Innovation is expensive and risky — and the US is falling seriously behind emerging economies in China, Israel, and other countries in developing innovations, depending on which metric you use to assess innovativeness (see below for rank based on innovative intensity as a function of GDP). In other posts on this website, you’ll find lots of valuable information to help jumpstart consumer innovation at your business. Not only does a lack of innovation leave your business vulnerable to more innovative competitors but, as I discussed on these pages before, low levels of innovation hurt American businesses and the US Economy.
Why innovation matters
Global competition heated up as world economies opened to products produced outside the home country. Global supply chains, except for a little hiccup during the pandemic, allow businesses to import goods from distant lands cheaper and faster than ever before and the internet means your customers have a plethora of options when it comes to choosing products that solve their problems. Add to this the reality that consumer needs and desired solutions change over time as the march of time reeks changes in demographics (especially the aging of populations in developed countries and the rise of the middle class in developing countries), geographic distribution (as consumers move from high cost-of-living areas to ones offering better opportunities), lifestyles (such as increased desires for labor-saving devices and automation through self-driving cars and artificial intelligence), and values (including the spread of environmental concerns and the belief that companies must embrace values not just provide products).
If your firm continues to deliver the same thing you did last year, a decade ago, or since its inception, you’ll find it harder and harder to survive in this quickly changing world. You only have to watch a movie from before 2000 to see how many products we now take for granted didn’t even exist when those movies were made. Here are just a few things you probably use every day or benefit from that didn’t exist in 2000, according to USA Today:
- Smartphones
- 3D printers, including the ability to print human organs to alleviate the wait for donor organs
- Self-driving cars
- Drones
- E-cigarettes
- Gene editing and cloning technology (although ethical concerns have limited the use of biotechnology)
- Human-like robots
- Augmented reality
- Blockchain and Cryptocurrency
- Capsule endoscopy
- E-readers
- Multi-use rockets despite the fact that one (Space X) just blew up after launch today
- Cord cutting and online streaming
- Mobile payment
And, that’s just in the last 20 years or so. Imagine what the future might look like in just a few years. Is your business ready?
Innovation not only means developing new products but adapting your business processes to take advantage of these new processes to improve efficiency and reduce costs to out-compete other firms.
Consumer innovation to solve consumer problems
Yet American consumers create thousands of innovations every year — more than twice as many as firms do, according to a study by innovation expert Eric von Hippel. And most consumer innovations are never patented, as the consumer never intended to make money from the invention, merely solving their own problem. Defending his research in a recent HBR article, von Hippel uses this example:
Say I build a new kind of mountain bike and ride it every day. I built it to use it, and I’ve gotten the private benefit I planned on as payback on my investment. So now I’m riding my new bike around and people see it, try it out, and ask me questions. At some point someone else decides to build a copy. Does that hurt me? No, it enhances my reputation, and that other user may make improvements to the bike that I can copy. If a bike company makes a commercial product out of my unprotected innovation and makes a lot of money from it, that may annoy me, but it doesn’t affect my original incentive for innovating. I got the reward I expected for the investment I made.
Consumer innovation solves consumer problems. Otherwise, why would the inventor spend time, money, and effort inventing something new? If enough people share a common problem, the new product is almost guaranteed success. By the same token, innovations developed by firms likely reflect products they CAN create rather than products they should create. In a recent HBR article, the author discusses human-centered innovation that shares three characteristics:
- Desirability in that consumers want this type of solution as a better tool to solve their problems.
- Feasibility, which reflects the possibility of creating the innovation. For instance, if you look at the notebooks kept by de Vinci, you’ll find all kinds of fanciful ideas but they lack the feasibility to make them. Although, as we’ll discuss later, this is also important for innovation.
- Viability in that the innovation can deliver a valuable solution over time.
That’s why many innovations fail — they reflect what engineers can do rather than what consumers want.
But, firms can capitalize on consumer innovation if they listen
And that’s another good reason to have an effective listening post that uses software and employs natural language processing to do more than simply track sentiment across social media. The first step is to listen to statements depicting unmet needs. When you ask consumers what they want, they invariably answer they want products that are faster, cheaper, and better. Companies already have R&D focusing on meeting these needs. What you really want to hear is something about how the consumers couldn’t do something or the product they had failed to deliver a sufficient solution. For instance, a user might discuss with a connection that she needed a lightweight but powerful drill/driver that fits her hands and gets into tight spaces. If you’re DeWalt or Ryobi, this is a golden opportunity to develop something with a built-in market as more and more women take on simple home repairs and remodeling (don’t believe me, walk through any Home Depot).
