It is easy to blame chief executives and senior management for not devoting enough attention to introducing new products, but that is too simplistic an explanation for why radically new products are so rare. Marketers deserve some of the blame for at least three reasons:
Successful strategic innovations need more than a great idea.
There's no shortage of new product concepts. We are willing to bet you could come up with a handful of intriguing ones before lunch if you set your mind to it.
But new ideas by themselves are worthless. You need to move from idea to execution, and that is where the majority of companies stumble. You need a new-product development process—one that is codified, efficient, and repeatable, and which allows you to turn a notion into something you can sell.
But there aren't a lot of marketers who have tried to formalize a new-product introduction. Too often, marketers see their job as simply coming up with the idea. They leave the actual development and production to someone else and then profess to be surprised when the finished product is not exactly what they had envisaged. (This is true, by the way, whether we are talking about introducing new consumer products or selling business-to-business.) It is always nice to have someone else to blame when something goes wrong—such as, the product didn't sell. But it isn't the best use of your time, or of company resources.
The takeaway point from all this is that you want to create a process that will allow you to introduce a new product the same way every time. The procedure needs to be replicable—and easily understood internally—so you can train new hires to execute it. The process should become a legacy in your organization.
There is a shortage of Renaissance men (and women).
This builds off the previous point. As we have just seen, there are two distinct components to developing a successful new product: Coming up with the idea and then putting it into practice—i.e., executing it. We must make sure that it is produced exactly as designed and that the marketing that follows is consistent with the overall message the product is supposed to communicate. Failure can arise when we look for people who possess both skills, but in reality such people are extremely hard to find in any organization. Most people are naturally better at one or the other part of the process.
Instead of looking for someone who is good at both, it would seem more efficient to let people do what they do best. Since most companies have people who are fairly good at carrying out a mission once it is defined for them, it probably makes more sense to keep that capability in-house, and to look to outside resources to help you discover new ideas and fresh needs in the marketplace. Once the outside firm has unearthed those opportunities, the company can develop them.
Marketers tend to be fatalistic.
Marketers seem to go into new-product introductions with the expectation that they are going to fail. So they deal with new-product failures rather like the way an overweight person does with their problem: We periodically make half-hearted efforts to fix things…and then give up.
Just like someone who resigns himself or herself to being overweight, marketers conclude that there is nothing they can do to improve their batting average when it comes to introducing new products. Instead of throwing up their hands and saying "woe is me," they should be studying their past successes to see what they should do the next time they introduce something new.
That, of course, takes us full circle, underscoring as it does the need to have a replicable process to make new product development as painless as possible.
Blaming the CEO and others for not being more supportive about new product development is a waste of both time and mental energy. Look in the mirror and try to figure out how to make things better. Addressing the three problems we just talked about is a good start.
Certain fundamental tensions exist everywhere. In our personal lives it's "spend now or save for retirement?" In sports the question is often "bet it all on winning this year, or build for the long-term?"
It's no different in business. Do you give in to the temptation of immediate gratification—satisfying Wall Street for this quarter—or increase the research and development budget?
The tension is never more apparent than when trying to balance the innovation pipeline against the needs of your sales force to have something new to sell today.
Know Your Sales Force
We've done lots of work with companies that are sales-driven. Our first customer (nearly 20 years ago) was Superior Coffee & Foods—now part of Sara Lee. We've also helped Keebler create new products quarterly for Sam's Club and Costco and worked with food-service and manufacturing giants driven by sales forces that have an insatiable desire for new products. Lately we've done a lot of work around agent-driven industries like life insurance. All of these experiences have made us acutely aware of the roles speed, ego, business models, instant results and inertia play in sales-driven cultures.
These are the things you need to remember about salespeople. They:
• Need almost immediate results • Get bored with ideas quickly, so they need a short-term pipeline • Become dependent on "innovation news" as a way to sell • "Eat their own young" if they are not busy or happy. We once worked with a company who had gone from having the best year in history to dysfunctional feuding because they lacked a pipeline of new things to sell. • Are numbers driven—sometimes to a fault—which isn't surprising since the best are often paid on commission.
The excellent news is the innovation bar can be set fairly low when it comes to satisfying what the sales force needs. Salespeople are often happy with evolution, not revolution:
• ShinyGlow cleaner with new packaging graphics • ShinyGlow cleaner with a new, resealable top • ShinyGlow cleaner in an applicator pen • ShinyGlow cleaner "now with static guard" • ShinyGlow cleaner in an easy-to-pour package • ShinyGlow cleaner with built-in sunshine softener
These types of ideas are usually easy to come up with and to execute, and are often created in response to a competitor's product. If the sales group likes these ideas, they tend to be successful because the salespeople work harder to make them a reality.
Sales Teams as Innovators
Salespeople are great innovation advocates. They get excited. They know a ton about your customers and their business. They'll fight for their own ideas and will them into success.
Here's the best news about salespeople: They often feel neglected. Not many companies do a good job of leveraging the excitement they show for your product. If you can harness what your sales team knows and the energy they bring, you will have a huge competitive advantage.
How do you do that? Here are five ideas:
• VOS. Voice-of-the-customer research is the cornerstone of new product development. In your case, voice-of-the-salesperson research is just as important. There are many techniques to regularly enlist the minds and hearts of your salespeople. Success criteria should come largely from them. Platforms should come largely from them. Ideas should come from them. For example, arm your sales force with Flip Video cameras or explorer journals. Ask them to capture competitive insights, opportunities, or what's on their wish lists. They see things out there that you should know about.
• Enlist the alpha influencers. Sales teams are like packs. There is an alpha. Actively tapping these influencers is amazingly powerful. Imagine having them present your (their) innovation pipeline. We recently used this technique and got a standing ovation from 200 insurance agents. They did not realize they were applauding their own new product and service ideas. (Or did they?) Planned and facilitated round tables with sales alphas are a highly effective way of creating this type of buy-in and momentum.
• Create short-term and long-term pipeline tracks/projects. The goal is to help the sales team create their short-term innovation "fix" and sales goals while they envision what the future can and should look like. With their short-term needs addressed, we are free to help them create an exciting future via new products, services, and business models. Every meeting we review where we are in the short term vs. the long term and adjust the pipeline accordingly. An example would be to focus on their next two sell-in meetings with quick ideas. At the same time, work on ideas that are five years out.
