Innovators as Interpreters

Our colleague, intellectual property counsel, Jim O'Shaughnessy recently suggested we read the book, Innovation: The Missing Dimension by Richard K. Lester and Michael J. Piore (2004). Their essay rightly suggests that not only does innovation require both analysis and interpretation, but that for a variety of reasons, we tend to over-do the analysis and under-do the interpretation. This is one reason, the authors contend, why innovation is so often “missing.”

Years ago I learned the importance of striking a balance between analysis and interpretation in another context—when I was learning how to analyze very old and familiar biblical texts and attempting to craft something new and meaningful for my Sunday morning listeners. Text can be analyzed. Context must be interpreted—both the context of the text and that of the listeners. If one relies on analysis alone, the message tends to be lifeless, dry and at best difficult to hear. If, on the other hand, one relies only on interpretation, the message risks losing substance, even though it may be easier to follow with the ear.

The major point of the book struck a chord with what often happens at the so-called “front end” of innovation efforts. In the rush to discover some new and proprietary insight before it is generally recognized (particularly by the competition) what consumers say or do is often canonized and regarded as sacred “text.” Prematurely we apply sophisticated analytical methods to these texts, often ignoring important elements of context. Quickness to analyze is aided and abetted by a general discomfort in dealing with ambiguity. The result is too often partial or erroneous conclusions regarding what consumers want and need and how important it is to them.

"There is no information lacking…something else is lacking…a something one person cannot directly communicate to another,” the Danish philosopher and theologian, Soren Kierkegaard, stated over 100 years ago. His observation seems just as relevant today as it undoubtedly was back then.

One of the first, if not the first, challenge for the innovator is to interpret—to creatively “read” the end-user's context—whether cultural, technological or otherwise. To discover and understand something important the competition does not yet see concerning current or potential end-users—for example, “a job the consumer needs doing”—requires interpretive ability as much, if not more, than analytical acumen. And interpretation is best done through direct and indirect conversations with others, frequently, Lester and Piore suggest, requiring a “protected” space.

Recently I found myself trying to define the word “protocol” to my eight-year-old daughter. (Why we were mutually interested in that word is another story.) My first attempt led me to tell her how diplomats rely on protocol to communicate correctly between two countries with very different languages and cultures. When I realized that illustration wasn't working, I tried defining “protocol” from the world of computers and the Internet. I said, “You know when you want to visit Disney.com?  It's a protocol that allows your computer to find and connect with the computer over at Disney.com.” She actually understood that definition better than my first attempt with diplomacy.

Established protocols are available and essential for interpreters to follow wherein interaction and communication patterns are known. However, for the innovator who deals with novelty, established protocols don't yet exist, patterns of interaction and communication are unknown. There is no established protocol. The job of the innovator is to create one—to make a meaningful connection. And this requires interpretation.

The innovator is an interpreter. He or she stands between two different worlds, each with its own linguistic and cultural signatures. To effectively interpret requires sufficient knowledge, empathetic imagination and understanding of both to adequately discover a new and meaningful connection between the two. Proficient interpreters can work quickly to translate the words—text. Excellent ones translate the text in context bringing richness and meaning in the appropriate intonation of their voice.

Successful innovations are built upon the foundation of interpretive activity as they arise from the discovery of meaningful new connections across the boundaries (real or imagined) of previously unconnected worlds. The innovator’s job is to design and build those bridges, based on firm foundations of understanding, both in the world of the company's know-how and the other world—the world of meaning and value to people the innovator seeks to serve.

Perhaps this is what Albert Einstein was alluding to when he mused, “Imagination is more important than knowledge.” To that we might only add, “empathy.”

This article was originally published in Innovating Perspectives in May 2005. For this and other back issues of our newsletter, please visit our website at innovationsthatwork.com or call (415) 460-1313.

The Fuzzy Front End of New Product Development

Thomas Edison said that genius is 1% inspiration and 99% perspiration. As one of the prolific inventors of all time, Edison undoubtedly knew what he was talking about. However, I don’t believe he ever indicated which comes first, the inspiration or the perspiration.

