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TECH TALK: Innovation: Fostering Innovation

August 2nd, 2001 · No Comments

Innovative ideas emerge from people but, many a time, get lost within companies. It takes extra effort to ensure that innovation is encouraged and pushed out into the marketplace. More often than not, innovative ideas can be disruptive to existing entrenched products. On these occasions, the natural reaction is to push the ideas aside. But somewhere someone is trying these ideas out in other markets, and one day could threaten the established company.

Says Clayton Christensen, the author of “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail” in an interview in the July 1997 issue of Product Development Best Practices Report:

Many high-performing companies have well-developed systems for killing ideas and products that their customers don’t want. It’s part of an entrenched philosophy that focuses resources on the most lucrative markets of the moment. As a result, these companies find it very difficult to invest in disruptive technologies-lower-margin opportunities that their customers don’t want at this time-until their customers realize they want them. And by then it’s too late.

Companies that demand market data and financial justification before pursuing a new possibility are vulnerable-in fact, their hesitation actually helps faster, more-entrepreneurial companies to catch the next great wave of industry growth. And yet, the cycle inevitably repeats itself once these aggressive, entrepreneurial companies succeed and grow, making it progressively more difficult for them to enter the even-newer small markets destined to become the larger ones of the future. Finding new applications and markets for your products seems to be a capability that many successful firms exhibited once, only to surrender it as they establish a strong customer base and fall victim to the ‘good company’ practices that brought down their predecessors.

The important question is whether the disruptive technology is on a trajectory of improvement such that some day it might be good enough to meet what is needed in the market. Often, disruptive technologies take root in lower-end markets or entirely new ones.

This technology disruption (and the likely reaction of the existing market leaders) is an opportunity for bringing new ideas to market. One of the challenges is to select the target markets with care to ensure that the leaders either do not notice initially or even if they notice are more likely to ignore it because the market at that point of time is deceptively small.

A number of steps can be taken within companies to encourage innovation. Brainstorming and Prototyping are two such measures. Brainstorming done well and with the right mix of people can be very effective. Many times, no single individual may have the right background or the experience to suggest the ideal combination of ideas. But taken in a group, the power of the ideas can get multiplied. The collective thinking and fine-tuning done within a group is a great platform for breeding innovation.

Prototyping helps test out ideas and products quickly. Writes Tom Kelley in “The Art of Innovation”:

Prototyping is a way of life [at IDEO]. From quick and dirty mechanisms made of foam core and rubber bands to sophisticated assemblies that work like the finished product, prototypes get ideas out of the head and off of the drawing board and into people’s hands, where the problems can be discovered. Prototyping is problem solving. It’s a culture and a language. You can prototype just about anything — a new product or service, or a special promotion. What counts is moving the ball forward, achieving some part of your goal.

Prototyping helps bring in external feedback. It is, in many cases, an iterative process. One needs to give form to documents and whiteboard discussions to see what the market thinks. Timing is also critical: too early with a new idea and there will be a lackluster response, and too late with an idea means it is an also-ran.

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