• Make it fun. Why do all the marketing people get to come up with the ideas that others have to sell? Schedule regular, engaging, and fun brainstorming sessions. Use the insights your salespeople brought you in your VOS meetings to build innovation platforms. Let the world know that the sales group came up with the ideas. Give away innovation awards. You can plan and facilitate these quarterly meetings and more importantly, screen and prep the right alphas to be in them.
• Educate. Along the way, stop and inform the sales group about the techniques you are employing. Make them aware that the work you are doing together is critical. Help them build concepts. Share research findings with them. Make them appreciate the rigor that great ideas and their thoughts deserve.
We love working with salespeople. Companies that have learned how to use them to drive innovation are not only faster to market but more connected with their customers (and, of course, more successful).
It just makes sense to tap the intelligence of people who offer a product that shares certain characteristics with yours. You sell your product through insurance agents? Great. Talk to people in travel, publishing, Hollywood, real estate, and everyone else who uses agents. You'll discover they have solved many of your challenges in ways you haven't considered.
Enlisting the Best and Brightest
As fast as the world is changing, it's hard to argue with the premise that a company's capacity to create industry-changing products and services is directly tied to its ability to forge connections efficiently among big brains around the world and throughout your company.
But how do you identify and enlist your company's best and brightest in the innovation process, even if they are not usually part of your company's marketing efforts? It's easier than you may think.
1. Encourage Fun and Games. Your first challenge is to attract the "ideators," the people who traditionally come up with the biggest ideas, regardless of the topic.
Great ideators tend to be a bit competitive. Tap into that. Post challenges—through your intranet, bulletin board, or e-mail system—on behalf of clients, and offer prizes for anyone who can come up with the answer within a set period of time. Competitive, inventive people will respond with novel ideas that you can adopt. The prize can be simple: a free lunch or sports tickets. If you have cash in the budget, even better.
And if you don't have a current client project in need of solving, you can make one up. For example, if vacuum cleaners did not exist, how would you clean floors? The question isn't as important as the answers. The responses you get will give you a great list of innovative thinkers.
Not only will you have a great technique for solving many of your most daunting challenges, you will also have the makings of an innovation roundtable to draw from in the future.
2. Encourage Graffiti. Want a simple way to foster a culture of innovation and find out who has hidden strengths? Allow people to draw on the walls.
One thing that works particularly well for our firm when we are looking for new insights, or ways to tweak a product or service offering, is to paper the walls of a room with flip chart sheets. We write thought-starters and headlines that relate directly to the challenge at hand. For a vacuum project, we might post headlines like "things that pick stuff up," or "the cleanest surfaces in your house."
Then we ask everyone—no matter where they are in the organization, or what their title—to drop by the room a few times and have some fun. Build on others' ideas. Cut out pictures. Draw. Make connections.
Once the walls are filled, schedule mini-meetings where you moderate a discussion among small groups of participants to take the ideas further.
Here's the best part. You won't have to sell this idea. The room becomes a magnet. You will quickly get new ideas and you'll see who has the ability to connect, build, and reinvent. This costs nothing but time, and often results in astoundingly fresh thinking.
3. Raise Your Profile. The great thing about taking either or both of these approaches is that not only does the company benefit but it also gives those who would like to be seen as experts opportunities to raise their hands in a nonthreatening atmosphere.
If you're one of those people who is looking to raise your profile, participate in these exercises every chance you get. That will get you noticed. You will be seen as an idea catalyst, someone whose ideas, enthusiasm, and energy causes others to be more energetic and engaged.
People who help organizations identify and engage great thinkers are prized. And so are the great thinkers.
There has never been a better time to innovate. However it takes an entrepreneurial mindset to see that what most people view as a crisis is actually an opportunity for you to pick a battle you can win.
When everyone else is taking flight, it's the perfect time for you to stand and fight because the odds are in your favor.
In 1915, Walter Cannon published his seminal work on acute stress response. (Anybody under acute stress right about now?) His theory basically states that all animals—including humans—have evolved to deal with stress in one of two ways: We stand and fight or we run like crazy in the opposite direction.
But entrepreneurs are behaving differently. They are seizing what they see as an historic opportunity to reinvent themselves, their businesses, and many times, the industry in which you are currently hiding, uh, competing in. Consider:
• Matt Kuttler, known for building a promotional products business, is reinventing the way small business supplies are purchased at ReStockIt.com;
• Rick Jamaison, known for building accounting businesses, is bent on creating the greenest brake pad company at ABS Friction;
• Marty Renkis, known for building an online training company, is bent on reinventing digital, wireless security systems at SmartVue.com.
And proving that you don't even have to go far afield to find new opportunities:
• Brad Handelman, known for being the largest manufacturer of bowling bags, is now putting any high resolution image you want on bowling pins and balls at Ontheballbowling.com
These are not just dreams. They are ideas that were quickly turned into multimillion-dollar businesses by people who saw a need, had an idea about how to fill it, and experimented until they got the formula right. Does that sound like your company today?
Probably not. But it should. In times like these, entrepreneurs should be your role models because no matter what is happening in the economy, they constantly ask "what if?" They are constantly examining—and reexamining—opportunities most of the people in your company will overlook.
Scrap the Business Plan?
It isn't surprising the entrepreneurs listed above, and thousands of others, are responding to the recession this way. Adaptability is the hallmark of a great entrepreneur, no matter what you may have been taught in school.
Anybody who has taken a business class has been told something along the lines of "The secret to success is a good business plan." The only thing this statement proves is that your professor has never run his own business.
Find an honest entrepreneur and she will tell you she has changed directions so many times that her business has little in common with the initial plan—if there even was a business plan in the first place. The point isn't that business plans—or the annual plan you prepare for your company—are worthless. On the contrary, they are an excellent way to envision, create strategy, raise funds, and test ideas. But sometimes—like now—sticking with the plan is the worst thing to do.
Mike Michalowicz is a serial entrepreneur who embodies the flexibility and vision many large companies lack. But he does not attribute his success to hard-line traditional business planning; in fact, his approach is the polar opposite. Mike launched his first company, Olmec Systems, with the intent of selling computers and training to law firms, but Michalowicz quickly discovered an unmet need in supplying proprietary information to hedge funds, so he changed direction and became a national player before selling the firm.
