What's the right pace of innovation?  How often should you introduce incremental improvements, new breakthroughs, and how much can the market realistically absorb?

Yesterday, JD mentioned in a comment that "consumers are more accustomed to a heightened pace of innovation and change" than ever before, inferring that they may be ready to respond more quickly to inovation that could help to turn the market around. 

JD makes an interesting point, and I think consumers' expectations can work in our favor in the current market.  However, we can no longer innundate consumers with new offerings that have little or no additional value just because we can.  Why?  Because consumers will no longer tolerate waste, choosing to spend only on added value.  Rather than taking a buckshot approach to satisfying consumer needs, organizations will do better by taking the time to optimize the value they are offering. 

The pace and type of innovation should become dependent on how well an organization can deliver greater benefits to their consumers, and not on how fast they can make new things.  For example, a consumer may value ease of choosing the right product more than an infinite selection based on slight variation.  Or the opposite may be true.  The only way to know for sure is to understand what it is that makes your consumer tick, and deliver those benefits.

The point here is that the market can always absorb innovation that consumers will truly value.  Think about what is in your current pipeline.  Is every product adding value to your consumer?  It is your job to separate what is useful from what is wasteful.  If your products are not doing well, don't blame the market.  Consumers are ready for a fast pace.  What they will be sitting out is the addition of waste.

Not only should Congress encourage/facilitate the organized bankruptcy of the Big Three, but it should also make it easy for them to be replaced by 500 new car companies.

He goes on to describe that this is what it was like 90 years ago, and suggests what it could be like in the future.  Great idea.

I would build on Seth's idea to suggest an increase in the incentives for companies that are built around consumer needs, rather than new technologies.  Never before have consumers been so available, ready and willing to be part of the process.  As I've said many times before, valuable innovation is not random.  The tools are available for a company to identify a real need (not just a preference), define the market for it, and connect the dots for how their solution will satisfy that need.  Companies who do this should be rewarded with the most incentives, as their value propositions will be able to support multiple types of products and services to satisfy those needs.  They will have a clear roadmap, and will be less likely to get bogged down in the development of a solution in search of a market.

This could also provide a new perspective for the way VC's evaluate potential investments.  But that is a story for another time...

Individuals and organizations have one thing in common.  We all must carefully balance the time and energy we spend attending to the things that are important, and the things that are urgent.

What's important are the activities that keep you true to your mission.  Who you hire or choose to work with, how you contribute your talents, and how you solve the needs of your market are all important things to consider.  Your choices about them have long term effects on whether you will achieve your ultimate goals.

What's urgent are the activities that sustain you in the immediate future.  How you pay the rent, get the funding, or respond to external changes are all urgent issues that must be resolved along the way.  They are like bumps in the road, and your choices about how to manage them can also have long term affects on whether you will achieve your ultimate goals.

We all must attend to important and urgent issues, and how we balance them will determine our ultimate success.  For example, an entrepreneur may tweek a business model to ensure their company will get funded.  If they tweek it to the point that it is a different business altogether, they have gone too far.  It seems that those who go too far are lacking clarity or vision of their ultimate goals.  They end up becoming a product of the external forces that they have allowed to shape them, and their reactions are driven by panic and fear more than vision and mission.

Today we are seeing unprescedented panic and fear that can shatter our ability to achieve our economic and social goals - if we let it.  This current bump in the road should change the way we do business, but we should not let it change our business.  Yes, we need to innovate, and I believe that the innovations that will add the most value will come from those who clearly define what's important - and decide to make it urgent.

There is a good article in Strategy + Business about Consumer Choice Modeling.  Consumer Choice Modeling is a tool to project how well different product options and their attributes will do in the market.  Rather than being a simple preference test, it projects the consumer's likely behavior at the store shelf, given a specific set of choices.  As an example, they said that this tool accurately predicted that Apple's first iPhone was priced too high, which the market subsequently validated.

I think tools like this are great.  However, problems arise when they are used at the wrong point in the process.  These tools are best used after a new product is defined; the benefits, the details of how they will work, and what they will cost are all worked out.  These tools do not help you to develop a breakthrough innovation from scratch.  For that you need to figure out what would motivate a consumer to try a new solution in the first place; what problem really needs to be solved. 

