1. IGetting toTHANK YOU A Practitioners Guide toINNOVATIONCHRIS FINLAY

2. G E T T I N G TO T H A N K YO U A P r a c t i t i o n e r s G u i d e t o I n n o v a t i o n C H R I S F I N L AY 3. Copyright 2014 Chris Finlay All rights reserved No part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior permission of the author. Requests for permission should be Publisher: Chris Finlay Editor: Todd Sattersten Copyeditor: Robyn Cummer-Olsen Proofreader: Jessie Carver Designer: Vanessa Maynard Illustrations: Alex Baranov ISBN 978-0-9913771-0-7 4. To the extent that I am smart, I am smart because other smart people shared with me what they knew. The way I pay them back is sharing what I know. This is the underpinning of academic life: the community of scholars. Bill Buxton, principal researcher at Microsoft Research 5. VIG E T T I N G TO T H A N K YO UTA B L E O F CONTENTS Introduction: For You9Chapter 1: Thank You13Simple and powerful, getting a thank you is how you know you are getting it righteven designers and business people can agree on that.Chapter 2: Innovation Imperative23Fear, fun, adrenaline, competition, and delight. Business models are born and die faster than ever before, and competition comes from the most unexpected places. Your org chart will hate it, and your manager probably will too. As my friend and brother-in-arms Michael Dila says, This is going to hurt.Chapter 3: Understanding Experiences41Experiences are the magic in the middle. Designing experiences is like cutting cubes out of fog, as my innovation hero Larry Keeley likes to say. Understanding experience design fundamentally changes how you see the world and deliver your products and services.Chapter 4: Design Thinking vs. Business Thinking Innovation is why you need design thinking, and it takes more than just designers to make it happen. Designers and business people both want the same thingthey just get67 6. TA B L E O F C O N T E N T S83VIIChapter 5: Teamwork Herding cats is an overused bit of wordplay, but managing innovators is like, well, herding cats. They are passionate, intrinsically motivated, and ready to rumble. They dont require much except for a good problem, some whiteboards, and Post-its, but its important to think about team dynamics to improve the conditions for success.103Chapter 6: Approach Having a map wont tell you where every bump in the road will be, but it will keep you a bit safer and hopefully out of that creepy cabin in the woods. Having an overview of the process which in turn helps you identify where to play and how to win. There is no one right way to innovate, but there are a lot of wrong ones.123Chapter 7: Understand There are a lot of important things that have to happen in the world before you start thinking about your project topic. Many of them relate to why you are doing this work now and your chances of success. Find out who matters, why, and what you can take from what has already been done to help you win.149Chapter 8: Discover People have rich and complex lives that are always changing, People are not neatly divisible by job, race, income, or brand connect over shared values, and that is where you need to focus.215Chapter 9: Transform Reliable innovation is less like magic and more like accounting. detail of the research and to connect soft and hard data to point the way to the future. It is the bridge between design and business. 7. VIIIG E T T I N G TO T H A N K YO UChapter 10: Create253This is the part of innovation that starts to look a little more like magic. Using rigor through the process to get here gives you more proof than gut instinct, and you will have a more robust view of what is possible, probable, and pleasing. With the proper foundation, your mind is free to make high-value intuitive leaps.Chapter 11: Prototype279Prototypes, tests, sketches, and the strong and accessible logic they create make for powerful presentation of new ideas. They give you faster, cheaper, and deeper insight into what is right. Use them early and often.Chapter 12: Communicate303presentation with. When youve got it right you usually know it, so dont screw it up.Acknowledgements325Recommended Reading328Letter from Honest Paul330Innovation Process Overview333About the author335 8. INTRODUCTIONINTRODUCTION9 9. INTRODUCTION11FO R YO U This book is the result of my deep desire to share what has helped me improve my business and to share my ability to create good things in the world. I am a creator and problem solver who has spent a lifetime in service. I started my career early, at age nine, working summers at my grandparents hotel picking up litter and sorting beer bottles. Over the consultant, CEO of an international shoe manufacturer and retailer, and now the Director of Experience Design and Innovation for United employed in, the modern service economy. I studied how to create and deliver experiences in graduate school at the Illinois Institute of Technology, obtaining a master of business administration from the Institute of Design and a master of design from the Stuart School of Business. I studied how to communicate visually at the School of Visual experiences, I have learned a few things about getting to Thank You and most of them the hard way. Getting your customer to say thank you on a regular basis is no accident. The tools and ideas being presented here are for anyone looking for a practical interdisciplinary approach to innovation. Whether you are making chewing gum wrappers a little more fun, developing a new a new small business or improving an existing one, these tools can be you identify meaningful challenges and opportunities, evaluate them rigorously, and support the development of a clear chain of logic to help you create rich ideas and a powerful case for their value. This is not an exhaustive set of tools, but they are essential for anyone who is serious about innovation. There are many ways to deepen the tools presented in this book by further investigating the specialties within the disciplines of design, business, social science, and their related specialties. I encourage you to explore them all and embrace the power and problems each one 10. 