Innovate Innovate
by Margaret Heffernan

About six years ago, I was running a technology company that, as my board astutely pointed out, had "a positioning problem." We were producing a middle-of-the-road product and middle of the road, I was reminded, was where you got run over. Like many software companies, we had built a product that had something for everyone - so it appealed to no one in particular. We kept adding features (technologists usually think this is the answer) but that just made it even harder to explain. The harder we worked, the bigger the software - and the problem - grew.

That's when I first understood the true meaning of the slogan "innovate or die." But innovate couldn't mean more cool features; it had to mean something more profound and simpler than that. And our innovation had to be something we could execute fast. The "die" part of the slogan was becoming very real.

But innovation's hard. Research shows that successful innovators use one of three methods: a structured approach (having a research and development team, separate from the core business) a creative approach (big ideas and brainstorming) and a dynamic approach (which is a bit of both.) The dynamic approach seems to be the more successful because new ideas remain part of the main business but new ideas evolve constantly. Innovation and leadership are intertwined; if the leaders aren't constantly on the lookout for new ideas and ways of thinking, no one innovates or, if they do, no one pays attention.

What we did was, I realize now, adopt a dynamic approach. I brought some of my smartest employees together with a brilliant outsider, locked us all in a room together for days, and waited for creative sparks to fly. We didn't spend time talking about our failing product. We talked about trends and customers and spent a lot of time searching for structural insight into how our customers could be segmented. We looked for examples, for similar approaches and for products that did something right. We ate too much and slept little. When we ran out of time, we had nothing.

But about a fortnight later, sitting in a coffee shop, I figured it out. All that talk and data and discussion finally cohered into a single, strong market position. It isn’t often in business that you have these epiphanies - and when they come, you tend to think you've finally lost your mind altogether. Fortunately I was dining with a friendly board member that night and could road test the idea on her. She thought it was a winner.

We were a tiny company but I don't think our innovation struggle was anything other than typical. Like all businesses, we spent too long looking at ourselves and not enough time looking at the outside world. Recent research shows that executives cite the lack of processes for gathering information on trends as their single greatest obstacle to innovation. Big companies do this best; small businesses do it worst. And yet small businesses are often better positioned to respond most nimbly. In other words, if we could figure out how to monitor trends, we'd be streets ahead.

The most influential macrotrends are concerns for sustainability (meeting the needs of the present generation without a cost to future ones) authenticity, issues of safety, security and privacy and issues of convenience. Perhaps none of this is surprising - but how far does your business address these concerns up front, with conviction - and constantly? Of course, it might be that the smallest trends are those that will have most impact further down the road - in which case, we all need to start thinking about the consumer desire for vivid experiences, concerns about life balance and new attitudes towards aging. We should be thinking about the fact that women are the major influencers of 85% of purchasing decisions, while 60% of technology, car, clothing and cosmetics purchases are influenced by teenagers. Very few businesses won't be touched by the rise in obesity.

After I had my epiphany in the coffee shop, I returned to the office and did a ton of research: demographics, trend analysis, media analysis. The research enabled us to put some demonstrable, objective definition around our new positioning which everyone in the company could understand and articulate. We redesigned our product, and everything that went with it, in 90 days. These were breathless, frantic days - but we all knew what we were doing and why. When we wavered, we turned back to the research to correct our bearings.

I still remember the day that we stopped selling and started taking orders. Everyone in the office could feel the sea change. Our "dynamic innovation" had taken us from failure to success, from a positioning no man's land to a sweet spot. I'd never really been a fan of market research before I had this experience. Now I'm a glutton for trend analyses, as I think anyone running a business must be. This doesn't mean that you change what you do with every new survey - but that you are constantly reviewing the data to see where it opens up new markets, new products, innovative forms of service. Whether it's from surveys or face-to-face conversations with customers, the best new ideas are out there, if we can just remember to keep looking for them.

Then there's the next challenge: which great idea do you focus on?

This article was originally published in Real Business magazine

© Margaret Heffernan, 2004

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