The reason these tools are often misused is that they deliver an answer with a high degree of certainty.  This makes people comfortable.  But it does not take the place of the deep understanding required to figure out what a new offering should be.  What they do is confirm or disprove the decisions that have been made so far, but they will not give you information to come up with the idea in the first place - unless the idea is an improvement on what already exists. 

Once again, it all comes down to clearly understanding the scope of your innovation effort.  If you are already working with an existing offering, and want to improve it, then you can start with tools like Consumer Choice Modeling.  If, however, you want to develop something new, then save the Consumer Choice Modeling tool until you reach a point at which you have developed a set of choices for the consumer to make.

Last week Brandweek had an article about Design Thinking, and I'll have to say it was a bit misleading.  I'm not going to nitpick the article, but I would like to address a few points that I think are valuable to understand about the topic.

I should start by saying that I am a proponent of Design Thinking, just as I am a proponent of Business Thinking, Legal Thinking, Engineering Thinking, and Political Thinking.  All are approaches to solving problems that have evolved to ensure rigor and best practices in their respective professions.  Where it gets interesting is when a problem in one discipline benefits from an approach used by another discipline.  The current buzz about Design Thinking is an answer to the business world's need to innovate.  The current processes used to guide businesses don't lend themselves well to doing something new that can't be measured by current benchmarks.  Designers regularly create new solutions that have no benchmarks, so taking a page from the way they work should be helpful to achieve these goals.  And it is. 

What gets misleading is when the distinction is blurred between an approach that is used in a discipline, and the work, skills, and deliverables expected of professionals in that discipline.  If a business person uses design thinking to develop an innovative business model, the outcome is still a business model and the profession is still that of a business person.  It does not mean they should be called designers, as they do not possess the skills required of a design professional.  If a designer uses business thinking to make their designs more relevant to the business, they are still designers.  The article references people with design backgrounds who are now in marketing roles.  That would be called a career change. 

Finally, it is misleading to narrowly associate tools with disciplines.  The article associates ethnography with the way designers learn about consumers, and suggests that focus groups are more for business goals.  This is just not true.  Ethnography is a research tool, and is used when a deep understanding of consumer values is necessary to solve a problem.  This could be a business problem, a design problem, or a pure science problem.  If we are truly employing design thinking methodology, we are less worried about what tools we are using, and are instead doing whatever is necessary to achieve our goals.

I don't know who first coined the term Design Thinking (I've heard it was either Tim Brown of IDEO or Roger Martin of the Rotman School of Business), but Roger Martin's article is still the best I've seen in terms of defining the value of design thinking to a business.  His article on Reliability and Validity is well worth the read.  Reliability vs Validity.doc (42.00 kb)

Nov. 13 - Update today from Jess to clarify the attribution of who first coined the term Design Thinking:

As far as origins, Peter Rowe wrote a book called "Design Thinking" that came out in 1987. Not sure about earlier usage, but I'm skeptical of either Brown or Martin being the originator.  Here's the Google Book result for Rowe's "Design Thinking"

http://bit.ly/rowe_design_thinking

I talk with a fair number of start-up companies and I'm always able to tell who chose the company name.  Not the specific person who chose the name, but whether or not the name originated from within a marketing function or a technical function. I can also usually tell if it's a second or third generation name.

The technology function tends to love names that are cleverly descriptive of what their underlying technology is or how it functions.  Sometimes the names are difficult to say or remember, but that doesn't matter.  The more descriptive the better, and if it's disguised in some type of word play that's even better.

The marketing function tends to love names that connect the company's product to current popular trends.  They also seem to love names that are enigmatic enough to allow meaning to be built into them through use.

And then there are the names that are descriptive of a company's benefits.  Usually simple, and often indirectly referenced, these names reinforce what I will be buying into when I choose their products.  In my very small sample size, I've noticed that these names are often second or third generation names of these companies.  There are often stories about how someone realizes that what a technology does for people is more interesting than the technology itself.  Or they realize that it's more important to differentiate from the sea of My- or i- products and companies, than to show a connection to them.  The key is that the name becomes relevant to the consumer, rather than relevant to a technology, internal preference, or discipline the consumer may not know exists.

This is the way to enable the consumer to influence your business right down to the name.  It's not about asking them to choose their preference from a set of choices.  It's about understanding what you provide that is relevent to them, and reinforcing that value in the name.