Effective innovations don’t fall out of the sky or appear as a light bulb over your head. They take hard work and patience, and require you follow the right steps for success. In this engaging text, executive and business school professor Lorraine Marchand offers expert insights into how to hone the innovation mind-set. Learn how to recognize a good idea, create a business plan and source funding to bring your product or service to market. Marchand emphasizes the importance of customer feedback and market research in creating products people actually want, and offers a host of real-life examples.
- Innovation starts with identifying the correct problem.
- Brainstorm three good ideas.
- Test your solutions through a minimum viable product (MVP).
- Interview 100 customers.
- Stay open to pivoting strategies.
- Understand the importance of a thorough business plan and model.
- Pitch your product to investors.
- Take your product to market with an end goal in mind.
Innovation starts with identifying the correct problem.
Innovation isn’t a mystery, but many companies struggle with breaking it down into a manageable process. In fact, most innovators create a product without knowing who or what the product helps. Successfully selling a product means understanding the problem it solves.
“Necessity is the mother of invention.” (Plato)
So what is the necessity for your product to succeed? Worthy innovation begins with analyzing the problem before jumping to solutions. Start with finding the right problem in four easy steps:
- Ask the right question – For example, ask: Is the problem worth solving? Who does the problem affect?For example, does the world need another type of Bluetooth headphones?
- Reframe the problem – Adopt the perspective of the customer, shareholders, supplier and manufacturer to understand how the problem will affect them.
- Use analogies – Gain insight from how others implemented solutions to similar problems.
- Break it down – Deconstruct the problem into smaller parts, and identify its components based on customer input.
Once the problem becomes clear, and you see the issue from all angles, move on to the next step.
Brainstorm three good ideas.
Generating new, relevant ideas can be tricky, especially if you don’t understand the customer’s viewpoint. For example, a team of engineers working on improving their company’s diabetes-related products had trouble coming up with viable solutions. An interview and discussion of pain points with a diabetes nurse – also a mother to a diabetic child – enabled the team to understand their potential customers. Once they understood the daily issues their customers faced, they were better equipped to consider what solutions the team could offer.
“It’s the discipline of following a process for problem identification and solution generation that makes the difference between success and failure.” (Aris Persidis)
Working with the customer’s input, the team used a combination of brainstorming methods to create solutions:
- “Big Idea Vignettes” – The team laid out all the components of an idea utilizing white boards and sticky notes to visualize how a customer might interact with their solution.
- “Storyboards” – The team identified their customer, a setting and a plot to understand how their solution would align with a hypothetical, real-world scenario. For example, they envisioned a child trying to read her glucose meter at night, in the dark.
- “User experience road map” – The team explored the long-term effects of their proposed solution in terms of how their idea could change their customer’s life.
While brainstorming, keep things visual, come up with as many ideas as possible, listen to your teammates and stay on topic. Once you have a plethora of solutions, narrow them down to the top three. If one doesn’t work, you have backups.
Test your solutions through a minimum viable product (MVP).
Once you have your top solutions, start testing them. Don’t spend a ton of up-front money on a product you can’t guarantee customers will buy, however. Creating a minimum viable product (MVP) defers risk and saves money. For example, Nick Swinmurn, the creator of Zappos, started with a simple MVP website called Shoesite.com. The test website allowed him to determine if customers would buy shoes online – which they did – before going to investors to finance Zappos.com.
An MVP allows you to test your solution without too much commitment and gain customer feedback. It allows you to improve or change your proposed solution, as needed. An MVP also gets your solution out in the world quicker, and with greater certainty that it will succeed.
“The type of MVP you use depends on what you’re trying to learn.”
A common MVP is a “sketch test.” For example, instead of trying to build an entire website – spending hours creating the software – mock up a paper prototype that someone can flip through. Another MVP involves manually simulating the solution. Nick Swinmurn simulated how Zappos.com would interact with manufacturers in delivering shoes to customers by going out and buying the shoes listed on Shoesite.com before shipping them. This experience let him test his idea’s viability, identify what methods customers might pay to use and see how the supply chain might function.
Interview 100 customers.
Effective MVP testing requires lots of customer feedback. It takes time and effort to understand the mind-set of your customers, and to learn what they think about and will operate your product. Look for ways to bridge the gap between customers who like your products and customers who will actually buy the goods.
“Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.” (Steve Jobs)
Interview at least 100 individuals to gather sufficient statistically significant data. By interviewing 100 people, you guarantee that you hear diverse perspectives and nearly every possible complaint.
Apply these methods during interviews to strengthen the credibility of your results:
- Utilize full-service search firms that do all the work for you.
- Hire self-service firms that give you access to customer bases; you then conduct your own research.