Generally it is assumed that inspiration precedes the sweaty work of invention. But recently my appreciation has grown for the perspiration that precedes inspiration, the labor that yields the powerful one-percent of which Edison spoke. The old adage “chance favors the prepared mind” speaks of the same truth.

Many companies are chronically dissatisfied with meager returns from their innovation efforts. This dissatisfaction may stem partly from an impatient and premature rush to generate new ideas. Managers with responsibility for new products or other innovation initiatives are under pressure to show progress for their efforts. In their rush to results, they can jump too quickly into the creative phase looking to the idea generation process as the way to get inspired. But without spending appropriate time and energy to discover, examine and understand the entrepreneurial opportunity, the corresponding innovation is undernourished.  And this malnutrition results in weak, uninspired ideas, not to mention a lot of sweat.

When the generation of ideas substitutes itself for the discovery and understanding of an entrepreneurial opportunity, then creativity is easily misdirected. Insight-less idea generation has left many innovation efforts stuffed with activity but starved for substance. What inspiration we can muster is focused on opportunities that are often too small or offer insufficient promise to compete for resources from corporate initiatives. 

Business planning and idea generation are absolutely necessary in new business, category or product development efforts. However, they often do not yield the kind of inspiration that direct observation and discovery can when done explicitly and purposefully. This discovery phase has been called “the fuzzy front end” of new product development.

A central task of the fuzzy front end is to get in front of the trends before everyone else; in other words, to discover underlying changes in behavior that reveal new trends before they are generally recognized.  Devoting appropriate time and attention to the fuzzy front end of innovation efforts before jumping into the planning and idea generation phases, can help managers make better decisions regarding which new opportunities to pursue.

The fuzzy front end—the perspiration that precedes the inspiration—is more about discovery than planning, more about observing changes in human behavior than analyzing market behavior, and more about creatively anticipating trends than analyzing existing trends, product categories or competitive behavior.

The fuzzy front end demands a willingness by managers to be lost for a while. The nature of the work in this phase is entrepreneurial and unfolding rather than managerial and administrative. Many managers spend insufficient time, patience and effort in the fuzzy front end of innovation.

Lack of attention to fuzzy front end is not surprising given the discomfort of uncertainty often felt during this phase. But doing the fuzzy front end of an innovation effort well and patiently can help address the chronic dissatisfaction companies have with the new product process.  In the end, an inspired, entrepreneurial observation may be even more valuable to a company than a creative idea.

For example, in the 1970s, research consultants were looking for new business opportunities for the Kimberly-Clark Corporation. In their search they uncovered two seemingly unrelated facts. Once had to do with the demographic trend heralding a burgeoning older population. The other fact came from the medical community—a significant percentage of people over the age of 65 years experience incontinence. These two facts were then related and coupled with a new non-woven technology called Coform, which was invented by a Kimberly-Clark engineer. This combination led not only to a new product, Dependsä, but also gave birth to a new market, product category and a very successful new business.

A large part of the entrepreneurial challenge for established companies is to find an idea that is big enough to warrant the investment despite the risk and to divert resources from other priorities, yet related enough to corporate interests that it makes sense to pursue. It is not simply a question of fit. It is a question of fit and the size of the opportunity.

The dual challenge of the fuzzy front end is to both discover what is new and find the vocation of your organization.

Almost a decade ago, Peter Drucker made a similar point in his book Innovation and Entrepreneurship.  He said, “There is actually no empirical evidence at all for the belief that persistence pays off in pursuing the brilliant idea. Bright ideas are the riskiest and least successful source of innovative opportunities. The casualty rate is enormous. Most successful innovations are far more prosaic. They exploit change. And thus the discipline of innovation is a diagnostic discipline: a systematic examination of the areas of change that typically offers entrepreneurial opportunities. 

