Folks,
Here is an interesting article i came across about “Want to create innovative Products? Tap into global brains!” .
It gives lot insight into how innovation works at globally and how it should happen!
http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4244
Happy reading!
-Yogesh
————————–
I am writing this post on a crisp Fall morning, in a world in which Google stock has crossed $700 per share, Microsoft’s tiny stake in Facebook values the company at $15 billion, and New England’s beloved Boston Red Sox have won their second World Series in four years. If any of you can explain any of that, I’d love to hear from you in the comments section of this blog.
The only conclusion I can draw? We are living in a world full of surprises. As a company, you never know who’s going to emerge as your most important rival. As an innovator, you never know where the next great idea is going to come from. As a long-suffering baseball fan, you never know when an 86-year old drought is going to turn into a dynasty.
Indeed, that surprising reality defines the new leadership frontier for executives, entrepreneurs, and game changers of all stripes. More than ever, the most powerful source of business genius isn’t the strategic brainpower of an individual CEO or the technical chops of an inspired engineer. It is the “hidden genius” of grassroots innovators inside your organization, and the collective genius of all kinds of talented people outside your organization. Increasingly, the best ideas come from the most unexpected places.
That’s what Goldcorp’s Rob McEwen learned when he invited the whole world to help him figure out where his company should explore for gold. As an entrepreneur, Rob bought a low-performing gold mine, spent years trying to find gold where the previous owners couldn’t find it—and only succeeded when he shared his proprietary geological data with the outside world and organized an open competition to devise the best drilling strategies.
That’s what shoe designer John Fluevog learned when he applied the lessons of open-source software to the creation of high-heel shoes and knee-high boots, in a program he calls open-source footwear. He unleashed the talents of passionate customers around the world, who have designed a bunch of hot-selling new models for the hot-shot designer.
That’s what the founders of Rite-Solutions learned when they decided to create a “stock market” for ideas inside their fast-growing software company, and let anyone in the organization float an idea (in the firm of a stock), and everyone in the organization invest in ideas that they like through $10,000 of opinion money.
These are just a few examples of this game-changing approach to leadership and innovation. Have you figured out how to navigate—as a company, as an executive, as an entrepreneur—in a world in which the most powerful ideas come from the most unexpected places? Don’t be surprised if that emerges as your next big challenge.
———————
An interesting webinar @
-Yogesh
This was copied from ‘The Silicon Valley Product Management Group’ by Marty Cagan…————————-Probably the single most common question I get from CEO’s is where
to find great product managers?I tell them that often they’re already in their organization, hiding
under a different title – maybe a software engineer, designer, or an
SE – just waiting to be discovered. But whether you recruit product
managers from inside or outside, the easiest way to spot them is to have
a clear understanding of the characteristics to look for. So in this
note I’ll enumerate the specific traits and skills you’re
looking for:
Personal Traits and Attitude
Most skills can be learned, however there are some traits that are very
difficult to teach, and as such they should form the foundation of any
search for a product manager.
– Product Passion
There are some people out there that just love products. Not
necessarily every type of product, but also not just a single type of
product. Great product managers have a love and respect for good
products, no matter where they come from, and they live to create them.
This passion for product is an essential ingredient as it will often be
called upon to provide the motivation to get through the many very
difficult challenges, and long hours, of defining a great product.
Further, the product manager will need to inspire the rest of the
product team, and the passion for a product is contagious.
It is fairly easy to determine whether or not you are talking to such a
person by simply asking them what some of their favorite products are
and why. It is hard to feign passion; the insincerity comes through.
Ask for examples from different domains. Ask what they would improve on
their favorite product if they were the product manager. Ask about bad
products too.
– Customer Empathy
The ideal product manager does not necessarily have to come from your
target market (there are pros and cons to this), but they absolutely
need to be able to empathize with your target market. This trait is
often difficult to find in high-technology companies trying to produce
mass-market products. We tend to want to think of our users as we think
of ourselves and our friends. However, the target market very likely has
quite different values, priorities, perceptions, tolerances and
experiences.
Ask the candidates about the target market, and how they believe they
might be different from themselves. Try and detect how the candidate
feels about the target market, and most importantly, does the candidate
respect and empathize with that target market, or does he view his job
as “enlightening” the target market.
This is doubly important for international products, or those products
targeted at specific countries or cultures. There are many
similarities, and many differences, between cultures. Many of the
differences are incidental and not important to defining products.
However, some of the differences are essential. Does the candidate you
are talking to have enough understanding of the target market to know
which is which?
– Intelligence
There is really no substitute for innate intelligence. The successful
product manager must be able to learn very quickly. Product management
is about insights and judgment, both of which require a sharp mind.
Hard work is also necessary, but for this job, it is not sufficient.
Hiring very smart people is harder than it sounds. Much depends on the
strength and security of the hiring manager. Hiring smart people speaks
to the company culture which is another important topic in its own
right, but suffice it to say here that if your goal is a truly good
product, it is simply not going to happen if you can’t find a truly
bright product manager.
Assuming you are anxious to find the brightest, most insightful person
possible, one technique is to drill in on problem solving. Microsoft is
famous for their very intensive and effective interviewing for
intelligence based on problem solving. The technique is to use one or
more experts in some topic to drill the candidate on a problem. The
interviewer is not looking so much at whether or not the candidate
simply knows the right answer (knowledge rather than intelligence), but
rather, how well they deal with not knowing the answer. How does the
candidate work out problems? When the candidate comes up with a
solution, the interviewer changes the question somewhat and asks what
the candidate would do then. This is done continuously until the
candidate must force herself to deal with a scenario she doesn’t
know the answer to, and then she is asked to verbalize how she would go
about solving that problem. With practice, this can be a very effective
technique in assessing a candidate’s problem solving capability.
Another approach is to ask two or three people in your organization who
are well known for their intellectual prowess, and ask them to interview
this person, and help you determine the candidate’s problem solving
ability.
