Innovating in Dark Corners

By Shlomo Maital

  Let’s run a psychological experiment, based on ‘stream of consciousness’.

  Say the word ‘innovation’ out loud.

  Say what pops into your mind.

  Now – how many of the things that pop into your mind are related to products – or services?

  Most?  All?

   Why?

   Innovation is simply creation of novel ideas.  Why should innovation be confined to product innovation?  The truth is, the most powerful innovations are found in dark corners, where many people do not even bother to look.  Here are a few examples:

    Process innovation:  Research shows that the rate of return on investment in R&D is far far higher for process innovation (innovation on processes that organizations use, such as production, marketing, quality assurance, supply chain management) than for product innovation – because many new product launches simply fail, and yield no return.  Apply innovation to everything your organization does.  How can it be improved?  Process innovation cannot fail!  Because – the worst that will happen, is that you use the old process when the new one doesn’t work out. 

   Business design innovation:   In their HBR article,  Ramon Casadesus-Masanell and Joan E. Ricart [“How to Design a Winning Business Model”] show that 7 out 10 companies are engaged in business-model innovation, meaning – innovations in the way they do businesses, rather than in the products they make and sell.   Part of the motivation is the global business slowdown, the need to shift to emerging markets, and hence the vital necessity to radically alter existing conventional business designs.

   Talent management:  How does your organization choose, hire and develop talent?  As the baby-boomers retire, a burgeoning shortage of talent is developing. Companies who excel at finding and developing talent will have a major competitive advantage.  There is much room here for innovation. Conventional HR methods will simply not do.

    Marketing:        Writing in Market Leader (Quarter 4 2010),   John Kearon  (founder, CEO and Chief Juicer at BrainJuicer Group) writes provocatively that:   “….the adoption of ‘marketing science’ is the reason why large corporations no longer seem capable of creating the kinds of new category innovations that made them big in the first place. ….. it is freedom from the constraints of marketing science that has enabled small startups to innovate and initiate new behaviours”.    “The problem with putting the consumer first when it comes to originating new categories is that people instinctively reject new behaviours, and it takes inventors/entrepreneurs to ignore these reactions and do it anyway.”

   If your innovation is driven by marketing, as it is in many organizations, perhaps you need to innovate your marketing-R&D link.  And while you’re at it, innovate how you market your products.

    MBA education:  America has 4 million graduate students. Fully one in four, or a million of them, are MBA students!  These MBA students study essentially identical curricula, from identical textbooks, case studies and articles.  They are cookie-cutter managers.  There is a huge need for innovative MBA programs that will generate managers who apply the Apple slogan: Think Different! 

   Career paths:  Today’s MBA grad will need to develop at least 3-4 different careers, over their working lives.  There is much room here for innovation, using the ‘adjacent possible’ idea – after excelling in Area A,  what could I do, in Area B, which is far enough to be challenging and stimulating but close enough so that I do have a headstart on knowledge, skill and human capital? 

   The story is told of an economist who drops a $100 bill in a dark alley, then dashes out to the street lamp to look for it.  Why?  Of course – because that is where the light is.   Don’t be like the economist.  Look for innovation where others don’t – in dark corners, in places where the light of innovation doesn’t penetrate. You’ll be astonished at the results.