12G E T T I N G TO T H A N K YO Ucontains. Business strategy, management, organizational behavior, Web analytics, interaction design, graphic design, and anthropology are some of the most interesting and compelling areas of study that will further your ability to innovate. A warning about tools: Tools make it seems as though there is one right provided are suggestions about how to organize information based on experiences, and they may or may not be appropriate for you. Tools can be a great way to increase your chances of heading in the right direction. My purpose of including tools is to support you as you learn to think in new ways. As you master them, you may come to a place where a certain tool doesnt quite meet your need, and then you should adapt it or create a new one that helps you answer the questions you need it to. We should always be actively shaping our tools as we go. As the well known Canadian philosopher and futurist Marshall McLuhan said, We shape our tools and thereafter our tools shape us. in particular require committed people with the courage, care, and compassion to do great work. Using them is no guarantee of success, will come out ahead of where you would have without them. That said, if you simply view the tools as a prescription you will miss the value of the methodology as being open and iterative. Just as great chefs still use cookbooks for inspiration yet still improvise, you should use this as a starting place or reference but seek ways to improvise with the tools for Finally, I also wrote this book to connect with other passionate folks and would love to hear from you. 11. T H A N K YO UC H A P T E R1T H A N K YO U13 12. 14G E T T I N G TO T H A N K YO UIts not about the world of design, but the design of the world. 1 Bruce Mau, creative director of Bruce Mau Design and founder of the Institute without BoundariesI dont think that anyone has really told [people] what design is. It doesnt occur to most people that everything is designedthat every building and everything they touch in the world is designed. Even foods are designed now. So in the process of helping people understand this, making them more aware of the fact that the world around us is something that somebody has control of, perhaps they can feel some sense of control, too. I think thats a nice ambition. 2 Bill Moggridge, co-founder of IDEO, designer of the first laptop computerMost designers dont understand business. 3 John Seely Brown, author and former director of Xerox Palo Alto Research Center 13. T H A N K YO UFigure 1. The corn cob-shaped water tower greets those visiting Rochester, Minnesota.15As you drive into Rochester, Minnesota, you will pass a few of Americas favorite chain restaurants, a mall, and a grocery store. And youll know you are almost downtown when you see the large water tower on the horizon painted like an ear of corn. The big summer excitement in Rochester is the county fair, and regular entertainment mostly relates to the nearby lakes or watching movies projected on the side of the community center. Rochester is a pretty humble slice of America. What makes this little town known around the world is that, despite its humble nature, it is home to the Mayo Clinic, one of the most advanced and prestigious research hospitals in the world.I spent a summer at the Mayo Clinic working as a design strategist for the SPARC Innovation Lab, which recently became the Mayo Clinic Center for Innovation. Communicate) was a real-time lab for health care service innovation. of many other innovation centers in hospitals and other organizations across the country. In 1889 a tornado struck the town, and Dr. Mayo and the nuns of Rochester founded the Mayo Clinic to treat the victims. Dr. Mayo, and subsequently his sons, dedicated themselves to care that in many ways pushed the boundaries of medicine and its delivery. They saw an opportunity to improve physician education, and thereby patient care, by observing other physicians and by inviting physicians from around the world to study with them. At that time it was considered dangerous people by sharing information. Their courage to break boundaries changed the physician practice model forever. The walls of the original Mayo Clinic buildings are literally etched with the teachings and traditions of the Mayo family, including their one-hundred-year-old value statement, The needs of the patient come 14. 16G E T T I N G TO T H A N K YO Ulived by the employees on a daily basis. There are famous stories such as the one about an ER nurse arranging to have an eighteen-wheeler moved from the emergency lane in front of the hospital so it didnt get towed while the owner was cared for. Or a janitor who went to a patients home to feed the patients cat. There is no shortage of these stories and they are told with pride. The small town of Rochester even has a commercial airstrip to accommodate the jumbo jets of princes, kings, executives, and politicians coming for treatment. There are very few places that are more committed, at every level, to innovation and to providing worldclass service and amazing results in some of the most critical moments of peoples lives. Our team audited Mayos most advanced service experiencesfrom transplant surgery to nicotine abatement to patient check-inand met with some of the most brilliant medical innovators on the planet. We dug into each program with its sponsors, met the operations agents on a regular basis to Mayos internal medicine board, which has a our observations and meetings, then developed