To Begin Innovation Starts With Disruptive Hypotheses. Here's How To Create One

 The process hinges on three steps: Defining the situation, searching for cliches, and twisting those cliches around, according to Luke Williams.

A disruptive hypothesis is an intentionally unreasonable statement that gets your thinking flowing in a different direction. It’s kind of like the evolutionary biology theory of “punctuated equilibrium,” which states that evolution proceeds slowly and every once in a while is interrupted by sudden change. Disruptive hypotheses are designed to upset your comfortable business equilibrium and bring about an accelerated change in your own thinking.

The ability to ask, “What if?” is an essential part of every executive’s skill set.

Contrast this with the more traditional definition of “hypothesis,” which is a best-guess explanation that’s based on a set of facts and can be tested by further investigation. With a disruptive hypothesis, however, you don’t make a reasonable prediction (if I charge the battery, the phone will work). Instead, you make an unreasonable provocation (what if a cell phone didn’t need a battery at all?). The difference between prediction and provocation, to paraphrase George Bernard Shaw’s famous line, is the difference between “seeing things as they are and asking, ‘Why?,’ or dreaming things as they never were and asking, ‘What if?’” In our fast-changing world, when business certainties are no longer certain, the ability to imagine things as they never were and ask, “What if?,” is an essential part of every executive’s skill set.

What Do You Want to Disrupt?

To meaningfully differentiate yourself from everyone else in the same space, you have to define the situation in the industry, segment, or category that you want to challenge. Here’s what a list of what you want to challenge might look like:

• This is an area in which everyone seems to be stuck in the same predicament and nothing has changed in a very long time.
• This is an area where profit performance is average—it really should be more successful than it is.
• This is a category where growth is slow and everything seems the same.

Once you have a situation to focus on, describe it in one sentence: “How can we disrupt the competitive landscape in [insert your situation] by delivering an unexpected solution?”

Whether you choose to think about an industry, segment, or category is up to you and your business needs. For example, if you owned a boutique hotel in San Francisco, you might describe your situation in one or more of the following ways:

• How can we disrupt the competitive landscape of the Travel & Leisure industry by delivering an unexpected solution?
• How can we disrupt the competitive landscape of the Hotel segment by delivering an unexpected solution?
• How can we disrupt the competitive landscape of the Luxury Hotel category by delivering an unexpected solution?

That’s it. The important thing is that the high-level situation you choose is just that—high-level. It’s essential that you resist the natural urge to start thinking in terms of specific “problems.”

What Are the Clichés?

Now that you’ve defined your situation, what are the clichés—the widespread, hackneyed beliefs that govern the way people think about and do business in a particular space? If you pay attention, you’ll notice that clichés are everywhere.

Consider the multi-billion dollar video gaming industry. Video consoles were driven by several clichés. First, that the world is split into “gamers” and “nongamers.” Second, that gamers mostly care about faster chips and more realistic graphics. Third, game consoles are expensive. And fourth, that people play video games sitting down, barely moving anything but their fingers. With the Wii, Nintendo turned the gaming industry’s clichés on their head.

Searching for Clichés

Just being told, “Okay, get out there and find those clichés,” can be extremely daunting. So, here are a few tips that will help you jump-start the process. Start by getting online and identifying a handful of direct competitors in the industry, segment, or category you’re focused on. Group together those with similar characteristics (such as size and resources), strengths (such as brand name, distribution), and strategies (such as high quality). Select one or two competitors in each group that are pretty representative of the group as a whole. A total of three to six competitors are the ideal number to work with.

With the Wii, Nintendo turned the gaming industry’s clichés on their head.

Now, do a little research on each competitor and make a list of the clichés that keep everyone doing the same thing, competing the same way, or operating with the same set of assumptions. Keep your research activities quick and informal, intuitive and qualitative. To keep you from drowning in a sea of information, consider using the following three filters:

• Product clichés: What are the cliché features and benefits? What are the cliché product attributes that are advertised (convenience and reliability, for example)? Where are the cliché areas where the product competes (typical customers, typical geographies, and typical market size?).
• Interaction clichés: What are the cliché steps a customer experiences when buying and consuming their products and services? Is the interaction face-to-face? How frequently do customers purchase or use? In the rental car business, for instance, the prevailing interaction clichés include the following: face-to-face interaction with a service agent, completing a lot of paperwork, and renting vehicles by the day.
• Pricing clichés: What are the typical ways companies price their products and services and charge customers? Are they packaging products and services together or pricing them individually? Are they charging the customer directly or through a retail partner? Are they offering discounts or other incentives?

