Getting To Thank You: A practitioner's guide to innovation

G E T TI N G TO TH A N K YO U
A P r a c t it ione r ’s G u id e t o I n nov a t ion
C H R I S F I N L AY

Copyright 2014 © Chris Finlay
All rights reserved
No part of this publication may be reproduced, stored in or introduced
into a retrieval system, or transmitted, in any form, or by any means
(electronic, mechanical, photocopying, recording, or otherwise), without
the prior permission of the author. Requests for permission should be
directed to chris@chrisfinlay.com
Publisher: Chris Finlay
Editor: Todd Sattersten
Copyeditor: Robyn Cummer-Olsen
Proofreader: Jessie Carver
Designer: Vanessa Maynard
Illustrations: Alex Baranov
Cover Design: Kaitlyn Wahldick
ISBN 978-0-9913771-0-7

To the extent that I am smart, I am smart because other
smart people shared with me what they knew. The
way I pay them back is sharing what I know. This is the
underpinning of academic life: the community of scholars.
—Bill Buxton, principal researcher at Microsoft Research

VI GETTING TO THANK YOU
TA B LE O F
CO NTENTS
Introduction: For You
Chapter 1: Thank You
Simple and powerful, getting a thank you is how you know
you are getting it right—even designers and business people
can agree on that.
Chapter 2: Innovation Imperative
Fear, fun, adrenaline, competition, and delight. Business
models are born and die faster than ever before, and
competition comes from the most unexpected places. Your
org chart will hate it, and your manager probably will too.
As my friend and brother-in-arms Michael Dila says, “This
is going to hurt.”
Chapter 3: Understanding Experiences
Experiences are the magic in the middle. Designing
experiences is like “cutting cubes out of fog,” as my
innovation hero Larry Keeley likes to say. Understanding
experience design fundamentally changes how you see the
world and deliver your products and services.
Chapter 4: Design Thinking vs. Business Thinking
Innovation is why you need design thinking, and it takes
more than just designers to make it happen. Designers and
business people both want the same thing—they just get
there a little differently. And together they are powerful.
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TABLE OF CONTENTS VII
Chapter 5: Teamwork
Herding cats is an overused bit of wordplay, but managing
innovators is like, well, herding cats. They are passionate,
intrinsically motivated, and ready to rumble. They don’t
require much except for a good problem, some whiteboards,
and Post-its, but it’s important to think about team dynamics to
improve the conditions for success.
Chapter 6: Approach
Having a map won’t tell you where every bump in the road
will be, but it will keep you a bit safer and hopefully out of that
creepy cabin in the woods. Having an overview of the process
will help you develop an idea of how activities fit together,
which in turn helps you identify where to play and how to win.
There is no one right way to innovate, but there are a lot of
wrong ones.
Chapter 7: Understand
There are a lot of important things that have to happen in the
world before you start thinking about your project topic. Many
of them relate to why you are doing this work now and your
chances of success. Find out who matters, why, and what you
can take from what has already been done to help you win.
Chapter 8: Discover
People have rich and complex lives that are always changing,
and we need to seek to understand them to make stuff they love.
People are not neatly divisible by job, race, income, or brand
of jeans, especially when you are trying to find the new. People
connect over shared values, and that is where you need to focus.
Chapter 9: Transform
Reliable innovation is less like magic and more like accounting.
It requires us to rigorously evaluate and define the value of every
detail of the research and to connect soft and hard data to point
the way to the future. It is the bridge between design and business.
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VIII GETTING TO THANK YOU
Chapter 10: Create
This is the part of innovation that starts to look a little more
like magic. Using rigor through the process to get here gives
you more proof than gut instinct, and you will have a more
robust view of what is possible, probable, and pleasing. With
the proper foundation, your mind is free to make high-value
intuitive leaps.
Chapter 11: Prototype
Prototypes, tests, sketches, and the strong and accessible
logic they create make for powerful presentation of new
ideas. They give you “faster, cheaper, and deeper insight”
into what is right. Use them early and often.
Chapter 12: Communicate
Pride or fear is what you will walk into your final
presentation with. When you’ve got it right you usually know
it, so don’t screw it up.
Acknowledgements
Recommended Reading
Letter from Honest Paul
Innovation Process Overview
About the author
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INTRODUCTION 9
I NTRO D U C TI O N