recommendations and designs for potential services and operational models to leverage the value of existing services and knowledge in more powerful ways. We used Even while surrounded by such incredible excellence and innovation, one of the service experiences that touched me most from my time in Rochester was the one I had at the Honest Bike Shop, a small store located next to the old train tracks and a not particularly inspiring Mexican restaurant. As I stepped into the Honest Bike Shop, I waswas a beautifully simple presentation. It had a naturally inviting feel, a bit like the way I remember my grandfathers tidy and well-swept garage. It was full of little innovations and care that added up to something wonderful. It was so touching because it came from such a small and approachable establishment. It showed that anyone can provide a meaningful experience for their customer. 15. T H A N K YO U17The owner, known as Honest Paul, greeted me and asked how he could help. He encouraged me to browse, handing me a piece of plain white paper that had clearly been printed on the store printer and saying something like, If you would like to take a moment to read what we are all about while you look around that would be great. Honest Paul had handed me his personal history and mission statement. That is powerfully symbolic: a one-page proclamation of what he believed, how he worked, and what I could expect from doing business with him. It was captivating in its earnestness rather than being slick and pithy. It pretty well ignored all of the marketing advice of the day, but its honesty won me over instantly. You can read the full text in the back of this book; it is an endearing biography that leads you through why he does business the way he does, describing his career in the Air Force, his humble beginnings, and his hard work. The lines that really stick out for me are his guiding principles, his criteria for designing his business: Good repair and service, good products, fair prices and good reputation have brought about a thriving business, and he looks forward to many more good years of serving you properly. The last lines of his statement really spoke to me. Paul went on to show me around his clean and simple shop with pride, especially proud of the work stalls that Figure 2. The front of the Honest Bike Shop. had been built not just for technicians but also for owners to visit their bikes while they were being worked on. I could tell he had considered both me as a person and what I might need to be happynot just what he could sell me that day. Paul was asking for a relationship and telling me about his commitment to his relationships over his life. Wow. After a relatively straightforward discussion about its merits, I bought a big deal is that Honest Paul had convinced me to believe in his business and compelled me to tell others by connecting with me over a shared 16. 18G E T T I N G TO T H A N K YO Uvalue of community, quality, and care. He expressed them overtly and subtly in the design of his store and the way he approached me. He showed me how much my needs mattered to him and were accounted for. I wanted his shop in my neighborhood. moment I walked into that shop I felt like saying Thank You. It was a simple and powerful revelation. In that moment I realized that my goal is not just to properly thank my customers for their business but also to create products and services so meaningful they feel compelled to thank me.C H E AP VS . D EEP There are many types of Thank You, and they run the spectrum from cheap to deep. Cheap thanks is given as an afterthought, as a part of participating in polite society. You give thoughtless thanks when a waiter something you dont want for your birthday. Relieved thanks when a cop lets you go with a warning. These all serve their purpose in polite society, but when I write about getting to Thank You, I am talking about a thanks that you are compelled to say. A thanks that if you didnt say it, you would regret it. It is not about debt or guilt but rather aboutCHEAPDEEPFigure 3. Thank You runs from the cheap to the deep.feel it. Your body may tingle. It is often revelatory. It is insightful. It may be associated with seeing a powerful movie, reading a book that led you to understand something more clearly, or someone sharing a deeply personal story that helped you understand the world in a new way. It is a bit like watching the sunrise on a lake when you are snuggled in a warm blanket. You are just happy you got to be there. It is more than memorable; it is meaningful. Deep thanks is the result of changing your belief about what is possible or what someone might do for you. It makes you happy to say it and happy to hear it. It is what we devote lives and careers to. In relation 17. T H A N K YO U19to products and services, a deep thanks is most often given because you feel like someone went out of their way to consider your needs and make something that feels like it was made for you. It often feels like they knew youas an individual, as a part of a tribeand went beyond their job requirements or tapped into some higher intelligence or power to give you what you needed at that moment. They made something awesome. They made something magical. Deep thanks opens the doors to a lifelong relationship, a relationship with meaning that leads people to pay more, tell others, and invite your company into their homes. When customers are thanking you, it means you are getting it right, and getting it right means they are going to buy from you again. When companies consistently get their customer experience right through their products and services, those companies turn out to be stars like Apple, Facebook, Amazon, Four Seasons, Disney, Twittercompanies that are known the world around as innovators. They connect to people. They are smart and careful