What Are Your Disruptive Hypotheses?

Now that you have a list of the clichés that are influencing the business situation you’re focused on, your next goal is to start provoking the status quo. To do that, you’ll take those clichés and twist them like a Rubik’s cube. You’re trying to find a way to rearrange the pieces, which in turn will provoke a different way of looking at the situation.

What Can You Invert?

If there’s an action, look at the opposite action. If something is happening over time, run the time scale backward. Whenever there’s a one-way relationship between two parties, try changing the direction 180 degrees.

What Can You Deny?

The denial method works by completely dumping key aspects of a cliché. Back to our rental car example for a minute, where the prevailing industry clichés include: See the customer. Complete a lot of paperwork. Rent by the day.

What would happen if you no longer needed to see the customer, you got rid of the paperwork, and you started renting by the hour? Well, you’d end up with something very much like Zipcar. The disruption? Don’t see the customer. No paperwork. Rent by the hour.

What Can You Scale?

What is scarce that could be made abundant? What is abundant that could be made scarce? What is expensive that could be free?

After going through these steps, you should be able to generate several hypotheses that will challenge your established way of looking at an industry and help you imagine radically new scenarios, ask unconventional questions, and discover unexpected advantages. The general rule is that the bolder your “What Ifs,” the fresher the perspective they offer. 

Now, while that’s a huge accomplishment, hypotheses aren’t really worth much all by themselves. In the next post, we look at the process process of taking hypotheses and gaining the customer insight necessary to turn them into business opportunities.

[This is a condensed version of the first chapter of Disrupt: Think the Unthinkable to Spark Transformation in Your Business. Click here to buy the book.]

via fastcodesign.com

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Jim Woods is president and founder of the InnoThink Group. He is a no nonsense "tell it like it is" author, speaker, and a strategic management, innovation, commoditization and hypercompetition expert to business and government. He advises clients with an objective view of their competitive capabilities and defines a clear course of action to maximize their innovation return on investment to achieve profitable growth. To build your capability for ongoing innovation across your company or to secure a riveting speaker for your next event - Call 719-649-4118 or email us for more information on hiring Jim. Check Availability. 

America's Healthy Infatuation With Entrepreneurs - David A. Shaywitz

REUTERS

America has fallen hard for entrepreneurs.

The aesthetic appeal is easy to understand. Compare the Fortune 500 CEOs interviewed on the HBR IdeaCast talking about Campbell's Soup or Coca-Cola (podcast here) with the entrepreneurs at the Stanford Entrepreneurial Thought Leader Seminar Series discussing Pandora and Instagram (podcast here). The big company CEOs sound just like you'd expect. They are competent, factual,  and in control. But while most of them presumably have strong interpersonal skills and a high EQ, they come across as dry, unemotional, and focused on the "core business."

In contrast, the entrepreneurs presenting at Stanford wear their hearts on their sleeves. They are vividly passionate. They exude emotion. They are selling themselves, with a kind of animated desperation. They tell student to "do what you love." It's an appealing message, and you can see why it catches on.

These two personalities generally reside at opposite ends of the business spectrum, presumably reflecting two very different business needs. It's essential to be brash and irrationally exuberant to start a business. But to sustain a large multinational corporation, you've got to be calculating and rational.  It's also a well-described phenomenon that as start-ups evolve into progressively larger companies, their character changes, and their needs evolve, or "mature."  Mature organizations are supposed to act predictably, responsibly, unemotionally. The qualities embraced (or at least tolerated) at the start-up level can become liabilities. Many start-up CEOs hand over the reins at this stage, or at least share them (as Google did for years when Brin and Page hired Eric Schmidt), explicitly acknowledging the need for an "adult in the room." Talk to us about leveraging your capabilities.

While many large organizations might similarly benefit from having a kid in the room -- someone who is energetic, passionate, emotional, excitable - it's hard to envision a corporate phenotype that would be more doomed: the environment just doesn't support it.  Sure, companies trot out bromides about "cultivating entrepreneurship," while HR departments sponsor group training sessions on innovative thinking. But the reality is that the culture of most big companies is geared to performing established activities in increasingly efficient ways. Simply stated: doing the old things better takes precedence over doing new things well enough. Most employees (and certainly the ones who last) figure out extremely quickly how you're supposed to act at work (Sir Joseph wasn't far off). You could say most large organizations have elected to trade the passion of young love for the predictability of adult relationships.

