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Tony Ulwick, founder and CEO of Strategyn, recently gave a webinar entitled, “Why Your Idea Is Worth Nothing, and How to Create Growth Plans That Work.” In this webinar, which Strategyn did in conjunction with Institute for International Research, Tony explained why most ideas do not succeed in the marketplace and presented a framework that can be used to create ideas that customers will embrace. Time constraints prevented us from addressing all the audience questions, but as we promised, we address some of those now. If you were unable to attend the webinar, you can view the video here. The slides are also available for download here.

Q1: For “non-user disruption,” it is difficult to assess initial market size (e.g. iPhone)? What is the best method to correctly predict market size in this case?

A: The objective is to learn how many people are trying to get the job done, but do not have the finances or skills to acquire or make use of the existing solutions. We figure out if these people are underserved and calculate their willingness to pay to get the job done perfectly. Once those things are known, a target for a disruptive platform can be established.

Q2: With the current fast pace of technology and trends, how is it possible to plan for long-term success?

Technology changes all the time, but the job the customer is trying to get done doesn’t. A company that knows how customers measure the successful execution of a job (their desired outcomes) is in possession of a stable set of metrics that make it possible to determine what technologies to invest in to grow company revenue.

Q3: Any strategies for when you have weak middle managers who constantly block progress or won’t deal with problems that need to be dealt with?

This is a common issue and one we will address in our next webinar, to be held in the coming months.

Q4: I have been a proponent of getting input from multiple customers in one industry before launching a development product, but some of our most successful products have been for just one customer.  Any comments?

If you can hit your revenue growth objectives by creating an innovation for a single customer, then do it. If you cannot, then finding other segments of customers that are underserved along the same dimensions would make more sense.

Q5: Our product is typically an ingredient in a system. What are some suggestions on how an ingredient maker can be innovative?

Add to your ingredient to help your customer get a bigger portion of their job done. For example, maybe the ingredient could be used as a conduit to pass useful information from one part of the system to another.

 

A recent Economist article, “Let’s hear those ideas,” discusses how governments – in countries such as the US and Britain – are looking to “social innovation” as a solution to solving today’s social ills. In the US, for example, the Obama Administration has instituted the Social Innovation Fund (SIF) that will make monetary contributions to non-profit organizations with missions to alleviate social challenges such as Jobs for the Future, Local Initiatives Support Corporation and National AIDS Fund.

That’s a good start. But one of the biggest challenges facing many Americans today is joblessness. Up until this point, government initiatives have seen some success in maintaining or saving jobs, but it has been ineffective in creating new jobs for working America.

When faced with limited resources, such as money, time and people, what can we do to make sure such social innovation efforts are a success? First, it can’t only be about generating ideas. It has to be about meeting the “customers’ needs.”  In my view, a few key areas can’t be ignored:

1. Partnerships. Collaborate with universities, corporations, non-profits and government agencies to develop sustainable, long-term solutions that solve the problems of economic development, conservation, healthcare and education. In short, get with the right minds to develop true, workable solutions.
2. Think Differently. Albert Einstein once defined insanity as “doing the same thing over and over again and expecting different results.”  Why then as a society do we do the same things over again and expect for it to yield a different outcome? In order to be successful, we must adopt a different method for social innovation.
3. Learn from the Experts. Bring together the best and brightest minds in innovation to map out a short- and long-term plan for how we can tackle America’s most pressing social challenges.

How would you approach social innovation?

According to a recent New York Times article, companies are taking in record profits, up 42.2 percent on average. But they are also holding onto their cash like Scrooge. Shareholders are happy because they’re profiting. But without reinvestment, the economy can’t grow, workers remain unemployed, and innovation is stifled.

That’s not a sustainable strategy, nor a desirable one.  In the article, “Industries Find Surging Profits in Deeper Cuts,” the reporter notes that companies from Harley-Davidson to General Electric to Hasbro to Ford are cutting jobs to improve their profit margins.

In this same article, Ethan Harris, a chief economist at Bank of America Merrill Lynch, says, “As long as corporations are reinvesting, the economy can grow.” But that’s not happening. And that’s not good news for any of us.

To be sustainable long-term, companies have to invest in their futures. And this means investing in innovation, research and development, and market selection. If a company discovers the next big market, that drives growth, profitability and hiring.

Since the economic collapse, Americans have a natural distrust of large corporations.  Now is the time for corporate America to invest in growth and innovation. Long-term, that’s an approach that will reap rewards, create jobs and re-establish America as the world’s innovation center. Businesses need to operate with hope and commitment to the future. Right now, they are sending a message of retrenchment and fear (and some would say, greed). That is not going to instill confidence on Wall Street or among consumers.