about how they serve people. These companies show people that they care by creating joy in their lives. Its not just for the big guys either. Small but dazzling businesses like the Honest Bike Shop can make this happen. Even small businesses can make Thank You moments that leave their customers overjoyed. Honest Pauls version of innovation doesnt cost much or take a lot of time. It focuses on the values that matter to Paul, work for his company, and matter to his customers. He built his business around them. He makes his choice about how to invite someone into his store, what he They are his guiding principles. Paul is special but not because of his deep expertise in innovation. He gets to the heart of what matters and practices it daily to make his customers world a better place. Innovation practice. Innovation is simply making something new of value or making something better. 18. 20G E T T I N G TO T H A N K YO UI N N OVATI O N AN D THAN KS How to innovate is not something everyone agrees on, but Thank You is. Business people, customers, and designers understand the importance of service and gratitude at their core. They agree that we all want to get and to give thanks, and that is where we need to start to work together. Finding out what to makeand whyin order to provide these Thank You experiences is the focus of this book. We know that the best products and services that evoke this connection are what set expectations for quality, service, and experience that businesses in every industry must compete with. It is what you have to be committed to in order to succeed. In fact, it is that ethos that is at the heart of Zappos, the online retailer purchased by Amazon for just under $1 billion 4 , beloved by shoppers and the press for its deep commitment to creating Thank You experiences 5. It makes people happy and makes people money. Those things are often one in the same. Stop worrying about innovation metrics before you worry about hearing Thank You. Thank You is certainly not the last metric you need to measure success. Thank You is both a beginning for collaboration and an end result for the customer. You may not always hear thanks directly from the customer, but if you listen through business performance, social media, front line employees, or net promoter scores, it shouldnt be too hard to hear what people think about your business. You should be asking them anyway. Getting to Thank You wont always require months of research but ingraining the process for research, design, and decision-making is something that takes persistence and commitment. We all know what an outstanding experience feels like but few of us know how to create them. In order to unlock and understand the power of getting to Thank You have to start by understanding the people we want to serve. We need to understand that customers dont just buy products and services, they buy experiences and the meaning behind them. Over the coming chapters we will dig into what an experience is, how it works, and what you can do to construct one in order to innovate and deliver value. We will explore how to uncover what is meaningful to people, generate powerful ideas from that meaning, and test and 19. T H A N K YO U21communicate those ideas to get you to Thank You. Many of the activities will feel familiar. Most of us have worked collaboratively with a colleague, built a requirements document, made a budget, or managed a project, but having the right perspectives and tools organized for innovation is something uncommon. These tools form a guide to know what to make and why in order to create and deliver value to your company and your customers in an increasingly complex world. In short, you hold a basic guide to modern innovation methods. 20. 22G E T T I N G TO T H A N K YO UN OTES 1. Massive Change, Bruce Mau Design, accessed March 23, 2013, http://www. brucemaudesign. com/4817/88330/work/massive-change. 2. In Remembrance Of Bill Moggridge, 1943-2012, Fast Co.Design, accessed March 23, 2013, http://www.fastcodesign.com/1670751/ in-remembrance-of-bill-moggridge-1943-2012. 3. Robert Berner, Design Visionary, Bloomberg Businessweek Magazine, posted June 18, 2006, http://www.businessweek.com/stories/2006-06-18/ design-visionary. 4. Sarah Lacy, Amazon Buys Zappos, TechCrunch, July 22, 2009, http://www. techcrunch. com/2009/07/22/amazon-buys-zappos. 5. Bill Taylor, Please, Can We All Just Stop Innovating?, HBR Blog Network (blog), Harvard Business Review, May 30,2012, http://blogs.hbr.org/ taylor/2012/05/please_can_we_all_just_stop_ innovating.html. 21. I N N OVAT I O N I M P E R AT I V EC H A P T E R2I N N O VAT I O N I M P E R AT I V E23 22. 24G E T T I N G TO T H A N K YO UProt is not the explanation, cause or rationale of business behavior and business decisions, but the test of their validity. 1 Peter Drucker, management thought leader, author, and educatorWe are searching for some kind of harmony between two intangibles: a form which we have not yet designed and a context which we cannot properly describe. 