INTRODUCTION 11
FOR YOU
This book is the result of my deep desire to share what has helped me
improve my business and to share my ability to create good things in
the world.
I am a creator and problem solver who has spent a lifetime in service.
I started my career early, at age nine, working summers at my
grandparents’ hotel picking up litter and sorting beer bottles. Over the
past twenty-five years I have been a waiter, chef, designer, innovation
consultant, CEO of an international shoe manufacturer and retailer,
and now the Director of Experience Design and Innovation for
UnitedHealth Group. I grew up in, have evolved with, and been firmly
employed in, the modern service economy. I studied how to create
and deliver experiences in graduate school at the Illinois Institute of
Technology, obtaining a master of business administration from the
Institute of Design and a master of design from the Stuart School of
Business. I studied how to communicate visually at the School of Visual
Arts in NYC where I obtained a bachelor of fine arts. Through those
experiences, I have learned a few things about getting to Thank You—
and most of them the hard way. Getting your customer to say “thank
you” on a regular basis is no accident.
The tools and ideas being presented here are for anyone looking for a
practical interdisciplinary approach to innovation. Whether you are
making chewing gum wrappers a little more fun, developing a new
service for delivering cancer treatments, or defining options for starting
a new small business or improving an existing one, these tools can be
the difference between a half-baked idea and a hit. These tools will help
you identify meaningful challenges and opportunities, evaluate them
rigorously, and support the development of a clear chain of logic to help
you create rich ideas and a powerful case for their value. This is not an
exhaustive set of tools, but they are essential for anyone who is serious
about innovation.
There are many ways to deepen the tools presented in this book by
further investigating the specialties within the disciplines of design,
business, social science, and their related specialties. I encourage you
to explore them all and embrace the power and problems each one

12 GETTING TO THANK YOU
contains. Business strategy, management, organizational behavior, Web
analytics, interaction design, graphic design, and anthropology are some
of the most interesting and compelling areas of study that will further
your ability to innovate.
A warning about tools: Tools make it seems as though there is one right
way, or if you fill in the blanks, a solution will appear. The tools I have
provided are suggestions about how to organize information based on
experiences, and they may or may not be appropriate for you. Tools can
be a great way to increase your chances of heading in the right direction.
My purpose of including tools is to support you as you learn to think in
new ways. As you master them, you may come to a place where a certain
tool doesn’t quite meet your need, and then you should adapt it or
create a new one that helps you answer the questions you need it to. We
should always be actively shaping our tools as we go. As the well known
Canadian philosopher and futurist Marshall McLuhan said, “We shape
our tools and thereafter our tools shape us.”
Good tools always take practice to use effectively, and these tools
in particular require committed people with the courage, care, and
compassion to do great work. Using them is no guarantee of success,
but I firmly believe that by working with them, even in rote fashion, you
will come out ahead of where you would have without them. That said,
if you simply view the tools as a prescription you will miss the value of
the methodology as being open and iterative. Just as great chefs still use
cookbooks for inspiration yet still improvise, you should use this as a
starting place or reference but seek ways to improvise with the tools for
the needs of your specific project.
Finally, I also wrote this book to connect with other passionate folks and
would love to hear from you.
- Chris Finlay
Connect with me on:
Twitter: twitter.com/chrisfinlay
LinkedIn: linkedin.com/in/christopherfinlay
Visit: chrisfinlay.com

THANK YOU 13
C H A P T E R 1
TH A N K YO U

It’s not about the world of design, but the design of the
world. 1
—Bruce Mau, creative director of Bruce Mau Design and
founder of the Institute without Boundaries
I don’t think that anyone has really told [people] what
design is. It doesn’t occur to most people that everything
is designed—that every building and everything they
touch in the world is designed. Even foods are designed
now. So in the process of helping people understand
this, making them more aware of the fact that the world
around us is something that somebody has control of,
perhaps they can feel some sense of control, too. I think
that’s a nice ambition. 2
—Bill Moggridge, co-founder of IDEO, designer of the first
laptop computer
Most designers don’t understand business. 3
—John Seely Brown, author and former director of Xerox
Palo Alto Research Center

THANK YOU 15
As you drive into Rochester, Minnesota,
you will pass a few of America’s favorite
chain restaurants, a mall, and a grocery
store. And you’ll know you are almost
downtown when you see the large water
tower on the horizon painted like an ear of
corn. The big summer excitement in
Rochester is the county fair, and regular
entertainment mostly relates to the nearby
lakes or watching movies projected on the
side of the community center. Rochester is
a pretty humble slice of America. What
makes this little town known around the
world is that, despite its humble nature, it is
home to the Mayo Clinic, one of the most
advanced and prestigious research hospitals
in the world.
I spent a summer at the Mayo Clinic working as a design strategist
for the SPARC Innovation Lab, which recently became the Mayo
Clinic Center for Innovation. SPARC (See, Plan, Act, Refine, and
Communicate) was a real-time lab for health care service innovation.
It was the first of its kind and served as a model for the development
of many other innovation centers in hospitals and other organizations
across the country.
In 1889 a tornado struck the town, and Dr. Mayo and the nuns of
Rochester founded the Mayo Clinic to treat the victims. Dr. Mayo,
and subsequently his sons, dedicated themselves to care that in many
ways pushed the boundaries of medicine and its delivery. They saw an
opportunity to improve physician education, and thereby patient care,
by observing other physicians and by inviting physicians from around
the world to study with them. At that time it was considered dangerous
socialist behavior, but they knew they would find better ways to treat
people by sharing information. Their courage to break boundaries
changed the physician practice model forever.
The walls of the original Mayo Clinic buildings are literally etched
with the teachings and traditions of the Mayo family, including their
one-hundred-year-old value statement, “The needs of the patient come
Figure 1. The corn cob-shaped water
tower greets those visiting Rochester,
Minnesota.