– Work Ethic
Not every role in the product team requires the same level of commitment
and effort. However, the product manager role is not for someone who is
afraid of hard work. It comes along with the responsibility. The
product manager is the person ultimately responsible for the success of
the product, and this burden weighs heavily on the successful product
manager.
Even when skills such as time management and the techniques of product
management are mastered, the successful product manager is still
consumed with the product. Can you have a family and a non-work life
and be a successful product manager? I believe you can. At least once
you have some experience. But there are many people that want to be
able to work 40 hours a week and most importantly, leave their work
problems at the office when they leave at the end of the day. This
unfortunately is not the life of the successful product manager.
I believe in being very frank with candidate product managers about the
level of effort required for successful product management. But to be
perfectly clear, it is not about requiring the product manager to work
certain hours – if you have to actually ask or tell the product
manager to come in during a critical point you have the wrong person for
the job.
It should also be emphasized that the level of effort and commitment is
not uniform throughout the lifecycle of the project. There are certain
phases that are much more intense than others. What won’t change
for the successful product manager is the degree to which they care and
worry about their product and the lengths they are willing to go to
ensure its success.
– Integrity
This trait also relates to the company culture, but of all the members
of the product team, the product manager most needs to reflect the
values of the company and the product. In most organizational
structures, the product manager does not directly manage the people on
the project team, and as such, he can’t simply direct the people to
do his bidding. Rather, he must work by influencing those on the team.
This persuasion is done by mutual trust and respect.
This trust and respect is built over time by the successful product
manager demonstrating the traits and skills of a strong product team
leader. If the product manager is not perceived to have integrity, or
honesty, or fairness when dealing with his teammates, then the product
manager will not have the degree of collaboration and team effectiveness
that he needs to get the job done.
The product manager may not be an expert in every role of the product
team, but he should have a deep understanding and respect for what each
team member is responsible for, and he should be willing and able to
trust those people to do their job.
As the main interface between the product team and both the executive
team and the sales organization, the product manager is often put in
difficult situations, such as being asked to deliver products earlier,
or with special features for large customers. The product team will
watch closely how the product manager handles these situations.
As with intelligence, assessing someone’s integrity can be
difficult. For candidates with previous experience as product managers,
they can be asked about how they dealt with the stresses in past
products. Press for details of particular situations; what made the
situation hard and how was it dealt with?
– Confidence
Many people think of confidence as a result of experience. However,
while experience may be a prerequisite for confidence, many very
experienced product managers simply do not project confidence (you can
sometimes find brand new college graduates simply bursting with
confidence, although this is generally the confidence that comes from
not yet knowing what they’re in for).
Confidence becomes an important trait in that the entire product team,
executive team and sales organization is looking to the product manager
to convince them that what they are investing their time and money and
careers in will be successful. There will be many difficulties along the
way, and during these times of stress especially the product manager is
looked to for inspiration.
It is important that the product manager be able to project confidence,
to be able to remind the team and organization why the product will be
successful, and why the vision is a good one. In communicating
persuasively, confidence is a critical ingredient.
– Communication Skills
While communication skills can, for the most part, be learned, it can
take years to become an effective speaker or writer, and these skills
will be required from the start. As discussed above, the product
manager influences others by persuasion rather than authority –
making his case by communicating either through writing, speaking, or
both.
Speaking skills can partially be assessed during the interview itself,
but written skills should be assessed specifically. I like to suggest
that product manager candidates bring in examples of written material
such as white papers or strategic documents.
While good communication skills are absolutely essential, it is
important to emphasize that speaking with an accent, or minor
grammatical issues with a non-native language, do not constitute poor
communication skills. The person must speak clearly enough to be easily
understood, and write powerfully enough to persuade, but perfect
pronunciation or grammar is not required.
– Attitude
The successful product manager sees himself as the CEO of the product.
He takes full responsibility for the product, and does not make excuses.
The successful product manager knows he is ultimately responsible for
the success of the product. More importantly, he knows that there are
many very valid reasons for the product to not ship, or fail in the
market when it does – the product is too difficult to build, it will
take too long to get to market, it will cost too much, it will be too
complicated, etc. – but he knows it is his job to see that each and
every one of these obstacles is overcome.
This does not mean that he micromanages the product team, or that he
tries to do it all himself, but rather than he is quick to take the
blame if something goes wrong, and equally quick to give credit to the
rest of the team when it goes well. The successful product manager
knows that it is through the rest of the team that his product vision
will become a reality, but that it is his product vision they are
building.
Skills
In order to succeed at the job of product management, there are several
skills that are important. If the person has the right personal traits,
I believe all of these skills can be learned:
– Applying Technology
One reason many successful product managers come from the engineering
ranks is that a big part of defining a successful product is in
understanding new technology and seeing how it might be applied to help
solve a relevant problem.
While you don’t need to be able to invent or implement the new
technology yourself in order to be a strong product manager, you do need
to be comfortable enough with the technology that you can understand it
and see its potential applications.
There are many ways to develop this skill. Taking classes, reading
books and articles, and talking with engineers and architects can all
help you learn. Ask the senior engineers on your product team what they
would recommend as ways to learn more about the technology
possibilities. Brainstorming sessions with the engineering team is
another way to learn how new technologies might be applied.
– Focus
“The main thing is to keep the main thing the main thing.”
There are so many distractions out there, especially for the product
manager trying to create a product that customers will love. The ability
to keep the focus on the key problem to be solved, and not to succumb to
creeping featurism, or the loud voices of a few key people or customers,
requires tremendous discipline – both company discipline and
personal discipline.
The truth is that nearly every product has features that are not really
all that important – if the features were never there it would not
significantly impact the sales or customer satisfaction. Much more
often, if the features were not there, the product would be better for
it as more users could comprehend and appreciate the resulting simpler
product. Focus will help you reduce the number of cluttering features,
reduce the time it takes you to build the product, and therefore the
time it takes you to get to market.
– Time Management
In today’s e-mail, instant message, and cell-phone based world, it
is so very easy to come in to work early in the morning, work
frantically all day even skipping food, and then head for home well into
the night, not having actually accomplished anything important for your
product. That is because you have spent the day chasing fires and
working on “urgent” items.
