CEOs–and all members of the C-suite–want to grow the company, but it’s no easy task. Just ask Thomas Glocer, the former CEO of Thomson Reuters. He was just fired for not growing fast enough.

A December 2, 2011, Wall Street Journal article <http://on.wsj.com/wuWogz>reports, “The Markets division has suffered from the weak performance of a new product, Eikon, that it had been hoping would spur growth. In response to the weak performance, Thomson reorganized the Markets unit in July, under pressure from the Thomson family.” Glocer tried to turn things around, but in December he announced that Eikon, “which was supposed to begin paying dividends [in 2012], likely won’t see an uptick in sales until next year and won’t drive revenue growth until 2013.”  That wasn’t good enough for the Thomson family.

What did the Markets division–and Glocer–do wrong? The answer is relatively simple: they relied on very traditional innovation methods. With their knowledge of the market, they brainstormed what they felt would be a good solution: Eikon. After concept testing, they created a supporting business. Then they created product requirements, based on the teams’ prioritization of the features. Finally, they developed and launched the product.

And it failed to generate growth.

This happens all the time. Why? Because executives continue to use innovation processes that are fundamentally flawed. First, they brainstorm a weak idea with their team without knowing all the customer’s needs. Then they find customers who say they would buy such a product–even though they won’t. Lastly, they put together a business case that mistakenly projects returns that would pay back their investments. In other words, they guess, and most of the time, they guess wrong. Ultimately, this destroys the equity value of the company.

To mitigate these risks, companies must use an innovation process that works. Our patented innovation process, Outcome-Driven Innovation, achieves these objectives almost 90 percent of the time. It works because it is focused on the job the customer is trying to get done. With the customer’s needs in mind, we help companies: (1) correctly identify markets that offer revenue growth potential, (2) effectively uncover all the customer’s needs and prioritize those that are unmet, and (3) systematically construct the platforms and feature ideas that will satisfy the unmet needs.

And because we defined customer needs (outcomes) using metrics, we can measure if a new solution concept is going to deliver value in the market (i.e. will it help the customer get the job done better) before significant capital is invested in development, marketing, and sales.

Had Thompson Reuters’ Markets division understood the job their customers were trying to get done and what metrics those customers used to measure the successful execution of that job, the division would have developed an entirely different product, one that would have accelerated Thomson Reuters’ growth.

And Thomas Glocer would likely still have his job.

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.

Many companies are attempting to create a corporate culture of innovation by establishing a centralized Innovation Center of Excellence. Decisions on how to structure and staff such a center can make or break it—and can affect the company’s ultimate success or failure.

There are two common approaches to creating a culture of innovation:

1. Everyone is responsible for innovation. Organizations that take this approach train hundreds, even thousands, of employees as part of a change management effort. They want all their employees to think differently about innovation.
2. A specialized team is responsible for innovation. Organizations that take this approach place responsibility for innovation upon a small team and call upon that team as needed.

In our experience, both approaches are flawed. Companies that take the first approach, which is the more common, see innovation as being inextricably linked to broad cultural change in the organization. But it doesn’t need to be. What we have learned is that innovation as most commonly understood—that is, product and service innovation, geared toward growth—should not be everyone’s responsibility. Only those who decide what products to place in the development pipeline should concern themselves with innovation. These are the people who need to think and act differently so that only products that will create significant new customer value and contribute to revenue growth enter the development process to begin with. The rest of the organization simply has to do what it has always done—that is, validate, prototype, design, build, create, ship, and launch those products. Training the entire organization to be innovators is a time-consuming, costly, and unnecessary activity.

But the second approach is also flawed, and at a fundamental level. The problem with creating an internal team of innovation consultants is that there is a mismatch between the time it takes to develop the needed skills on the one hand and the demands that the organization is likely to place on the team, once trained, on the other. It takes a long time to obtain the skills and expertise needed: if this group is not involved in constant innovation, those skills will get rusty (and may never develop properly in the first place). But most organizations are not generating that level of innovation throughput. All too often, organizations that take this approach end up dissolving the innovation team. It simply lacks the skills needed to sustain itself.