first.” That is not a hollow vision cooked up in a marketing meeting. It is
lived by the employees on a daily basis. There are famous stories such as
the one about an ER nurse arranging to have an eighteen-wheeler moved
from the emergency lane in front of the hospital so it didn’t get towed
while the owner was cared for. Or a janitor who went to a patient’s home
to feed the patient’s cat. There is no shortage of these stories and they
are told with pride. The small town of Rochester even has a commercial
airstrip to accommodate the jumbo jets of princes, kings, executives,
and politicians coming for treatment. There are very few places that are
more committed, at every level, to innovation and to providing world-
class service and amazing results in some of the most critical moments of
people’s lives.
Our team audited Mayo’s most advanced service experiences—from
transplant surgery to nicotine abatement to patient check-in—and met
with some of the most brilliant medical innovators on the planet. We
dug into each program with its sponsors, met the operations agents
above them that pulled those services together, and reported our findings
on a regular basis to Mayo’s internal medicine board, which has a
huge influence on the future of the clinic. We gathered insights from
our observations and meetings, then developed recommendations and
designs for potential services and operational models to leverage the
value of existing services and knowledge in more powerful ways. We used
the past and present to find the future. It was awesome.
Even while surrounded by such incredible excellence and innovation,
one of the service experiences that touched me most from my time in
Rochester was the one I had at the Honest Bike Shop, a small store
located next to the old train tracks and a not particularly inspiring
Mexican restaurant. As I stepped into the Honest Bike Shop, I was
greeted not by glaring fluorescent lights and crushing displays typically
found at bike stores at that time, but rather by hardwood floors and lots
of natural light. Present was a definite sense of openness and expertise. It
was a beautifully simple presentation. It had a naturally inviting feel, a
bit like the way I remember my grandfather’s tidy and well-swept garage.
It was full of little innovations and care that added up to something
wonderful. It was so touching because it came from such a small and
approachable establishment. It showed that anyone can provide a
meaningful experience for their customer.

THANK YOU 17
The owner, known as “Honest Paul,” greeted me and asked how he
could help. He encouraged me to browse, handing me a piece of plain
white paper that had clearly been printed on the store printer and saying
something like, “If you would like to take a moment to read what we
are all about while you look around that would be great.” Honest Paul
had handed me his personal history and mission statement. That is
powerfully symbolic: a one-page proclamation of what he believed, how
he worked, and what I could expect from doing business with him. It was
captivating in its earnestness rather than being slick and pithy. It pretty
well ignored all of the marketing advice of the day, but its honesty won
me over instantly. You can read the full text in the back of this book; it is
an endearing biography that leads you through why he does business the
way he does, describing his career in the
Air Force, his humble beginnings, and
his hard work. The lines that really stick
out for me are his guiding principles,
his criteria for designing his business:
“Good repair and service, good
products, fair prices and good reputation
have brought about a thriving business,
and he looks forward to many more
good years of serving you properly.” The
last lines of his statement really spoke
to me. Paul went on to show me around
his clean and simple shop with pride,
especially proud of the work stalls that
had been built not just for technicians
but also for owners to visit their bikes
while they were being worked on. I could tell he had considered both me
as a person and what I might need to be happy—not just what he could
sell me that day. Paul was asking for a relationship and telling me about
his commitment to his relationships over his life. Wow.
After a relatively straightforward discussion about its merits, I bought a
twenty-dollar flashing safety light for my bike. No big deal. What was a
big deal is that Honest Paul had convinced me to believe in his business
and compelled me to tell others by connecting with me over a shared
value of community, quality, and care. He expressed them overtly and
Figure 2. The front of the Honest Bike Shop.

subtly in the design of his store and the way he approached me. He
showed me how much my needs mattered to him and were accounted for.
I wanted his shop in my neighborhood.
As I reflected on that experience, what I realized was that from the
moment I walked into that shop I felt like saying Thank You. It was a simple
and powerful revelation. In that moment I realized that my goal is not
just to properly thank my customers for their business but also to create
products and services so meaningful they feel compelled to thank me.
CHEAP VS. DEEP
There are many types of Thank You, and they run the spectrum from
cheap to deep. Cheap thanks is given as an afterthought, as a part of
participating in polite society. You give thoughtless thanks when a waiter
fills your glass of water. Forced thanks when your grandma gives you
something you don’t want for your birthday. Relieved thanks when a
cop lets you go with a warning. These all serve their purpose in polite
society, but when I write about getting to Thank You, I am talking
about a thanks that you are compelled to say. A thanks that if you didn’t
say it, you would regret it. It is not about debt or guilt but rather about
honoring someone’s earnest effort to do something great for you.
CHEAP DEEP
Figure 3. Thank You runs from the cheap to the deep.
Deep thanks is very different; you feel it. Your body may tingle. It is often
revelatory. It is insightful. It may be associated with seeing a powerful
movie, reading a book that led you to understand something more
clearly, or someone sharing a deeply personal story that helped you
understand the world in a new way. It is a bit like watching the sunrise
on a lake when you are snuggled in a warm blanket. You are just happy
you got to be there. It is more than memorable; it is meaningful.
Deep thanks is the result of changing your belief about what is possible
or what someone might do for you. It makes you happy to say it and
happy to hear it. It is what we devote lives and careers to. In relation
to products and services, a deep thanks is most often given because you

