3 Mistakes Companies Make When Trying to Foster a Culture of Innovation

Given the rapid pace of change today, it’s no surprise that many leaders want to create a culture of innovation to stay relevant. Yet, in my work as an innovation and growth-strategy consultant, I consistently see organizations make the following three mistakes:

1. Confuse innovation with creativity
2. Seek to understand customers instead of the jobs that customers are trying to get done
3. Generate ideas instead of gain insights

Mistake #1: Confusing innovation with creativity

Innovation and creativity are different. There are many definitions of innovation, but we define it this way because this definition reveals the two key steps of innovation:

“Innovation is the process of discovering target customers’ unmet needs and then developing solutions to address them.”

This sequencing is critical for success if organizations want to transform innovation from a guessing game into a business process that consistently delivers results. There’s a reason why doctors conduct a patient diagnosis before developing a treatment plan: because it informs them about how to develop the best treatment plan. Similarly, companies should learn how to conduct a “customer diagnosis” to inform them about how to develop winning new or improved offerings.

Creativity, on the other hand, is only part of innovation. It’s the mental process of making connections between the target customers’ unmet needs and solution capabilities. Hence, the building blocks for creativity are to gain a clear understanding of the:

1. Target customers’ unmet needs
2. Solution capabilities that can be used to address the customers’ unmet needs

It’s virtually impossible to be creative and generate a winning new offering if you are not aware of your customers’ unmet needs or misunderstand them. This is why creativity training alone often fails to deliver results; it’s shooting at an unknown target with a blindfold on.

Most organizations don’t lack creativity; they lack focus. They lack clarity about where the best opportunities lie. The best creativity trigger is a well-defined customer need.

Mistake #2: Seeking to understand the customer instead of the jobs that customers are trying to get done

Most companies don’t know how to conduct a customer diagnosis, what questions to ask, what inputs to obtain or how to get them. Contrary to conventional wisdom, you do not need to obtain a deep understanding about your target customers to win at innovation; you need to gain a deep understanding of the jobs they are trying to get done.

To generate the design and features of the iPhone, for example, Apple did not need to know what magazines its target customer read, their age, education level, ethnicity or income. They needed to understand the jobs people are trying to get done that software and a handheld device could enable them to do.

While demographic information is very important for reaching target customers with messaging and positioning after a new offering has been conceived, the most important information companies need to obtain to generate winning new offerings is:

1. What job(s) are target customers trying to get done?
2. How do they measure success when executing each job?
3. Where do they struggle when executing the job given current solutions, and why?

The answers to these questions are readily available by talking with customers but you must know what information you are seeking and how to get it. The answers to these questions will show you where to focus and what to do to differentiate, innovate and grow in a predictable manner.

Mistake #3: Generating ideas instead of gaining insights

Contrary to conventional wisdom, innovation does not begin with a good idea; it begins with an insight. Every new solution idea is comprised of an insight about, 1) an unmet need, and/or 2) a new way to address an unmet need. That’s what a new product “idea” is. An idea is not fully formed if it does not contain these two elements.

Successful innovators know that they must first prepare the soil in which ideas can germinate. That begins with obtaining clarity about the target customers’ unmet needs and the solution capabilities available to address those unmet needs.

By generating ideas before understanding the target customers’ unmet needs, companies are unwittingly engaging in a haphazard guessing game that generates a lot of bad ideas. In truth, any idea that does not address an important unsatisfied need is a bad idea. Vetting a lot of bad ideas wastes scarce resources that could be used to develop winning new offerings. If you want to dramatically improve new product success rates, unclog the pipeline, quicken time-to-market, and drive revenue growth in a predictable manner, then you must gain insight about the target customers’ unmet needs before generating ideas or, if ideas have been generated, validate the presumed customer needs before prototyping.

It’s now possible to identify and rank a comprehensive set of your target customers’ unmet needs according to the opportunity for innovation and growth that each need presents, with statistical validity. Rather than testing dozens or hundreds of dubious ideas, you can narrow your focus to a few big market opportunities that you know in advance customers care about most. This enables companies to consistently establish a valued and unique position in the market. We know this even before the offering is conceived because, if you can help customers get an important job done better (and you can), then customers will value your offering. And if you can satisfy an unmet need (and you can), then customers will see your offering as unique. This is how leading innovators engineer a valued and unique position in the market, which is the essence of good strategy. This is how leading innovators consistently devise new solutions that establish a competitive advantage and drive growth. You can, too.

(A version of this article initially appeared in The Business Journals, December 11th, 2017)