What is Innovation?

What is Innovation?

When we say a product is Innovative, what do we mean really? Do we just mean that it is new? Is novelty alone enough? And new to who? To me? To you? To those in the know? To those who are always the last to know?

In this blog I am exploring a number of topics concerning Innovation, Innovation Strategy, and particularly about the deliberate strategic application of The SWIFT Design New Product Innovation Method(TM) to ensure commercial success and widespread adoption.

In another post I'll be talking more about a specific kind of Technology Innovation that is an important component of SWIFT: namely what Clayton Christensen calls Disruptive Innovation.

As an entrepreneur and new product design strategist, these kinds of innovations are particularly interesting because they result in new market entrants overturning of the status quo market - even when the well established market leaders are fully aware of the innovation that is about to destroy their market. And it is the theory of Disruptive Innovations that lent its name to this blog.

However, before we go onto Disruptive Innovation, let's just start with the simpler question of what makes a product an innovation. Because in the course of our exploration of what innovation is we are going to come across some key concepts in SWIFT involving

• stakeholders,
• goals,
• tasks,
• desire, value and motivation,
• efficiency, effectiveness and advantage,
• personal and task reliability, performance, effort and expense,
• habit cessation and habit formation,
• new product adoption,
• learning curves,
• product mastery and productivity and
• commercial success.

These are the building blocks of our methods and we will be returning to them again and again through out this blog.

There are many definitions of innovation available on the Web. Here are just a sampling:

Wordnet defines an Innovation as an invention:

invention: a creation (a new device or process) resulting from study and experimentation

In contrast, the Wikipedia definition. speaks of an innovation as being useful, and applicable in a commercially successful way:

Innovation is the introduction of new ideas, goods, services, and practices which are intended to be useful (though a number of unsuccessful innovations can be found throughout history). The main driver for innovation is often the courage and energy to better the world. An essential element for innovation is its application in a commercially successful way. Innovation has punctuated and changed human history (consider the development of electricity, steam engines, motor vehicles, et al). ...

The US government also speaks of innovation in terms of the marketplace:

Introduction of a new idea into the marketplace in the form of a new product or service or an improvement in organization or process.

The Scottish Enterprise speaks of innovation as creating value:

Creating value out of new ideas, new products, new services or new ways of doing things.

Meanwhile the New Zealand government speaks of efficiency, effectivenss and competitive advantage:

The creation, development and implementation of a new product, process or service, with the aim of improving efficiency, effectiveness or competitive advantage.

And finaly, Logistics Focus offers a more cynical view:

A new idea, method or device. One of the most overused nouns in the business vocabulary today. (With all of this innovation going on, why aren't more people satisfied with their logistics operations?) We are counting the days until we hear the buzzword "re-innovation."

Let's see if we can reconcile these views a bit.

An Innovation must provide value. Value is in the eyes of the stakeholder who perceives the value. Value comes from the stakeholder's expectation of increases in efficiency, effectiveness and advantage. Value creates desire.

In a marketplace, desire by stakeholders called customers motivates purchases creating commercial success.

But there are products that are quite successful at creating the expectation of value but that ultimately leave the purchaser's expectations unfulfilled. We do not consider such products innovative. In software we call these disappointing products "shelfware", because once they are purchased and found wanting the software sits in a box on the stakeholder's shelf because no one wants to use it.

So, it isn't enough that the innovation motivates purchases, the innovation must also be adopted. That is, it must be used.

In usage, value is measured by stakeholders resulting actual improved efficiency, effectiveness and advantage.

Wait! Improved efficiency, effectiveness and advantage of what?

Aha! This is another important point. To have improved efficiency, etc. the person must have a specific pre-existing goal.

And not only that, they must also have some specific pre-existing tasks that the stakeholder regularly performs in hopes of achieving their goal as reliably, quickly, easily, and inexpensively as possible. In most cases these tasks are performed so regularly that they have become habitual.

The value proposition of the innovation for the stakeholder is thus:

"By performing new tasks, with the aid of this innovation, you will achieve your previous goal more reliably, faster, easier or inexpensively than they in the past."

Now we see why so many merely new products fail to achieve the success a true innovation does.

People don't adopt an innovation because they are forced to do so. They adopt an innovation because they are motivated to do so.

But anyone who has ever tried to consciously break a habit knows how hard it can be to do so. The previous tasks have become automated. So they don't require any thought. But the new tasks require conscious effort -- so they usually aren't easier than the past.