THANK YOU 19
feel like someone went out of their way to consider your needs and make
something that feels like it was made for you. It often feels like they knew
you—as an individual, as a part of a tribe—and went beyond their job
requirements or tapped into some higher intelligence or power to give
you what you needed at that moment. They made something awesome.
They made something magical.
Deep thanks opens the doors to a lifelong relationship, a relationship
with meaning that leads people to pay more, tell others, and invite
your company into their homes. When customers are thanking you,
it means you are getting it right, and getting it right means they are
going to buy from you again. When companies consistently get their
customer experience right through their products and services, those
companies turn out to be stars like Apple, Facebook, Amazon, Four
Seasons, Disney, Twitter—companies that are known the world around
as innovators. They connect to people. They are smart and careful about
how they serve people. These companies show people that they care by
creating joy in their lives.
It’s not just for the big guys either. Small but dazzling businesses like
the Honest Bike Shop can make this happen. Even small businesses
can make Thank You moments that leave their customers overjoyed.
Honest Paul’s version of innovation doesn’t cost much or take a lot of
time. It focuses on the values that matter to Paul, work for his company,
and matter to his customers. He built his business around them. He
makes his choice about how to invite someone into his store, what he
sells, and how he sells based on the values he has so clearly identified.
They are his guiding principles. Paul is special but not because of his
deep expertise in innovation. He gets to the heart of what matters and
practices it daily to make his customers’ world a better place. Innovation
isn’t defined by scale, budget, or time but rather by commitment and
practice. Innovation is simply making something new of value or making
something better.

INNOVATION AND THANKS
How to innovate is not something everyone agrees on, but Thank You
is. Business people, customers, and designers understand the importance
of service and gratitude at their core. They agree that we all want to get
and to give thanks, and that is where we need to start to work together.
Finding out what to make—and why—in order to provide these Thank
You experiences is the focus of this book. We know that the best products
and services that evoke this connection are what set expectations for
quality, service, and experience that businesses in every industry must
compete with. It is what you have to be committed to in order to succeed.
In fact, it is that ethos that is at the heart of Zappos, the online retailer
purchased by Amazon for just under $1 billion 4
, beloved by shoppers and
the press for its deep commitment to creating Thank You experiences 5
.
It makes people happy and makes people money. Those things are often
one in the same.
Stop worrying about innovation metrics before you worry about hearing
Thank You. Thank You is certainly not the last metric you need to
measure success. Thank You is both a beginning for collaboration and
an end result for the customer. You may not always hear thanks directly
from the customer, but if you listen through business performance, social
media, front line employees, or net promoter scores, it shouldn’t be too
hard to hear what people think about your business. You should be
asking them anyway.
Getting to Thank You won’t always require months of research but
ingraining the process for research, design, and decision-making is
something that takes persistence and commitment. We all know what an
outstanding experience feels like but few of us know how to create them.
In order to unlock and understand the power of getting to Thank You
to find new spaces to play and new ways to put the pieces together, we
have to start by understanding the people we want to serve. We need to
understand that customers don’t just buy products and services, they buy
experiences and the meaning behind them.
Over the coming chapters we will dig into what an experience is, how
it works, and what you can do to construct one in order to innovate
and deliver value. We will explore how to uncover what is meaningful
to people, generate powerful ideas from that meaning, and test and

THANK YOU 21
communicate those ideas to get you to Thank You. Many of the
activities will feel familiar. Most of us have worked collaboratively
with a colleague, built a requirements document, made a budget, or
managed a project, but having the right perspectives and tools organized
for innovation is something uncommon. These tools form a guide to
know what to make and why in order to create and deliver value to your
company and your customers in an increasingly complex world. In short,
you hold a basic guide to modern innovation methods.

NOTES
1. “Massive Change,” Bruce Mau Design, accessed March 23, 2013, http://www.
brucemaudesign. com/4817/88330/work/massive-change.
2. “In Remembrance Of Bill Moggridge, 1943-2012,” Fast Co.Design,
accessed March 23, 2013, http://www.fastcodesign.com/1670751/
in-remembrance-of-bill-moggridge-1943-2012.
3. Robert Berner, “Design Visionary,” Bloomberg Businessweek Magazine,
posted June 18, 2006, http://www.businessweek.com/stories/2006-06-18/
design-visionary.
4. Sarah Lacy, “Amazon Buys Zappos,” TechCrunch, July 22, 2009, http://www.
techcrunch. com/2009/07/22/amazon-buys-zappos.
5. Bill Taylor, “Please, Can We All Just Stop ‘Innovating’?,” HBR Blog Network
(blog), Harvard Business Review, May 30,2012, http://blogs.hbr.org/
taylor/2012/05/please_can_we_all_just_stop_ innovating.html.

