Between 1978 and 2011, despite the invention and democratization of the internet, the number of firms being created in the US steadily reduced, until that number was exceeded by the numbers of businesses that failed. Successful entrepreneur and New York Times bestseller Diana Kander thinks that’s down to our approach to innovation. That it’s dead wrong.
So then, what are the key factors in getting innovative strategies right? In the next few minutes, we’ll go over some of the main ones, focusing on innovative strategies and product innovation.
The biggest prerequisite for innovative strategies is aspiration. As pointed out in McKinsey Quarterly, "President John F. Kennedy’s bold aspiration, in 1962, to 'go to the moon in this decade' motivated a nation to unprecedented levels of innovation." But in business, aspiration is often tempered by expectation - financial growth is the most important target, and so the twain must meet, by establishing a quantitative innovation aspiration - essentially, putting a financial number against the plan for product innovation.
But aspiration isn’t enough without the disposal of pride. People will use your product in ways you did not anticipate, and you must take great care to engage with that.
Imagine you have made the greatest meat pie you can possibly imagine. It’s cooked perfectly, and the pastry is flaky. You hand it out to a bunch of kids, waiting, hoping to see their faces light up as they eat.
Instead, take the pie tin and they start throwing it to one another, ignoring the pie itself. We’d probably all be pretty deflated.
But the greatest innovators spot the opportunities in how their product is used – they use innovative strategies. Frisbie the pie brand, was acquired in 1958 after closing down their factory. But the flat disc toy inspired by the tin, Frisbee, has since sold more than 300 million units.
And there are countless other examples. Bubble wrap was originally made as wallpaper, Listerine was created to clean medical equipment, Viagra was created to lower blood pressure. The point is, lots of products don’t turn out to be what their creators intended.
Sometimes, in business, innovating means swallowing your pride and ignoring the pie. Because it’s the tin the customer really wanted all along.
The third quality necessary for innovation is vision. In his excellent TedTalk, Guy Kawasaki talks about ‘jumping to the next curve’. For true innovators, small, incremental improvements aren’t enough. Kawasaki uses the wonderful example of the ice industry.
To paraphrase, in 1900 4 million kilos of ice were harvested by cutting blocks of ice in lakes, during the winter months. That was Ice 1.0. The version of product innovation the ice harvesters chose was getting more and bigger horses.
30 years later, Kawasaki says, we got Ice 2.0. Ice factories were introduced, which removed the seasonality of the industry, as well as many of the costs associated with moving from city to city, and horses were upgraded to trucks.
Another 30 years, and we have Ice 3.0. The refrigerator. Now we could all create and store ice locally, we had our own ice factories. But the interesting part of all of this is that none of the innovations came from within - ice harvesters didn’t create ice factories, and the ice factory industry didn’t create refrigerators. Because each of them defined themselves by what they do, not the benefits they provide. They lacked vision.
The final subject related to innovative strategies that we’ll talk about today is risk-taking. To be an innovator, you must be willing to take risks. In any pivot or significant strategic change, there is a risk of failure. Diana Kander put it best, though, when she said ‘Failure hurts, but not nearly as much as regret.’ Take Kodak. In 1968, Kodak had captured about 80% of the global market share in the field of photography. Kodak sold cameras at affordable prices with only a small margin for profit and then sold the consumables such as films, printing sheets, and other accessories at a high-profit margin. But when one of its own employees, Steven Sasson, developed the first digital camera and presented it to them, Kodak told him to keep it to himself. They ignored the potential of digital cameras, in one of the worst business decisions in history. Because the digital camera threatened their current strategy. With digitized photography, nobody would need the consumables anymore. But their refusal to acknowledge Sasson’s breakthrough, and to use it to innovate further, became the most disastrous decision in their history.
Now, the global photography market is worth tens of billions of dollars. Kodak’s market cap is just $450million.
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So, let’s recap the main criteria for innovation that we’ve discussed today. The first is aspiration. We need to aim appropriately high if we really want to change the status quo. Looking for incremental improvement is not the same as true innovation.
The second criterion is disposing of useless pride. It doesn’t matter about your positioning - ultimately, your product is what the market makes of it. And if you can listen closely to the feedback, you might be able to create something truly innovative.
The third point was that to properly innovate, you must have vision. Consider broadly the possibilities. Don’t close your eyes to the possibilities ahead, as Kodak did.
Finally, you must be able to take risks. Edison, when asked about his failed attempts to create the light bulb, once said ‘I have not failed 700 times. I’ve succeeded in proving 700 ways how not to build a lightbulb’. A true innovator shouldn’t be afraid of failure but motivated by what they can learn.
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