2 Christopher Alexander, architect and author 23. I N N OVAT I O N I M P E R AT I V E25My grandfather, Francis Wyatt Lawson, a submarine captain and inventor, passed away over ten years ago. While archiving his business papers last year, I came across his yellowed copy of a 1960 Harvard Business Review article titled Marketing Myopia 3 written by Harvard University Professor Figure 4. Marketing Myopia is a Harvard Business Theodore Levitt. I thought it would classic. be a good read for noveltys sake and was shocked by how relevant the content still is. The article turned out to be a classic. It went right to the heart of one the key concepts for innovation: Focus on what your product and service accomplishes for your customers rather than on always just tweaking the product performance attributes to convince customers to keep using your existing product. Making something smaller, faster, and in more colors wont save your business if people dont even want or use the core product. You should be most worried about whether or not your product is the rightWHAT S YO U R J O B? Levitt is further credited with the classic line, People dont want to buy a quarter-inch drill. They want a quarter-inch hole! 4 People want the outcomes, not the mechanism, and whoever can deliver that will win. His ideas, summarized as What business are you in?, have been further championed by Clayton M. Christensen, professor at Harvard Business School and renowned innovation thought leader, in his Jobs-tobe-Done theory. The Jobs-to-be-Done theory is an excellent evolution of Levitts work and points to the simple but powerful idea that the job article, Levitt gives examples of how businesses need to understand the job they are really doing for people in order to increase their competitive edge. For example, moviemakers jobs should be broadened to that of entertainment providers in order to compete against other forms of 24. 26G E T T I N G TO T H A N K YO Ujobs should be broadened to that of transportation, rather than as just being in the business of trains, in order to compete against trucks and cars. Christensen uses the example of a milkshake that some people bought because of boredom rather than as a dessert or for some particular nutritional value. In order to increase sales of milkshakes, an expert in fast food might be tempted to increase revenue by making a thicker or sweeter shake, but a better solution might simply be a marketing campaign to emphasize the on-the-go value, adding a game to the Identifying the role the product plays takes a deeper understanding of peoples behavior. You can see how easy it is to discover options when you know what people are trying to accomplish. Simple insights bring important ideas to life. They make our products and experiences that much better. The jobs a companys products and services need to perform, and the level of detail with which the company needs to do its job, are both rapidly evolving. The Internet spreads the smallest of cultural trends seasons, morphing both meaning and value. This means that a new in the U.S. today. It will change what people want because they will be inspired by what is now possible. And what is possible changes rapidly with advanced sensing technology such as accelerometers that tell your iPhone which way is up and thinking devices such as tablets and their microprocessor brains becoming cheaper and more ubiquitous. All of that technological capability creates deeper, richer, and fresher information, requiring new experiences to make sense of it. Technology has been magical and revolutionary but we will continue to see that the real magic will be the relationships we facilitate and the experiences that we build with it through design rather than how fast the processor will be and how many pixels the screen is. 25. I N N OVAT I O N I M P E R AT I V EBUSINESS MODELHOW A COMPANY MAKES MONEYPRODUCT AND SERVICE OFFERINGHOW A COMPANY DELIVERS VALUECULTURAL AND COMPETITIVE SHIFTS27WHY COMPANIES NEED TO CHANGEFigure 5. Companies are continuously creating products and services in response to changes in culture and market conditions.K N OWI N G WHAT TO MAK E AN D WH Y This increasing complexity leads us to the innovation gap, a concept championed by innovation pioneer Patrick Whitney, the dean of the Institute of Design at the Illinois Institute of Technology. Prior to the 1950s, most of humankind had limited options for products and services, and all well-crafted products were precious. After the 1950s, there was an explosion of high-quality, low-cost, mass-produced consumer goods. Since then, our ability to make whatever we can dream up has rapidly increased to a huge array of productsfrom super colliders to the Snuggie. That wave of goods was a boon to our standard of living, but the more stuff companies make, and in greater variety, the more complex and nuanced peoples lives get, and the harder it is to know what to make and why. By being incredible manufacturers and consumers, we have complicated the supply and demand relationship exponentially. This makes for some pretty interesting challenges, and, as author John Naisbitt said in Megatrends: Ten New Directions Transforming Our Lives, The most exciting breakthroughs of the 21st century will not occur because of technology but because of an expanding concept of what it means to be human. 5 Businesses must get smart about engaging their customers and creating 26. G E T T I N G TO T H A N K YO UO RGA N IZ ATI O N A L K N OW LED G E28K N OW L E D G E O F H OW TO M A K E T H I N G SI N N OVAT I O N G A PK N OW L E D G E O F PEOPLES LIVES TI M EFigure 6. As companies have an increasing technical capability to make new products and services, peoples lives become more complex and the harder it is to know them: This is known as the innovation gap.complex systems for living, not just for buying and selling commodities. Innovation is about changing and moving with human behavior and culture to create desirable experiences. The best way to understand culture is by spending time with people and understanding the jobs that need to be done. Innovations are made of relationships between people, products, services, and systems that support that. Understanding those relationships and their complexity, and demonstrating how meaningful ideas function in a system, are important ways to show value. human are new business opportunities. As philanthropist and Microsoft founder Bill Gates said, Never before in history has innovation 6 The risk of blind spots for established companies unable to stay aware of what is meaningful in the market grows daily, while the opportunity for new entrants who can