INNOVATION IMPERATIVE 23
C H A P T E R 2
I N N OVATI O N
I M PER ATIV E

Proﬁt is not the explanation, cause or rationale of
business behavior and business decisions, but the test of
their validity. 1
—Peter Drucker, management thought leader, author, and
educator
We are searching for some kind of harmony between two
intangibles: a form which we have not yet designed and a
context which we cannot properly describe. 2
—Christopher Alexander, architect and author

My grandfather, Francis Wyatt
Lawson, a submarine captain and
inventor, passed away over ten years
ago. While archiving his business
papers last year, I came across his
yellowed copy of a 1960 Harvard
Business Review article titled
“Marketing Myopia” 3
written by
Harvard University Professor
Theodore Levitt. I thought it would
be a good read for novelty’s sake
and was shocked by how relevant the content still is. The article turned
out to be a classic. It went right to the heart of one the key concepts for
innovation: Focus on what your product and service accomplishes for
your customers rather than on always just tweaking the product
performance attributes to convince customers to keep using your existing
product. Making something smaller, faster, and in more colors won’t save
your business if people don’t even want or use the core product. You
should be most worried about whether or not your product is the right
thing to offer at all.
WHAT’S YOUR JOB?
Levitt is further credited with the classic line, “People don’t want to
buy a quarter-inch drill. They want a quarter-inch hole!”4
People want
the outcomes, not the mechanism, and whoever can deliver that will
win. His ideas, summarized as “What business are you in?,” have been
further championed by Clayton M. Christensen, professor at Harvard
Business School and renowned innovation thought leader, in his Jobs-to-
be-Done theory. The Jobs-to-be-Done theory is an excellent evolution
of Levitt’s work and points to the simple but powerful idea that the job
your product or service offers may not be what you think it is. In his
article, Levitt gives examples of how businesses need to understand the
job they are really doing for people in order to increase their competitive
edge. For example, moviemakers’ jobs should be broadened to that of
entertainment providers in order to compete against other forms of
entertainment such as television or even fine dining. Railroad owners’
Figure 4. “Marketing Myopia” is a Harvard Business
classic.

jobs should be broadened to that of transportation, rather than as just
being in the business of trains, in order to compete against trucks and cars.
Christensen uses the example of a milkshake that some people bought
because of boredom rather than as a dessert or for some particular
nutritional value. In order to increase sales of milkshakes, an expert
in fast food might be tempted to increase revenue by making a thicker
or sweeter shake, but a better solution might simply be a marketing
campaign to emphasize the “on-the-go value,” adding a game to the
cup, or offering a cup size that was better suited for car cup holders.
Identifying the role the product plays takes a deeper understanding of
people’s behavior. You can see how easy it is to discover options when
you know what people are trying to accomplish. Simple insights bring
important ideas to life. They make our products and experiences that
much better.
The jobs a company’s products and services need to perform, and the
level of detail with which the company needs to do its job, are both
rapidly evolving. The Internet spreads the smallest of cultural trends
and influences around the globe in minutes rather than in years or even
seasons, morphing both meaning and value. This means that a new
product feature offered in Japan yesterday can create new expectations
in the U.S. today. It will change what people want because they will be
inspired by what is now possible. And what is possible changes rapidly
with advanced sensing technology such as accelerometers that tell
your iPhone which way is up and thinking devices such as tablets and
their microprocessor brains becoming cheaper and more ubiquitous.
All of that technological capability creates deeper, richer, and fresher
information, requiring new experiences to make sense of it. Technology
has been magical and revolutionary but we will continue to see that the
real magic will be the relationships we facilitate and the experiences that
we build with it through design rather than how fast the processor will
be and how many pixels the screen is.

BUSINESS MODEL HOW A COMPANY MAKES MONEY
HOW A COMPANY DELIVERS VALUE
WHY COMPANIES NEED TO CHANGE
PRODUCT AND SERVICE OFFERING
CULTURAL AND COMPETITIVE SHIFTS
Figure 5. Companies are continuously creating products and services in response to changes in culture and
market conditions.
KNOWING WHAT TO MAKE AND WHY
This increasing complexity leads us to the “innovation gap,” a concept
championed by innovation pioneer Patrick Whitney, the dean of the
Institute of Design at the Illinois Institute of Technology. Prior to the
1950s, most of humankind had limited options for products and services,
and all well-crafted products were precious. After the 1950s, there was
an explosion of high-quality, low-cost, mass-produced consumer goods.
Since then, our ability to make whatever we can dream up has rapidly
increased to a huge array of products—from super colliders to the
Snuggie. That wave of goods was a boon to our standard of living,
but the more stuff companies make, and in greater variety, the more
complex and nuanced people’s lives get, and the harder it is to know
what to make and why.
By being incredible manufacturers and consumers, we have complicated
the supply and demand relationship exponentially. This makes for
some pretty interesting challenges, and, as author John Naisbitt said in
Megatrends: Ten New Directions Transforming Our Lives, “The most exciting
breakthroughs of the 21st century will not occur because of technology
but because of an expanding concept of what it means to be human.” 5
Businesses must get smart about engaging their customers and creating