It is absolutely essential to get very skilled at distinguishing that
which is important from that which is urgent, and to learn to prioritize
and plan your time. If you can’t manage to get the time to focus on
those tasks which are truly important to your product, your product will
fail.
I have known too many product managers that burn themselves out with
70-hour weeks and the worst part is when I tell them that they’re
not actually doing their job. The natural response is that they just
don’t have any more time and can’t work any harder. I then go
into my lecture on time management and working smarter. So much of what
these people spend time doing is avoidable.
– Written Skills
Product managers spend a great deal of time writing – composing
e-mails, specs, white papers, strategy papers, data sheets, competitive
product reviews, and more. The successful product manager is only
taking the time to write these if he believes people are going to read
them, and since they are going to be read, they need to do their job
well, which is typically to describe, educate and/or persuade.
Being able to write clear and concise prose is a skill that product
managers use every day. The successful product manager realizes that the
readers of his writings are constantly evaluating him based on his
writings. Especially with senior management, sometimes these writings
are all they have to go on.
– Presentation Skills
The other major form of communication that product managers frequently
need to do is a presentation. Presenting in front of a group is hard for
many people. Presenting effectively is even harder. Yet this is an
important skill for a product manager since many of the most important
events in the life of a product require the product manager to stand up
in front of company executives or major customers or the company sales
force and in the short time you have, explain what your product is about
and why it is important.
We have all sat through terrible presentations, with slide after endless
slide; the speaker simply reading the bullets; people straining to read
the too-small print; meaningless graphics; and being unclear what the
key messages actually are and why you should care.
In contrast, the successful product manager has a minimal number of
slides; he is engaging, clearly knowledgeable and passionate about his
product, he speaks clearly and to the point, his slides provide relevant
supporting data for what he is saying, and he has unambiguously stated
his main points, and what he needs from the audience after the
presentation. His presentation finishes early, he entertains questions
and if he can’t provide a clear, useful answer immediately he
follows up diligently and promptly with the questioner, and if
appropriate, the entire audience.
– Business Skills
Finally, business skills are also important for the product manager. As
the main interface with the rest of the company, the product manager
will need to work with company finance staff, marketing people, sales,
and executive management, and the language and concepts that these
people deal with.
I sometimes talk of product managers as needing to be bilingual. They
need to be able to converse equally well with engineers about technology
as with executives and marketers about cost structures, margins, market
share, positioning and brand.
This is one reason why so many product managers are recruited out of
business school. The product organization knows that they need someone
that can talk the language of the business side, so they hire an MBA. I
have known some great product managers that have come through the MBA
path, but if you’re read this far, you know that the business skills
are but one part of the mix required for a successful product manager,
and they can certainly be learned. It is at least as common that an
engineer moves into product management and acquires the business skills
required by reading books, taking courses, and getting coaching and
assistance from mentors in the finance and marketing organizations.
So where do you find these people?
After reading this list of traits and skills, you may be thinking that
such people are extremely rare. They are rare – about as rare as
good products are. But few hires you make will be as critical as your
product managers, so it is worthwhile to interview for these
characteristics and to set the bar high.
There are different schools of thought on recruiting product managers.
Many companies think that all you need is someone from the marketing
organization or someone with an MBA. In the old-school definition of
product manager as product marketing, this may have been true, but this
is a recipe for failure today.
Many companies prefer MBA’s from top business schools that have a
technical undergraduate degree combined with applicable industry
experience. This can work well if you keep in mind that a problem with
MBA programs, even from the top-tier schools, is that they almost never
teach product management, so it is dangerous to assume that the recent
MBA grad has any idea of how to be a product manager.
My favorite source for product managers is to look for people with the
characteristics described above and then use training, an informal
mentoring program, and/or a formal employee development program to
develop these people into strong product managers. Such people might be
found virtually anywhere in the company. I’ve seen outstanding
product managers come out of engineering, technical support,
professional services, product marketing, sales, and the user community.
Often these people will approach management asking how they can get more
involved in the product. It can also be useful for senior management to
approach top performers from across the company about the possibility of
product management, as this can be essential experience for those on an
executive track.
I’ve written earlier about running a good interview process
(www.svpg.com/blog/files/microsoft_advantage.html), but there have been
some great posts on general hiring practices recently. My favorite is:
http://blog.pmarca.com/2007/06/how_to_hire_the.html.
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I’ve been thinking long time about, how information technology can help us in our daily living? Or Make it much better?I didn’t find an answer! However, when further thought down, realized that “Finding the right problem” might be the key to innovation!This blog has been created to address and list down all such problems we face in our day today life;However, currently we may not have any solution to it!Hereby, I encourage everyone, who visits this site, from any part of the world, request you to post your problem. I really believe, someone, somewhere, definitely will think about it and will have some solution or if not might think that direction.This site has been mainly created to encourage innovations! The more we post our problems, the more innovations will happen!
Let’s think and post more,
-Yogesh Hublikar
This article has been published: June 27, 2007 in Knowledge @ Wharton
Larry Huston was vice president of knowledge and innovation for many years at Procter & Gamble. During that time, he was the architect of its Connect + Develop program, the creator of P&G’s Brand Bootcamp operation, and innovation leader for the company’s global fabric and homecare business, among other initiatives. He is now managing partner of 4INNO, and recently joined Wharton’s Mack Center for Technological Innovation as a senior fellow. Knowledge@Wharton asked Huston to talk about innovation and its role in the global economy. If you have iTunes, you can subscribe with one click: http://knowledge.wharton.upenn.edu/weblink/187.cfmIf you have your favorite podcast source, the url is: http://knowledge.wharton.upenn.edu/podcastcurrent.xmlFor your convenience you may play or download with the links under the title. Below is an edited version of the podcast.
Knowledge@Wharton: I’d like to start out by asking you, what is the Connect + Develop approach to innovation and why is it innovative?