With more than a 40 percent increase in profits, what else is corporate America going to do with all that cash?

The service industry dominates our economy and everyday life. According to economic census figures from 2007, more than 80 percent of the U.S. gross domestic product derives from service industries.[1] Similar statistics can be found in other developed countries as well.

Despite the significance of services, however, the topic of service innovation leaves many executives scratching their heads. As noted innovation expert Henry Chesbrough lamented just a few years ago: There is a “problem of innovation in services.” He says, “Without tangible products to prototype and focus on, how can we determine whether we’re designing what customers want?”[2]

Chesbrough is correct: there is a problem with service innovation. However, the problem does not lie in the intangible nature of services as he surmised. Rather, the problem lies in the undue focus on the intangible nature of services. Ironically, the problem of innovation in services is the undue focus on the service itself. When service is the focal point for service innovation, it leads to the misguided belief that a distinct innovation approach is required for intangible services versus tangible goods. Even more troublesome, an undue focus on service has caused service innovation to fall into the trap that has plagued product innovation for decades – capturing requirements on the solution rather than customer needs.

True service innovation begins with the recognition that services are solutions to customer needs. They are a means to an end, not an end in themselves. A patient doesn’t need a doctor, a physical exam, or a prescription. What he or she needs is a diagnosis and treatment for an illness. The emergence of the CVS Minute Clinic, WebMD and self diagnostics such as home pregnancy tests are witness to this fact.

So long as service innovation remains fixated on particular services, innovation will be constrained. Why? Because the focus will be on the means instead of the end. What is the point of improving a current service when you are still not sure what customers are trying to achieve? How likely are you to come up with entirely new service offerings when the anchor point is a current service?

Rather, the appropriate focal point for service innovation is the job the customer is trying to get done. Ultimately, a customer is hiring a product or service to help him or her get that job done.  We “hire” a nutrition plan to prepare healthy meals. We “hire” a search engine to locate information. We “hire” a real estate agent to buy or sell a home. A focus on the customer job means that customer value is not limited or determined by preconceived notions about the solution. Rather, customer value can be defined in a manner that guides improvements to current services and creates entirely new services.

Once the focus is placed on the customer job, the goal of innovation changes. The primary goal of service innovation is no longer to innovate service. Rather, the primary goal is to help customers get a specific job done better or to help them get more jobs done. It is only a secondary goal to provide an essentially intangible service to help customers in this way.

My new book on this topic contains numerous case studies and examples of how service innovation can benefit by looking at the jobs customers are trying to get done – and looking at ways to meet those needs.

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[1] U.S. Census Bureau, 2007 Economic Census. Available at http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-ds_name=EC0700CADV1&-_lang=en.

[2] Henry Chesbrough, “Toward a New Science of Services,” Harvard Business Review 83, no. 2 (February 2005), 43–44.

I finally was able to make it into an Apple store this weekend and get my hands on the Apple iPad to see if all the buzz about the device was warranted.  As a follow-up to my post about the iPad, I’d like to make a prediction.  I do not believe that the device will sell nearly as well as all the analysts predict.

I say this despite the fact that it technically is great.  The screen resolution, responsiveness to the touch, and ease of use is really as good as people have been exhorting.  However, I cannot help but wonder what its positioning is in the mind of the customer.  In fact, as I stood in the Apple store playing with the iPad, a gentlemen came up to me and said, “Why do I need this?  Is it any better than what I have here?”  He was pointing to a MacBook he had tucked under his arm.  I responded by repeating some of the benefits I had heard, but ended the conversation thinking that perhaps he has a point.

As a precursor, the Wall Street Journal is reporting today that Palm is looking to sell itself.  Despite the fact that its new webOS has received very favorable reviews and hits on many of the unmet needs customers have while being mobile, the company has had a difficult time gaining sales.  I believe this is absolutely due to their lack of a valued position in the market.  RIM has unambiguously staked its claim for the BlackBerry as the device for mobile professionals who need to stay connected to the office and Apple has positioned the iPhone as the elegant, sophisticated multimedia and gaming hand-held.  Even Google has pushed Android as the open platform for the “techies.”  What comes to mind when consumers think of the Palm Pre/Pixi?  Not much. That is the problem.

Back to the iPad.  As long as it is positioned as another hand-held device rather than a replacement for the computer, I don’t think the masses will buy it in volumes.  Sure, the “innovators” and “early adopters” will get theirs.  However, I believe without a clear and credible point of distinction in the mind of the consumer, like Palm’s Pre/Pixi, this product will struggle, at least by Apple’s standards.  What do you think?