see subtle but important needs grows as well. On top more accessible than ever before. Now, one sharp individual can eclipse a well-established business model. The individual innovator can now scale a product or service more rapidly than ever before to threaten 27. I N N OVAT I O N I M P E R AT I V E29large and established competitors. When a company such as Google, worth hundreds of billions of dollars, feels the need to buy up two-person start-ups who have nothing but a little revenue and a good idea, you as Saul Kaplan, founder and chief catalyst of the Business Innovation Factory and former economic strategist for the state of Rhode Island, likes to say, The half life of a business model is rapidly shortening. Almost 60 years after Theodore Levitts article EXPERIENCE SPEED was published, companies are only now beginning to MEANING QUALITY understand how the richness of peoples lives VALUE PRICE informs innovation. Companies are realizing Figure 7. People have moved beyond the basic descriptors of that they exist to provide value in terms of performance and now look for deeper values. value to people, and people require products and services to express their sense of meaning and accomplish their jobs. The three classic determinants of valuespeed, quality, and priceget a bit more complicated in our present-day service economy than in the former industrial economy. We increasingly live in a world where unique and powerful experiences, rather than physical objects, are the most highly valued purchases. Even Amazon founder and most incredible volumes of products in human history, recently said, People dont want gadgets, they want services. 7 personalization and customization are also available, transforming the creation, delivery, and consumption process. As a result, we have gone past speed, quality, and price as the main criteria for the value of a product. The new big three in the service economy are meaning, value, and experience. We have leveled up. While innovation is what drives change in, and creates value out of, our world, the approach to innovation continues to be stubbornly stuck in industrial revolutionera mechanics. This has led to a very high 8 Few companies in the world 28. 30G E T T I N G TO T H A N K YO Uit because of the pace of change.I N C R EM ENTAL VS . E XPERI M ENTAL I N N OVATI O N Innovation typically follows two very broad paths: incremental innovation or experimental innovation. Both are valid, valuable, and process, product, service, radical, disruptive, and probably another good twenty or so other types of innovation that consultants like to try to own, but fundamentally there are only two. The one that keeps the money rolling in on established products and services, and the one that TOTAL INNOVATION BUDGETINCREMENTAL INNOVATIONEXPERIMENTAL INNOVATIONFigure 8. The majority of innovation budgets are spent on incremental innovation, a more reliable and predictable form of innovation.Incremental innovation means doing things a little better through and better design and engineering. It is focused on delivering functionaliPod, that start as big breakthrough innovations and are then iterated and improved upon to extract the maximum value. The addition of the incremental innovation. It is how to make a great idea keep on giving. 29. I N N OVAT I O N I M P E R AT I V E31Incremental innovation is the lifeblood of most companies and what keeps customers coming back on a regular basis. This is where the majority of growth-focused budgets are spent, and with good reason. The returns are easier to predict, and they capitalize on a strong and proven product or service. Unfortunately, only following the path of incremental innovation leads to a zero-sum game or a red ocean strategya scenario where all space. When a company gets caught there, its tempting to believe that faster, cheaper, and more is a good strategy to outlast or outrun the competition, but the company will likely follow its products price to thehard to change. People get committed to an idea and wont let go if it makes money, even in the face of impending doom. As the brilliant technologist and author Clay Shirky says, Institutions will try to preserve the problem to which they are the solution. 9 For example,understanding the threat and Blockbusters senior leadership being too attached to what worked in the past. The consequence was billions of dollars of value rapidly wiped from the company and ultimately sending the eight-ton gorilla of video rentals into bankruptcy. Ouch. Belief is a kind of blindness, and billions of dollars make you believe that you are right and that everything is OKuntil its not. Saul Kaplan calls this The Business Model Innovation Factory, 10 and that term seems pretty appropriate. When an idea is brought to market, it is optimized for operational driven and dying a slow, painful death due to over-management. Starbucks is a great example of a company that became totally focused on maximizing revenue through process, and then forgot the job it originally aimed to perform. The company maximized shelf space, product lines, brand extensions, and store locations, which led to reduced quality and poor experiences. To reclaim its former high-level quality Starbucks brought back its former CEO Howard Schultz. He returned 30. 32G E T T I N G TO T H A N K YO Uthe focus to providing a meaningful service to customers, turning the company around even after it had been declared beyond saving. Schultzs return to meaning vaulted Starbucks back into a leadership position with sales only ten months after launch, capturing about thirty percent of the $330 million premium single serve/pod category. 