So where do you look for inspiration? The perspiration that precedes inspiration requires both an outward and inward search. Many have made the mistake of doing only one or the other, not both. The dual challenge of the fuzzy front end is to discover what is new and find the vocation for your organization.

The outward search can be as simple and mundane as simply getting out, wandering around and making observations, especially of people who are experimenting with new ways of living and working.  More formal activities can include various scanning activities, listening to customers in roundtables, “unfocused” focus groups, and structured or unstructured interviews, conducting expert panels with technologists and leading industry analysts. The goal is to identify the early indicators of significant change. A good way to do this is to make your own observations.

The inward search should be driven by an attempt to understand the underlying causes of expected events, results and discrepancies between what is and what ought to be in the context of the current business.  Surprise results, even when they are successes, should be closely watched. They may be the early warning signs of major change.

The fuzzy front end should be approached with a balance of curiosity, open-mindedness and humility.  And though it may not be very comfortable to put ourselves in the middle of ambiguity, it can bring us closer to an entrepreneurial opportunity your competition does not see. As the French writer and philosopher Voltaire noted, “Doubt may be an uncomfortable state, but certainly is a ridiculous one.” 

 

Potential Sources for Innovation

The following are symptoms of change worthy of our attention as they are likely to signal underlying opportunity for innovation. These sources are listed in descending order of predictability and reliability; yet those sources later in the list represent higher rewards for those who do succeed.

1.     Unexpected events and results.

2.     Incongruities

3.     Process needs

4.     Structural changes in industry or market

5.     Demographic changes

6.     Changes in values, attitudes and perceptions

7.     Arrival of new knowledge

 8.     The “bright” idea

  Sources from Innovation and Entrepreneurship: Practice and Principles by Peter F. Drucker

 

This article was originally published in Innovating Perspectives in October 1995. For this and other back issues of our newsletter, please visit our website at innovationsthatwork.com or call (415) 387-1270.

The Proverbial Funnel

The funnel metaphor is often used to describe the “flow” at the front end of innovation systems and stage-gate processes. The image of the funnel was perpetuated in the 1960s by the consulting firm Booz, Allen & Hamilton after its new product development study with Sam Johnson and Johnson Wax Company. Almost 50 years later Henry Chesbrough described what many of us had already sensed: that the era of “open innovation” had arrived. This should have led most of us to conclude that the funnel was no longer tenable. The realities of the dynamics of open innovation poked permanent holes in the notion of upstream “funnels” and downstream “pipelines.” Funnels and pipes with holes in them do not work. Yet the proverbial funnel persists. 

One reason for this persistence may be that symbols and mental models linger until better ones come along. In this case, a better one hasn’t come along yet. Another reason may be the associated notion that it takes a lot of ideas in the beginning to arrive at a good one in the end. That the flow of innovation starts with a wide diameter at one end of the funnel—taking in lots of ideas—and a narrow one at the opposite end where one works on only a few good ideas. A third reason that the funnel persists may be the over-riding concern among managers to conserve resources, which reinforces the need to narrow the number of ideas or concepts that can be worked on, given the reality of scarce resources.

The notions that one should select from a large set of options—the larger the set the better the selection—and the need to conserve resources may be worth re-examining. The first notion may be simply inaccurate and mistaken. The second one may be sound logic but overlooks how precious a resource a complete and compelling opportunity actually is.

The word “opportunity” comes from the Latin opportunus—a word associated with the mythological Portunus, the god of harbors (portus). According to the dictionary, Portunus governed local conditions (wind and tide) near the harbor. Imagine entering or leaving the harbor under sail, the normal mode of power at the time. Sailing under favorable wind and tide conditions and at the right time can prove to be the difference between success or ending up on the rocks.

Opportunities also derive much of their essence from timing and surrounding conditions. This is why the expression “window of opportunity” works for well. Like conditions in a harbor, the “window” can open or close depending upon which way the tide is running and how strong, and which way the wind is blowing and how strong. What makes an opportunity compelling, therefore, has to do with whether the time is right and the conditions are favorable. 

