Biology and Innovation

Welcome back to 10types of innovation!

I have always loved the science course when I was in high school and I still remember the first principle of science: everything that grows, dies. Don’t worry, I will not bore you with science and biology, this concept, in fact, can be applied also to every product or service innovation. Every innovation, including the product HuskyBand and the new Njabini website follows a life cycle. Keep in mind the scheme above, because I am going to re-analyze it later. Now let’s start our journey, from when we stopped in the previous blog: the idea is ready to be launched into the market and it has become an innovation.

The first step is the embryonic stage. The innovation is newly born and, as a little child, it has to be feed and groomed, The HuskyBand and the new Njabini website are still in this stage. Only few people are able to recognize the potential of these innovations: these people are the innovators and the early adopters. Then the innovation grows and the early majority starts adopting it; when the late majority knows about the innovation, it means that it has reached the maturity stage. In conclusion, the innovation declines and in this period, the laggards start using it. The figure above shows the shape of the lifecycle, while in terms of market share, an innovation follows an S curve. It reaches the 100 % of market share when everyone has adopted the innovation including the laggards. The almost saturation of the market means the beginning of the decline phase.

 

 

 

The blue line is the life cycle of the innovation, while the orange line is the adoption of the innovation in terms of market share

The S curve is really useful for the companies because it shows the accumulation of the adoption of their innovation. When it reaches the 100 % of market share, companies should be able to change S curve, starting a new innovation and a new life cycle.

As a child needs his mom, an innovation needs people behind it. The figure of the entrepreneur is the mother of every product/service innovation and he is also the one who takes the risk of launching an idea into the market. There are different types of entrepreneurs: small business owners, professional and fast growth entrepreneurs, intrapreneurs or social entrepreneurs. Cognitions and experiences determine what type of entrepreneur you are.

 

The intersection between great ideas and people results in the ventures. There are different types of venture but every venture follows the science principle explained (and drawn) before: everything that grows, dies. Similarly to the innovation itself, ventures follow a general life cycle; obviously a small business venture doesn’t have the same lifecycle of a start-up or of a large company. A small business company has a less impact and it stays in the maturity phase more than in the embryonic and growth stage. A start-up, instead, has more impact and it has to put its large efforts in the embryonic phase. That’s why it is more interesting focusing on the lifecycle of start-ups.

From the scheme above, we can see that the embryonic phase for a start- up is essential because it is the stage in which a venture needs money to become a successful company. We can divide the embryonic stage into five developmental phases: idea, feasibility, verification, demonstration and commercialization.

 

 

Each following phase need more money to be implemented. If 1 $ is needed to develop an idea, 1,000 $ is needed in the demonstration phase while 10,000 $ is needed in the commercialization. Start-ups and ventures have many ways to raise fund depending on the stage in which they are. (Frank Demmler, Raising money for new and emerging companies)

In the idea/feasibility phases, start- ups usually raise funds with debt (from family and friends) or they are helped by government programs. In the next phase the Angel investors enter to help the new company, while in the demonstration and commercialization phase, Venture capital replaces the Angel investors. Only in the last phase, the company enters in the stock market with an IPO (Initial public offering).

In this scheme, it is important to underline the difference between Angel investors and Venture capitals. The Angels are usually an invisible group of wealthy managers who gives money in exchange of a percentage of the company. Usually the angels fund the company for 3/5 years and then they left. Venture capitalists are instead investment managers who raise money and invest in other companies. Similarly to the angels, they have a percentage of the company but they expect more than the angels because they are more involved in the management of the company and they fund the venture for 7/10 years.

Angels Investors vs. Venture capitalists





The new venture has to face another important problem in the embryonic stage: its products/services have to be protected and the owners need to be granted with certain exclusive rights for their innovations. In the USA, There are four different types of Intellectual Property depending on what is the tangible/intangible asset the company wants to protect: Trade secret, Utility or design patent, copyright and trademark. The HuskyBand would need a design patent while Njabini new website would be protected by a trademark. The problem of IP is not present only in the embryonic stage; when the product reaches its maturity stage for example, some other companies could ask for technology licensing, and the venture should be prepared for negotiating its license.

While the embryonic stage is essential for start-ups, the maturity phase is important in large companies because they need to re-innovate continuously themselves in order to avoid the decline stage. One way to innovate a large company is to create an internal corporate venturing or a spin off. A spin off is when a company splits off a section of itself or when some employees leave to form an independent start-up firm. If we continue on our “biological” comparison, a spin-off is the teenager who leaves his house to go to college.  In addition, an internal corporate venturing or a spin off allows large companies to go outside their comfort zone. They, in fact, have to be able to create other lifecycles, innovating their products/services continuously.  If I were an employee of a large company, I would probably try to create a spin off using new ideas in order to innovate my company and start a new lifecycle. It could be hard and I will probably fail but maybe, in few years, I will become the new CEO of an internal corporate venturing!

So, employees don’t be shy and get out of your comfort zone!

 

 

a conversation I had..

Welcome again to 10types of innovation!

