to learn more. And it is this passion for learning that is the key to our past and current success. As Dr. Deming said:
It’s so easy to do nothing. It’s a challenge to do something. Learning is not compulsory; it’s voluntary. Improvement is not compulsory; it’s voluntary.
But to survive, we must learn. The penalty for ignorance is that you get beat up. There is no substitute for knowledge. Yet time is of the essence.
Turn the page or flip the screen, and let’s get started with education on some basic innovation definitions. But first . . .
What Did You Learn?
• What systems do you work with that are world class?
• What systems do you work with that are barriers to your speed and success?
• How focused are you and your organization on the future?
• What is likely to happen in the future that you are not confronting reality on?
• What stops you from using data to help you make smarter decisions?
• What is the learning process that your company uses to train people?
• In what areas are you smarter today than you were a year ago?
• What should you focus your learning on right now?
3
Innovation Agreement
Innovation is the ability of an organization to change as its outside world changes. You’ve got to have that in an organization.
—Sir Terry Leahy,
retired CEO of Tesco
A Major Mistake
As we embarked on bringing system thinking to the world of innovation, we made a major mistake. We assumed that everyone understood what innovation was and why it was important.
The mistake was discovered and quantified during a quarterly review of data from our Innovation Culture survey. The survey measures employee and management perceptions and their mindsets toward innovation. We have fielded this survey before every innovation project the Ranch and the Innovation Engineering community have run since 1995. What we learned was shocking.
7 out of 10 managers DON’T AGREEthat there is a need for their organization to innovate!
8 out of 10 managers see NO URGENCYfor their organization to innovate!
It was an embarrassing moment for me. For years, I had mistakenly thought that everyone saw innovation as I did. The reality is that the majority of managers and business leaders don’t see innovation as needed or urgent.
As an aside, we missed this data insight because of the way we had been reporting the data. For 20 years we reported results relative to a world-class standard. During this analysis we looked at the data in the absolute, not on a relative basis. The result was an entirely new insight.
A New Beginning
To address the lack of agreement and urgency that we had discovered from our analysis, we implemented a program of beginning all of our conversations and classes with a discussion on:
WHAT is an innovation?
How do you know one when you see one?
WHY innovate?
Explain in a way that would motivate workers and leaders.
If you can’t agree on WHAT an innovation is or WHY it’s important to innovate, then the rest of the conversation on HOW to innovate is irrelevant.
WHAT Is an Innovation?
If you want to be entertained, ask five people in your organization how they define an innovation. More specifically, how would they know one when they saw one? The word innovation has been used and abused to the point where there is little agreement on its definition.
Our Definition of Innovation
The Innovation Engineering community’s definition of innovation is precise.
Meaningfully Unique
MEANINGFUL in that it has an obvious value to the customer. That is, the idea is so meaningful that customers would willingly give up their existing behaviors for it. Importantly, it is also instantly understandable as to “Why should I, the customer, care?”
UNIQUE in that it is a genuine original. It’s a nonobvious leap that doesn’t exist in the world. Often it offers a quantifiable advantage such that you can put a number on how much better it is versus the existing alternative, if there is one.
How to Evaluate if Your Innovation Is Meaningfully Unique
The simple way to identify if your new or improved product or service is innovative is to ask the question: “Are customers willing to pay more money for it?” No customer wants to pay more money for anything. If they are willing to pay a premium, then the offering must be both meaningful and unique.
Conversely, if they are not willing to pay a premium—because they can achieve essentially the same benefit or effect elsewhere—then it’s a commodity. It’s not a requirement to charge a higher price for an innovation. It’s also possible to charge the same as competing offerings and use the increased demand to drive increased sales volume.
For system improvements or nonprofit causes, the equivalent question is: “Does the innovation offer a value that is so meaningful and unique that other stakeholders (departments, employees, partners) are willing to invest their time, energy, and/or money into changing from what they are doing now to the new approach?”
You can quantitatively assess your Meaningful Uniqueness by asking potential users, customers, and stakeholders for their ratings of Purchase Intent (Meaningfulness) and New and Different (Uniqueness) each on a 0–10 scale. Then you weight the average ratings 60/40 (60% Purchase + 40% New and Different). Our research has found this is the single most predictive measure of marketplace success with an innovation. Details on the data behind this can be found in the academic research article, “The real-time response survey in new product research: it’s about time,” published in the Journal of Consumer Marketing. I wrote it with Lynn Kahle of the University of Oregon and with Mike Kosinski.
Other qualitative ways to identify if an idea is meaningfully unique include:
Is the idea so surprising, so original, so newsworthy that it will generate word-of-mouth? Ideas that offer real news spread by word of mouth. Is your idea so original that customers would share it with others and on the internet via their social media outlets? A common question I ask is: “Would a customer post this innovation on Facebook, and, if so, what would they write?”
Does the idea instantly spark additional ideas? Great innovations set off a chain reaction of ideas because they open our minds to seeing the world in a new and different way.
Is the idea patentable? This is my personal favorite. Patentability is arguably the most clear and specific definition that exists for what is a true innovation. To be patentable, the innovation has to be a “nonobvious leap” for someone who has ordinary skill in the field. And, frankly, an idea that is obvious to someone like your competition would be hard to defend as a real innovation, wouldn’t it?
An innovation is also genuinely