Huston: Terrific question. You’ve got to start with: What is innovation in most companies today? For most companies, it’s all about inventing everything yourself. Yes, some companies do joint ventures. They mostly do that out of trying to fill in a weakness or a capability gap. But most companies invent everything. Procter & Gamble invented 90% of its innovations. Everything came from basically within the four walls of P&G. We had 9,000 R&D people at Procter & Gamble, but the world has about 1.8 million people who are equal in education and have access to first-class lab facilities, [like] P&G people. So basically, Connect + Develop is all about redefining our organization as 1,809,000 people — that 1.8 million plus our 9,000 people — and then leveraging the intellectual assets and capabilities of the world in a connected model to bring big innovations to our consumers. So it’s about connecting, not just inventing. You can think about it as: You want to continue to invent, but you want to connect. It’s what you know plus who you know on the outside, so that you can really create a lot of value for your customers or consumers.
Knowledge@Wharton: So if I get it right, the model that you’re describing is about harnessing the innovative ability and creativity of external constituencies … in order to drive the innovation process.
Huston: Absolutely. It’s not outsourcing. It’s an in-sourcing. I think that’s another misconception.
Knowledge@Wharton: What are some of the challenges, especially on the intellectual property front, that come up when you use that kind of model?
Huston: I think, frankly, the biggest challenge is the mindset inside companies. Most people have the attitude that if we share our briefs with people on the outside, our competitors are going to read what we are going to do. It’s really changing the inside culture to accept ideas. What you do in Connect + Develop is what companies always do. If someone comes and knocks on your door, you will ask them to share things with you non-confidentially, or you’ll share things non-confidentially. If you think they have something, hopefully it’s patented.However, if it’s not patented, you then reach out and you begin to develop confidential agreements, one-way, two-way agreements, and so on. That’s how you operate today. What you do under Connect + Develop is the same way. It’s just that I’m doing it at scale. Think of doing what you’re doing on a small scale basis, typically, where you have the innovation office at each company or an out-licensing and new business development office. But you’re now doing it at scale.So what you’ve got to do is put controls and vetting processes in place, so that the whole organization isn’t sending confidential information to the outside. They’re sharing non-confidential information. But the normal processes of confidential agreements still exist as if you were still small. It’s a scale issue, for the most part.Frankly, in the entire time that we did this when I was at Procter & Gamble, I can’t think of a single significant intellectual property issue where we tipped our hand to a competitor. Now there are ways to handle this. Briefs are very important, trying to define what you’re looking for. Sometimes we just deliberately put our name on a brief and sent it to the world, because we’d get a much higher hit rate if we put our name on it. They want to be associated with a big company.In other cases, you may describe your problem in a very oblique way. You may not say what you’re doing, or you can disguise it in some way. So there’s a whole variety of mechanisms to deal with this. It will be the first reaction that people have, that this is going to be a barrier. But my experience and the experience of other companies who are doing this is that it’s blown way out of proportion.
Knowledge@Wharton: If IP isn’t an issue, then what are some of the biggest challenges of pulling this off?
Huston: Well, the biggest challenge of making a company into a connected innovation company is number one: It’s got to be a strategic capability. This is a strategic platform for a corporation. This is not something that a department within a pharma company or a car company or a consumer products company can do. This has to be something where the CEO and the management team says, we’re going to make a fundamental shift. We believe that our current invented model is not sustainable to create the needed levels of top line growth we need, and that we’ve got to find a new way to create shareholder value and value for our consumers or customers.We are going to embrace a new model of innovation; a model that basically depends upon us getting very clear what will drive value for our customers, expressing that in a way that the intellectual assets of the world — people’s ideas, institutions, other companies — can come in. Our door will be open and they can come in and join with us in solving these problems for our customers. It’s a major, major mind shift for companies to do this.So that’s why I say the senior management has to be involved. It’s really incumbent upon the CEO and the top management to say, we really don’t think our current innovation model can create the needed levels of growth. If you take a company like Procter & Gamble, we have to create 7% growth per year from innovation. This is a $72 billion company. That means we have to create $5 billion a year. Imagine if you’re GE, which is well over a $100 billion company, what you have got to do.So is our organization capable of embracing all the new science that’s coming at us? Bioscience? Nanotechnology? You can’t. There’s not enough money to embrace the new technology and build all the capacity you need for all the stuff that’s coming at you, yet create all these needed levels of growth. So we fundamentally decided that the current R&D model or innovation model that we are following and most companies are following, is a broken model. It’s not sustainable. So when the top officers of the company reach that conclusion, it’s time to change.I really do think that the most important thing is that wake-up call — for people to realize, then for companies to realize, that big companies have lots of money but need to act like little companies who don’t have a lot of money. And be open to the outside world and making connections. That’s fundamentally what it’s about. I do think that’s the most important thing. Now under that are a huge number of things about changing the culture and building capabilities — but I think that’s the most important thing in this whole scenario.
Knowledge@Wharton: I think you’re quite right that a number of companies are starting to hear the wake-up call. They want to be innovative, but very often they don’t know how. What do you find are some of the main barriers to innovation within companies that want to be innovative?
