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Business News/ Mint-lounge / Decoding the innovation puzzle
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Decoding the innovation puzzle

Decoding the innovation puzzle

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Innovation expert Scott D. Anthony, in his newbook The Little Black Book of Innovation: How It Works, How to Do It, says “the best innovators follow a disciplined process to discover opportunities to do something different that has impact".

In his new book, packed with case studies, Anthony says innovation can be developed like a skill, spelling out a 28-day programme to help managers think like innovators. In an email interview, Anthony talks about areas of work that facilitate prolific innovation. Edited excerpts:

Tell us some key mindsets that can increase the chances of successful innovation.

There are three that I find most critical. The first is to draw inspiration externally. That is, instead of saying, “Here’s what I have, what can I do with it?", ask, “What is it the market wants and needs, and how do I deliver against it?" Procter & Gamble embodies this mindset—the company’s goal is to understand the consumer better than he or she understands themselves.

Pathfinder: Scott D. Anthony.

The third mindset is to be willing to organize and act differently. Companies seeking to drive innovation have to organize and act in different ways. Otherwise they fall into Einstein’s definition of insanity: following the same behaviour but expecting different results.

Innovation seems to do a lot with what market to target. Explain how innovation and non-consumption tie in together?

The basic idea is that many great innovations essentially unlock demand that was pent-up because existing solutions are too expensive or complicated. In other words, there’s a market opportunity just sitting there, waiting for someone to develop a convenient, affordable solution. Godrej & Boyce has demonstrated this with its ChotuKool refrigerator. The vast majority of the Indian market wants the benefits of refrigeration, but needs a solution that is smaller, less power hungry, and more portable. Innovators often get fooled by looking at today’s big markets—if you address barriers constraining consumption you create tomorrow’s big markets.

Often innovation feels like shooting arrows in the dark? How does one know that the opportunity you’ve spotted, and others have missed, is for real?

If you look back at the great-growth businesses over the past 30 years, you notice very clear patterns. If you school yourself in the patterns, it helps make attractive opportunities obvious. Non-consumption is one part of the pattern. Simplifying technology is another. Distinct and powerful business models is a third. These and other patterns can be great guides to opportunities.

Take the risk: Act and think differently to get results.

Necessity is the mother of invention, but you have a slightly different viewpoint. Tell us about selective scarcity.

The way I frame it in the book is by asking why is it that Steve Jobs didn’t come from sub-Saharan Africa? While I do believe that creativity often comes out of constrained environments—the notion of frugal innovation or jugaad demonstrates this—too much scarcity leads to starvation. The notion of selective scarcity is to put thoughtful constraints on innovation. I generally like focused teams, a single point of decision, and relatively short development cycles. These constraints make it impossible to waste too much money.

It’s one thing to churn out several new innovative ideas, and another to translate them into action which have financial benefit. Is there an easy way to check profitability of ideas early on.

It’s hard to know for sure if an idea is going to make money until you’ve actually earned the revenue and covered the costs. The way we think about it at Innosight is to start with a story. How exactly are you going to earn money, turn that into profits, and turn profits into cash flow? Then, use a tool called a reverse income statement that works backwards from profits or cash flows to pinpoint underlying assumptions. Run focused experiments on those assumptions to build confidence in an idea’s profit potential.

Is innovation more like a stroke of luck or is it a skill that can be cultivated?

There’s an emerging stream of research—summarized most clearly in The Innovator’s DNA by (Jeffrey H.) Dyer, (Hal B.) Gregersen, and (Clayton M.) Christensen—that innovation is indeed a skill that can be cultivated. I’ve seen demonstrated success of companies and individuals getting better at innovation by approaching it in a disciplined way. This isn’t just a “nice thing to do"—the pace of change in today’s markets demands it. This isn’t just true in our jobs by the way. The way we live, communicate, and play is changing so fast. Mastering innovation is critical for all of us.

Where should Indian companies look for growth?

The middle class is growing so rapidly in India and many other Asian countries. That tier of the market has been ignored for too long. People have either gone where the money is (the rich) or where the greatest population is (the so called bottom of the pyramid). The next frontier is developing innovative ways to meet the unique needs of the emerging middle class.

komal.sharma@livemint.com

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Published: 19 Feb 2012, 08:58 PM IST
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