His second company, PG Lewis & Associates, also followed an unexpected path. He formed PGLA with the intent of delivering computer forensic services to large corporations, only to find a tremendous need in criminal investigations. Yet again realigning his company to service an unexpected niche, PGLA achieved national prominence within three years and was subsequently acquired by a Fortune 500.
Today, Michalowicz, the author of The Toilet Paper Entrepreneur, is the CEO of Obsidian Launch, which advises small business entrepreneurs on how to grow healthy businesses fast, even in this challenging economic time.
"We can all learn from entrepreneurs," Michalowicz told us. "They are early adopters. They are innovators. They are risk-takers. While so many established businesses are in a frozen state of panic, entrepreneurs are trying new ideas."
Entrepreneurs know that freezing up, running away, or laying low just aren't options that will work for them. They would rather fail spectacularly than sit still and have the market do it to them.
We aren't advocating spectacular failure. We are advocating that you take some risks and stop acting like a Nervous Nelly.
Want some good news? Talk to an entrepreneur. Want big ideas? Talk to an entrepreneur. Want someone to tell you to grow up and stop crying? Talk to an entrepreneur.
Columbus insisted the world was round and then promptly missed America on his first attempt. The Wright Brothers claimed flying was possible and nearly killed themselves trying to make it happen. Steve Jobs launched NEXT computers—a hardware failure that most don't remember because they now think of him as the guru behind such ground-breaking devices as the iPod and iPhone. And, of course, Albert Einstein, whose very name we use as a short-hand for describing someone as a genius, was a lousy student. (As were many successful CEOs and entrepreneurs.)
Our point: Failure isn't fatal, in fact, failure is actually required for innovation success.
That is an idea you need to accept, if you are going to do your best work. It is an idea that you definitely have to get across to your team—and indeed your entire company—in order to free it from the innovation-limiting shackles of perfection.
The phrase "Be patient. God isn't finished with me yet" is a healthy mantra for most of us—and most of our innovation projects.
Soft Launches
One reason that's true is that in order to make a product or service everything it can be it needs to be repeatedly soft-launched with both internal stakeholders and external customers. This means literally sending the idea—be it a product or a service—into a limited part of the marketplace with the full understanding that it will be modified (perhaps extensively) based on how customers and consumers react.
For successful launches to happen, a team must be O.K. with the premise that they are starting with what some may consider a half-baked idea, one that very well may fail as constituted. You need to make this O.K. You need to tell your team that the real failure is fear of launching an idea until it is perfect.
To buttress your case, make the following points:
1. We're only right when the market tells us so. Right now, we presume to be right, and our thinking is based on as-good-as-we-can-get research, history, and gut feel. The market will help us see and hear what we can do to be more right (and also help us eliminate all the things our customers—and potential customers—don't like or don't want.)
2. We can make any changes quickly. We can simulate years of research data in the span of months once we are out in the marketplace. It is the fastest way to learn.
3. It has never been cheaper to test ideas; The Internet allows for instant feedback; empty strip malls allow for in-and-out shopping experiences with risk-free short-term leases; technology has made prototyping doable in days instead of weeks.
4. It is going to be fun. We're doing this to learn and improve, not to beat up an idea. (So there is no reason for anyone to get defensive.)
5. We will be making our "mistake" on a small scale, i.e. you are not launching the Iridium Phone or Segway only to find no one understands it or only 1,000 people want it. If we find out our idea is completely off-base, we're about to save the company millions of dollars and perhaps our jobs.
One more point: Be careful of the language that you use when describing your testing process. We often find that words like "prototype" and "beta" come with too much baggage to overcome. When they hear those terms, many people think it means that certain elements of the product (or service) that you are about to test are locked in place. That's not the message you want to send. Just about everything should be up for grabs. For our people "soft launch" sends the message we expect lots of things about the idea to change. But consider creating your own language that stresses the results you are trying to achieve, e.g., iteration phase 3 or "project optimize".
If your team still resists the idea of iterative soft launches, just remind them that if this approach was good enough for Columbus, Steve Jobs, and the Wright brothers, it is probably good enough for them.
"Spend enough time around innovation and you become aware of a startling
analogy: Ideas are just like children. Ideas need a loving set of
parents to conceive them, encourage them, challenge them, and protect
them until they are ready to stand on their own. Good parenting will
produce ideas — born as simple insights — that can change the world.
The problem is, we as corporate executives (parents) abandon our
nurturing role too early. And just like in any family (or company),
once the core set of parents is gone, the child (insight) suffers."
Watch a brief excerpt from the discussion below, and remember to raise your ideas correctly!
Intelligence is learning from our own mistakes. Wisdom is learning from the mistakes of others.
At Future Trends 2009 I spoke about infusing outside experts to solve problems you are working on right now.
At Maddock Douglas, we call upon our Global Expert Network (GEN) to help create solutions to complex problems. GEN is an exclusive group of thinkers that includes entrepreneurs, professionals and specialists that span the globe and hand picked to meet specific opportunities and challenges. These experts often come from a parallel industry or have a specialized skill that relates to the challenge at hand. This cross-section of thinking creates relevant, and frequently groundbreaking, ideas. Do you have a GEN? And if not, how do you plan to infuse outside expertise into your next big challenge?
Last time, in our column "Insurers: Effective Innovators—Almost,", we said—in total sincerity, we want to stress—that insurance had the potential to be one of the most innovative industries on Earth.
The response to that column was actually better than we expected. Yes, some of you laughed, others got offended, and more than a handful of you questioned our sanity (a special "thanks" for the offers to pay for the psychological counseling you felt we needed). But most of you got our point: To consistently launch successful new products, insurance companies, just like the firms within your industry, simply have to do a better job of understanding and aligning the three critical underlying components of innovation.
Marketplace success occurs when:
1) You discover a significant need.
2) You conceive of a new product, service, or business model to meet that need.
3) There is clear communication that connects No. 1 to No. 2.
Our point last time was that most insurers—like most businesses in general—spend the majority of their efforts discovering and fulfilling the need, and as a result short-change the communication portion. Innovation is a three-legged stool. If you get the insight and idea right but get the communication wrong, your launch will tip over. It will fail.
To keep that from happening, let us give you three and a half ideas to help you get the communication right. We often tell clients that a bad idea executed brilliantly is the same as a brilliant idea executed badly. They both result in failure. Insurance companies everywhere are sitting with two out of the three ingredients for innovation success in hand. They have created amazing financial tools to help businesses and people in a myriad of ways.
