We know you probably don’t have time to read through full magazines, so we read them for you. This month we summarize the best of: Rotman Management Magazine, Fall 2014, with a focus on effective innovation.
Rotman has long been one of our favorite publications, with many thought-provoking articles and interviews on design thinking, psychology, consulting, behavioral economics and neuroscience. You can subscribe here – we guarantee your thinking will be sharpened as a result.
In the US alone, estimates suggest that as many as 75% of all new product launches fail. The latest research shows that efforts to solve social problems have focused too narrowly on developing solutions and not sufficiently enough on developing a rich understanding of the process that individuals use to adopt solutions. Real consumers are emotional; they use intuition to make decisions; they are lazy (both physically and cognitively); and they are significantly influenced by the context they find themselves in.
For example, people overweigh losses by a factor of 2.25 relative to gains, and the value people assign to objects and products they possess is greater than the value they assign to identical objects and products that they do not possess. Further, people tend to stick with current products and courses of action even when a better alternative exists, and this “status quo bias” intensifies with time. And when there are too many options to choose from, people tend to either stick with what they already know, or they fail to choose anything at all.
Ultimately, the best innovations are those that are developed in the very communities in which they will eventually be used. The key is to take steps to understand the context fully before any product or service is designed. ‘Living the life’ of an actual consumer can enable an innovator to identify unmet needs and develop solutions based on actual behavior.
The Yin-Yang of Management, Wendy Smith & Marianne Lewis
When faced with tensions, actors treat problems as dilemmas and impose and either/or choice when a both/and perspective would be more effective. Research shows that linking conflicting strategies can spur learning. For example, in his study of 54 highly creative individuals, Rothenberg found that their genius stemmed from the capacity to juxtapose opposing ideas.
Successful innovations are rarely 100% new. Instead, most of the products and services we hail as game-changers apply an existing innovation to a new situation, in a way that users find accessible.
Genuinely disruptive innovations rarely do well right out of the gate. The fact is, we rarely experience genuine innovation, and it often makes us nervous. Our most common reaction to something unprecedented is to prime ourselves for frustration – to throw our hands up and say we simply don’t understand it. How could we, after all? We’ve never seen it before.
The lesson for designers and decision-makers is that the more innovative a product or service is, the more familiar it needs to feel.
Everybody is responsible for the search and implementation of ideas to improve operational performance; responsibility is pushed down to the widest and lowest possible level in the organization.
Innovative entrepreneurs develop their winning value propositions or products through observation. Their sparks are generated by ‘explorations in depth’ of a small number of customers and non-customers. No skill is more critical than the ability to understand your customer and sense the market. Get out into the field, meet with customers and hold ‘dreaming sessions’ with a subset of them to enhance observational research capabilities.
The worst habit associated with traditional strategy is overthinking – aka ‘death by analysis’. An obsession with minimizing risk leads to the inability to make decisions fast enough to respond to disruptions. Meanwhile, applied indiscriminately, design thinking can cause a swing to the other extreme – underthinking. All-too-often the long-term returns on investments in design thinking falls well short of expectations.
The trick is to apply the strengths of design thinking to those of strategy in specific ways. Design will help to open up new possibilities, and strategy will help you choose between them. Good strategy is ultimately about choices: it is as much about what not to do, as what to do.