Listen to hear conversations where customer innovation is discussed. For instance, like the bike discussed above, if you see consumers sharing ideas for products online or even showing their own innovations in social posts, these are proof of concept and you should consider adding them. Fashion houses have done this for decades by watching trends as consumers modify or make their own clothing or accessories. Now, social media greatly expands your ability to monitor consumer innovation in your market space. These conversations point to consumer problems and may identify ways consumers solved these problems already. Firms can then create similar innovations or incorporate innovations created by consumers.
As Dr. von Hippel mentioned, consumers get pretty pissed off if they see you’ve stolen their invention, even though there may not be much they can do legally, since they didn’t patent the innovation. Firms that steal a consumer innovation do face the prospect of discouraging further innovation. Instead, firms could recognize and reward the innovator — even though there’s no legal requirement. Rewards might include royalties from innovations or simply naming the innovation after the inventor. Rewarding inventors is the right thing to do and likely represents a much smaller cost than inventing the product in-house, which likely generated many failures before hitting on a successful innovation.
Rewarding consumer innovation encourages further innovation and motivates innovators to bring their inventions to YOU
Imagine having a whole horde of innovators who create innovative products without any expense. It’s a sure-fire recipe for success. And, the best part is you only pay for inventions that bring money into your business. IBM and GE did this over and over again by offering prizes to individuals or groups who could solve specific problems of interest. IBM currently offers a large cash prize for anyone who can develop a program that can out-diagnose five physicians as they march toward improving IBM Watson’s medical abilities.
The added benefit of buying rights to commercialize consumer innovation is you’ve eliminated the danger consumers will take their invention to a competitor or commercialize it themselves. It’s a win-win situation for everyone.
You can even enable consumer innovation by holding contests or creating opportunities to crowdsource innovation
Food companies have mastered this technique for consumer innovation. They hold contests to gather consumers’ recipes using their products or identify new flavors, such as the Lays contest to develop new flavors of their snacks. And building materials firms do the same thing by holding contests highlighting consumer renovations. WordPress often holds developer events during their WordCamps where developers get together and code a new application during a session. So we KNOW consumer innovation can be encouraged by the actions of the firm.
Design thinking and innovation
Design thinking is a process of innovation that is human-centered and helps identify problems when the solution isn’t obvious. It involves a non-linear process that involves prospective customers in an iterative fashion to help improve the concept at multiple stages in the development process to avoid ending up with a product no one wants. I once worked as CMO for a tech startup that was building a mobile app. We went through 3-4 iterations (prototypes) of the app on paper before writing the first line of code. Each iteration involved potential users who provided feedback on the usability of the product. Once we had the MVP (minimum viable product), we again tested it out with potential users and then made changes based on their feedback. Finally, we launched the product to a larger group of potential users, continuing to iterate until we ended up with something that users wanted to download and use.
Below, you can see a visual depiction of the process.
The process begins with an idea. The best ideas of wild, crazy, creative, and boundless. That’s why de Vinci’s notebook was so valuable. The physics of his designs weren’t known nor were technologies such as internal combustion, so his ideas had to wait for technology and science to catch up. But, and here’s the important point, without those ideas, the rest of the process wouldn’t have been possible. Where did his ideas come from? Probably some were a function of a wild imagination. Others probably came from observing the world and the people around him. Whatever it was, his ideas were brilliant.
Never shoot down an idea because you can’t make it — now. Save it for when the rest of the world catches up. Shooting down ideas is also a sure way to close off thinking and fail to develop something truly innovative. After you have a bunch of ideas, now is the time to get more concerned with reality as you decide which ideas you can bring to life.
Conclusion
I hope this post gave you a new appreciation for the importance of innovation for the success of your firm regardless of your industry or target market. It’s never too late to build innovation into the DNA of your firm.
I also hope you gained an appreciation of design thinking in the innovation process and the role of consumer innovation in generating ideas to get you started on the innovation path.
If you have ideas or comments to add to this post or suggestions for future posts, I’d love to hear them. Simply use the comment section below.
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