If you met with a creative expert in the insurance industry (they exist), you would soon find out that there are thousands of challenges—everything from putting your kids through college to dealing with the economic downturn—that insurance can help you meet right now. But very few people know about these solutions insurance companies can provide, because the industry has done such a lousy job of communicating about its innovative products.
As a high-ranking marketing friend in the insurance industry recently told us, "If our innovation score was like the SAT, we'd score very high in math but woefully low in verbal."
So how do you correct this issue? Let's say that, like the typical insurance company, you have identified a significant need in your market. And let's also agree that you have a new product, service, or business model that meets that need. Here are three and half ways to make sure your idea resonates with your customer or end consumer. (We'll continue to use the insurance industry as an example, but feel free to substitute your industry—or better, your company—every time you see "insurance.")
1) Speak English
Do you know what "Universal Life," "Variable Life," or "Whole Life" is? Like most industries, insurance often forgets that insurance professionals are the only ones who understand its language.
It is critically important that you constantly keep this in mind (and act accordingly): You are not the true experts of the benefits your products deliver—your customers are the experts. They use everyday words when they talk about their wishes, dreams, and fears. If you are not using the words your customers use to describe their needs as you go about explaining what you have to fill them, you are making your job 20 times harder than it has to be. The voice of the customer must resound clearly in all of your communication.
1.5) One Voice
If everyone has to agree on the key characteristics of the message you are going to communicate, you will end up with a really bland message. The higher the number of people who have to agree, the worse this gets. Create a small innovation team—or just one person—and empower that team. Get out of the team's way. Let it live (or die) by how often it's right. You will get a clearer, better message to market faster.
2) Get the Benefit Right
"Life insurance"? Seriously? Somebody decided to call it "life insurance"? We have a feeling that life insurance got its name because nobody wanted to sell something "death insurance." But people aren't buying life (or death) insurance. They are really buying benefits such as an inheritance for their kids or a paid-off home for their surviving spouse.
The point: Would you rather buy "Education for a Whole Entire Family Insurance" or "Whole Life Insurance"? When companies connect the correct insight/benefit (legacy) with the product (insurance) and communicate the benefit evocatively, e.g., "The Five Generation Scholarship Plan," something magical happens. It sells.
3) Engage the Influencers
Now more than ever, social media sites have allowed us to find those who really care the most and get them engaged in the new idea. We can ask for their insights about how to communicate it, and give them credit. Make them evangelists and carriers of the message. Once your campaign starts, they will be attached to it and help propel it.
This idea is critically important when it comes to people who sell the product directly—like agents. It is important for other advisers, too. For insurance, this would include CPAs. Think: Who are the influencers, advisers, and agents in your industry? When was the last time they helped you discover a need, invent an idea, and launch it?
It is easy to think a great idea sells itself. It doesn't. Learn to use the voice of the customer to communicate what you have while you are formulating the product itself. Your odds of success will increase dramatically.
How do businesses grow to maximize profits and improve
productivity—all while maintaining a deep sense of purpose? To many
entrepreneurial organizations, these are sink or swim issues. For Rand Stagen, member of the Maddock Douglas Global Expert Network,
these are the benefits of transforming a reactive, revenue focused business
into a proactive, profit generating company.
A Senior Partner of Stagen, a management firm that
specializes in helping mid-market companies scale, Rand is a seasoned
entrepreneur who has been featured in The Columbia Journalism Review, Entrepreneur Magazine
and Fox-TV.
The Global Expert Network SM includes entrepreneurs, professionals and specialists
spanning the globe.
When we asked our expert why some moderately successful
businesses just can’t climb to the next level, Rand cited The Leader’s
Performance Paradox, the strategy that asks organizations to let go of their
winning strategies.
Sound strange? It might. Watch Rand’s video to learn why the
strategy that first made your business successful might actually be stunting
your growth.
What if we told you insurance is one of the most innovative industries we know? (Hold the smirks. We are serious.)
What if we went further and said that the insurance industry was poised to assume the leadership position when it comes to creating new products, services, and business models in our economy? You'd probably think we were trying to sell you a whole life policy.
Well, the fact that you don't believe us—and again we are totally sincere about this—says a lot about the problem insurance companies have when it comes to innovation, a problem that we bet your industry may have as well. And therein lies a tale.
1. There is a significant need or insight. 2. A product, service, or business model meets that need. 3. There is clear communication that connects No. 1 to No. 2.
By this definition, the insurance industry is clearly innovative—at least when it comes to creating a product that fulfills a need. Consider some of the more obvious benefits available through one type of coverage: life insurance.
Life Insurance
A. Need or insight
B. Solution
C. Benefit
Your heirs need money while your assets are in probate.
Life insurance benefits are paid quickly.
Your heirs receive the benefits from your policy quickly.
You need a way to protect your assets from creditors.
Creditors cannot get at your life Insurance assets.
Your assets are protected.
You want to make sure your heirs aren't saddled with any of your debts (including estate taxes and funeral expenses).
You can take out a life policy whose benefits are specifically designed to cover these costs.
Your loved ones are not burdened with expenses caused in your life or death.
You want to provide an estate for your loved ones, or to help fund a charity, after your death.
You can take out a life insurance policy and have the proceeds fund whatever you want.
You create the legacy you want.
The table begs one obvious question: Did you know about these benefits? Probably not. The insurance industry often has two of the three key ingredients for successful innovation: the need and the idea. What is missing is the ability to communicate these ideas in a way that is relevant to increasingly busy people.
A Failure to Communicate
An aside: The fact that up until now the insurance industry has fallen down when it comes to innovation is ironic because innovation couldn't happen without insurance. Every year, hundreds of new products are launched. Products that you put on your skin, your kids, your pet—services that require you walk up steps, get on new rides, and use heavy equipment. Business models that require you to write down your Social Security number and push "Send." The fact is that most of these new ideas would never be launched unless the potential liability associated with each was covered by—you guessed it—insurance.
So, you would think that the insurers would be a master at communicating the benefits they offer. But the fact that they are not is, unfortunately, not unusual. Many times the best insights and products are overwhelmed by poorly executed communication. If you don't agree with this, consider that perhaps the most successful insurance marketing in the past decade involves a talking duck and lizard.