“The overwhelming majority of successful innovations exploit change.” This is how Peter Drucker described what makes for compelling opportunities. This is often overlooked, partly because innovators are usually regarded as the ones who make change. But this is only partially true. Innovating is first about diagnosis, then prognosis. It is about spotting and understanding opportunities that emerge from the flow of change. As such, innovators are change spotters before they become change makers. Successful innovators are among the first to spot changes. Their ability to diagnose and decipher the opportunities lurking within changes happening around them is their “core competence.”

Knowing what innovators are looking for—compelling and complete opportunities (see accompanying article Anatomy of an Opportunity)—and how to recognize them, is one thing. Knowing where to look for opportunities is another. Assuming that change is constant and happening all around us, how does the innovator know where to look for a compelling opportunity? How do they know what changes to attend to and which ones they can ignore?

Drucker gave us an answer to this question years ago. He pointed to seven sources of innovation and ranked them in order of their predictability and reliability. The first and most reliable source of innovation he listed was The Unexpected, whether an unexpected success or failure. The second he called The Incongruity—a difference between the way things are and the way things should be. Third on his list was what he called a Process Need. Customers have jobs they need to do and steps by which they accomplish those jobs, needs can and do arise within the context of the steps. Completing the top tier of Drucker’s list of the more reliable sources of innovation are Changes in Industry or Market Structure, particularly those changes that catch everyone off-guard, not unlike the unexpectedness of the first and most reliable on his list. 

What is worth noting about Drucker’s list is how immediate—present, available and accessible—each of the more reliable sources of innovation actually are. It is not about some clever and counterintuitive analysis, nor does it require a super creative brain. These sources of innovation are right under our noses; they are the signals and symptoms that present themselves, especially to the knowledgeable and experienced among us. 

Several years ago I conducted an experiment with a colleague at Hewlett-Packard, which was inspired by Drucker’s observation that the most reliable sources of innovation comes from the unexpected. Over the course of a couple of days at HP we asked several respected and veteran engineers to think back over the course of their work in the past year. We asked them if they could list a circumstance that piqued their curiosity and wonder—anything unexpected, surprising, curious or unexplained—which, if they were given the time and space, they would want to explore. In every instance, each of these engineers came up with at least two or three items. It could be that compelling opportunities are sitting there, waiting for us to discover them. All it may take, at least initially, is a little time and space, which may be well worth it, given that a compelling opportunity may be our most precious and scarce resource.

Instead of filling the funnel with lots of ideas, perhaps it makes more sense to spend less of our time and energy generating ideas, and more of our time and energy diagnosing the present manifestations of where the unexpected is showing up, and dig deeper there to understand the needs we find underneath.

Anatomy of An Opportunity

What makes for an opportunity? The answer depends on how we understand the anatomy and physiology of what an opportunity is.


An opportunity is a value proposition. It is propositional because there may be evidence to suggest there is opportunity, but it is as yet unproven. Every opportunity remains a proposition until it is transformed and embodied into an innovation, which is then tested in the field under actual conditions. When it becomes an innovation is is no longer an opportunity.


The anatomy of a complete opportunity has four essential elements: there is a customer need and a means to satisfy that need, it provides value to the customer and has profit potential. The need and the means to satisfy it are arguably the two most important variables in the anatomy.


The third element­—a proposed value that ranks relatively high in the hierarchy of what is important to customers—is always relative. Knowing where it ranks is important in understanding whether there is opportunity there or not. The fourth element is profit potential. Satisfying the need must cost substantially less to deliver than what the one is willing to pay to have his need satisfied.


Any potential entrepreneurial opportunity is incomplete until all four parts are present and cohere: a need, a way to satisfy it, a relative value, and a way to produce and deliver the satisfaction at a cost substantially less than the customer is willing to pay. Having a complete opportunity, however, doesn't necessarily mean you have a compelling one. ❑

These articles were originally published in Innovating Perspectives in March 2010. For this and other back issues of our newsletter, please visit our website at innovationsthatwork.com or call (415) 460-1313.