ELEVEN
The Tactics of Innovative Companies
CHAPTER SUMMARY: This chapter covers tactics that companies, large and small, are using to foster innovation. There are many such tactics, and broadly speaking they include innovation prizes and contests, design sprints, crowdfunding, lean methodologies, borrowing, and recruiting rule breakers and dreamers.
There are many paths to innovation and many viable ways to encourage employees and stakeholders to come up with novel products, solutions, and services. In this chapter, we cover what we consider some of the most viable and well-trialed systems and methodologies applicable directly in an organization, without necessarily spending a lot of money or instituting changes difficult to undo.
Innovation Prizes and Contests
The Ansari XPRIZE was conceived and launched in 1996 to foster innovation in space launches and space flight. The $10 million prize was to be awarded to the first team that could “Build a reliable, re-usable, privately financed, manned spaceship capable of carrying three people to 100 kilometers above the Earth’s surface twice within two weeks.” This contest launched innovation in affordable, efficient suborbital space flight. It also captured the imagination and attention of a generation of leading engineers. Won by pioneering aerospace entrepreneur Burt Rutan with backing from Microsoft billionaire Paul Allen on October 4, 2004, the XPRIZE made clear that space flight was a field ripe for innovation despite the heavy presence of such established incumbents as Boeing and Arianespace. The relatively small price of this first XPRIZE contest unlocked many billions of dollars in finance.
Another classic, wildly successful innovation challenge was the DARPA Grand Challenge. In the United States, the Defense Advanced Research Projects Administration (DARPA) has initiated a series of scientific challenges that have attracted top research teams from academia and industry. The first DARPA Grand Challenge, with a $1 million prize, held on March 13, 2004, in the Mojave Desert of the United States, was a race to see which autonomous vehicle could travel the greatest distance along a defined route. None of the robot vehicles completed the route, and the winning entrant, from Carnegie Mellon University, traveled only 11.78 kilometers (7.32 miles) of the course before becoming stuck. Later races expanded to cross-country jaunts and then to drones. The teams and researchers involved went on to form the backbone of many of the leading autonomous vehicle efforts that are powering driverless car innovation around the world.
Less prestigious and ambitious contests too can effectively attract innovation and even new products. In the United Kingdom, the government’s Innovate UK portal offers money to finance product development and prototypes to companies and groups solving specific problems. For example, one prize posted offered an opportunity “for businesses to apply for a share of £1.08 million, plus VAT, to develop solutions to detect and deter trespass at railway platform ends and edges.”1 Innovate UK has attracted dozens of bids for funding to solve problems that various government agencies in transportation, defense, and health care have raised.
Innovation contests can also work well for small, arguably mundane innovations. For example, what are new uses for duct tape? ShurTech, the owners of the Duck Tape brand of duct tape (an umbrella term for a tape style originally used for affixing insulation and making repairs to pipes and ducts and serving as something of a Swiss Army knife for anything requiring adhesion), has become legendary for running hilarious contests in which consumers show off unexpected uses for duct tape. Contest examples have included a “Stuck at Prom” contest, in which U.S. high-school students designed clothing for the “prom,” a popular end-of-year dance event.2 ShurTech gave away a $10,000 college scholarship to the winner. The original maker of duct tape, 3M, runs its own contests on the Instructables websites, and some of the contests’ products have been astounding; a working duct-tape kayak and a lawn chair are two examples. Besides increasing product consumption, such whimsical contests spread ideas on product usage, for just a few thousand dollars.
Innovation contests are not limited to product development; innovation prizes can also foster marketing efforts, rewarding the best campaign ideas, the most compelling videos, the funniest advertisements, the best time-saving idea, and many others. This contest ethos directly affirms that everyone is a potential innovator and inventor.
Design Thinking and Design Sprints
Design firms such as IDEO, Frog Design, and Fjord have long been pioneers in building products that reflect user needs and wants. That aim, often overlooked by in-house teams building products in isolation, is one that design thinking, originating in the 1990s, addresses directly.
As summarized by IDEO, “Design thinking is a process for creative problem solving” with a human-centric approach. It lays out a system and approach for focusing design efforts through listening to the people for whom they are creating. This leads to better products and services, and also tends to clarify and streamline internal processes. Design thinking has also been applied in software development, in what’s called the agile methodology, wherein every major part of a team’s work is broken down into discrete components and described as a “user story” through the eyes of the user. As IDEO explains on its educational website IDEO U: “When you sit down to create a solution for a business need, the first question should always be what’s the human need behind it?”3 Design thinking uses simple tools—whitegboards, pens, paper—to create an inclusive process that puts technical and nontechnical workers on an even footing.
One of the most common ways to apply design thinking is design sprints. A low-cost program originating at Google in 2010, design sprints focuses on putting a client’s team into the shoes of a targeted customer or buyer to design and test a new product for that buyer within a week. Design sprints is low tech (paper and pens) and low risk; its client’s primary cost is its participating team’s time. Google even uses its own service: GV (formerly Google Ventures), Google’s venture-capital arm, has a design sprints team that assists funded startups in idea development.
Design sprints in action are a blast. On Day 1, the team defines and maps the problem. On Day 2, individual participants sketch out ideas for solutions. On Day 3, the group votes or decides on which sketches have the greatest potential. On Day 4, the team (sometimes with help) builds a realistic a prototype—which can be as simple as a series of drawings on a legal pad to simulate an iPhone app or as sophisticated as a 3D printed part or even a prototype piece of software. On Day 5, teams test that prototype with five target customers and gather feedback to understand whether their proposed product will resonate with them.