TIME
ORGANIZATIONALKNOWLEDGE
KNOWLEDGE OF HOW
TO MAKE THINGS
KNOWLEDGE OF
PEOPLE’S LIVES
INNOVATION GAP
Figure 6. As companies have an increasing technical capability to make new products and services, people’s
lives become more complex and the harder it is to know them: This is known as the innovation gap.
complex systems for living, not just for buying and selling commodities.
Innovation is about changing and moving with human behavior and
culture to create desirable experiences. The best way to understand
culture is by spending time with people and understanding the jobs that
need to be done.
Innovations are made of relationships between people, products, services,
and systems that support that. Understanding those relationships and
their complexity, and demonstrating how meaningful ideas function in a
system, are important ways to show value.
Other outcomes of this rapidly evolving definition of what it means to be
human are new business opportunities. As philanthropist and Microsoft
founder Bill Gates said, “Never before in history has innovation
offered promise of so much to so many in so short a time.” 6
The risk of
blind spots for established companies unable to stay aware of what is
meaningful in the market grows daily, while the opportunity for new
entrants who can see subtle but important needs grows as well. On top
of that, prototyping, financing, design, and marketing resources are
more accessible than ever before. Now, one sharp individual can eclipse
a well-established business model. The individual innovator can now
scale a product or service more rapidly than ever before to threaten

large and established competitors. When a company such as Google,
worth hundreds of billions of dollars, feels the need to buy up two-person
start-ups who have nothing but a little revenue and a good idea, you
know the world has changed. The major side effect of all of this is that,
as Saul Kaplan, founder and chief catalyst of the Business Innovation
Factory and former economic strategist for the state of Rhode Island,
likes to say, “The half life of a business model is rapidly shortening.”
SPEED
QUALITY
PRICE
EXPERIENCE
MEANING
VALUE
Almost 60 years after
Theodore Levitt’s article
was published, companies
are only now beginning to
understand how the
richness of people’s lives
informs innovation.
Companies are realizing
Figure 7. People have moved beyond the basic descriptors of
value in terms of performance and now look for deeper values.
that they exist to provide
value to people, and people
require products and services to express their sense of meaning and
accomplish their jobs. The three classic determinants of value—speed,
quality, and price—get a bit more complicated in our present-day service
economy than in the former industrial economy. We increasingly live in
a world where unique and powerful experiences, rather than physical
objects, are the most highly valued purchases. Even Amazon founder and
CEO Jeff Bezos, arguably one of the men responsible for moving the
most incredible volumes of products in human history, recently said,
“People don’t want gadgets, they want services.” 7
The flexibility of
offerings such as services and software mean higher levels of
personalization and customization are also available, transforming the
creation, delivery, and consumption process. As a result, we have gone
past speed, quality, and price as the main criteria for the value of a
product. The new big three in the service economy are meaning, value,
and experience. We have leveled up.
While innovation is what drives change in, and creates value out of,
our world, the approach to innovation continues to be stubbornly stuck
in industrial revolution–era mechanics. This has led to a very high
failure rate—some say ninety-five percent. 8
Few companies in the world
practice innovation in a consistent and effective manner, and few leaders

are satisfied with their investments in innovation, but they are driven to
it because of the pace of change.
INCREMENTAL VS. EXPERIMENTAL
INNOVATION
Innovation typically follows two very broad paths: incremental
innovation or experimental innovation. Both are valid, valuable, and
necessary. We could get into specific types of innovation built around
process, product, service, radical, disruptive, and probably another
good twenty or so other types of innovation that consultants like to try
to own, but fundamentally there are only two. The one that keeps the
money rolling in on established products and services, and the one that
introduces new product and service offerings.
INCREMENTAL
INNOVATION
EXPERIMENTAL INNOVATION
TOTAL INNOVATION BUDGET
Figure 8. The majority of innovation budgets are spent on incremental innovation, a more reliable and
predictable form of innovation.
Incremental innovation means doing things a little better through
iteration, variation, cost effectiveness, reducing environmental impact,
and better design and engineering. It is focused on delivering functional
value by maximizing an existing product or service offer. Incremental
innovation is also done to extend product lines, such as the Swiffer or the
iPod, that start as big breakthrough innovations and are then iterated
and improved upon to extract the maximum value. The addition of the
Swiffer WetJet and each subsequent iPod model are good examples of
incremental innovation. It is how to make a great idea keep on giving.