And perhaps this is why we look so wistfully at entrepreneurs. They seem to exude the raw passion that experience has taught us to modulate, the vivid emotion that we've learned to suppress, the intense energy that we learn must be channeled, the unreasonable audacity that has been replaced by sensible objectives.  We cheer for them because they represent our youthful hopes, our idealism, our ambitions and our dreams. And when these entrepreneurs defy the extraordinary odds, and succeed, we rejoice, for at the moment we can sense, if only fleetingly, the exceptional untapped potential within each of us. We rejoice, and wonder: what if?

It would be easy to dismiss our infatuation with entrepreneurs as misty-eyed revisionism, the way we might selectively recall and invoke treasured childhood memories while forgetting the many painful challenges of youth and adolescence. The day-to-day reality of getting a new company off the ground is generally far less glorious than the inspirational experiences trotted out by the small minority of ultra-successful entrepreneurs who are routinely invited to share their stories. There's a significant selection bias here, to say nothing of the urge to write oneself into a heroic cultural narrative.

But I'd argue that if we had to find a group of people to admire and admittedly idealize -- and you know we're going to -- we could do a lot worse than taking our inspiration from impassioned, dedicated individuals seeking against all odds "to make a dent in the world." via theatlantic.com

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Co-Creation and the 12 Different Ways for Companies to Innovate

Here is an excerpt:

..what exactly is innovation? Although the subject has risen to the top of the CEO agenda, many companies have a mistakenly narrow view of it. They might see innovation only as synonymous with new product development or traditional R&D. But such myopia can lead to the systematic erosion of competitive advantage, resulting in firms within an industry looking more similar to each other over time. Best practices get copied, encouraged by benchmarking. Consequently, companies within an industry tend to pursue the same customers with similar offerings, using undifferentiated capabilities and processes. And they tend to innovate along the same dimensions. In technology-based industries, for example, most firms focus on product R&D. In the chemical or oil and gas industries, the emphasis is on process innovations. And consumer-packaged goods manufacturers tend to concentrate on branding and distribution. But if all firms in an industry are seeking opportunities in the same places, they tend to come up with the same innovations. Thus, viewing innovation too narrowly blinds companies to opportunities and leaves them vulnerable to competitors with broader perspectives.

 

How to think differently

Mohan and his co-authors then continue to explain how companies can avoid innovation myopia...

We propose anchoring the discussion on the customer outcomes that result from innovation, and we suggest that managers think holistically in terms of all possible dimensions through which their organisations can innovate. Accordingly, we define innovation as the creation of substantial new value for customers and the firm by creatively changing one or more dimensions of the business system.

The authors define twelve such innovation dimensions in total. These are: Brand, Networking, Presence ("where"), Supply Chain, Organisation, Processes ("how"), Value Capture, Customer Experience, Customers ("who"), Solutions, Platforms and Offerings ("what"), They then continue...

Traditionally, most firms’ innovation strategies are the result of simple inertia or industry convention. But when a company identifies and pursues neglected innovation dimensions, it can change the basis of competition and leave other firms at a distinct disadvantage because each dimension requires a different set of capabilities.

Co-Creation and new theory of Disruptive Innovation

I am particularly interested in how certain of these innovation dimensions are now more capable of disrupting incumbent firms than others. For example, I had a chat with Karl Long about how co-creating firms have the potential to disrupt existing markets in new ways (Clayton Christensen in The Innovators Solution writes only about how simpler, cheaper, more convenient products and technologies can disrupt existing markets). So for example, using the article's dimensions – co-creating firms should seek to innovate along a co-ordinated combination of Brand (Engagement), (Social / Community) Network and Customer Experience (Design / Elements) dimensions. Importantly, to be a successful co-creating open business, it is not enough to excel in one alone but all three simultaneously.

Original Post: http://chrislawer.blogs.com/chris_lawer/2006/06/cocreation_and_.html

via futurelab.net

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Jim Woods is president and founder of InnoThink Group. A leading consulting firm specialized solely in enabling organizations of all sizes in all industries develop top line growth through strategic innovation and hypercompetition. Jim has over 25 years consulting experience in working with small, mid size and Fortune 1000 companies. He is a former U.S. Navy Seabee and grandfather of five. For availability email or call us at 719-649-4118. Subscribe to our innovation and hypercompetition newsletter.   