11 Via is a product that evolution of the Via product, but purpose is what builds excitement and slowed store expansion to improve the quality of experiencea central value in the original Starbucks successand signaled an overall return to the values that delivered on its promise of a place for people to spend time outside of work or home on a regular basis, reinforcing a concept known as the third place. for companies such as Apple, Amazon, Twitter, and Microsoft. It pushes failing companies back to the top of the charts and tips industries on end, generated from specialists but often requires the generalist perspective that can see how to bring together the right solutions to the right problems at the Time, Wired, and Fast Company.P U R P OS E M A I N TA I N E D 2 ND W I N DP U R P OS E D R I V E NP R O C E SS D R I V E NFigure 9. Keeping a company fresh takes a strong sense of purpose. (Mats Lederhausen, BECAUSE, 2008) 31. I N N OVAT I O N I M P E R AT I V E33Experimental innovation or disruptive innovation, as Harvard Business School Professor Clayton M. Christensen calls it, 12 is the highest risk type of innovation. This type of innovation is pursued to outside the current trajectory of the industry or product category to leapfrog another competitor or business. It often opens the door to a new population of consumers by offering a low-cost version of a similar product, a new technology, or a combination of technologies, in a way that is unexpected. The now-discontinued Flip video camera disrupted larger, established recorder that was easy to operate while the rest of the industry, even other low-end video camera makers, were still adding incremental features and sustaining innovations. If we apply Christensens concept here, its evident that the Flip camera open[ed] the door to disruptive innovations. 13 Other well-known disruptors include the transistor radio that made listening to music on the go cheap and accessible and the early Honda motorcycles that made transportation cheap and accessible. All ofmeeting their needs. Disruptive products and services dont always have to be cheap. They tend to be cheap because, rather than chase premium categories that are expensive to break into, they isolate the key value great study in this. Its initial product was cheap, looked good, and had the essential function and a smart system being grown behind it. It gave a lot of people a lot of value at a very low price. Since its launch, it has become entrenched and has grown up into a premium quality competitor. 32. 34G E T T I N G TO T H A N K YO UFigure 10. The now-discontinued Flip camera disrupted the video camera market.Incumbents often leave themselves open to competition by continuing to make their existing products only marginally better and more complicated, excluding a large customer base. They get lost in features rather than delivering value. The way to avoid this nasty business is to look for and commit to meaning and shared values that can unite a ninety-year-old woman and a fourteen-year-old boy. People relate to things by what matters to them.and leveraged the power of meaning to give its product a unique advantage and a jump on the trends. In the past, the market leaders Nintendo, Xbox, and PlayStationall listened carefully to gamers, responding to their requests with more features and options in the games and the controllers people used to play them. They sought the best customers, the ones who were the most vocal and the biggest consumers, but they ended up making products for an increasingly niche market, which by nature becomes smaller over time. Console makers were losing people who had previously played games when the controls were easier to manage. People now had to be masters of the multiple-button combos or else face the taunts of twelve-year-olds. Nintendo took a step back and asked how it might be able to solve the customersa critical move and a critical distinction. People have rich lives and experiences. They are not just customers, neatly packaged into safely controlled away from the chaos and risk of the real world. However, Nintendo rolled up its sleeves and dug into the meaning of play. It realized that video game players and nonvideo game players alike shared a love of play, but the complicated interface of the game consoles limited the number of people who would or could invest the time to master the existing gaming platforms. 33. I N N OVAT I O N I M P E R AT I V E35WiiSNES Atari 2600NES PS2 Xbox 360PS1iPad Atari 5200 Genesis19751985N641995PS320052008Figure 11. Video game controllers consistently increased complexity over time till the Wii and iPad disrupted them and now the iPad has created a new rival and partner in the gaming industry. (Source unknown)This simple idea of play massively broadened Nintendos market by reinventing the way that people played video games. Not only did Nintendo create new opportunity for itself, it created opportunity for its partners to create new games and new hardware, and it found a huge surge in demand for the new console. In fact, the new console was in such demand that it was constantly out of stock for two seasons while Nintendo ramped up production. An important part of the Nintendo Wii story is that the CEO, Satoru Iwata, was able to make such a huge change to the product line. This is still a rare event as leaders of established businesses often have not changed their business model within their careers. They either dont know how to or cant pivot because their businesss existing infrastructure is built on one product line or idea of value they deliver. It is a very industrial-era approach and a habit that is hard to shake and hard to address. Leaders must recognize the need to change, or their companies will have no chance at maintaining a trajectory of success. 34. 