So what is the solution?

We have introduced an innovation culture-building model called “directed innovation.” The directed innovation model enables an organization to grow through innovation quickly, with the least investment.

Instead of requiring the entire organization to be responsible for innovation, the directed innovation model requires a small group of people to form the nucleus of the Center of Excellence. But this model differs from approach number two because this team is not responsible for actually creating growth plans. Rather, it is responsible for assisting Strategyn’s professionals in the creation of such a plan and for managing its execution. The team does not have to develop the skills required for selecting and sizing markets, and it does not have to conduct job-based research. The innovation team, or Center of Innovation of Excellence, has three responsibilities:

1. It must identify the markets that will generate growth.
2. It must work with Strategyn to create a growth plan for those markets.
3. It must oversee the execution of that growth plan.

With our assistance, the Center of Excellence presents a visionary growth plan to the sponsoring division, along with supporting information and financial justification. The sponsoring division takes it from there and works with the center to execute the growth plan. We will often work with the division as well, to ensure the plan is being executed as envisioned and to teach them how to use the plan’s insights to manage growth for years to come.

The diagram below illustrates the three recommended areas of focus for a Center of Innovation Excellence.

To find out more about how using directed innovation can help companies achieve their growth objectives without a major cultural overhaul, read our article “Building a Corporate Culture of Innovation.” Please feel free to contact us at info@strategyn.com with any questions or comments.

On April 20, Tony Ulwick, founder and CEO of Strategyn, explained why he believes the voice of the customer (VOC) needs to be silenced in a webinar conducted by the Institute for International Research and Strategyn. We had great feedback, but unfortunately we ran out of time before we could answer all the questions that were coming in. We would very much like to respond to some of those questions now. (You can view the recorded webinar here.)

A: Strategyn defines a job as the fundamental goal or goals customers are trying to accomplish, or problems they are trying to solve, in a given situation. This includes functional and emotional jobs. The job map, however, is only applicable to the functional job that is being studied, as it reveals how to improve product function. Making the job the unit of analysis is the cornerstone of the outcome-driven innovation philosophy.

Q: You assume that the job to be done is not changing. However, often, this is not the case because as capability to do different things changes, often the request for a specific job then changes. How do you handle this?

A: Changes in the capability to do things actually represents changes in the tools for the job, not changes in the actual job. The job does not change – that is a safe assumption. Let’s say you switch from using a toothbrush and toothpaste to clean your teeth to a Sonicare cleaner or to chewing gum with antiplaque ingredients in it. If you think in terms of the tools—the solutions—you might think the job has changed, but it hasn’t: the job is still cleaning your teeth. Only the tools to do the job have changed.

Q: How do you know everything a customer wants when they don’t even know what they want?

A: Traditional innovation approaches often say customers don’t know what they want because those approaches are thinking in terms of solutions, and it’s true that customers often can’t envision what solutions will help them get a job done best – after all, they are not the technology experts. But customers do know exactly what jobs they are trying to get done, and the 50 to 150 metrics they use to measure the successful execution of a job. We have completed hundreds of studies that prove this is so. These metrics are the customer’s needs, and they know them – all of them. With these metrics in hand, companies can envision and create the products that will help customers get the job done better, which is the goal of innovation.

Q: If you are silencing the voice of the customer, who do you talk to in order to find out what jobs the customers are trying to get done?

A: We are not suggesting that companies stop talking to customers. What we are suggesting is that companies silence the voice of the customer as a practice – it does not work for innovation. In other words, companies should silence VoC and adopt the practices we are describing here. These improved practices are still dependent on customer input, but the focus is on understanding the job they are trying to get done and not on how to improve a product, which is where VoC goes wrong. We ask the customer to describe all the steps they take to get a job done, and then we ask them to tell us what makes each step time-consuming, unpredictable, and inefficient. We then listen for the metrics they use to measure success and document them as customer needs.

