Thanks to Eduardo for illustrating this point so beautifully in the following cartoon!

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Does this look familiar?  How are you really allocating your resources?  Are your “innovation people” protected from day to day firefighting?  Do you have a group is charged with seeing beyond the financial returns of the given quarter?  Innovation never just happens, and it is not painless.  It seems that most companies get what they organize for.

I have spent half of my career in Corporate America and the other half serving it.  And it’s in this arena that my quandary lies.  Why do big companies operate by such different rules?  If a typical company in the US found the ultimate service provider, they would still be pressured to send out bids each time they have a need. Forget the history, the knowledge the shared vision their current provider might have, they will always be looking for a new one for fear that they’re not getting the best service at the best price. I can’t help but think that a huge portion of their investment is spent in bringing the new provider up to speed, whereas a trusted advisor could hit the ground running.  

As with the previous examples, corporate service providers surely fall into two camps; cogs and linchpins.  I understand why there might be no loyalty to the bottled water supplier.  But why are the “artistic” linchpin types of firms treated like commodities?  Where are the virtual partnerships that were anticipated a decade ago?  It would appear that most companies actually prefer cogs, both in terms of their employees as well as in their service providers.  While that might not provide them with the best results, it most easily fits into their rigid processes.  It makes you wonder how things could be, if partnerships with linchpins were truly appreciated and utilized.

I was asked to read and review the book “The Idea Factory Bell Labs and the Great Age of American Innovation” by Jon Gertner.   It’s funny, this is not the type of book that I would typically select and read myself.  My reading typically consists of marketing books (for business improvement) or pure fiction (for mindless entertainment).    This book is actually more of a business history book.  In it the author vividly describes the processes and the personalities

that came together to form Bell Labs during the last century.  It provides fascinating stories of various inventions, and the not-so-obvious way that they came to be.  As in any modern corporation, politics and resistance were met at many turns, and the strong and diverse personalities behind the “brains” of the group often found themselves in conflict.

If you are looking for a “how-to” book for implementing innovation in your own organization, then this is not for you.  If on the other hand you are interested in getting an insider’s glimpse into one of the most innovative organizations of the last one hundred years, then you will find this to be an enjoyable (though lengthy) read.

I live near Indianapolis, and all the news today is about the release of Peyton Manning from the Colts.  Twitter and Facebook posts are filled with opinions and consolations.  Most people saw this coming, but to look at the social media pages, you’d think this was a shock to everyone.

In glancing through the posts, I’ve noticed something unexpected, yet very interesting.  People seem to be falling into one of two distinct camps on this topic.  There are those that think Colt’s owner Jim Irsay is an idiot, and those that think that letting Peyton go (while saddening) was inevitable.  As I started to look at who was writing what (and knowing the backstory of many of those people) I started to see a correlation between their own lives and what they were writing.

One of the most notable “Irsay is an idiot” contributors was until recently one of the largest home builders in the city.  His comment was “Why would you ever let a proven winner go…?”.  Interestingly enough, this man’s company has gone into bankruptcy in the last year and is no longer around.  He himself had a “proven winner” in the form of a business model in this city… until the recession hit.  Even in the midst of the recession, he was passionately pursuing the largest development of his career.  Unfortunately, the world changed around him (in this case the economy).  What had always worked so well for him in the past was unable to sustain him in the present.  The sad result is that a good man and a good company went under.  Many of the other posters would fall into a similar (though less extreme) scenario.  ”You don’t let go of a winning approach”.  ”You don’t fix what’s not broken”.  You see it in their posts and you see it in their lives.

The other camp also fondly remembered and honored the past.  But they recognize that the situation has changed and it is time to move forward.  The Colts are not the Super Bowl team of a few years ago, they are admittedly in a rebuilding scenario.  Therefore, it doesn’t make sense to spend all of the team’s salary cap on bringing back a single player that will be rendered ineffective because of the lack of talent surrounding him.  Some of the people in this camp have proven to be highly resilient – even successful in spite of life’s circumstances.

In my mind, this is a perfect analogy that reflects many of the companies in our country today.  Highly innovative companies are continually rei

nventing themselves and pursuing their goals in bold new ways.  Ultra-conservative companies continue to hold onto tradition, and attempt to cost-reduce their way to success.  This worked in the 1990′s.  But it doesn’t work in 2012.  Yes we should honor the past.  We should take time to celebrate those that helped us in our past successes.  But we cannot afford to stay there as the world changes around us.  Innovation is the key to survival.  That’s true for the Colts, and that’s true for our businesses.