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How Not To Suffer The Fate of RIM Blackberry. A Lesson in Commoditization and Longevity

by Jim Woods on 12/19/11

 

 

They have volumes in common with you.

It shouldn’t come to much surprise that the embattled Research In Motion, makers of Blackberry, will become that next failed company. Despite occasional resuscitation from loyal fans, reminiscent of Saab’s recent fiascos which lasted years too long, RIM created a niche only to fall prey to the enemy of the great: Commoditization. RIM’s stock is down ytd at this writing by a mind numbing 70%. This didn’t need to happen. 

RIM was “The” smartphone company until a competitor named Apple out innovated and out competed their own product. How did Apple deftly spring past RIM? Surprisingly with ease. RIM forgot they would have competition. Most would presume that RIM with its well priced iconic product Blackberry would assuredly not be affected by commoditization in which a product becomes indistinguishable from its competitors. You would be wrong. What is happening with RIM is probably occurring in your company. 

The road to ubiquity is laced with land mines.  At a time when business moves at the speed of thought RIM responded to business demands traditionally slow if at all. RIM was slow to advance from its core market of B2B to B2C which was fast becoming tepid and then continually released poorly designed products. Flanked by a perpetual assault by competitors i.e. proliferators on price and innovation such as Google android and Apple with their “rope a dope” techniques, RIM continued to over promise and under perform.

I find three reasons why RIM has failed. 

1. Deterioration – When low end competitors move in with low-cost, low benefit drawing the mass market.
2. Proliferation – When competitors develop new combinations of price and unique benefits attacking an existing market.
3. Escalation - When competitors squeeze profits by offering more benefits at the same or lower price.

If you were RIM’s CEO or Board person you would find they have faced two out of three of the challenges. Deterioration and proliferation.

 Now, RIM is undermined by a reputation of poor quality, lack of innovation an inadequate customer service.   

Earlier this year at RIM's Capital Market Day Mike Lazaridis founder and Co-CEO of RIM announced he was presenting on RIM’s Playbook. He discussed the features but little to nothing on differentiation. 

In Jonathan Geller’s the "Boy Genius” he writes: 

“Picture yourself sitting in an executive briefing at Research In Motion. You’d hear Mike Lazaridis unequivocally state time and time again that BlackBerry smartphones would never have MP3 players or cameras in them because it just does not make sense when the company’s primary customers were the government and enterprise. “BlackBerry smartphones will never have cameras because the No. 1 customer of ours is the U.S. government,” Mike Lazaridis would say in meetings. “There will never be a BlackBerry with an MP3 player or camera.” 

What does Mr. Jobs do? 

He strutted the iPhone which eschewed the design of then top players RIM’s BlackBerry and Palm’s Treo line. Avoiding groupthink, Apple and Jobs dropped the keyboard, and replaced the stylus with the finger and multitouch. RIM? 

Continues Geller: "When you hear Mike (RIM CEO) talk about the latest and greatest, it's been the same thing for ten years: security, battery performance, and network performance. RIM has positioned battery life and network performance for years. People are not concerned with iPhone batter life," one source told me. Network performance to Mike trumps any innovation a device like iPhone offers. Mike is convinced people won't buy an iPhone because battery life isn't as good as a BlackBerry."

This is a textbook example of deterioration. The outcome is predictable.

In today’s business environment there are new rules of war: 

• Speed
• Agility
• Adaptability
• Innovation
• Fierce competitive resolve.

This is the new world of business competition at the speed of thought. The old days are the old days. RIM's leadership looks grim. They are models of security conscious businesses for sure. A feeling of victory is understandable. But not where investors are lukewarm with growth prospects and more erstwhile competitors are nipping frantically at the flanks.   

Jim Woods is president and founder of InnoThink Group. A global management consulting firms specialized solely in helping organizations of all sizes in all industries catalyzing top line growth through strategic innovation and hypercompetition. Jim has over 25 years consulting experience in working with small, mid size and Fortune 1000 companies. He is a former U.S. Navy Seabee and grandfather of five. Jim is board president of a charter school located in Colorado Springs whose sole purpose is to prepare otherwise disadvantaged students more competitively for college. To arrange for Jim to speak at your next event or devise an effective hypercompetition strategy email or call us at 719-649-4118 for availability. Subscribe to our innovation and hypercompetition newsletter.   

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