Point: Breakthrough innovation requires nonlinear change

Story: In his presentation at the World Innovation Forum, strategist and Dartmouth professor Vijay Govindarajan used the analogy of Olympic high-jumping to illustrate the non-linear thinking that companies need to make to create breakthrough innovations. The traditional approach to high-jumping until 1920 was the “scissors” approach: jumping over the bar with a scissoring motion similar to what is used by hurdlers. The highest jump possible was about 5′ 3″.
The best approach to jumping higher, however, is to identify the limiting factor in the jump. For high-jumping, the limiting factor is the jumper’s configuration of body parts relative to their center of gravity and to the bar. In the 1920s, the innovation called the “western roll” changed the jumping style from a hurdling over the bar with a scissors kick to rolling over the bar sideways with the jumper’s back to the bar. In the 1960s, the innovation of the straddle changed the center of gravity even further with the jumpers keeping their belly to the bar. And in 1968 the Fosbury flop (invented by Dick Fosbury) changed the motion yet again: jumpers launch themselves straight up into the air using both feet, and then they twist over the bar so that the head clears first.
The challenge for organizations: you can’t win by incrementally improving the incumbent scissors kick if your competitors are inventing the western roll or the Fosbury flop. Breakthrough innovations require removing or changing the limiting factor. This often means breaking old assumptions. Prior to the Fosbury flop, all high jump techniques assumed that the jumper goes feet-first over the bar and lands on their feet. Fosbury jumped head first over the bar to flop on the mat and extended the possible jumping height to over 8 feet.
Action:

• Document the fundamental limits that seem to prevent further incremental innovation
• Consider ways to break those limits or bend those limits
• Examine the “how we’ve always done it” assumptions to find opportunities for radical change

See Vijay Govindarajan’s blog here.

Point: Innovation processes must reflect people’s true behavior

Story:
Dan Ariely, author of Predictably Irrational, finds that people display a host of consistent behavioral quirks in how they respond to products and marketing. These cognitive biases change not only people’s decisions and subjective opinions, but also their objective performance with products.

For example, in his work on behavioral economics, Ariely and his colleagues documented such quirks as:

• how “free” items can bias decisions
• how arbitrary numbers (e.g., the last two digits of your social security number) can affect the price a person is willing to pay
• how adding a choice that almost no one will choose can cause many people pick the more-expensive choice
• how publicly-made choices differ from privately-made choices.

Note: Dan Ariely will be speaking about the hidden forces that shape people’s decisions at the World Innovation Forum in New York City on May 6, 2009 at 4-5:30 pm.

One strong example from Ariely’s research is the effect of product price on performance. Does getting a good deal on a product change how well that product works? To test this, Ariely and his colleagues studied the efficacy of products such as pain killers, cold medicine, and energy drinks as a function of the price people pay from them. In the energy drink study, people bought an energy drink (some test subjects got a price discount), drank the drink, and then performed a word puzzle test. People who paid more for the drink solved more of the puzzles than did people who got a discount for the identical drink. Similar patterns appeared in the pain killer study and cold medicine research.

The implication for innovation: This research helps explain why good products can fail because of the discrepancies between beliefs in how people should act versus how they actually do act. Moreover, this irrational behavior is consistent across people, products, and time. Because the irrational behavior is consistent, companies can adjust their innovation, product development, product testing, and marketing processes to fit people’s real behaviors.

Action:

• Understand the human biases that affect product choice, willingness to pay, and product performance.
• Design products that suit how people are, not how people should be.
• Create product testing processes (e.g., focus groups and lead user studies) that replicate or control for the effects of actual retail and usage scenarios

Point: You don’t have to be the originator of an idea to succeed with it.

Story: Sam Walton didn’t invent discount retailing. Instead, he learned of the idea from an article about two Ben Franklin stores in Minnesota trying self-service. At the time, self-service retail was a brand new concept. Previously, customers came to a counter and the full-service clerks helped the customer by picking items from the shelves behind the counter. Upon reading the article about this new concept, Sam went to investigate. “I rode the bus all night long to two little towns up there — Pipestone and Worthingon,” Walton recounts in his autobiography. “They had shelves on the side and two island counters all the way back. No clerks with cash registers around the store. Just checkout registers up front. I liked that. So I did that, too,” In 1950, Walton’s Five and Dime was the third self-service variety store in the country.

But Sam didn’t simply imitate this one discount retailing idea. He continued to toy & tinker with it and improve it, even as it grew and became successful. He kept his stores well stocked with lots of items, stayed open late, bought goods in bulk to reduce costs, and pioneered communications and logistics technologies to maintain his everyday low price strategy. “As good as business was, I never could leave well enough alone, and, in fact, I think my constant fiddling and meddling with the status quo may have been one of my biggest contributions to the later success of Wal-Mart.”

Howard Gardner, Professor of Cognition and Education at the Harvard Graduate School of Education, sees this style of constant innovation as key characteristic of creative people. He says, it’s not a flash-in-the-pan, one-time-only thing. it’s a whole style of existence. People who are creative are always thinking about the domains in which they work. They’re always tinkering. They’re always saying, “what makes sense here, what doesn’t make sense? And if it doesn’t make sense, can I do something about it?”

Action:

• Be open to the new and different — seek out odd-ball business practices in out-of-the-way places
• Study how others do what they do, why they do it, and how it can work in your situation
• Adopt and adapt those discovered ideas and keep tweaking the ideas

For more information: Sam Walton: Made In America and Creative Spirit by Daniel Goleman, Paul Kaufman, and Michael Ray.