Q: How different is the outcome-driven approach when it is used for breakthrough innovation vs. product improvement?

A: In both scenarios, the outcome-driven innovation process is executed the same way. Differences do arise, however, when new solutions are being proposed. Product improvement assumes new features will be added to an existing product platform, but breakthrough innovation typically requires the conceptualization of a new platform. In either case, your primary goal is to find solutions that address the unmet needs of the customers. The tools to get there are the same.

Q: What was the independent study that quantified the change in success rate from ODI?

A: In 2010, Strategyn engaged researcher Janet Bumpas to study the success rates of traditional innovation methods and its own innovation process, Outcome-Driven Innovation® (ODI). The results show that while traditional innovation processes have an average success rate of 17 percent, ODI’s success rate is 86 percent. This means that 86 percent of the products and services launched by Strategyn clients using ODI were a success. You can find more details of the study here.

Q: How was innovation success defined in this study?

A: Companies were asked to judge the success of a product based on one of four metrics: revenue, market share, customer satisfaction, or return on investment. Strategyn believes it’s time to silence the voice of the customer as an innovation practice. The customer does indeed have insight into the jobs they are trying to get done, but you need to think from a different perspective in order to turn that insight into valuable customer inputs. Strategyn’s ODI methodology does exactly that. Armed with that knowledge, you can tackle the challenge of innovation knowing that you will be successful: and you will create growth plans that work. For more information on Outcome-Driven Innovation, please visit our website to download the free white paper.

Conventional consulting wisdom encourages expansive research and multi-month engagements. And yet, this practice may be over-serving some of you in some innovation contexts. Our Innovation Track Record Study found that ODI’s innovation success rate is 5x the industry average. And yet, the verbatims from this study revealed that some of our best clients struggle with an over-abundance of data. Others are underserved, because despite plenty of clear data that points them in the right direction, they struggle to overcome entrenched, old patterns of organizational behavior. And almost universally, they desire to use ODI in more contexts, to speed it up, and reduce costs.

These are important issues, and two key breakthroughs came in my personal search for answers. The first, and most important, was the publishing of the New York Times bestselling book, Switch: How to Change Things When Change is Hard by Chip Heath and Dan Heath.

Switch: How to Change Things When Change is Hard

The Heath brothers say that Innovation is fundamentally about change, and the primary obstacle to change is a conflict that’s built into our brains. The rational mind wants a great beach body; the emotional mind wants that Oreo cookie. The rational mind wants to change something at work; the emotional mind loves the comfort of existing routine. This tension can doom an innovation effort – but if it’s overcome, innovation can come quickly. I’m proud to announce that we’re now partners with the Heath brothers. I am trained, certified, and licensed to use Switch to help you and your teams achieve quick wins and to get more out of ODI.

The second breakthrough came from the emergence of new research methods that are changing the rules of the game. My work in automating the gathering of customer needs has led to a 4x reduction in the time it takes to identify customer needs in many markets. The emergence of do-it-yourself quantitative research tools further reduces the time it takes to get data back from the field while simultaneously reducing cost.

As a result, I’ve created Strategyn’s ODI + Switch Quick-Win Innovation Workshop. Think of the workshop as having a flexible ODI front end, in which we take advantage of the time-saving and cost-saving new research methods, with a Switch backend, which results in innovation concepts that are, by design, easier to implement organizationally and easier for customers to adopt because Switch’s ground-breaking change-management principles are taken into account.

Skeptics may object. It is often said that one month feels too short in duration to reveal actionable insight. As an innovation scholar and consultant I take objections like this seriously. So, I tried it for myself.