Incremental innovation is the lifeblood of most companies and what
keeps customers coming back on a regular basis. This is where the
majority of growth-focused budgets are spent, and with good reason.
The returns are easier to predict, and they capitalize on a strong and
proven product or service.
Unfortunately, only following the path of incremental innovation leads
to a zero-sum game or a red ocean strategy—a scenario where all
competitors are fighting for a piece of the same action in a well-defined
space. When a company gets caught there, it’s tempting to believe that
“faster, cheaper, and more” is a good strategy to outlast or outrun the
competition, but the company will likely follow its product’s price to the
bottom as competitors copy the product and offer it cheaper.
A profit margin—even a small one—reinforces strategy and makes it
hard to change. People get committed to an idea and won’t let go if
it makes money, even in the face of impending doom. As the brilliant
technologist and author Clay Shirky says, “Institutions will try to
preserve the problem to which they are the solution.” 9
For example,
Blockbuster saw Netflix coming but thought they could outlast
them. It wasn’t about being caught off guard. It was about both not
understanding the threat and Blockbuster’s senior leadership being too
attached to what worked in the past. The consequence was billions of
dollars of value rapidly wiped from the company and ultimately sending
the eight-ton gorilla of video rentals into bankruptcy. Ouch. Belief is a
kind of blindness, and billions of dollars make you believe that you are
right and that everything is OK—until it’s not. Saul Kaplan calls this
getting “Netflixed” in his book The Business Model Innovation Factory, 10
and
that term seems pretty appropriate.
When an idea is brought to market, it is optimized for operational
efficiencies in order to maximize value, but the idea risks being process-
driven and dying a slow, painful death due to over-management.
Starbucks is a great example of a company that became totally focused
on maximizing revenue through process, and then forgot the job it
originally aimed to perform. The company maximized shelf space,
product lines, brand extensions, and store locations, which led to reduced
quality and poor experiences. To reclaim its former high-level quality
and return to its vision of creating a desirable space and great coffee,
Starbucks brought back its former CEO Howard Schultz. He returned

the focus to providing a meaningful service to customers, turning the
company around even after it had been declared beyond saving. Schultz’s
return to meaning vaulted Starbucks back into a leadership position with
its Via Ready Brew instant coffee, which reached $100 million in global
sales only ten months after launch, capturing about thirty percent of the
$330 million premium single serve/pod category. 11
Via is a product that
critics scoffed at. That comeback process was important as it led to the
evolution of the Via product, but purpose is what builds excitement and
ultimately captures market share. Schultz offered a great new product,
slowed store expansion to improve the quality of experience—a central
value in the original Starbucks’ success—and signaled an overall return
to the values that delivered on its promise of a place for people to spend
time outside of work or home on a regular basis, reinforcing a concept
known as the “third place.”
Experimental innovation is the stuff that inspires and creates the foundation
for companies such as Apple, Amazon, Twitter, and Microsoft. It pushes
failing companies back to the top of the charts and tips industries on end,
reshuffling competitors and long-held beliefs. It leverages the knowledge
generated from specialists but often requires the generalist perspective that
can see how to bring together the right solutions to the right problems at the
right time. This is the kind of innovation people fight for and salivate over, the
stuff that makes it to the cover of Time, Wired, and Fast Company.
PURPOSE DRIVEN PROCESS DRIVEN
PURPOSE MAINTAINED
2ND
WIND
Figure 9. Keeping a company fresh takes a strong sense of purpose.
(Mats Lederhausen, BECAUSE, 2008)

Experimental innovation or “disruptive innovation,” as Harvard
Business School Professor Clayton M. Christensen calls it, 12
is the
highest risk type of innovation. This type of innovation is pursued to
find the future and disrupt the present. A disruptive innovation goes
outside the current trajectory of the industry or product category to
leapfrog another competitor or business. It often opens the door to a
new population of consumers by offering a low-cost version of a similar
product, a new technology, or a combination of technologies, in a way
that is unexpected.
The now-discontinued Flip video camera disrupted larger, established
video camera producers by offering a low-cost, high-quality video
recorder that was easy to operate while the rest of the industry, even other
low-end video camera makers, were still adding incremental features and
sustaining innovations. If we apply Christensen’s concept here, it’s evident
that the Flip camera “open[ed] the door to ‘disruptive innovations.’ ”13
Other well-known disruptors include the transistor radio that made
listening to music on the go cheap and accessible and the early Honda
motorcycles that made transportation cheap and accessible. All of
these products identified the value to be delivered and created a simple,
inexpensive entry product that fit people’s lives and looked cool while
meeting their needs. Disruptive products and services don’t always have
to be cheap. They tend to be cheap because, rather than chase premium
categories that are expensive to break into, they isolate the key value
to be delivered and then deliver it efficiently. The Amazon Kindle is a
great study in this. Its initial product was cheap, looked good, and had the
essential function and a smart system being grown behind it. It gave a lot
of people a lot of value at a very low price. Since its launch, it has become
entrenched and has grown up into a premium quality competitor.