This time I want to talk to you about a conversation  I had with an engineering student and a marketing student. When I met them, they were arguing about the sources for an innovation; the engineer (I will call him Steve) strongly believed that the technology push innovation was the most suitable source for the customers’ needs , while the marketing student (I will call her Lisa) argued that market pull innovation was the best for the customers because it follows their trends.

 I listened silently their argumentations until Lisa asked me: “What do you think? What is the best source of innovation for you?”.

 I simply answered her: “ none of the two; there is a third source of innovation that you didn’t mentioned: the design driven innovation”.

 Before talking about the process of this third source; I explained to Steve and Lisa why their sources aren’t better than design driven. Steve’s main argument was that technology push innovation solves problems the customers have. It is true, but most of the engineers and R&D analysts care only about the problem and  don’t care about the customer during their tech push process: they spend hours and hours in their labs without considering   their final buyers.

Steve at work. Do you see some customer behind him?

“it‘s true Steve! You don’t care about the customer, while I am always concerned about his/her needs” Lisa said.

 I immediately stopped her: the market pull innovation looks for trend in the market, but the marketing studies only what the customers think they need. The market pull innovation only looks inside the customers’ categories.

Lisa and her marketing friends: following a trend is a short term innovation

The truth is that “the customers don’t know what they need, until you show it to them” (Steve Jobs).

The design driven innovation, instead, starts with customer’s aspirations, desires and values. The DD innovation don’t look at customer’s categories because  when you ask people what they want, they  lie. That’s why designers not only listen what existing or potential customers have to say, they also observe what they do and what they currently use: this is a process called ethnography. (Understanding customer need during new product development).

Ethnography helps designers to go out to customers categories and find what they really think is the” job to be done” by the product or the service.

“ok you have gone too far, what are the steps that you want to take to arrive at your product/service innovation?” Steve asked me. 

“Let me explain using the Continuum process and my personal experience. “

Everything starts with a problem that our potential customer have; for example my product innovation team and I focused our attention on a time management problem: students don’t manage their time well. After the problem statement, in the DD process, you need to focus on how your customer manage, at present, this problem and there is one only thing you have to do: data research.

The data research can be done in different ways : here it comes the ethnography that I explained you before. My project innovation team chose to interview some students at the library and to observe them in their natural “habitat”. If you are thinking about a service, instead, you should focus not only on your potential customers, but also on the stakeholders (who is “inside” the business you want to innovate).

"Ethnography: observing what the customers do and want"

The second step is the data analysis; it is important to look at present data “what is” or, as I mentioned before, “what are the jobs to be done” ,according to customers, in order to discover the opportunity area.

My service innovation project is currently analyzing raw data using the mind mapping, the journey mapping and the analogy. These frameworks are very important because they let you discover what are the real customers’ needs.  In addition we compared our data with a secondary source in order to find similarities and differences between what we have found and what the statistics said.

Journey mapping from my product innovation team 

"People need motivation to manage their time"

“People need motivation to manage their time? I have never thought about it! “ Lisa exclaimed

 “That’s because you are going out of your categories” I replied her “now Let’s come back to my experience.” After having found the POV, we started thinking about the “what if” possibilities: the imagination and our creativity started flowing and the idea came up: the HuskyBand

"Here it comes the innovation!” Steve said.

“ Not yet. There are still important steps in the design driven innovation process. Firstly you need to know “what wows”, in order terms “what would need to be true for my concept to be a good one?” (Analysis tool for research data).

The former step is the analysis of your product competitors; this is an important step because you need to know yourself, your competitors and how you differentiate from them. There are different sources where you can find information of your competitors such as Crunchbase, AngelList and Quora.

The latter is the concept testing. The concept testing is the filter that can transform your invention into an innovation; it is the testing of your new product or service into the marketplace. For the HuskyBand we have decided at first to show our product to our potential customers without the description of the product and then to explain them what was; with a new service ,instead, you should test your invention with the business staff, the technology staff and with their potential customers.

 Concept testing is necessary because it allows people to go out from their categories and it is compulsory because it avoid “false starts, wrong positioning, poor strategy and selling to the wrong people”(The concept of concept testing).

Only after concept testing, your innovation will be ready to the real market “what works” but, before that, you have to create the business model.” The business model” is how you can realize your business plan; but be careful! the business model  can make the difference between world leading success and dismail failure” (Business model canvas) .  

Check “the business model canvas” made by Alexander Osterwalder, before building one in your own way ; it will help you to fit all of your pieces together. 

“In conclusion- I told them- Research, analysis, POV, invention, competitors ,concept testing and business model: these are the ingredients that you need to use in the design driven process “what is, what if, what wows ad what works “

It seems difficult and boring, but trust me, you will get better results and you will create new meanings into the market, whether your innovation is radical or incremental”. 

INNOVATION RECIPE

Welcome to 10types of innovation!

This post contains an interesting recipe.  However you are not on a culinary blog and I am not a professional cook (by the way neither a basic one).