There is nothing wrong with using a cute symbol to get someone's attention. But how many people could tell you a) the names of the companies employing either symbol, and b) what products they're selling, and c) what specific benefits those products offer? Our research shows: not many. Your honor, we rest our case.
The good news is that it is incredibly easy to fix this part of the equation, particularly when you have a suite of products that are quite flexible and a CEO who believes change is necessary. For this reason, we believe the whole insurance industry is at a dramatic tipping point. Expect to see much more relevant and creative products soon. Why? Because we believe insurers are taking a cue from other industries and beginning to uncover meaningful and immediate needs that their products can readily serve. Once they figure out a way to communicate them effectively, watch out.
Communication Is Essential
Two of the questions we always ask when people complain to us that their hot new innovation effort has yet to gain traction: "Do people know about it?" and "Do they think they need it?" Invariably we hear some variation of "Of course they do" in answer to the first question and "How could they not?" to the second. Let's stop here for a second. Do you know that feeling you get in your gut when your IT department explains—using industry shorthand—a cool new technology? Think. What percentage of those words did you understand or care to understand?
Do you remember how you felt on your first day in chemistry class, when you were being passionately taught something that had no relevance to you at all? What if this is how you are making your customers feel? What if they don't understand your product? What if the words you are using don't resonate with them? What if they don't see the benefits? What if they don't think your product is worth their time?
Think back to our definition of innovation. It occurs when need + product (to fulfill the need) + communication (about how the product fulfills the need) are completely intertwined. If the communication fails, your whole innovation effort is severely crippled.
Question: If there have been skillions upon skillions of new and advanced safety products and services introduced over the past 20 years, why has the rate of industrial accidents remained so stubbornly high?
Answer: People are not using the products and services provided to them.
Innovative safety products work only if they are used. And if people don't understand clearly the benefits of your innovation, they are not going to use it, no matter how great it is.
The safety industry serves as a wonderful case in point. Failure to use protective gear provided at the workplace accounts for 40% of work accidents, according to the National Safety Council. Despite continuing workplace safety efforts, this statistic has been consistent for 20 years.
So where's the disconnect? Why aren't the safety innovations making more people safer? Indeed, why aren't people rushing to use your new innovative product or service despite its inherent superiority?
The answer can be found within our definition of innovation. As you'll remember, we believe that innovation occurs when:
1) There is a significant need or insight.
2) A product, service, or business model meets that need.
3) There is clear communication that connects No. 1 to No. 2.
We'll give the safety industry the benefit of the doubt that it's addressing the right needs with the right products. What's missing is the communication that connects the two.
Unlike the insurance industry, which communicates—albeit inadequately—the benefits of its products, the safety industry doesn't communicate those virtues in a believable or meaningful way at all.
The problem with that is obvious, no matter what you do for a living. You simply cannot assume your innovation's benefits are apparent to everyone, let alone believable.
The lack of response to the safety products raises at least one logical question: Why the irrational resistance to new things that will make our lives better (in this case, make us safer)? Research shows that our psyches have actually been wired to overestimate the possibility of good things happening to us ("We'll win the lottery") and underestimate the likelihood of bad things happening ("Seat belts—too much of a pain").
So why aren't people in high-risk professions, such as firefighters and police officers, buying and using the new products out there? There are three simple explanations:
1) They are not aware of the new safety regulations and standards.
2) Even if they are aware of them, they don't understand the safety regulations and standards or believe they apply to them.
3) They don't know the new products and services exist, don't believe they need them, aren't willing to pay the price for them, don't believe they'll work, and don't want to change their own behavior even if it's in their best interest.
1) Open ("Give me the information"): A small minority of people are actually receptive to change. They will require information and education, so make it readily available, accessible, understandable, and sharable.
2) Entrenched (It'll take an intervention): A larger group will be entrenched in em>not changing; they will require an enforceable law, mandate, and penalty to drive change. You need to show them the problems they will face if they don't take advantage of what you are offering.
3) Stubborn but not self-centered: The majority of people you are courting will not pull the trigger until social influence and social marketing are applied to get them to want to change for someone other than themselves ("My family and friends want me to change").
The thing to keep in mind in all three scenarios is this: The gap between knowing and doing is far greater than the gap between ignorance and knowledge.
The seven deadly sins of the innovator—and how you can stop yourself from committing them
Just for fun, let's take a look at seven of the most common and deadly sins of the innovator. We've seen all of these cause failures of Biblical proportions.
1. Lust. Innovating in a space you have no business being in. Trying to innovate outside your operational expertise or brand footprint creates incredible inertia internally. It also causes unhealthy confusion externally. "Wait," the customer says. "My longtime supplier of plastic molding injection equipment is now making iPhone (AAPL) accessories? What gives?"
2. Gluttony. Trying to create too many initiatives with too few resources. Innovation takes emotional and financial capital and focus. Instead of making a number of small bets, focus your team and resources on one or two initiatives that have the greatest probability of hitting it big.
3. Greed. Taking short-term profits at the expense of long-term growth. The stock market demands a high rate of return, which naturally results in safe bets like line extensions — leaving you at risk of being blown out of the water by an industry-changing idea. The solution? Create two teams. Put one in charge of evolution and the other in charge of revolution. You'll get both short- and long-term growth.
4. Sloth. Taking short cuts. Too many otherwise brilliant leaders have made the mistake of thinking that speed and short cuts are the only way to successfully innovate. While we agree that being overly cautious — "Let's test the idea for the 83rd time" — is also potentially fatal, there is a happy medium. Think big, quantify, qualify, refine, and launch. This should take no more than 12 months.
5. Wrath. Being so focused on your competition that you miss the same opportunities your rivals are missing. You can't read the label when you are sitting inside the jar.
Don’t get kicked to the curb by someone outside your industry who is rightly focused on the consumer (and not either one of you).
6. Envy. In the context of innovation, envy means launching a "me too" product instead of finding a space you can own. So when your sales team comes to you and demands that you launch a product to compete with the "hot" new offering they just saw from the competitor, don't take the bait.
7. Pride. You won't give up on your favorite idea — even when the numbers prove you're wrong. When it comes to your ideas, you must take a long, hard look at the data. Unless the data are overwhelmingly in favor of your idea, drop it and work on the one the team secretly knows is better.
Religion tells us the seven deadly sins are fatal to spiritual progress. We will let you debate that thought with the theologian of your choice. But we can tell you they are definitely fatal if you want to innovate successfully.