Huston: Well, I think, other than really having the will and walking the talk — which I do think is a very significant barrier, by the way — other than that, and assuming those things are in place, what’s the next thing that you need to do? One of the things that you need to do is to be very clear on a very basic model, which is how do you combine what’s needed with what’s possible. At its core, at its essence, innovation is bringing together a really deep understanding of what’s needed from the customer with what is possible technically. When those two things come together, there’s a sweet spot that happens and you can create products that delight your customers.Often, a major issue is that companies just simply do not know the needs of their consumers or customers. They know obvious needs or top line needs, but often the reason the products fail in the marketplace is because the concept is wrong. This morning I had a conversation here with one of the faculty members about Segway. Look at Segway. The thing performs terrifically, right? Technically it is not a problem, but it is a poor concept. It solves a problem that doesn’t really exist for people. It has all kinds of conceptual problems in terms of the benefit and how it improves consumer’s lives at a price that they can afford.Getting very clear on the consumer need and really understanding that at a deep level, at a price consumers are willing to pay, is what I mean by the market concept and often many, many failures. I’ve looked at hundreds of products. Probably 60% to 70% of the time, the source of the failure is that they didn’t understand the consumer. So just think of your product, things that have failed for you. Just go down your list and say, was this a technology failure or a concept failure? Often they are concept failures.Even successes are often beyond the basis of concept. Let’s take iPod, which is an enormously successful product. Name a new technology that’s in iPod. There isn’t a new technology, right? It’s a concept. It’s a concept in terms of the business model. It’s a great insight around consumers — that they don’t want to buy albums anymore; they want to buy individual songs. The assembly and the user interface, again, is a concept. I mean it’s not a new technology. This is a long-winded way to say, “Getting the customer insight at a profound level is enormously important and building the capability and skills to do that is enormously important.”Once you have that, then you have to get very clear on what are the ways that I can solve problems for consumers, or customers, and to not just think about innovation as a product. You also have to think about innovation as a total solution — both products and services. How do you deliver better experiences, shopping experiences, the total brand experience, or the usage experience? How do I develop a meaningful, trusted relationship with the consumer?All of those areas require innovations. It may not just be on a product feature but across solutions, experiences in building relationships. It partly deals with mindset as well. I keep coming back to the word mindset because people often just run to … ‘I need the stage gate model or I need a piece of technology and I’m innovating.’ It’s a lot more than that. It takes a lot of experience, but with commitment and discipline it’s one that people can master. A number of companies are mastering it.
Knowledge@Wharton: How can companies fail to understand what the consumer wants or needs when they spend millions of dollars in market research?
Huston: Well that’s the problem. Have you ever looked at the output? A [company rep] called me the other night [to ask] about my drive-thru experience at McDonald’s. I proceeded to try to tell them, ‘You are asking me the wrong question. You are asking my about my drive-thru experience when I don’t like the food experience. I would like you to put my comment on your form,’ at which point I knew that they had hung up.You tend to ask questions, number one, with pre-conceived notions, so you don’t have a good discovery process. Consumers in focus groups often tell you what you want to hear. Focus groups are like the movie “Groundhog Day.” I’ve been involved with developing new products. On average, you have eight consumers in a focus group and each consumer gets 12 minutes of airtime and you proceed to do focus groups from city to city. It’s like the movie “Groundhog Day” — over and over again. Consumers are very slick in either grandstanding with other consumers or telling you what you want to hear. They’re very confusing.Now let’s go to another consumer research technique, which is doing survey documents. Often people will say, “Tell me a long list of questions and attitudes of usage and everything.” By the time it is over then you might do 400 consumers and what do you get? Tabulations of statistical data. You cannot read one consumer’s holistic experience, mind, body, soul and task of a product.So what if I said to you, “I want to develop the ideal beer product.” What I want to do with you is not focus groups; what I want to do is understand your mind, your logical experience. You’re going to probably talk about high carbs and taste. Mind, body, the sensorial experience…. You’re probably going to say you want it cold and all kinds of things about the sensory experience, soul, the emotional experience. Look how Budweiser owns, and really owns, the relationship with men. Budweiser isn’t about beer; it’s about guy-to-guy relationships. What you really want to understand is one consumer in terms of mind, body, soul and task. Map a holistic experience and spend 12 hours with one consumer spent over a one-month period [instead of] running 50 focus groups where you have eight minutes with an individual consumer and do the “Groundhog Day” event over and over again.So what we have done is we have created, for example, a studio process and we have learned that we can get as much information from five consumers, mapped in depth, mind, body, soul and task, as you can from 50 focus groups. Five consumers, 12 hours each, over a month versus 50 focus groups, over and over again, on average eight minutes per consumer in a focus group.
Knowledge@Wharton: What do you do with these consumers for 12 hours?
Huston: What you do is you start with a hypothesis of how you are going to create a huge business. This hypothesis feeds a very deliberate protocol that is designed to elicit logic and emotion. The emotion is gathered up and is often the most important aspect of what you need to get from consumers is the unconscious. Now the issue is that if I’m talking to you, if I do an interview with the two of you right now about this bottle of water sitting here on the table, you’re going to give me some rational right-brain comments.However, if I gave you 12 photographs, none of them about water, out of the magazine and I said, “Tell me your thoughts and feelings about how water can positively improve your life.” I would ask you to look at a photograph. I would probe into your unconscious because as I’m speaking right now and as people are listening to this – what’s going off in their minds are pictures. You’re not processing a word; there are images and that is how the brain works.However, our consumer research methods are verbo-centric. They’re words which get you into the conscious level. If I can interact with you on your thoughts and feelings about water through imagery, you won’t believe the amount of stuff that would flow. It’s unbelievable, and we understand, we unravel, we elicit the dream with consumers through these deep probing methods that get at the unconscious.So we have entire protocols that are designed to get at the logic, the emotion, the sensory experience and the task. It takes 12 hours to do that over multiple weeks with very detailed maps put together. The first consumer will give us 400 concepts, the second consumer will give us 400, but there will only be like 200 new, the third will give us 400, and there will be about a 100 new. By the time I get to the fifth consumer, I have elicited the entire experience domain of a targeted group of consumers.So let’s say I am trying to get to Moms who have had their first baby and I am trying to elicit the ideal diapering experience. I only have to get the five moms because I build these maps and I pretty much elicit the domain space. But that doesn’t necessarily say what one mom tells me is the most important. I’ve only elicited the experience space. I then have to develop concepts and product prototypes… So managing five maps of Moms, first-baby moms, on the wall with each of their 400 concepts: Imagine the amount of insight there. I deeply probe them like a psychologist ….You can see how this is very different than the call that I get at home where I tell [the caller,’ “You’re asking me the wrong question” — or looking at a bunch of statistical data. It’s a very different kind of approach to the world and so it’s really, really powerful.