For many of these categories, the three hours the company spends brainstorming new ideas is more time than their consumers spend thinking about the same category over their entire lifetime.  As a result, the bold new improvement the company provides goes completely unnoticed by the marketplace.  Think about this for a moment.  On a given Saturday you find yourself in the midst of an unexpected home plumbing project (that does happen to people other than me, doesn’t it?).  You realize you need a Monkey Wrench.  You drive to the store, go to the plumbing department and are looking to buy right now.  You see a tag hanging from a given wrench that claims “50% better than our previous design”.  You’ve never owned a Monkey Wrench (I don’t think the things actually wear out, do they?), so you have no preconceived notions of the problems that existed before.  You can’t visually distinguish between this new “better model” and the competitor next to it on the shelf…  You can’t compare the new with the old, so that doesn’t help.   My guess is you probably make your decision based on price.  The Monkey Wrench company looks at their sales over the next two quarters and sees that they have experienced no significant increase in volume, and they decide that their innovation efforts were a wasted investment.

So the question is… Is it wrong to invest in ongoing product improvement?  No.  In most commodity situations that level of investment is required to maintain the shelf space that you currently have at retail.  But recognize it for what it is; maintenance.  If you want to drive growth, you have to innovate in a big enough way to first bring attention to your (oft-neglected) category.  You have to provide a benefit that spans well beyond what the traditional product has offered.  As an example… What if the Monkey Wrench company focused on expanding the usage of this now highly specialized tool?  What if with some reconfiguration and new design, this same product could benefit a consumer across various projects within their home?  If this became the next “must-have” tool, people would talk about it, it would appear in magazines and on cable shows and pretty soon people would come to the retail aisle in search of it.  What would the return on that innovation investment be?

The bottom line is this.  Companies that find themselves in a commodity status cannot afford the luxury of incremental innovation.  If they’re not making a big enough difference to attract attention to their category first and to their product second, their efforts will be wasted.  A design change that seems huge to the product managers in charge, may go completely unnoticed by the paying consumer.  It’s got to impact their lives in a significant way to get their attention.  Innovate big or go home!

It’s clear that our culture has shifted in the last decade. Facebook and other social media have allowed us to form and nurture relationships that were never before possible. People that used to seem one-dimensional to us (I know him as my dentist, she’s the waitress at our favorite restaurant, he works for our company as a shipping clerk) have become “whole people” once we befriend them and come to know them as family members and community volunteers. While we might not agree with all of their views, we gain respect for their passion.

Its only natural to assume that people will come to expect these same types of relationships with the companies they choose to buy from. What would your company look like if you shifted your emphasis away from direct selling to giving away free value? It’s a horrifying thought on the surface, but how would that change your business model? We’ve all experienced pushing a product or service upon a prospect and watching the negotiation begin. How different would that look if that same prospect came to us to see if we could help them?

My goal for this year is to give away a lot more free stuff; advice, counsel, service, etc. In return, I hope to gain credibility as a trusted expert on consumer empathy and innovation strategy. As a result, my hope is that the phone will ring more often, and I will have to make less uncomfortable sales calls. What does that look like for you? What can you “give away” in order to gain trust and credibility? How can you become the obvious choice when it is time for your customer to make a purchase? The day of shopping for the lowest price is waning. People want to buy from companies they identify with, like and trust. And that takes a whole new mindset.

Here’s an example.  When you get survey feedback or review a focus group report you see prioritized data on what consumers think and feel.  Sympathetic design would have you start at the top of the list and develop solutions for the top pains that have been identified.  If something is “hard to hold”, then make it easier to hold.  If it’s “too heavy”, then make it lighter weight.  It seems very straight forward.  Let’s contrast this with empathetic design.  Instead of reading reports, you spend time face to face with your customer watching them interact with your product.  You may still hear them say it’s “hard to hold”, but upon closer observation you come to realize that they’re not holding it as it was designed to be held.  While the proper usage seems obvious to you (as the maker of the product), it is clearly not intuitive to the end user.  The manner in which they hold it also makes the product feel much heavier than it ever should have.  Instead of redesigning the product to make it “easier” and “lighter”, you focus on the overall design of the product to make it more obvious in terms of it’s intended usage.  Suddenly the weight becomes a non-issue and the improved design can greatly increase consumer satisfaction.

Here’s another real-life example.  We once worked with a client to develop a new line of outdoor, patio heaters.  Over the course of the project, we learned (empathetically) that consumers often purchased these products for entertaining purposes, more than for personal comfort.  In fact, during the validation phase, we observed that people considered our prototypes as serving the role of “outdoor decor” or “furniture” as much as the role of heater.  There was a high degree of excitement toward the product and early versions won several design awards.  The problem came when the company took the product to retail.  Instead of using an empathetic argument when negotiating pricing, they fell back into their traditional sympathetic mindset (features and cost).  The retail buyer said that the cost for these products was too high for a patio heater (and all existing market data would agree with this).  In order to secure placement, the company cost reduced the product to hit the retail demands.  The resulting product had a much “cheaper” feel to it which immediately took it out of the decor and furniture mode from the consumers’ perspective.  A year later and this award-winning product was off the market.  What had been envisioned was never actually realized.

Could an empathetic approach have saved this product?  Even if you have an empathetic view of the consumer, how could you help others in the distribution chain share this vision?

I’d love to hear your thoughts on this one.