What is innovation?
2
Creativity
is about new
ideas
Innovation
is the profitable
implementation
of these ideas

In Fortune 500 companies…
 New products account for 50% of revenues
 And 40% of profits
3
Why it is important …

companies value innovation, are innovative
The perception gap: of companies think they had a major
innovation in the last 6 months. of consumers agree
The hard road from ideas to impact of valuable ideas do
not reach their full implementation

A warm up exercise
1000
40
1000
30
1000
20
1000
10
5,000
90 % of business
executives agree

Paradigms = models, patterns
the basic way of perceiving, thinking, valuing
A dominant paradigm is seldom if ever stated
explicitly; it exists unquestioned…
transferred through culture and unspoken
business practices
William Harmon-
An incomplete guide to the future

7
 It is about what we do behind closed doors
 Innovation just happens
 We need to reward innovation
 It is about working harder
 Innovation is about big ideas
 We need our brightest and best on the case
 It is all about selecting the best ideas and doing more
The Innovation Paradigm

Test Layout 8
These are comfortable, logical
business ideas and what we have been
taught….
But, they are not the whole story

9

10
It is about opening
doors and listening
Myth:
It is about what we do
behind closed doors

Innovation = Size ^ power value
Power value
Cities Companies
1.3 0.7
Innovation output
1 100% 100%
Size 5 690% 309%
25 4759% 952%
Innovation per person
1 100% 100%
Size 5 138% 62%
25 190% 38%
Source: Geoffrey West: The surprising math of cities
and corporations
Test Layout 12
The Power Laws of Innovation
As cities grow and contact
increases… innovation increases (25
X bigger = 2X more innovative)
Why: contact increases …
As companies get bigger
and have more resources…
innovation falls (25 X bigger = 60%
less innovative )
Why: contact decreases

Test Layout 13
Imagine this…
BMW has some of the best
designers in the world and sells
their designers by the day
below cost
Why: to build creativity…

14
Innovation is
something you make
happen
Myth:
Innovation just happens

Test Layout 15
Innovation is about
 Being committed to better satisfying unmet
unarticulated needs
 Working to build insights
 Staying focused on consumer (customer) value
 Habits

Test Layout 16
Needs first, not ideas first !
Develop a
solution
Find a need Find a market
Ideas
First
Success
Rate*
5-10%
Find a need
Develop a
solution
Find a market
Needs
First
70 %
* According to Strategyn research on outcome driven innovation…

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It is more than talking to
consumers
today’s
business
Mobile
phone
Computers
Internet…

It is about hard questioning…
You can't just ask consumers what they
want and then try to give that to them.
Sometimes (actually often) they don’t
know what they want
It is often about “golden questions”
18

21
More importantly you
need to reward good
failures
Myth:
We need to reward
innovation

22
The danger of the Internet…
Is there anything someone
hasn’t done on the internet ?
A big idea
Look it up
on the
internet
Someone
has done it
already

The big innovation Paradox
Whoever Makes the
Most Mistakes Wins
Richard Farson & Ralph Keyes
23

Introduction 24

Introduction 25

Introduction 26

“Reward excellent failures.
Punish mediocre successes.”
Phil Daniels, Sydney exec

28

29
No, it is about working
smarter
Myth:
It is all about working
harder

Introduction 30
“90 % of what we call ‘management’
consists of making it difficult for people
to get things done.”
– Peter Drucker

Your new creativity office
Test Layout 32

The test, solve a difficult task while…
Reading emails or smoking marijuana…
Test 1
Test 2

A few simple ideas
 Stop the email notifications
 No internal email Fridays
 5,10,20% time like 3M,
Google
 Get people to block (and
keep) time for creativity in
their agendas
Test Layout 35

36
Real innovation is
about the adjacent
possible
Myth:
Innovation is about big
ideas

Introduction 37
How many people think Apple
invented the MP3 player ?
Almost 50% of US consumers

Introduction 38
More memory
More features
Better song management
Simplicity and coolness

More Examples

Managers increasingly need to take “ors” and
turn them into “ands”
Roger Martin
The design of business

41

42
Actually, what you need
is people that think
differently
Myth:
We need our brightest
and best on the case..

43
Two Groups
Best 20 agents
Group 1
Random 20 agents
Group 2

44
The IQ View
Alpha Group
121
132 155
139
135
137
Diverse Group
121 84 111
105 135 95

45
The Toolbox View
Alpha Group
ABD
ADE BCD
ABC
BCD
ACD
Diverse Group
AHK FD AEG
EZ BCD IL

46
“Bringing new members into the
organization, even if they’re less
experienced and less capable, actually
makes the group smarter simply because
what little the new members do know is
not redundant with what everyone else
knows.”
James Surowiecki
author Wisdom of crowds..

