A Comprehensive Approach to Innovation

A Comprehensive Approach to Innovation

Conceiving of, developing, and launching new offerings is an inherently risky undertaking. By combining the risk-reduction ideas that innovation thinkers and practitioners have developed over the years, we can map out an end-to-end process that can greatly increase the odds of successfully launching innovative offerings in uncertain markets.

 

This process has four steps:

 GENERATE INSIGHTS

Use questioning, observational, and networking skills to search far and wide for broad insights into problems that may be worth solving.

 IDENTIFY AN IMPORTANT PROBLEM

Through direct observation look for an unsolved problem or an unfilled emotional or social need that enough people have for the opportunity to be worth pursuing.

 DEVELOP THE SOLUTION

Instead of building a complete product, quickly construct a set of simple prototypes of many different solutions. For each, start with theoretical prototype (that is, a verbal description). If that looks promising internally, move to a virtual prototype you can test with customers. This must be a visual representation but could be just a drawing. Move next to testing a minimum viable prototype with customers (the simplest, quickest physical version of the offering you can devise). Finally, pilot test the full-blown solution-the minimum “awesome” product (a refined version that seeks to be awesome on the few features that inspire customers).

 DEVISE THE BUSINESS MODEL

Once you have worked out the offering, apply the same experimental approach to developing and testing the components of the business model, including approaches to pricing and customer acquisition.

For most innovations you need to successfully complete all four steps before devoting resources to scaling. The exceptions are businesses that have network effects, such as PayPal, where the value of the innovation increases with each additional member. Even in those cases, you need to work through these steps judiciously as you scale, or you will most likely end up with a flameout worthy of the dot-com era.

 By Nathan Furr and Jeffrey H. Dyer: Leading Your Team into the Unknown

Harvard Business Review December 2014

Dr. Nathan Furr is my oldest son and Assistant Professor of Entrepreneurship at the Marriott School of Management at Brigham Young University, author of The Innovators Method, Bringing the lean Startup into your organization and Nail It, Then Scale It, The Entrepreneur’s Guide to Creating and Managing Breakthrough Innovation.