- Crowdsource customer interest from platforms such as Kickstarter, where people leave their input on your product’s post.
- Fund in-house research to explore your existing customer base and create social media posts to gain insight.
Get in the habit of constantly talking with your customers. Doing so helps keep your innovations relevant, and allows you to predict changes and have solutions ready for when the customers develop new needs.
Stay open to pivoting strategies at any point.
Pivoting is an integral part of innovation. For instance, in 1850, Cornelius Vanderbilt changed his shipping strategy from steamships to railroads in response to the burgeoning popularity of trains. More recently, during the pandemic, many restaurants pivoted to accommodate social distancing with services such as take-out and outdoor dining.
“Sometimes you can be afraid to pivot because you have so much invested in the product or service.”
If you pay attention to customer needs, at some point you will recognize that your current approach is losing traction. Customers stop buying your product, competitors have a better foothold on the market, your business partners lose faith or maybe external factors, such as a supply chain disruption, throw a wrench into your progress.
Step back and come up with a new plan. For example, a start-up company created a special bottle for deodorant that controlled the amount of product dispensed, so customers wouldn’t apply too much and risk staining their clothes. Initially, projections appeared on target, but soon the market dried up. The company adroitly changed its customer base. They marketed the product for medical use in monitoring the dispersion of specific topical medications. This change brought great success.
While pivoting, stay in constant communication with team members, investors, executives, shareholders and anyone else involved in making the product. Keeping everyone informed builds trust, credibility and confidence in case of unforeseen delays or financial shifts.
Understand the importance of a thorough business plan and model.
Part of maintaining constant communication with investors involves having a comprehensive business plan and a solid business model. Your business plan explains your industry, the problems you aim to solve and how your solutions will solve said problems. Your business model explains how your product will make money and how you will organize profits. Together, they function as advertisements to attract investors and proof of your credibility.
“The business plan is the road map… the business model is the skeleton.”
Since your business plan speaks to your viability, research it thoroughly. Avoid mistakes such as underestimating your competition or overestimating market demand. For example, the innovator of a new surgical method for sinuses failed to properly interview his target audience of surgeons. He released his invention without knowing that the surgeons had no desire to change their current methods. Despite the invention’s less painful and more cost-effective benefits, no one wanted to buy it.
To avoid such pitfalls, when creating a successful business plan and model, follow these four steps:
- Use a template – Provide a short two–three-page summary, followed by a longer explanation of your market research with an appendix of charts and data numbers.
- Think it through – Go through each step of product production and delivery; consider everyone involved; think about how you will manage cash flow; and test your assumptions.
- Double-check the number – Data changes as new products come to market and customer needs shift, so keep your research up to date.
- Get feedback – Ask mentors, colleagues, friends and other trusted people for their thoughts and advice.
Your business plan and model are living documents, so update them as you obtain new insights and information.
Pitch your product to investors.
A well-researched business plan and model form the basis of your elevator pitch to potential investors. To convince people to fund you, you must nail your pitch. Many pitches fail because entrepreneurs don’t know their audiences. For example, a group of businessmen pitching a Medicare service for diabetes patients failed to mention their “direct-to-consumer technology solution” to an investment firm that specialized in direct consumer technology. After clearly missing the main point, the entrepreneurs received no funding.
“Investors are evaluating you in this first meeting. They’re assessing whether to invest in your idea and your team.”
Nail your pitch and impress investors by doing the following:
- Present your overarching vision – Sum up the big issue in the market, your solution and how it works. Quickly explain customer feedback on your prototype and competition analysis. Demonstrate your credibility with an overview of your strategy for profits and of your team’s operations.
- Show investor benefits – Lay out a three- to five-year timeline for returns on investments.
- Keep it concise – Follow the 10-20-30 rule: 10 slides, delivered in 20 minutes in a legible 30-point font.
Hopefully your pitch leads to enthusiastic funding. Whether your funds come from friends, Kickstarter, wealthy executives or a venture capital firm, raising funds can take up to six months, so prepare your business operations accordingly.
Take your product to market with an end goal in mind.
Getting your product to market requires hiring the right team. Most start-ups need three key senior leaders: a Chief Executive Officer (CEO) who handles lead strategy, day-to-day tasks and represents the face of the company; a Chief Financial Officer (CFO) who creates financial forecasts and manages cash flow; and a Chief Business Officer (CBO) who deals with marketing and sales.
Alternatively, you can run everything yourself as CEO, and outsource the other positions to contractors. For example, serial biotech entrepreneur Laurence Blumberg operated as his business’s sole employee for two-and-a-half years while hiring expert contractors. This method is cost-effective and low-risk.