Knowledge@Wharton: We were talking sometime ago in this very room to senior consultants from the Boston Consulting Group. They had written a book called Payback about innovation and their argument was that the problem that companies face is not so much that they lack for ideas. In fact, there are too many ideas. Their real challenge is taking those ideas and getting and implementing them in a way that you can make innovation pay for itself. Do you think that’s right and how do you manage that in your process?
Huston: Well, number one, I disagree with BCG.
Knowledge@Wharton: Why?
Huston: Well, number one, you never have enough great ideas, and if you have a better idea, you drop that idea off the bottom of the list. Look, companies have idea files, and they have “submit an idea” systems. I would say that companies have file drawers of many meaningless ideas, that they certainly don’t have file drawers of ideas that have the legs to drive business growth. I totally disagree with this, by the way, and I am interacting with CEOs all over the place right now. But let’s set that aside for a minute. I feel so strongly about that.The question then is: Let’s assume that you have a good idea. How do you get a good return on it? Well, the major thing that I think is important early on, is to do financial modeling and good pro-forma work and identify killer issues along with the ideation process. For example, this bottle of water. Let’s assume that I’ve created a new concept in engineered water. Let’s say I have a prototype here. I want to really understand immediately what the business plan looks like and to financially model that. What’s going to be the trial rate? What’s going to be the repeat rate and what are going to be the killer issues?To really have the concept process and the innovation process, [you should] be very informed by the financials on an innovation. Most companies go and invent things, and then at the end figure out, “How am I going to price it?” They find that it’s priced too high; the consumers aren’t going to pay for it. And so what you’ve really got to do is move way upfront the whole financial modeling and identification of killer issues so that you can be successful. That’s one very important thing.The other important thing is you’ve got to get to a buying experience with your customer very early. You’ve got to find a way to make a little and sell a little. You can’t rely on market forecasts, which are notoriously wrong. They’re almost always wrong. You have to be informed by trying to find the way to sell this product, getting out into some sort of market situation and trying to sell it. [For example], you might go on QVC and try to sell it.The other day I had a company come to me and say: “Well, that’s great for consumer products. You can make a little and sell a little but we make enterprise software that sits on a computer.” I said, “Well, let’s think about this. How would we change your decision on your process? Let’s assume that you came to me, I am a big corporation, and you say, ” I’ve got this concept, are you going to buy it?”Well, I could say, I’ll always say, “yes.” Probably most companies will say “yes.” But if you came to me and said, “Hey, This is really going to improve your business. We would like $50,000 to develop the concept further. We’re going to give you a preferential position. You’re going to get five times that back in terms of pricing that’s going to save you all this,” and if I say “yes,” that’s going to be a big signal but if I say “no,” that’s going to tell you that I really didn’t believe in it.So you’ve got to find a way to invent into your process a real value exchange that forces the customer to put up something, to have some skin in the game when they give you advice on whether or not something is going to be successful. Most companies don’t do it. So one of the most important things that any company can do is figure out early in the process how to run the test.Consumers will say, “Oh, I am going to buy this” [when they are] in focus groups. So I’ve learned to go and knock on their door two months later and say: “Oh, you said you would buy this. Could you just give us your credit card because we’re ready to ship this to you”, and they say: “Well, I really don’t want it.” So you have got to figure out these kinds of things, and not work in rote ways because frankly, I think so much of the advice out there is very rote. Everybody is implementing the same systems and they’re not thinking through the human behavior issues, flaws and problems, and are not inventing around these. This is very much a thinking person’s game in trying to figure out how to be successful.
Knowledge@Wharton: In an earlier conversation you mentioned the discovery studio operation. What is that?
Huston: Well, discovery studio is an idea that we’ve implemented at 4INNO: “How do we create a really big business in one fifth of the time that it normally takes you to create a business? How can we create or conceptualize a half a billion or a billion dollar business in 16 to 20 weeks?”What we do is really work against a major three-step process which is, number one, let’s make sure on the front end that we’re asking the right questions; second, once we’re asking the right questions, how do we dig deep into the consumer, as I’ve just described to you; and then third, once we’ve dug deep into the consumer, how do we put together the concepts and technologies that are going to solve the problem?It’s driven from the right questions, which is very hard to do. [That’s because] it is very hard for you to ask a question that is out of your frame of experience. So if I say to you, “Tell me what you would do to create a new beer business or a new brand, and what are the right questions to ask,” you would have a hard time doing that.So what do we do? We look for analogies. What business has a situation that is similar to the beer business that is flat in sales? Coffee used to be that way. Think about coffee. You knew the coffee drinkers by how much grey hair they had, right? That wasn’t too long ago. It’s not that way now. But why did coffee go from declining sales to being a growth business?Well, there are all kinds of answers frankly, and it’s more than Starbucks. For example, I just came from another building, and we had a terrific espresso. The reason we had the espresso is that they had terrific espresso machines. All of a sudden you have terrific machines that have been deployed all over the place. Devices became important. Could we use a device strategy in beer in some way? Maybe we could find a way to do draft beer at home.How do I begin to ask right questions? One of the most important parts of creating big growth is asking new questions, asking the right questions, because most people operate in very rote ways about how they do things. Think of it as an environment and studio where it’s very inquiry driven, and you’re building in-depth knowledge, and you have all the creative tools to quickly formulate these things. Instead of taking three years, you could do it in six months and in significantly less time. Having the freedom to create a studio kind of environment where that kind of inquiry and learning can go on is very important.
Knowledge@Wharton: Can the consumer be a brand builder?
Huston: I think that the consumer can be a brand builder.
Knowledge@Wharton: How so?
Huston: First of all, social communities are really important. The Internet’s important. You see consumers being involved in brand building through things like YouTube, and creating advertising for companies. The key question is: In what ways can companies create benefits for consumers to build brands and to make a contribution to brand building at many more touch points?I think right now, there’s the storytelling, the news out there, and the things like the YouTubes of the world. There is an emergent whole new world where consumers are much more motivated to be involved with building brands at different kinds of touch points. This is an area under rapid development and evolution right now. It’s an area that we’re documenting in terms of stories and the like. I do think the next wave of open innovation is around consumers as brand builders.