My friend and colleague, Zac Lyons, has a grandmother’s whose ability to live independently has suffered greatly in the past few years. Zac’s mother now assists her with most of the activities of daily living. Zac has observed the physical and emotional toll it takes on his mother and caregivers like her. We asked, “Is there something ODI can do to help them?” We didn’t have a lot of money or time to invest, but this was a case in which directional insight would be better than guessing.

As a starting point, we picked the market of “caregivers bathing an elderly family member or spouse.” Applying the new research methods, we were able to gather the needs in one week, create, deploy, and gather data from the field in two weeks, and analyze the results in one week. We discovered the top unmet need was, minimize the risk of falls. The problems that contribute to the risk of falls are many: failing eyesight, muscle weakness, slippery floors, and high tub walls (to name a few). These are tough innovation problems to solve, especially within a budget affordable to seniors living on a fixed income.

And yet, we found a bright spot – those who had installed and used adaptive features such as grab bars and transfer seats were better satisfied. Using Switch, we transformed a hard innovation problem (“How can we address the frailties of age or remodel the bathroom?”) into an easier innovation problem (“How can we get more people to adopt and use relatively inexpensive grab bars and transfer seats?”) It turns out that some elderly bathers resist adopting and using assistive features because it’s an admission of a loss of ability and a sign of old age. Others are willing to adopt these features but struggle to implement them. Both are behavioral innovation challenges – ones well suited to quick-wins through the application of the Switch framework.

Innovation teams used to think that they had to choose between conducting a full, comprehensive ODI study (with its commensurate time and cost), using an outdated innovation method, or worse – guessing (and guessing wrong). Now there’s a new option. Applying these new methods in engagements with Microsoft, Johnson & Johnson, TD Bank, Dun & Bradstreet, and Ingersoll Rand have proven effective.

Don’t get me wrong. This is not a replacement for a comprehensive ODI study. The Quick-Win Innovation Workshop is best used for early-phase learning or to spur new thinking when you need to improve a product or service in an existing market quickly and when the innovation challenge is not purely technical, but also requires behavioral change. Complex product categories such as smartphones, highly technical categories such as medical device, and difficult to contact audiences such as business decision makers still require the breadth and depth of insight provided by a comprehensive ODI study.

How would being able to quickly understand your customer’s needs change the way your team innovates? Our goal is to make ODI accessible in a way that matches appropriate research breadth, depth, and investment with your innovation need. If you’re interested in improving your skills at planning and executing change, please leave a comment or send me a note at eeskey@strategyn.com.

This is no surprise to us at Strategyn. Based on our research we have discovered that today’s VOC methods are fraught with ambiguity and actually cause the failures that companies are trying to avoid.  So why is this? As the blog suggests, and what we firmly believe, is that most companies think about customer needs from the wrong perspective.

By focusing on the “job-to-be-done,” instead of the product or the customer, companies are able to create breakthrough products and services that garner them the financial success they seek. Thinking about innovation from this perspective is what makes our patented Outcome-Driven Innovation (ODI) process different. Using ODI, companies are able to discover customer insights that VOC simply cannot. The result is an impressive 86% innovation success rate. You can read more about Strategyn’s view on VOC and the ODI process in this White Paper.

To learn more, join us in our upcoming webinar on April 20^th, 1pm EST. Sign up here. Contact Strategyn directly to find out how our consulting services can help your organization: Toll free (866) 729-8400

He criticized us, saying we failed to address issues such as “starting point, talent, industry dynamics and tons of other independent variables.” This led him to the following conclusion: “Clearly, ‘process’ is 90 percent of (your) equation. Seems horribly overstated. What about the myriad of other factors at play?”

Chris is right. The thesis behind our Outcome-Driven Innovation methodology is all about the process that companies use to determine which products and services to bring to market. Clearly, companies aren’t struggling with developing products. But they are struggling to put out the right products. That’s why the average product success rate is 17 percent.

