and useful language. Our goal here is to codify and clarify what, in our experience, makes innovation work instead of fail.
Defining Innovation
Through overuse, misuse, hype, and enthusiasm, the word innovation has essentially lost its meaning. We often confuse the outcome and the process, and we describe everything in breathless terms, whether it is a modest product extension or a market-creating breakthrough. The definitions we show here help establish a nuanced understanding of what innovators actually do.
- 1 Innovation Is not Invention
Innovation may involve invention, but it requires many other things as wellâincluding a deep understanding of whether customers need or desire that invention, how you can work with other partners to deliver it, and how it will pay for itself over time.
- 2 Innovations Have to Earn Their Keep
Simply put: innovations have to return value to you or your enterprise if you want to have the privilege of making another one some day. We like to define viability with two criteria: the innovation must be able to sustain itself and return its weighted cost of capital.
- 3 Very Little Is Truly New in Innovation
Biologist Francesco Redi established the maxim: âEvery living thing comes from a living thing.â Too often, we fail to appreciate that most innovations are based on previous advances. Innovations donât have to be new to the worldâonly to a market or industry.3
- 4 Think Beyond Products
Innovations should be about more than products. They can encompass new ways of doing business and making money, new systems of products and services, and even new interactions and ...