"The people who are crazy enough to think that they can change the world, usually do."
–Think Different campaign, Apple 1984
With the economy in a recession and your customers relentlessly distracted with falling 401(k) values, layoffs, and a seemingly never-ending stream of bad financial news, the importance of innovation as a differentiator in the marketplace has never been greater.
You consider yourself a leader, yes? Well imagine that you are the CEO of a company driven by innovation. Obviously, you realize it is critical to have a highly functioning innovation team. What follows from that are two things:
1. You need to find just the right person to run it. You need to fill the seat of chief innovation officer (CIO) if you haven't already.
2. You need to determine who is going to work on this team (and who is expendable as the recession worsens).
Because the position of CIO is so critical, let's start there.
When it comes to innovation leadership, there is of course the common image that the perfect person is the loner with an off-kilter approach to both life and the problems that need to be solved. Innovation leaders are the "crazy ones" who choose to recreate systems while others are focused on refining the old ones. The ones who envision a completely new product while their counterparts only see incremental change. They question convention, always believing there is a better answer, and they are relentless in discovering it.
Well, from our experience, the most effective innovators are not as crazy as one might think. Infusing experts into our innovation process has afforded us the immense pleasure of brainstorming with hundreds of brilliant innovators over the years. These experts come from all walks of life: inventors, anthropologists, strategists, trend experts, scientists, engineers, writers, dreamers…
As you might imagine, we've thought hard about what makes them so special when it comes to the art of RE-creation (by the way, if you ever wonder if innovation should be fun, take a good look at the word recreation).
So here, based on our experience, are four criteria for choosing a great CIO, or, "The Most Innovative Person in the World."
The Balanced Innovator
Crazy does not necessarily equal creative. People seem to think the best innovators are mad scientists, tortured 24 hours a day by what could be. While Thomas Edison may have had his Van Gogh moments, from what we have been told most great innovators are wildly innovative at work yet still know when it is time to go home. The best know about balance.
John McCain for CIO?
One of our favorite parts of the Presidential election campaign was hearing John McCain tell the world he was a maverick. We love mavericks. Innovation requires mavericks. Mavericks have the guts and the ability to buck trends.
Look at companies that are innovation leaders—Apple being the most obvious choice, of course—and you will notice that most successful new product or service launches are led by a person who doesn't mind leaning into adversity. Since innovation by definition is meeting a need in a new way, it requires leadership from someone who welcomes the idea of doing things differently. And doing things differently means swimming against tradition and politics, a tough challenge for most. That's why seasoned mavericks usually make excellent innovators.
You can't lead an innovation crusade without a spreadsheet. Nobody famous said this. It's just true. There is far too much risk in business today to invest money in an miscalculated dream. For an innovation initiative to gain the support and maintain the momentum, the product or service you are developing must have to actually get to market. You must show the board the money you are going to make. That's why your CIO must be able to segment the opportunity, build strategy, and basically do the math. He or she must be able to be as innovative with mathematical modeling as he is with marketing concepts.
The joy of curiosity is at the heart of innovation. It propels you to discover new things and enables you to hear old ideas in new ways. We are all full of wonder as children, but it is something we seem to lose as adults. Do your company a favor. Find a CIO who still finds joy in being curious. There is no more important trait for the role.
This leads us to another brutal reality. Lack of curiosity and the corresponding absence of optimism is a deal breaker. Innovation simply can't stand up to a team of cynics and know-it-alls. If you have a cynical leader, fire him immediately. It has been said that if you want a happy team, fire all the unhappy people. If you want an innovative team, fire the cynics and incurious. This is the best way to tighten the belt in your innovation group—recession or no recession.
Great innovators—whether they serve as your CIO or are "just" a member of the team—are not crazy; they just see the world differently. Great leaders have learned to identify, respect, and harness this magic. There are still some in senior leadership who don't believe in this type of thinking but we suspect most of them will soon be unemployed.
What if we told you that you could come up with a great idea anytime you wanted?
We'll go further. We can show you how not only to summon new and innovative concepts on command but also to teach your people the same skill. This may sound like an infomercial ("Order our revolutionary system within the next 20 minutes, and we'll throw in a set of steak knives absolutely free"), but it's true.
The five techniques outlined below have one thing in common: They free your brain to let your best ideas flow.
As it is, you undoubtedly have too much on your mind. When you're driving during rush hour, you are too busy dealing with traffic to notice the scenery and enjoy the ride. The following practices eliminate mental traffic and help you liberate the great ideas inside you desperately trying to get out.
1. Shower your way to creativity.
Yep, it's absolutely true. There is a scientific theory that water hitting your head helps trigger the synapses and that's why people get great ideas in the shower. But we think it's simpler than that: The ideas occur because you are not making an effort to think. You aren't worried about anything. You are not stressed. Hence some of your best thinking occurs.
2. Sleep on it.
Remember how your mom used to say, "Why don't you sleep on it, honey?" when you were wrestling with a big issue? Well, when it comes to big ideas and problem solving, Mother really does know best.
The next time you want to solve a major challenge or be unusually brilliant, think about it in bed. Don't push yourself to figure out the answer before you fall asleep. Instead, just go through the issues at hand and tell yourself that you will have the answer in the morning. In our experience, this technique amplifies the power of the shower, because there are even fewer distractions to occupy your mind when you are asleep.
You can employ an alternate version of this while awake. The next time you can't think of a name, date, or important fact, just tell yourself aloud, "I will not think about this for a while, and the answer will come to me." This technique clears the traffic in your mind and lets your subconscious go to work. Your answer will often pop into your head the moment you stop "thinking about it."
3. Engage in mind-mapping
Purging is a great way to make new connections and create bigger ideas. Have a tough challenge to solve? Get a giant piece of paper (write small if you can't find one). In each quarter of the paper, write a keyword related to the challenge. For example, if you want to plan a cool family vacation, you might write the words "destinations," "transportation," "memories," and "kids."
Then, in no particular order, begin to brainstorm any word that comes to mind when you think of each of the keywords. For example, for "Transportation": plane, train, automobile, John Candy, pillows, sleep, sleeping bag, tent, treehouse, memories, dreams, daydreams, smells, popcorn, movies, adventure, pirates, islands, Swiss Family Robinson. Eventually, you will begin to make connections, and ideas that unify the key aspects of your goal will pop off the page.