When you establish your team, you have to pay them. Most businesses start with scant cash flow, so one workable option is trading a salary for equity positions, such as percentage of profits, which ensures your team will work hard, as your business’ success benefits them directly.
“Why are you creating a company, what does success looks like, and when and how do you want to exit?”
While building your team and management strategy, have an exit strategy in mind. How will the company continue when you no longer run it? You could merge with another company, go public on the stock market, have other owners buy you out or sell out completely. Chose among these options early on, so your decisions running the company lead to that desired conclusion. For example, Elon Musk sold his first company, PayPal, and used the cash to expand and create more businesses such as Tesla and Space X. Thinking ahead creates better opportunities for the future.
About the Author
Lorraine Marchand is Executive Managing Director of Enterprise Solutions and Strategic Partnerships at Merative. She is co-founder of four start-ups and an adjunct professor of management at Columbia Business School.
“The Innovation Mindset: Eight Essential Steps to Transform Any Industry” by Lorraine Marchand is a comprehensive guide that explores the key principles and strategies for fostering innovation within organizations. The book provides a step-by-step framework to help businesses and leaders embrace innovation and drive transformation in their industries.
Marchand begins by explaining the importance of cultivating an innovation mindset and how it can lead to long-term success. She emphasizes that innovation is not limited to technology-driven companies but is essential for organizations across all sectors. The author argues that innovation is a mindset that can be developed and nurtured through deliberate actions and practices.
The book outlines eight essential steps that organizations can take to foster innovation and transform their industries. These steps include:
Understanding the Need for Innovation: Marchand highlights the importance of recognizing the need for innovation in a rapidly changing business landscape. She encourages organizations to proactively seek opportunities for improvement and growth.
Building an Innovation Culture: The author emphasizes the significance of creating a culture that values and encourages innovation. She explores various aspects of an innovation culture, including leadership support, cross-functional collaboration, and a safe environment for experimentation and learning.
Embracing Design Thinking: Marchand introduces the concept of design thinking as a powerful tool for innovation. She explains how design thinking can help organizations understand customer needs, identify problems, and develop creative solutions.
Leveraging Data and Analytics: The book highlights the role of data and analytics in driving innovation. Marchand emphasizes the need for organizations to collect and analyze data to gain insights, make informed decisions, and identify new opportunities.
Fostering Collaboration and Open Innovation: The author explores the benefits of collaboration and open innovation. She discusses strategies for engaging with external partners, customers, and the broader ecosystem to leverage collective intelligence and co-create value.
Encouraging Entrepreneurial Thinking: Marchand emphasizes the importance of fostering entrepreneurial thinking within organizations. She discusses the characteristics of entrepreneurial leaders and provides guidance on how to encourage a mindset of experimentation, risk-taking, and continuous learning.
Managing Innovation Projects: The book offers practical advice on managing innovation projects effectively. Marchand outlines key project management principles and provides tools and techniques to ensure successful execution of innovative ideas.
Sustaining Innovation: The final step focuses on sustaining innovation over the long term. The author discusses the importance of continuous improvement, adapting to change, and creating a feedback loop to ensure ongoing innovation within the organization.
Throughout the book, Marchand provides real-world examples, case studies, and practical tips to illustrate the concepts and principles discussed. She offers actionable insights that can be applied by organizations of all sizes and industries.
“The Innovation Mindset: Eight Essential Steps to Transform Any Industry” by Lorraine Marchand is a highly informative and practical guide for organizations seeking to foster innovation and drive transformation. The book effectively outlines a comprehensive framework comprising eight essential steps that can be implemented by businesses to cultivate an innovation mindset and stay ahead in today’s dynamic business environment.
One of the strengths of the book is its emphasis on the fact that innovation is not limited to specific industries or sectors. Marchand makes a compelling case for the universal need for innovation and provides valuable insights that can be applied across various domains.
The step-by-step approach of the book helps readers to grasp the key concepts and implement them effectively. Each chapter is well-structured, providing a clear explanation of the principles and offering practical examples and case studies to reinforce the concepts discussed.
Marchand’s writing style is engaging and accessible, making the book suitable for both business professionals and individuals interested in understanding the innovation process. The author’s expertise and experience in the field of innovation shine through, providing credibility and depth to the content.
One minor limitation of the book is that it primarily focuses on the strategic and organizational aspects of innovation, with less emphasis on specific techniques or tools for generating innovative ideas. While the book covers design thinking and data analytics, readers looking for more detailed methodologies may need to explore additional resources.
Overall, “The Innovation Mindset: Eight Essential Steps to Transform Any Industry” is a highly recommended resource for organizations and leaders seeking to foster innovation and drive transformative change. Marchand’s comprehensive framework, practical insights, and real-world examples make this book a valuable guide for navigating the complex landscape of innovation in any industry.