The new tasks might ultimately be easier once the stakeholder achieves mastery but during the learning phase the stakeholder must focus effort on breaking old habits and forming new ones. At this time, the tasks are likely to be more onerous than they were before. Unfortunately, many products can't make it through this adoption and mastery period before users give up and go back to their old ways.

But clearly some products do get over this learning curve hump, the hump that Barry James Folsom has called the Folsom curve. How do the products that make it over this hump succeed? The answer takes us back to efficiency, effectiveness and advantage. The stakeholder must perceive such significant and measurable improvements that it is worth the switching cost.

Example: Matrix programming languages vs. VisiCalc

Consider this illustrative example: In 1978 a group of managers at Corning Glass Works explored the possibility of replacing one software application with another. The applications in question were so called "matrix program languages". Each relied upon an imaginary matrix with columns named by letters and rows named by numbers. Non programmers could then create simple reports by writing a number of formulas, one per punch card, which contained definitions for individual cells in the matrix. CGW had long used one of these languages, and there were an estimated 5000 "dusty decks" in users hands that were used to create various accounting consolidations and P&L reports each month.

A new matrix programming language from a different vendor was identified that was superior in many ways. There were many more useful predefined functions, including commonly used financial functions for calculating interest, future values, present values, etc. It was felt that these new functions would greatly simplify creating new reports in the future. Unfortunately though, each one of the 5000 programs would have to be re-written, or the company would have to pay to license both and maintain expertise in both. User resistence to learning the new system was expected, even though ultimately it might be better.

CGW management correctly recognized that even though new application building would be simplified, most of the usage of these systems was running old already working programs. CGW recognized that these users would not be motivated to get over the learning curve and the company stuck with its older matrix programming language and 5000 dusty decks.

The new alternative wasn't an innovation, it was merely new.

However, within 2 years an innovation did occur, and it swept away those dusty decks almost over night. The innovation was VisiCalc. The product was so innovative that many users were out ahead of the IT department in adopting it -- even purchasing their own personal Apple IIs, and bringing them in from home.

From the point of view of the underlying mathematics, VisiCalc did what the matrix programming languages did, indeed initially some of the functions available in the matrix programming languages were not yet in VisiCalc.

But VisiCalc did the math in an interactive way. The result was that when a user of VisiCalc made an error in a formula, they IMMEDIATELY saw the result was in error, and they corrected it right away, the error didn't persist and users were not even aware that they had spotted and corrected an error in an instant.

In comparison, the compiled batch card deck matrix programming languages required that the formulas would be key punched, and then later fed into the card reader. Eventually the results were printed on the printer and forwarded to the user. The result was that even in the case of habitual behavior user accuracy was low, completion time high and cognitive load daunting.

Although VisiCalc required learning a new language, the results of spreadsheet creation - even during the learning period - were fewer undetected errors, and far shorter turnaround time. With such advantages users quickly abandoned even their existing card decks.

The rapid adoption and success of VisiCalc (and failure of the alternative matrix programming language) at CGW was not an accident. It could have been predicted even before the first line of VisiCalc was written.

Summary

In summary, we can see how our theory of strategic innovation is built upon the following principles that we will explore further in coming posts:

1. Stakeholders, including Customers and Users, have prexisting goals that motivate their current behaviors.
2. In order to achieve their goals, and to do so reliably, speedily, easily and inexpensively Stakeholders perform their current, typically habitual, tasks.
3. The challenge for the New Product Innovator is to create a new set of tasks, supported by the innovation, which is superior to the existing tasks in achieving these pre-existing goals.
4. Stakeholders assess improvements in efficiency, effectiveness and advantage, as measured by relative improvements in reliability, speed, effort and expense required to achieve their goals.
5. These relative improvements create value, generate desire and stimulate motivation sufficient for Stakeholders to initiate the breaking of the previous habitual behaviors and tasks and their replacement by the new tasks required by the innovation.
6. Care must be taken to ensure that learning curve effort to overcome the old habits does so as to promote rapid adoption, product mastery and productivity as the new tasks and behaviors become habitual.
7. Through a thorough understanding of these steps we may more reliably create innovative products capable of commercial success.

In the coming posts I hope to lay the groundwork for a rigorous method that can allow companies to make similar evaluations and achieve far more success through adoption of deliberate Innovation strategies and specific design methods to ensure adoption well before product development is complete.