By using Outcome-Driven Innovation, we help companies identify unmet customer needs and look for the greatest opportunities to meet those needs using our patented process. The reason our success rates are so high – 86 percent is unheard of in the industry – is that customer needs are identified before a product or service is ever introduced into the pipeline.

We don’t think companies need to revamp their product development or launching process. Companies do a great job of executing these elements of the innovation process. What they don’t do well is the upfront process – everything that happens before invention takes place.

In an hour-long conversation with Chris (he invited me to spar with him), we talked about many things. But I think the big stumbling block for many in the innovation field is: how do we measure innovation success?

At Strategyn, we measure success by how well our clients meet their customer’s needs by producing products and services that grow revenue, market share and deliver value. It’s not about how many products an organization launches, it’s about launching the right products. And when organizations feel that happens, that’s success.

I loved Chris’ final comment in his email to me. “Your piece,” he said, “was successful in being provocative and raising my blood pressure.”  When we hit a nerve and get to talk to someone about our innovation theory, they often come away convinced that this is a common sense approach. I can guarantee that Chris’ blood pressure is much lower after our conversation.

I’ve worked in the innovation management field for close to 20 years and it amazes me that when it comes to innovation, CEOs and executives often pass off failure as something that should be expected, and in some cases encouraged. You’ve heard the advice from Tom Peters, author of In Search of Excellence : “Test fast, fail fast, adjust fast.” Even A.G. Lafley, the former CEO of Procter & Gamble, famously said that unless P&G experiences a certain amount of innovation failure, not enough innovation is happening.

So the question is: why do companies accept average innovation success rates of 17 percent when they can enjoy 86 percent success rates like our clients? Is it fear of change? Not being open to “innovating” how they go about innovation? A lack of insight or leadership?

Last year, I participated in a panel discussion on innovation at the Edison Awards and made the bold statement that companies could experience innovation success rates of more than 80 percent. Competitors challenged me. Other panelists looked in disbelief.

Strategyn released today an independent study proving that companies who have used our Outcome-Driven Innovation methodology have enjoyed 86 percent rates when launching a new product or service offering. This study clearly shows that ODI can help companies dramatically reduce their innovation failure rates and costs, while bringing products and services to the marketplace that meet customers needs – the bedrock of success.

For all of those who say innovation is not a process that can’t be managed and that failure is good, I say, “Think again.” There is a process that exists that is five times more effective than traditional innovation methods. How will you “innovate” innovation in your organization?

As a sponsor, I didn’t really know what to expect exactly, so I decided to participate in the process and submit a topic, “What Customers Want,” which was voted into the agenda.

My presentation http://pcampdc.blogspot.com/2010/08/what-customers-want-using-outcome.html was well received and subsequent conversations with those who attended revealed a common struggle — how to identify and manage product requirements. This issue came up again in an afternoon topic, “Developing Requirements that Don’t Suck,”  a lively discussion about how to define software requirements in a way that are actionable and clear as to what is needed by users so that programmers know what to code.

Other topics dealt with challenges related to the jobs that product managers and product marketing managers are trying to get done when it comes to getting successful products to market. One of the fundamentals –understanding what a need is and formatting needs in a way so that programmers and product managers can confidently take action on them — is still a big problem today.

This fundamental problem, and the downstream product management issues that result from it, revealed itself among a few of the other presenter quotes and anecdotes captured by the conference organizers throughout the day:

“We need something between a cocktail napkin and a 900 page requirements document.”  Steve Johnson of Pragmatic Marketing

“Does this sound familiar – Here’s product #1, here’s product #2, #3. Stop me when you hear something you like.”  John Mansour of ZigZag

“Has anyone ever seen a business case that looked like a loser?” John Mansour of ZigZag

So the lack of clarity in customer needs and a way to focus on the ones needed to make subsequent product management decisions is still creating havoc and uncertainty when it comes to getting successful products launched. From an Outcome-Driven Innovation champion perspective, our work is still a job-to-be-done.

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?