There’s a tendency to rate innovation by the engineering applied. But quite often this doesn’t reveal the challenge faced in bringing the innovation to market. Merely having a “Cool Gadget” doesn’t mean market success.
I’ll offer a second way to classify innovation below. But, first, to set the stage let’s consider a real situation.
A Veterinary Practice
The last post I put forth was based on a talk with my brother about bringing network connections to copier customers. This discussion reminded Walt of bringing innovative products into the Arvada, CO vet practice his wife owned (board certified veterinarian Paige Garnett DVM).
Over the time Paige owned the her practice (around 30 years), she developed a broad guideline:
When new machines are purchased, every veterinarian (and often some assistants or med techs) in the office would need specialized training in order for it to be effective and worth the cost.
Walt observed that this meant when buying a $25,000 machine, Paige might have to budget an additional $25,000 to $35,000 for training. After all, the training was never local and she had a solid sized staff. Training a single veterinarian included the cost of the class, the cost of travel, the hotel and meals, lost time at work, and travel time.
Regardless of whether engineers would call these machines continuous or step-change, from a customer point of view the machines were all step change due to the cost. (Walt didn’t discuss how many “innovations” were rejected because the juice wasn’t worth the squeeze.)
Classifying Innovation Based on Customer Costs to Adopt
Here’s a more instructive way to classify innovations when our concern is market success — by looking at the change required when customers adopt the new product/service.
Innovation which is easily adopted is often called “continuous innovation.” Looked at by customer cost, the first release iPhone is an example of continuous innovation. You could pick it up and make a call or send a text immediately — job done. Of course, there were many things you could do with it beyond your older cell phone. You might have to spend time learning it’s additional capabilities. But the iPhone transition was simple because there was no pain in order to achieve immediate success.
Innovation which takes more change might be called “dynamically continuous”. An electric car could be an example of the mid-range. For the most part, it looks like a car, drives just like a car, and feels like a car. Except, car owners must change their “fill up” behavior because of the loss of the quick addition of petrochemical energy (gas stations). And when driving distances, owners must plan their trips around fast charging stations — which aren’t as fast as a gas station filling station at this time. Electric car owners have to pace and plan long trips differently.
Innovation which requires high customer cost can be called “discontinuous innovation” or “step-change.” The connected home (as with most consumer IoT) is a superb example of step-change. Why aren’t more homes connected? Because it takes waaaaaay too much work getting the whole thing setup in the first place. Then you are constantly having to re-connect and update and change and baby the network. I know. I created ads for two early versions. Then we tried at my house. It was far too much work. So we disconnected our home.
Understanding this way of thinking is critical — the reward from an innovation MUST justify the cost for adopting the innovation. Just beginning to ponder this suggests three key innovation lessons.
First Lesson: Adding Innovative Technology Isn’t Enough
The business world is filled with “hot technology” which has been brought into companies and failed. I’m sure anyone who has been around business a while will have their own stories.
And, one primary reason is that the technology is often evaluated only for what it costs to buy it from the vendor. Most companies do a poor job of evaluating the internal cost required for the technology to deliver benefits.
I heard a story recently about air scrubbers bought by a university. Later the facilities folks at the U called the company who sold them and said they weren’t performing at spec — air wasn’t being cleaned well. The company investigated. Turned out the university hadn’t ever hooked them up. Why? I suspect someone bought them as a ‘good thing’ without making provisions for installing and maintaining them. So they sat unused.
Planning for innovation is also an issue in government. As an example, legislation in Oregon must always have an analysis of costs to the State of Oregon attached. Yet, for example, if that legislation mandates a change for school districts, that cost analysis won’t include costs to the school districts (which are almost always far higher than the costs to the state). This leaves districts in a constant scramble attempting to find money to cover mandates from the state. The innovation cost is shoved out onto local school districts. Worst, legislators never take the heat for their actions because parents always go to the local school district to shout displeasure.
Second Lesson: Customer Cost is Critical Even If the Innovation Targets an Internal Customer
Countless innovation projects for internal customers fail because of failure to consider cost. My first structural engineering software project is an example. My partner in crime, Mark, and I had designed and built a program to make the serious challenge of running MSC/Nastran easier. We thought it was freaking brilliant code. Except it wasn’t being used.
So we sat with one of the most knowledgable program users and asked them why he wasn’t using it. The answer? It was far harder to use our clever new widget than to just keep JCL files around to run his project. (Listen, it was the early 1980s — JCL was a challenge to deal with.)
With that knowledge in hand, we quickly re-designed the UX (the fundamental idea was good — the UX was wrong) and put it back out. It worked as needed. It worked so well that when I visited General Dynamics 12 years later that software had been made a requirement on any new computers.
Sometimes I think this “cost” issue is most critical for internal innovation projects. Too many people believe the top-down “mandate” allows them to ignore customer costs. Wrong. Billions of dollars are wasted every year in the US on internal innovations that fail because they fail to minimize the cost for internal customers.
Third Lesson: Innovation Always Lives in Connections
Consider Paige’s vet clinic example from the med tech supplier’s point of view. Suppliers tend to get quite excited about new things they’ve done — impressed by how much the new technology outperforms the old technology. Yet rarely is analysis conducted to understand how much customer change is required to make use of the tech.
I don’t think it’s an accident a that it was so easy just to make and receive calls & texts on the iPhone. Removing barriers to entry was critical to its success. To offer added cool features on a phone which is far harder to use just wouldn’t have sold.
Companies need to analyze customer impact and cost as an inherent part of innovation and new product planning.
Innovation Always Involves the Complex
An engineering/deisgn centric view of innovation is clearly insufficient. No innovation succeeds in the market without a wide range of hard work beyond engineering and including marketing — even if that marketing is with internal customers. (As I observed in my last post, no innovation is an island.)
Innovation inherently involves not only the product, but the way people relate to the product and impact of the product far beyond even the immediate users.
As complexity has begun to be recognized as a factor in business, many people have asked me “how do I know if a situation involves complexity?” If you work in innovation, the question isn’t IF there’s complexity. Instead, you must always work to identify WHERE the complexity lies — that which you must leverage to ensure a great success.
As with other issues in complexity, companies ignore this at their own peril.
©2020 Doug Garnett — All Rights Reserved
Through my company Protonik LLC based in Portland Oregon, I consult with companies on their efforts around new and innovative products and explore what marketers should learn from the field of complexity science. An adjunct instructor are Portland State University, I also teach marketing, consumer behavior, and advertising.
As a specialty, I also advise a select group of clients attempting to bring new life to Shelf Potatoes or taking existing products to new markets. We also produced marketing materials for artists including documentaries.
You can read more about these services and my unusual background (math, aerospace, supercomputers, consumer goods & national TV ads) at www.Protonik.net.
Categories: Business and Strategy