You have no doubt heard and probably used the phrase "Think outside the box." It has become something of a cliché, but it still works to describe the search for solutions that are not mired in a "Thats the way weve always done it" quagmire.
These days, almost everyone is talking about taking innovation out of the box. It seems redundant, since innovative thinking is supposed to be already out of the box. But what innovation itself has come to mean is up for grabs. Microsoft, for example, throws around the term far too loosely, labeling every small improvement to Windows "innovation." The word was also the linchpin of Microsofts antitrust defense—that the litigation was about the companys ability to innovate, rather than about taking unfair advantage of its monopoly position.
A panel of technology luminaries hosted by Horn Group in Boston last month did not advance the cause much. While the discussion was interesting, by the end of the evening, I felt no one got closer to understanding what innovation means today, at least in terms of the technology industry, other than the success of Apples iPod and downloadable ring tones.
A ray of light was shed on the subject at another gathering earlier this month. Forrester Researchs annual Executive Strategy Forums topic was "Accelerating Top-Line Growth." Some answers were given not in terms of what innovation is but, rather, where to seek it. Innovation wont necessarily be found in the lab or in market research but in networks of people, companies, partners, buyers.
Forrester Vice President Navi Radjou spoke of innovation ecosystems—another word being thrown around a lot in technology circles these days—in which interdependencies create opportunities for innovation. For instance, big pharmaceutical companies spend virtually all the R&D money in their industry but have few new drugs in the pipeline. Small biotechs, on the other hand, spend about 3 percent of that R&D total but develop two-thirds of the new drugs. New innovation networks are being formed between the big and small pharmaceutical companies, Radjou said, through alliances, partnerships, joint agreements and mergers, creating more opportunities for growth.
Also at the Forrester conference, management guru Adrian Slywotsky had another perspective that was both sobering and hopeful. The managing director of Mercer Management Consulting and author of "How to Grow When Markets Dont," Slywotsky discussed research that showed declining trends in "real" innovation, from 20 such innovations per decade in the mid-20th century to one now. Slywotskys solution to "finding" innovation is to create what he calls next-generation demand. That means two things: One, really think outside the box, and two, get to know your customers better than they know themselves.
The box is simple. Visualize a large grid with your product in the lower left-hand corner. Thats the small box. The grid, or big box, is all the other opportunities that could be derived from the small box. In other words, the big box is your potential product from the customers perspective. The vertical axis is filled with items such as new services, R&D and design built on top of the product, while the horizontal axis represents the new demand.
Johnson Controls, Slywotsky said, achieved next-generation demand by seeing far into the future of the car business and working with automakers to transform itself from a seat-parts manufacturer to a supplier of entire car interiors and electronics, creating double-digit growth for itself and saving automakers millions of dollars.
Technology innovation is a tougher nut to crack, Slywotsky said, because of the "bottle rocket" product life cycles—the products shoot up fast, only to fall back to earth. But the innovative message is still the same: See the bigger picture for your offerings from your customers perspective. Do not give up if the next great innovation doesnt come right away. It may come out of nowhere: Post-it Notes, a truly innovative product, was invented by accident, as was Viagras use as a virility enhancer. But the need for innovation is greater than ever. Your business depends on it.
Scot Petersen can be reached at firstname.lastname@example.org.