In fact, I am going to talk about how you can “cook” an innovation starting from your own experiences and how you can “differentiate” your  innovation main course.

Do not worry about your firsts results: It takes time to understand how to mix in a perfect way all these ingredients, but I will help you giving some pictures and important nutritional information.

 So, Let’s start talking about our main “ingredients”:

INGREDIENTS

-          A “lazy piece of meat” Brain who will become our primary source (1,1-1,5 kg)

-          experiences (both physical and emotional) (as required)

   1) take a physical or an emotional experience: it doesn’t matter what kind of experience; we live old and new experiences in every moment of our day.  Just grab one of them! 

   2) perceive your experience through the five senses: sight, touch, taste, hear and smell. These are interconnected with your brain: our most important primary ingredient.

      Our brain, however, is “a lazy piece of meat” (http://www.fastcompany.com/1007044/neuroscience-sheds-new-light-creativity.) and it will try to categorize your experience into an old pattern, putting it into the BOX (see figure 1)

      BE CAREFUL!   

        Your purpose is to create a new pattern, putting your experience outside the BOX. Therefore, you will have to live NEW experiences such as finding new places, meeting with new people or simply doing your normal activities in a different way.

        Once you have created a new pattern, your perception of the experience will be transformed into imagination and creativity: you are thinking outside the BOX.

The result of our first recipe is CREATIVITY.  

If you mix and whip creativity, imagination and new ideas, you will get an INVENTION that is the first occurrence of a creative idea.

        How it comes the most difficult part: how an invention can be transformed into an innovation.

        Why there are so many inventions and few innovations?

        In a normal recipe not every ingredient will be part of the final recipe. Some of these, in fact, will not pass on the cooking filter

        In our case the market is the cooking filter: only few invention becomes an INNOVATION that is the first attempt to carry an invention into practice.  

        BUT you don’t have to necessarily create a new invention to have an innovation.  You can choose from an existing invention and try to pass it into your “cooking filter”: it will result an innovation defined within market space.

 

            



Finally we have our main course: INNOVATION! But what does it taste like?

You can “cook” innovation in many ways, but I think that the most delicious are:

1)      RADICAL INNOVATION

2)      INCREMENTAL INNOVATION

3)      DISRUPTIVE INNOVATION

The saltiest: RADICAL INNOVATION

Do you really want to try new tastes? Do you think that your innovation will be a “cook” changer? 

You should cook a radical innovation: it will create new technologies and it will use new market spaces without affecting the existing markets.

Pizza Hut used to be a radical innovation: it didn’t affect” the pizzeria business” but it created a new market using new technologies.

The sweetest: INCREMENTAL INNOVATION

Are you a traditional cook? Do you think that you will “cook on” current innovation?

You should make an incremental innovation: it uses existing forms of technology for a new purpose, focusing on costs and improving competiveness.

Mc Donald’s now offers to its customers incremental variety of food, it started only wit h burgers and fries but now it has a wide range of food and beverages.

 

The spiciest: DISTRUPTIVE INNOVATION

Do you want to have “dead ingredients” in your wake?

You should try a disruptive innovation. It will disrupt other markets, creating a new one.

Starbucks is the best example of disruptive innovation: it has completely changed the meaning of “drinking a coffee” and has created a new “coffee market”.

 IMPORTANT NUTRITIONAL INFORMATION

   In the innovation recipe we have talked about two terms: technology and meaning. These are seen “as two dimensions where innovation can happen. The two are related, and as such there’s always a bit of each in every innovation. “(http://intenseminimalism.com/2012/incremental-and-radical-innovation-can-user-centered-design-help/)

Tech Push innovation is looking for solutions before turning “onto the market without proper consideration of whether or not it satisfies a use need”( http://en.wikipedia.org/wiki/Technology_push)

Market pull innovation,  is looking for trends in the market.

Meaning-driven innovation not only looks for trends in the market but also gives new  and radical meanings.

      MAIN COURSE PRESENTATION

Now the dinner is almost ready! But every professional cook knows that “the meal presentation” is as important as the preparation. How should you serve your new innovation to your customers? Do you want to focus on main course configuration, offerings or experience?

A Doblin research find 10types of innovation and “showed that companies that integrate multiple types of innovation will develop offerings that are more difficult to copy and that generate higher returns.”( http://www.doblin.com/thinking/#ten-types)

      They are divided in 3 main categories: configuration, offerings and experience.



Do you want to focus on your “meal structure”? You should align your talents and assets. Whole foods did it and now is one of the most important in its field.

Do you want to deliver your main course to your customers using a different channel? Nepresso should be your model; they sell their coffee only in their shops together with their particular coffee makers.

Do you want to concentrate on your service? “Bubba Gump”, a seafood restaurant chain, have waiters that sit with customers asking them challenging questions.

CONCLUSION

Whatever you choose, remember that now “innovation is the chef specialty of any enterprise”  and its process starts only from you, your experience and your brain.

If you follow my innovation recipe, you will prepare fantastic chef specialties!

BUON APPETITO!