Strive for as many words as you can, and don't judge the words. Judging is looking at the traffic when you are driving—it keeps you from coming up with ideas. Eliminate the traffic.
You can employ this simple technique yourself or do it in groups to loosen up your team. Imagine how much fun you'll have explaining to your family how you came up with the idea of renting a tree house for your vacation in Costa Rica.
4. Schedule Your Daydreaming
We all have a time of day when our brains work the best. For many, it is first thing in the morning, before rush hour. Unfortunately, the CrackBerry addiction has many of us checking our e-mail just when our brains are the most capable of creating.
The moment you check your e-mail, voice mail, or to-do list, you have hijacked your imagination. You have created a mental traffic jam. Do yourself a favor and schedule daydreaming. Unplug during the time that you know you do your best thinking and find a place that makes you feel energized. A lot of people love the local coffee shop. The buzz of conversation, the smells, colors, and energy create a safe haven for the mind to wander. Some prefer the library or the park. Whichever it is, go there. Let your mind wander.
5. Yuk it up.
Laughing is another great way to liberate your brain. Often consciously doing silly-seeming things will get the creative juices flowing. Spin a top. Get an ice cream cone.
As you test these five techniques, you'll find some work better than others. If it turns out you really do get your best ideas in the shower, be conscious of the circumstances under which they occurred. What was the water temperature like? How long had you been in there? What time was it? Replicate the experience.
You'll find the effort worthwhile. "The bottom line is that gifted performers are almost always made, not born, and that the journey to superior performance is for neither the faint of heart nor the impatient," says Rand Stagen, senior partner of Stagen, a management consulting firm that specializes in helping mid-market companies scale. "Just as in sports, becoming an elite performer in business requires struggle, sacrifice, and honest (often painful) self-assessment. Depending on the scope and difficulty of the skill to be learned, it will take months and probably years to achieve a high level of proficiency or mastery."
Learning how to implement these approaches is often what separates a brilliant thinker from a creative want-to-be. Really. At first, you may feel silly, but we promise they will work.
Introducing new products and services successfully requires: a) sufficient expertise and resources, b) a defined process (BusinessWeek.com, 5/8/08), and c) leadership resolve (BusinessWeek.com, 5/20/08).
But talking about expertise, process, and resolve is boring to everyone except engineers (and people who introduce new products successfully). So, with apologies to David Letterman, here's our list of the top 10 reasons your next new launch will fail.
10. Science Run Amok.
Companies use their research and development capabilities to come up with unique products, instead of making customer needs their starting point. They begin with what they are good at, as opposed to what customers want. New products aren't bloodhounds that go find markets. They must address an unmet need.
9. The Lemming Effect.
"The competition has just introduced an X, so we need to have an X, too." If all you are offering is a me-too product, you can only gain market share by cutting price, and who wants to go that route? Find an unmet need and go after it.
8. "Team ACME."
See if this sounds familiar. Someone comes up with an idea and it gets implemented by an ad hoc team with money found in a slush fund. It's a daring approach. It's innovative. And it almost never works because it isn't sufficiently thought out.
If you have ever watched a Wile E. Coyote cartoon you understand the problem. The Coyote's ad hoc solutions to the problem of catching the Road Runner always seem on the surface to make sense, but they always contain a fatal flaw that causes them to blow up in the end. If you substitute your company for Wile E. and "a nagging consumer challenge" for the Road Runner, you'll see why there are better ways to go. Meep Meep.
7. It's Scary Out There.
There are thousands of reasons not to be bold. The economy is weak; the market is unsettled. Somebody needs a hug. Fine, go get yourself one. Then buck up and get aggressive.
6. The Market is Too Small.
For a new product to be successful you need sufficient sales. It sounds ridiculously obvious, doesn't it? But you would be amazed at the number of companies that design a product for too small a market. Say your new product is targeted at households with at least $55,000 in annual income. Well, that's only 50% of the 105 million U.S. households. But it's really just for the 18-65 age group—there goes another third of the market that's left.
And this mythical product will only appeal to those with an active lifestyle: one-third of the remaining 35 million homes—some 12 million. Say you get 33% to try it, and of those 4 million households, only 50% said they would buy it again. Your potential market is about 2 million households, and sales at that level won't cover the developmental costs, advertising, etc.
Instead of acknowledging this, we redefine the market as "for everyone 18 and over"—and then wonder why a product designed for a narrow target didn't sell well.
5. Dartboard Product Design.
There is almost never sufficient thought given to what the total product should look like. Let's say there are four key components—price, packaging, size, and usability—that could affect how well it sells. And each one of them has four options. So there are 256 different ways you could manufacture that product.
What's the predominant technique used to choose among them? People sit around a conference table with some pizza and soft drinks and say, about a new paper towel, for example, "Let's go with 500 sheets, super-high absorbency, and middle-of-the-road packaging, and priced 10% above the market leader."
What's the probability they've chosen right? By definition, it is 1 out of 256. Maybe they have some expertise; that boosts the odds to 1:128. Better, but still not great.
4. Death by Consensus.
If everyone has to agree on the key characteristics of a new product, you are going to end up introducing really bland products. The higher the number of people who have to agree, the worse this gets. Create a small task force of new product experts and empower them. Get out of their way. Let them live (or die) by how often they are right. You will get more compelling ideas to market faster.
3. Lack of Alignment.
You have a great idea. But because your process did not identify key stakeholders and influencers, it is your idea, not everyone's. The Five Dysfunctions of a Team by Pat Lencioni does a great job talking about what happens to teams when trust is not established. Your success criteria should reflect the wants of the stakeholder. Trust builds momentum. Want to see your boss kill an awesome idea? Fail to include him early and often.
2. Leadership Churn.
Great ideas are like kids. They need to be nurtured, protected, pushed, challenged, and loved. Innovators are the proud parents that make sure this happens. So when these parents move from one brand to another, are poached by competition, or simply burn out, the kids suffer. (See? It really is always the parents' fault.)
1. Ready, Fire, Aim.
Tom Peters and Bob Waterman perpetrated one of the biggest crimes ever against Corporate America when they told it to do a little homework, get the product in the marketplace, and make corrections based on market feedback, a concept they called "ready, fire, aim." Speed to market is a killer concept in the negative sense. It kills new products.