Knowledge@Wharton: What are some of the challenges of launching new products in global markets?
Huston: In global markets, I think probably the biggest challenge for most companies is that they take an idea from a western geography, let’s say the U.S. or Europe, and just basically try to take the cost out — to get the price down in order to sell it in India or China or Indonesia, or wherever it might be. That mentality has been proven to lead to a lot of failure.You have to start with a clean sheet of paper and say, “What are the needs of these consumers?” You have to respect the needs of these consumers as unique. You have to design a product at a price point that meets their needs under their local conditions. That is the biggest challenge that the companies face. They have to develop the local consumer research, technology and sourcing strategies in each region in order to create terrific products at a price that consumers find delightful.
Knowledge@Wharton: What companies have been successful in doing this?
Huston: I don’t know. That’s a hard one for me to answer, because I don’t pay too much attention to products, and I don’t have many stories on the tip of my tongue. But I think Procter & Gamble is driving the growth of its international business quite well, and is creating good value for consumers. I don’t have enough of those details to give you a good answer.
Knowledge@Wharton: You may have answered this question in different ways in our conversation so far. How would you sum up your innovation philosophy?
Huston: I would say innovation philosophy, number one: It’s all about superior insights and intellect. It’s not all about money and scale. It’s knowledge driven and connections driven. To me, creativity is about connecting things. People sometimes confuse creativity and innovation. It’s really about having deep insights and connecting them: the consumer, the technology.I would say that current mental models are a big barrier. You have to learn to ask new questions. Setting big goals is big because it forces you outside the box. A discontinuous goal means an incremental answer is not going to be good. I’ll give you a simple example. Let’s say you are a high jumper, and you can get over a bar that is seven feet high. If I said, “I want you to get over a bar that is seven feet two,” what would you do? You would improve your kick or leg strength. If I said, “I want you to get over a bar that is 10 feet high, and I don’t care how you get over it,” what would you do? You would get a ladder, jump over a trampoline, or pole vault. But notice, as soon as I gave you a discontinuous goal, your mind went to a totally different dataset.That’s why discontinuous goals are important. If I give you an incremental goal, you will go to the dataset and the answers you already have in-house. If I give you a discontinuous goal, it will force you to immediately say, “I can’t solve this inside with what I know. I have to go outside.” Discontinuous goals are very important — the ability to ask the right questions, the ability to create deep knowledge and insights about consumers, and finally the idea that we can connect and create value rather than invent everything ourselves. Most people have the idea that if the consumer needs something we will run to our labs and invent it ourselves.The first question should be, do we already have it solved some place in our organization? Secondly, if not, has the world solved it? Most often, the world has solved it. Finally, if it’s not inside, and the world hasn’t solved it, then go invent it yourself. But don’t immediately have a knee-jerk reaction that we’re under the bench and think that you’re going to invent these things yourself. It’s just a waste of time and money. It doesn’t add value for the consumer in the end. It’s punishing to do that. Again, it all ties back to what I said about mindsets. Mindsets are a very big part of this.
Knowledge@Wharton: Thank you so much for joining us.
Huston: You’re welcome. I enjoyed it. Thank you very much.
Folks,
Please have a look at this, I got this email on one of my yahoo groups.
Check this out!
-Yogesh
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It’s a new (and free) member-driven community called Catalzye (www.mycatalyze.org), and I would like to invite the product managers in this group to check it out. Catalyze is meant to augment and complement the PSPM Yahoo Groups site.Catalyze is a member-driven community for all professionals involved in defining business systems, designing software applications and creating websites. If you are a product manager, business analyst, usability professional, UI designer, information architect, interaction designer, project manager or anyone else involved in the definition process of software applications, this community is for you and will be worth your time.Professionals approach application definition from many different angles and this community will “catalyze” or gather strength from all points of view to heighten the importance of this space. The challenges, issues and topics are similar across all of these professional functions, and Catalyze is the first community to bridge these diverse disciplines. Catalyze is a place to share, learn, find resources, offer opinions, get involved and make connections. The future direction of Catalyze will be driven by a group of community leaders who are experts in their fields and are committed to making Catalyze “the top destination” site for application definition and design professionals. Catalyze is also presented in association with the International Institute of Business Analysts (IIBA) and with the Usability Professionals Association (UPA).There is no cost to join the Catalyze community – and all members will be able to contribute content to the community via blogs, discussion forums, resource library and event calendar. Members can create extensive profiles and will be able to search and network with others who with similar interests. Catalyze also uses the latest in Web 2.0 technologies to enable the community experience.
Thanks!