36G E T T I N G TO T H A N K YO UTH I N K I N G I N E X TR EM ES People are often scared of innovation because they are unaware of the more reliable and repeatable methods of innovation. This is exacerbated by a kind of blindness to options. As the saying goes, when you have a hammer, everything looks like a nail. We are naturally inclined to do what we know, and it is scary when we are tasked with purposely finding something that is outside what we know or is at the edges of our knowledge. Unfortunately, people who are hired to maximize an existing market opportunity are also often forced to experiment when they may not be prepared to. Maximization takes high degrees of focus and operational acuity while experimentation requires ambiguity, empathy, and a generalists perspective to seamlessly integrate a variety of disciplines to succeedcritical attributes of design thinkers. Requiring people to change sets them up for disaster and reinforces fear of experimentation. It is a rare person who can solve highly specialized challenges while also dealing with the complexities and ambiguity of innovation. Additionally, humans have a strange tendency to think in extremes, particularly when they are projecting themselves into an unknown future. Starting a project with the goal of creating something new is like staring into an abyss; it can be overwhelming to say the least. People daunting task that feels a bit like building a bit like building a skyscraper on its side and trying to stand it upright. Hard work, to say the least. Even the world-famous architect Frank Gehry (the man who designed some of the worlds best known structures, including the Guggenheim Museum in Bilbao, Spain, and the Walt Disney Concert Hall in Los Angeles) experiences this fear in his work. In an interview for Peter Sims book, Little Bets: How Breakthrough Ideas Emerge From Small Discoveries, Gehry calls this anxious feeling a healthy insecurity. Gehry said about starting a new project, Its a terrifying moment. And then when I start, Im always amazed: Oh, that interesting is even felt by the very best designers in the world. Everyone is afraid to fail but the most successful people prepare themselves to succeed by 35. I N N OVAT I O N I M P E R AT I V E37New Coke or Segway. The truth is, most value creation is generally somewhere in between those extremes. People would do well to recognize this spectrum instead of believing that they need to hit a home run every time. The innovation process is manageable, but results take some time, persistence, and a great foundation. As product innovation expert and founder of Timesulin, an innovative insulin monitoring system, Marcel Botha says, There is a lot of room to make life better in the simplest of ways.Figure 12. People tend to think of innovation in its extreme successes and failures rather than realizing most of the value and work is done in the middle.adopters, but these people dont have to be those living in a far-out future, they are people who are willing to try something new and will hopefully spread their understanding of the innovations value to others. Early adopters dont require a revolution; they care about value. information about the past and present, then deciding what you think the future should look like. It just takes some proper organization, contextualization, and a little bit of inspiration. PASTPRESENTFUTUREWhat has happened.What is happening.What you think should happen. 36. 38G E T T I N G TO T H A N K YO UTo deal with ambiguity, and to identify whats important in the broad spectrum of possibilities, companies need generalists who are deeply curious, can manage interdisciplinary teamwork, and, to paraphrase XPLANE founder and author, Dave Gray, get from point A to point B without knowing what point B looks like. Most of all, they need both people who are passionate about creating experiences that are deeply human, and people who understand that the obvious never is. 37. 40G E T T I N G TO T H A N K YO UN OTES 1. Peter F. Drucker. 2003. The Essential Drucker: The Best of Sixty Years of Peter Druckers Essential Writings on Management. Collins Business. 2. Christopher Alexander. 1964. Notes on the Synthesis of Form. Cambridge: Harvard University Press. 3. Theodore Levitt, Marketing Myopia, Harvard Business Review, July 2004, http://hbr.org/2004/07/marketing-myopia/ar/1. 4. Clayton M. Christensen, Scott Cook, and Taddy Hall, What Customers Want From Your Products, HBS Working Knowledge (blog), Harvard Business School, posted January 16, 2006, http://hbswk.hbs.edu/item/5170. html. 5. John Naisbitt Quote, Great-Quotes, accessed March 24, 2013, http://www.greatquotes.com/ quote/39460#.UO8KL4njnQ0. 6. Think Exist.com, accessed August 9, 2013, http://thinkexist.com/quotation/ never_before_in_ history_has_innovation_offered/147274.html. 7. Matthew Panzarino, Amazons Bezos: People dont want gadgets, they want services, posted September 6, 2012, http://thenextweb.com/ mobile/2012/09/06/amazon-stats/http://thenextweb.com/mobile/2012/09/06/ amazon-stats. 8. Carmen Nobel, Why Companies Failand How Their Founders Can Bounce Back, HBS Working Knowledge (blog), posted March 7, 2011, http://hbswk.hbs. edu/item/6591. html. 9. Kevin Kelly, The Shirky Principle, The Technium (blog), posted April 2, 2010, http://www. kk.org/thetechnium/archives/2010/04/the_shirky_prin.php. 10. Saul Kaplan. 2012. The Business Model Innovation Factory: How to Stay Relevant When the World is Changing. New Jersey: John Wiley & Sons, Inc. 11. Noreen OLeary, Starbucks Brews Success With Via, Adweek, posted August 6, 2010, http://www.adweek.com/news/advertising-branding/ starbucks-brews-success-103004. 12. Clayton Christensen, Disruptive Innovation Explained, YouTube video from the Harvard Business Review, 7:52, posted on Disruptive Innovation, Clayton Christensens website, accessed March 23, 2013, http://www.claytonchristensen. com/key-concepts. 13. Clayton Christensen, Disruptive Innovation, Clayton Christensens website, accessed March 23, 2013, http://www.claytonchristensen.com/key-concepts.