You don't want to make your mistakes in public. To launch a product before it is ready with a $40 million campaign is just idiotic. The problem is, it isn't seen as idiotic. It's seen as one of the costs of doing business. That's sad. People who do this should not be seen as bold, they should be seen as bad marketers.
After reading this, feel free to smile knowingly, roll your eyes in frustration, or forward it to unresolved leaders. Better yet, why not take a look at your current innovation initiatives and make sure none of these things is happening on your watch.
Corporate culture can distort creativity without innovators realizing it. Luckily there are several telltale signs, and tips to freshen up your perspective
There is a great saying in the South: "You can't read the label when you are sitting inside the jar."
From our experience this saying applies directly to your ability to innovate. If you have been with a company for more than six months, it is time you realize something: You're stuck in the jar. The way you think about new ideas is distorted by the corporate container you find yourself working within.
As a result, it is extremely difficult for you to see the priceless ideas that are all around you, ideas that will become the very new products and services your competitor will use to steal market share and give your boss a reason to question the effectiveness of your whole innovation strategy.
We know, we know. We can't be talking about you. We had the same reaction initially. But if any of the following sounds familiar, you are in the jar—just like we were. (And fear not, there is a way out, which we will tell you about.)
You know you are in the jar when you hear the following:
"We've tested that idea. It didn't work."
What idea exactly? People who are in the jar interpret ideas based on how they last saw them. In their minds, when they hear about a scooter, they think skateboard, not Segway. When they hear about an auction, they think Sotheby's, not eBay. They have literally judged an idea before it has been re-envisioned by the brilliant people around them. Their experience blinds them to the possibilities of the future.
Silence.
When your team is trying to brainstorm new ideas, the room gets eerily quiet. The reality is that they are probably desperately trying to be creative but they keep seeing hurdles. They don't want to appear negative, so they decide to be silent and nod a lot.
"Yes, but…"
Trying to be polite, people will just "but" other people's ideas to death. ("It is a really interesting idea you are proposing, but it will never work because…") This is usually not about intent—they really want to be helpful—but they are too busy thinking about regulatory issues, manufacturing issues, political issues, budgetary issues…deadening their ability to be creative. Not only are they in the jar, but the lid is really tight.
An idea for (yet another) safe line extension.
Line extensions and evolutionary innovation should be a large part of your plan. But when that's all your team is producing, it probably means they have lost the ability to recognize big ideas, or worse, they no longer have the fortitude to push the rope up the hill. Even when senior management begs for revolutionary thinking, they already see the outcome—"Let's just add a button, a flavor, or a perk and move on."
"Huh?"
If you are often asked by really smart consultants or newcomers to your company what in God's name you are talking about, you're probably in the jar. Seems that after a few months in the jar together, we develop our own language. Often laced with industry-borne acronyms, this strange way of communicating seeps into our customer and client communications. These industry clichés keep our customers from recognizing great innovation.
A few years back we scored big points with about 40 million customers when we convinced a client to change the last line on its monthly billing statement from "Account Balance" to "What you owe." You are surrounded by hundreds of similar examples.
At the root of Zen philosophy is the ability to objectify your situation, to be able to step outside your situation and see it for what it really is—warts and all. So now that you see yourself in the jar, what do you do about it? Following are three simple tips:
1. Get experts from outside your industry to help you stay honest and see what is happening outside the jar.
2. Get outside your office and act like an anthropologist. Spend time with your customer and bring an expert interpreter and a couple members of your team. Compare notes; you will be shocked at how differently you all see the situation.
3. Be very careful about the language you use. In this case, "voice of the customer" should be taken literally. Customers recognize, respond to, and build from their own words more than yours. So use their language when exploring insights, writing concepts, and introducing new products.
Ever notice how a 5-year-old can walk into a situation and ask an innocent question that elicits the "because that's the way we do it" response? Then you realize you've never really questioned why you do it that way? Five-year-olds are too young to be in the jar.
Attracting and retaining the most creative and ingenious employees, the Alphas, means feeding their hunger to innovate. Here's how to do it.
Much of what we've read and certainly everything we have experienced running our firm tells us that the keys to attracting and retaining the best employees — the Alphas — are working on something 1) meaningful, 2) in a lower stress environment, and 3) with a reward system that makes sense.
Now it just so happens that being innovation-focused naturally attracts Alphas, and this in turn drives a better culture. The reason is simple: Successful innovation is intrinsically meaningful. Said differently, you have to be solving a significant need in order to have success with a new product or service. The best and happiest employees want to work on something meaningful. So they naturally gravitate toward innovation assignments.
So how do you attract Alphas and keep the ones you have around? Offer them your most heady, rewarding challenge. Think about what would happen if you had a project like that for every Alpha in the organization. The result would be a magnetic culture that attracts and retains the best people. It would be the Alpha Effect.
Do you have “idea parents" inside your company? If you don't you should.
Your children AND your ideas need love, support, discipline and protection.
read more »
“Voice of the customer” is a phrase you hear a lot in research and marketing circles. Put simply, it means actively listening to your customers to understand their needs and how they speak about them. This is a tried and true concept for most industries. When it comes to innovation in life insurance, I believe the company that aggressively embraces voice of the customer wins the game. read more »
Every company has an internal thought leader who, despite all good intentions, gets in the way of innovation. Here’s how to handle this wonderful asset.
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Insurance (yes, I said insurance) will be the launching pad for great innovation in the near future. This article tells you why we believe this is true and checks to see if you will be a leader or a surprised follower. read more »
Venture capitalists have changed their tune and now are helping drive innovation by investing in companies long on inspired thinking. While they used to look for companies with operational challenges, today’s VCs know to look for three qualities in fast-growth companies. read more »
It used to be that being a venture capitalist meant playing bad-cop and tightening up a sloppy company. Today the smartest VCs recognize that the rules have changed and they face an unprecedented opportunity to help the world innovate. read more »
Are you better at creating an idea or bringing an idea to life? A company that understands its greatest strength has taken an important step towards innovation success. read more »
The language you use has an incredible impact on your culture. It also says something about how your lead. We’re talking about a different kind of swearing. Here’s how to recognize it and what to do about it. read more »
Drive your innovation platform—and increase sales— by making use of your salespeople's front-line customer contact and thirst for new products
As we mentioned previously, the best, most innovative, companies are discovering the incredible return on investment that comes from 