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A UCLA MFA 3 X harder to get into
than Harvard MBA
The bigger surprise…
Average starting salaries for
MFAs are now higher than MBAs
* MFA = Masters of fine arts

What you can do…
Diversity Independence Aggregation
+ + =

What you decide not to
do is just as important
Myth:
It is all about selecting
the best ideas and doing
more

“Fail . Fail again. Fail better.”
– Samuel Beckett

“With so many things to do and so many
great ideas… what we decide not to do
is infinitely more important than what
we decide to do”
– Steve Jobs

Research on innovation
211 companies
Worst Avg Best
Top vs.
bottom
% of revenues from new products 17% 28% 47% 2.76
% of profits from new products 11% 25% 44% 4.17
% of products that meet profit targets 43% 48% 66% 1.53
Go / Kill criteria set up front 26% 57% 85% 3.28
Decisions are objective / fast based 15% 42% 57% 3.85
Decisions are made in review meetings 26% 51% 60% 2.32
Cooper, Robert G. "Perspective: The Stage‐Gate® Idea‐to‐Launch Process
Update, What's New, and NexGen Systems*." Journal of Product Innovation
Management 25.3 (2008): 213-232.

Let’s have some fun
and exercise your innovative
muscles…

And let’s be honest ….
Many of you have products / ideas only a
mother could love !

The biggest 3 mistakes of
Entrepreneurs/ Innovators
1. Investing in the wrong business
2. Staying too long in the wrong business.. (after you should
know it is time to change…)
3. People don’t buy your product or service ‘cause they
understand why they should…

I will see it when I believe it
VS.
I will believe it when I see it

An example: global warming
Hot summers
Warm winters
Evidence of
global warming
Cold summers
Cold winters
Evidence of
global warming

SUGGING

You’re not alone !
‘‘More than nine out of ten consumable products
launched in the last ten years offered absolutely
nothing new to the consumer.
More than eight out of ten new products fail. You
don’t need to be a statistician to realize there’s a
correlation between the two numbers.’’
– Robert McMath

A checklist for ideas…
 Is there a benefit (real or perceived)
 People willing to pay (enough)
 Cost of cut-through acceptable
 People will see the benefit buy again / recommend to
others
 Will someone hate it

A simple evaluation system…
Pets.com
Kosmo
Despair.com
Etoys.com
Petrock
Flooz
Webvan
Is there a benefit (real or
percieved)
People willing to pay (enough)
Cost of cut-through acceptable
People will see the benefit buy again
/ recommend to others
Will someone hate it
Kill Puppy (0 = kill, 1 = love)

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Pets.com
Pet supplies via the
internet
Save big, save time
Stay at home

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Kosmo.com
Instant delivery of products
purchased via the internet in
big cities Order a wide variety
of products, from movies to
snack food, and get them
delivered to your door for free
within an hour.

Despair.com
We hate all the senseless, wasted time on employee
motivation and un-founded optimism
We imagine you do to, buy our products and show your
true colors
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Continuous effort is the key to unlocking your potential
Winston Churchill

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Etoys.com
The new place to buy toys. Find you want on
the internet
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Petrock.com
Pets take a lot of
time and energy.
Your kids can have
almost as much fun
with a pet rock.
We even include a
care guide

Flooz
72

Webvan.com
Buying groceries should be easier. With webvan you
can get all your groceries, so you have time for other
things
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Now the most important question
Why would this business fail …
Pets.com
Kosmo
Despair.com
Etoys.com
Petrock.com
Flooz
Webvan
Why will this business fail…

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 Arguing the other
direction…
Why is this a bad
idea…
If it fails, why will it
fail…
 And then deciding
what can be done
about it…

Moving forwards…

What you need is a bit of
innovation magic…
Magic
Make
innovation
Central
Thinking
Different
Good ideas in
Bad ideas out

A summary…
 Getting people out of the building asking the right questions
 Structuring your innovation process around customer needs
 Changing the reward systems to encourage good failures
 Changing the organization so people have time to be innovative
 Helping your team leverage opportunities in the “adjacent
possible”
 Building team diversity/ better ways to work in teams
 Creating systems to kill bad ideas so you have more time for
good ones

What is the real danger ?
Flavor of the month…
Suggestions:
 No announcement of a big new innovation program/focus
 Building enthusiasm for innovation from the bottom up

The solution…
go slow to go fast…
build on what you have…
you don’t need to change everything to
be innovative