Many notable technology companies and brands use design sprints, including Airbnb, Dropbox, Facebook, Google, LEGO, McKinsey, Medium, The New York Times, Slack, and Uber.
The design sprint is not just low risk and efficient; it also serves to take a team out of its usual office work and environment and empowers it to solve a challenging problem and exercise its members’ minds in unexpected ways. These tend to be heavily visual, with participants drawing their ideas. Design sprints also level hierarchies usefully; one of the charges of a design sprint’s leader is to make sure that everyone contributes and that everyone’s contribution is equally valued.
Crowdfunding
In November 2017, the well-regarded German audio electronics concern Bose did something strange: it launched a crowdfunding campaign on the popular crowdfunding site Indiegogo, seeking to raise $50,000 to cover the costs of prototyping a new type of sound-masking earbuds. A pair of these, fitted into the ears, would help users go to sleep.
The campaign went on to raise more than $450,000 in contributions from more than 2,900 backers (whose backing effectively pre-purchased the prototype earbuds). The campaign in reality was far less about fundraising than about product validation: confirming that the idea had legs and a real market. Additionally, Bose’s product team was able to recruit a large audience of energized, responsive participants into the project, giving Bose a high volume of high-quality feedback. Data and insights gathered from the project eventually led to a second version of the product, which hit the market in late 2018 and is still available today. Those who purchased the original, prototype devices received free upgrades to the production version.
A growing number of organizations are using crowdfunding sites to economically test a product concept on a large audience and to simultaneously test their marketing messages for social selling, email marketing, and other types of campaigns requisite to selling via non-traditional but influential online outlets. The benefits of crowdfunding campaigns are many. Cheaper and offering stronger verification than focus groups, they often present a strong marketing opportunity to attain brand recognition. The fast timetables required enforce innovation discipline in legacy companies’ teams. The Bose project, for instance, took a single year, a relatively brisk period for launching a new electronics product.
Lean Methodologies
Popularized by entrepreneurs Steve Blank and Eric Ries, the “lean startup” is a way for innovative businesses to attenuate development cycles and quickly learn whether a proposed business model is viable.4 Its premise is that startup companies that work to iteratively build products or services designed to solve problems for early customers can minimize market risks and wastage of money on untested feature development and expensive product launches that have not yet been validated as meeting customer needs. Blank and Ries espouse a number of simple ways to test product ideas and get feedback quickly and effectively, without spending a lot of money on technology or focus panels. The goal is to get to a viable product and revenue stream as quickly as possible with minimal risk.
Ries and Blank initially applied this perspective to startups to increase their prospects of commercial success. Its principles have since been applied to innovation processes inside companies of all sizes, not just for new products but also as a way to solve problems. In that sense, the lean startup is closely related to design thinking, but it entails a more drawn-out process.
Borrowing Liberally and Literally
If you are not borrowing ideas from competitors or others, then you are not doing your job. We are not advocating stealing intellectual property or commercial secrets, but rather smart copying and learning from competitors, applying their best offerings to your own products and services.
Silicon Valley succeeds because it excels in sharing ideas and building on the work of others. As Steve Jobs said in 1994, “Picasso had a saying: ‘Good artists copy, great artists steal’, and we have, you know, always been shameless about stealing great ideas.”5 Almost every Apple product has features that were first developed by others; rarely do its technologies wholly originate within the company. The iPod, for example, was invented by British inventor Kane Kramer; iTunes was built on SoundJam MP, a technology purchased from Casady & Greene; and the iPhone frequently copies Samsung’s mobile technologies, and vice versa.
Mark Zuckerberg also built Facebook by taking pages from Myspace and Friendster, and he continues to copy others’ products. Facebook Places is a replica of Foursquare; Messenger video imitates Skype; Facebook Stories is a clone of Snapchat; and Facebook Live combines the best features of Meerkat and Periscope. Facebook tried mimicking WhatsApp but couldn’t gain market share, so it spent a fortune purchasing the company. This is another one of Silicon Valley’s methods: if stealing doesn’t work, then buy the company.
There is no shame in copying. Innovation smartly borrowed and used to a new end works just as well as innovation arising from within, so teams should recognize that their best idea may be a better version of their competitor’s or partner’s idea.
Recruiting Rulebreakers and Dreamers
Just as critical as these tactics is capturing the interest of the innovators in your midst. Often the best innovators may not look like the most productive employees. The director of the groundbreaking Pixar Studios feature animation Incredibles 2, Brad Bird, heard from nearly everyone at the studio that the movie he wanted to make would be technologically impossible.6 One of the biggest challenges was to realistically depict flowing hair, and computer graphics systems at the time could not make animated hair lifelike. So Bird sought out employees who were dissatisfied with their roles at Pixar (though not with the company itself). From these people he formed a flock of black sheep who were told to break the rules and just solve the big problems—like flowing hair—without reference to established methods. Identifying and unleashing the yearning to do something better, Pixar created an entirely new way of doing animation, not to mention the highest-grossing animation film series in the history of cinema. Recognizing who might be innovators and offering them the chance and the space to “think different” is just as important as deploying the latest models of innovation. Some people just want to innovate. Finding them and setting them free can pay disproportionate dividends.