by Karim R. Lakhani and Lars Bo JeppesenFor even the toughest of R&D problems, there are often people out there with innovative solutions already on their shelves or in their back pockets. The trick for corporate executives is finding and gaining access to those individuals. Our research with a company that broadcasts technological problems into the ether—and gets back solid results—has given us a profile of the kind of people most likely to solve R&D puzzles. We wonder whether firms might be able to emulate this method to draw new insights from the talents and expertise of their own employees.A little background: Open-source software communities have shown that broadcasting technical conundrums to a broad network of individuals can yield effective solutions. Open-source problem solving has now migrated beyond software to industries as diverse as custom integrated circuits, biotechnology, pharmaceuticals, content production, and music.Our profile was drawn using data from InnoCentive, the well-known Andover, Massachusetts, company that posts corporate R&D problems for outsiders to solve, offering substantial monetary prizes. In collaboration with InnoCentive, client companies have learned to break up their problems in sophisticated ways to avoid revealing strategy and other proprietary information. In a remarkable 30% of cases, problems that could not be solved by experienced corporate research staffs were cracked by nonemployees. When we analyzed all the problems broadcast from 2001 to 2004, we found that on average, each one received detailed attention from more than 200 people and received ten solution submissions. It’s similar to what the British Parliament did in 1714 when it solicited ideas for obtaining longitude at sea and got a solution from an unknown Yorkshire clock maker, John Harrison.We were curious about today’s John Harrisons. What fields are they in? What motivates them? Could a system in which companies post their R&D problems for outsiders ultimately replace an internal R&D staff? Through our studies with Jill Panetta and Peter Lohse of InnoCentive, we found these answers:Problems should be broadcast to people in varied fields.Radical innovations often happen at the intersections of disciplines. In fact, the more diverse the problem-solving population, the more likely a problem is to be solved. People tend to link problems that are distant from their fields with solutions they’ve encountered in their own work.A pharmaceutical firm’s researchers were stumped, for instance, by the unexpected results they encountered from a toxicology test in a drug study, even after consulting with toxicologists inside and outside the company. After being broadcast by InnoCentive, the puzzle was solved by a scientist with a PhD in protein crystallography who didn’t normally encounter toxicology problems but was able to apply methods common in her field. In another case, an aerospace physicist, a small-agribusiness owner, a specialist in transdermal drug delivery, and an industrial scientist came up with entirely unique solutions to a problem in polymer science.Prizes are necessary but not sufficient.Our analysis shows that prize money is important in motivating individuals to participate—people expect financial rewards for solving corporations’ problems, and, indeed, firms must pay for solutions in order to retain the IP rights to them. But the enjoyment of taking on a novel problem is a bigger draw: We found no significant correlation between the size of the prize and a problem’s likelihood of being solved.Insiders are still important.Scientists and engineers inside the company are critically important in determining which problems should be broadcast and which potential solutions are best. And they are needed to help implement the solutions in products.Reprint: F0705H
Posted by Jim Andrew and Hal Sirkin on June 13, 2007 11:31 AMJim Andrew and Hal Sirkin are Senior Partners and Managing Directors of The Boston Consulting Group and coauthors of Payback: Reaping the Rewards of Innovation.If you read recent cover stories in BusinessWeek and the Economist, you might conclude that Apple is the ultimate innovator. And you might be right. The company has reinvented itself multiple times and in the process has already transformed at least two industries — personal computing and digital music. What will be the impact of the iPhone? While there are no certainties, “major” seems to be a safe bet.So — is Apple’s continued innovation leadership a foregone conclusion? Not necessarily. As good as its track record has been, like every great innovator, Apple has had its share of mishaps, too. More fundamentally, our experience (as reflected in our book, Payback) tells us that there are many keys to long-term innovation success for any company — and very few organizations manage to maintain success for extended periods of time. First, innovation leadership needs to come from the very top, across generations. “From the top” isn’t a problem at Apple — obviously. But Apple will have to face the generational challenge at some point. Steve Jobs has been in charge for virtually decades. Who are the other Apple innovation leaders? How will a future, Job-less Apple continue to innovate at the same high level?Long-term innovation leaders make sure that the entire organization is aligned to support innovation. Again, no problem for Apple right now — but it’s easy for organizations to get out of alignment, slowly, incrementally, as other goals and priorities creep in. As long as Jobs is firmly in the saddle and the product set stays limited there’s less cause to worry — but with other leadership, and as Apple acquires more partners with agendas of their own, and the product line continues to extend, the focus may soften.Finally, long-term innovators are humble. They’re always looking out — watching competitors, listening to customers, picking up on trends — and finding ways to turn ideas into cash payback, which is the real test of innovation success. And innovation isn’t just about ideas — it’s about using ideas to generate incremental profit. Any company that falls in love with its cover stories — and with its ideas as opposed to its execution — is in danger of becoming an innovation also-ran. So far, Apple has successfully avoided this but it’s happened before — just ask any number of formerly “great innovators” who have fallen from grace. So, best of luck, Apple — but be careful out there.
Key ideas from the Harvard Business Review article by Satish Nambisan and Mohanbir Sawhney
The Idea
It’s smart to look outside your organization for sources of innovation. But the prevailing methods present unattractive trade-offs. For example, shopping for raw ideas costs less, yet it’s riskier and lengthens your time to market. Shopping for market-ready products (for example, through an acquisition) gets you to market faster, but it’s expensive.What to do? Nambisan and Sawhney recommend adding a third approach: shopping for market-ready ideas. This method falls between the two extremes of shopping for raw ideas and market-ready products. To use it, find an innovation capitalist firm to identify commercially viable ideas and to refine them so you can evaluate their manufacturing feasibility. Innovation capitalists reduce your risk by spending their money to develop a promising idea. And they help you avoid the up-front costs of acquiring fully baked products.Expand your shopping strategies, and you get first dibs on the most exciting ideas percolating outside your firm—without paying top dollar.
The Idea in Practice
Nambisan and Sawhney offer these suggestions for skillfully sourcing external innovation.Choose the Best Approaches to Outside InnovationYou don’t need to—and you shouldn’t—rely exclusively on one approach to source external innovation. Blend approaches based on your industry and company’s circumstances. To identify the right mix, locate where your company falls relative to factors like those listed in the left-hand column. Notice where your responses cluster.Use an Innovation Capitalist to Find Market-Ready IdeasHave you decided to shop for market-ready ideas? If so, build a productive relationship with an innovation capitalist firm through these means:• Understand its role. Innovation capitalists identify ideas with commercial potential through word of mouth. They chase down inventors behind the ideas, negotiate partial ownership of ideas, and fund ideas’ development. Throughout, they draw on their deep industry knowledge and maintain a sharp market focus. They then offer the fully developed product concept to interested companies. For their contributions, they share the revenues their client companies get from commercializing the new products. • Nurture a long-term, trusting relationship. Innovation capitalists contribute a unique combination of industry, market, networking, and innovation-management skills, as well as assume some development risk. To capitalize on their talents, share information about your innovation priorities, business goals, and internal processes. The more they know about you, the more they can offer value that complements your capabilities. • Educate your internal units about innovation capitalists. When internal units—particularly R&D—understand innovation capitalists’ unique role, they’re less likely to experience the “not invented here” syndrome.
Business 2.0 