The Customer Pyramid of Innovation

The customer anticipation pyramid is key to innovation success. As Wayne Gretsky said " I always skate to where the puck (customer) is going to be, not where it is now". At the bottom of the pyramid is the Henry Ford days. Ford produced the model T primarily in black because the paint dried faster and he could product more cars that way but interestingly when the Model T first came out there were other colors (regressive innovation?). In general though, producing what we want and placing it in inventory is an internal driven closed-loop process without customer input. You could also argue that this goes against current lean principles of customer pull.

Moving to the middle of the pyramid, is the more typical external driven organization whose product development and innovation strategies are based on what the customers "say" they want. While listening to the customer is always encouraged, the customer is frequently absorbed with his own needs and desires and not your profitability. Does the customer driven innovation lead to sustainable profits? Are these ideas/products that can be used by other customers? What's the wider market for a specific customer-driven innovation? Is it complementary with your business strategy? Unless there is a great customer partnership and historical success, the reactive approach doesn't address innovation from where it should originate.

The top of the pyramid is one of the best positions for innovation success and longevity. Innovation that is driven by proactive leadership through studying the customer in areas such as market, technology, and competitor sensing can create demand that doesn't currently exist. This data mining looks at questions such as:

1. What are we good at that our competitors are not that potential customers would see?
2. What problems and frustrations do our current customers face that we can address?
3. Who can we partner with for an innovative offering to expand the customer base into a new market (open innovation)?

If one stays at the base of the pyramid, tunnel vision sets in. As you move up the pyramid, the perspective and potential opportunities increase. Unfortunately, it's not always that easy to climb a pyramid.

Nonprofit Agencies and Innovation

Last week, I spoke at the National NISH Conference in Atlanta on Innovation processes leading from ideas to reality. NISH is the national nonprofit agency whose mission is to create employment opportunities for people with severe disabilities. NISH helps local and regional nonprofit agencies apply for federal contracts to support this mission by providing employment in a wide range of jobs. These include everything from light manufacturing assembly and call center support services to the more visible Goodwill store operations that I personally frequent for bargains. I found that through the comments, nonprofits share similar experiences with lack of innovation traction among company leadership that you hear from for profit companies which was a little surprising since an organization that relies so heavily on fund raising and donations, would assume to be more innovative. Some of the reluctance had to do with the nonprofit board of directors and their personal interests while other resistance came from the usual suspects of lack of internal resources, time or a process to innovate.

In the process of sharing some ideas for incremental innovation, it became apparent that there were several less risk adverse nonprofits that had actually been quite innovative in developing new services. Some of these were the direct result of engaging the customer in eliminating their process pain points as services that the nonprofit could provide. A few of these included: product labeling rework from Chinese manufactured purchased goods, document shredding, laundry and janitorial services. It was apparent from the discussions that the most innovative non-profits were those that established a good client relationship and understood where they could add value to the customer’s supply chain. We then discussed the idea of recycling as an up and coming value-add to help meet a customer’s internal objectives while helping the environment and potentially eliminating customer landfill costs by collecting scrap that could be sold by the non-profit. The ideas generated spurred quite a discussion and what started out as a theoretical topic turned into a great discussion with useful ideas for the attendees. Taking a step back in your organization to have similar discussions can be a great first step toward innovation and can release creativity that can ultimately lead to increased profits (or reinvested proceeds as the nonprofits like to call it).

3 Innovation Killers in Action

Tactical Innovation involves the 3 C's and I think if we get a handle on these 3 we'll be in good shape moving forward with innovating ourselves out of whatever hole we're in. I like to say innovation is turning ideas into $'s, very practical. Fortunately, we don't innovate in a vacuum which is a good thing because we need the group environment to nurture, refine, test and explore our innovation process. I highly recommend Group Genius for some insight on this topic. Unfortunately, we innovate best with others which can be messy, time-consuming, non-linear. Here are 3 issues with regard to an effective innovation process:

• Culture- The #1 biggie and the worst innovation killer this side of the moon. Management and a culture that criticizes new thinking methods and a fail fast/cheap without judgement approach is doomed from the start. It probably begins with the management's attitude and goes downhill from there as good behavior is caught rather than taught.
• Communication- Are your departments like 2 samari warriors with drawn swords facing back to back with competing goals, visions, leadership or is it more like a relay race where the baton gets passed or worse (dropped) in transition. The old throw the design over the wall and see if manufacturing can make it scenario. If you don't identify with either of these 2, you probably are on your way with having a fair shot at innovation with your current group of folks.
  
• Collaboration- Who works well together? Who doesn't? Is there any joint effort between groups and not just individuals where the sum of the parts is seen as more valuable than the parts themselves. I'll even give you extra points if you have groups that cross departmental boundaries to solve problems.

Innovation processes, software tools, training programs etc. are meaningless without attacking the problems a lot of organizations face with the above. To have practical innovation, focus on evaluating the temperature of these 3 and address where failures have occurred in the past before you add innovation as the next flavor of the month.

Patent first always??

I was just responding to a LinkedIn question on how to move forward with an MP3 innovation from a sincere inventor. Most of the answers were IP attorney type responses. Patent first, Non-disclosure everything, don't move or breath until done (or at least that was my takeaway). I would submit with open innovation forums like IdeaConnection BulbStorm PlanetEureka which are low cost/free? to more well established ones (higher cost/more technology driven) Innocentive and NineSigma , that there are other options. Now yes, anyone you talk to seriously you should have some sort of Non-disclosure Agreement (NDA) to cover your assets. And yes, a patent is the ultimate "pay to play" tool where investors like to see you've made that effort first before discussion, BUT, are there parallel processes using open innovation sites like the above to have "non-disclosure disclosure". Share enough but not too much. Get some buzz going about your idea. Let the listing drive some investors to you. Do you need to be careful? absolutely! Do you need to investigate an NDA with whoever you talk to? Most likely.

Here are some lower hurdles that can get you going. File a provisional patent, good for a year ($110) and less paperwork as you move towards a formal patent and gives you some protection. Use the sites above to explore what's already out there to get your brain engaged. Share your idea without explaining "how" it's done (maybe in parallel with a provisional patent). Let others comment on your idea, use the forums to help publicize what you are trying to do. Who knows? the next best step may be a helpful collaborator to improve the innovation rather than a corporate savior who swoops in to license your "perfect" solution.

Lastly, tactical innovation involves some risk. Sharing ideas for input with others is part of the collaborative community that makes innovation more robust and grow. The reward for any exposure risk you take is most likely enhancement to your idea. Can someone steal it and leave you penniless, I guess, but this "lawyerly" view is overblown. Lawyers want no risk, airtight agreements, secrecy. Strike the balance in innovation. Garner group/community/like-minded input while still protecting yourself through the NDA and provisional patents. Turn the protection tools into open windows not locked doors.

What has been your experience with using any of the open innovation tools that are out there??