Incumbents often leave themselves open to
competition by continuing to make their existing
products only marginally better and more
complicated, excluding a large customer base.
They get lost in features rather than delivering
value. The way to avoid this nasty business is to
look for and commit to meaning and shared values
that can unite a ninety-year-old woman and a
fourteen-year-old boy. People relate to things by
Figure 10. The now-discon-
tinued Flip camera disrupted
the video camera market. what matters to them.
The Nintendo Wii is an excellent example of a company that identified
and leveraged the power of meaning to give its product a unique
advantage and a jump on the trends. In the past, the market leaders—
Nintendo, Xbox, and PlayStation—all listened carefully to gamers,
responding to their requests with more features and options in the games
and the controllers people used to play them. They sought the “best”
customers, the ones who were the most vocal and the biggest consumers,
but they ended up making products for an increasingly niche market,
which by nature becomes smaller over time. Console makers were losing
people who had previously played games when the controls were easier to
manage. People now had to be masters of the multiple-button combos or
else face the taunts of twelve-year-olds.
Nintendo took a step back and asked how it might be able to solve the
problem differently. It sought to understand people, not just current
customers—a critical move and a critical distinction. People have rich
lives and experiences. They are not just customers, neatly packaged into
single servings. Customers can be flopped into an Excel spreadsheet,
safely controlled away from the chaos and risk of the real world.
However, Nintendo rolled up its sleeves and dug into the meaning of
play. It realized that video game players and non–video game players
alike shared a love of play, but the complicated interface of the game
consoles limited the number of people who would or could invest the
time to master the existing gaming platforms.

1975 1985 1995 2005
Atari
2600
Atari
5200
NES
Genesis
SNES
PS1
PS2
N64
Wii
Xbox 360
PS3
2008
iPad
Figure 11. Video game controllers consistently increased complexity over time till the Wii and iPad
disrupted them and now the iPad has created a new rival and partner in the gaming industry.
(Source unknown)
This simple idea of play massively broadened Nintendo’s market by
reinventing the way that people played video games. Not only did
Nintendo create new opportunity for itself, it created opportunity for its
partners to create new games and new hardware, and it found a huge
surge in demand for the new console. In fact, the new console was in
such demand that it was constantly out of stock for two seasons while
Nintendo ramped up production.
An important part of the Nintendo Wii story is that the CEO, Satoru
Iwata, was able to make such a huge change to the product line. This
is still a rare event as leaders of established businesses often have
not changed their business model within their careers. They either
don’t know how to or can’t pivot because their business’s existing
infrastructure is built on one product line or idea of value they deliver.
It is a very industrial-era approach and a habit that is hard to shake and
hard to address. Leaders must recognize the need to change, or their
companies will have no chance at maintaining a trajectory of success.

THINKING IN EXTREMES
People are often scared of innovation because they are unaware of
the more reliable and repeatable methods of innovation. This is
exacerbated by a kind of blindness to options. As the saying goes, when
you have a hammer, everything looks like a nail. We are naturally
inclined to do what we know, and it is scary when we are tasked with
purposely finding something that is outside what we know or is at the
edges of our knowledge.
Unfortunately, people who are hired to maximize an existing market
opportunity are also often forced to experiment when they may not be
prepared to. Maximization takes high degrees of focus and operational
acuity while experimentation requires ambiguity, empathy, and a
generalist’s perspective to seamlessly integrate a variety of disciplines to
succeed—critical attributes of design thinkers. Requiring people to change
mindsets so significantly without arming them with the proper capabilities
sets them up for disaster and reinforces fear of experimentation. It is a rare
person who can solve highly specialized challenges while also dealing with
the complexities and ambiguity of innovation.
Additionally, humans have a strange tendency to think in extremes,
particularly when they are projecting themselves into an unknown
future. Starting a project with the goal of creating something new is like
staring into an abyss; it can be overwhelming to say the least. People
often worry they will be expected to create the next Swiffer or iPhone—a
daunting task that feels a bit like building a skyscraper on its side and
trying to stand it upright. Hard work, to say the least.
Even the world-famous architect Frank Gehry (the man who designed some
of the world’s best known structures, including the Guggenheim Museum in
Bilbao, Spain, and the Walt Disney Concert Hall in Los Angeles) experiences
this fear in his work. In an interview for Peter Sims’ book, Little Bets: How
Breakthrough Ideas Emerge From Small Discoveries, Gehry calls this anxious
feeling a “healthy insecurity.” Gehry said about starting a new project, “Its’
a terrifying moment. And then when I start, I’m always amazed: “Oh, that
wasn’t so bad.’ ” That worry that you might not find something new or
interesting is even felt by the very best designers in the world. Everyone is
afraid to fail but the most successful people prepare themselves to succeed by
finding the tools that work for them and honing their craft.

Even worse than figuring out how to be that successful is the fear of
creating what might be seen as a first-rate failure, creating the next
New Coke or Segway. The truth is, most value creation is generally
somewhere in between those extremes. People would do well to recognize
this spectrum instead of believing that they need to hit a home run
every time. The innovation process is manageable, but results take
some time, persistence, and a great foundation. As product innovation
expert and founder of Timesulin, an innovative insulin monitoring
system, Marcel Botha says, “There is a lot of room to make life better
in the simplest of ways.”
Figure 12. People tend to think of innovation in its extreme successes and failures rather than realizing
most of the value and work is done in the middle.
When you are offering something new, you will often be reaching early
adopters, but these people don’t have to be those living in a far-out future, they
can be people who simply want or are open to a new feature or benefit. These
are people who are willing to try something new and will hopefully spread
their understanding of the innovation’s value to others. Early adopters don’t
require a revolution; they care about value.
In fact, innovation effectively boils down to getting valuable
information about the past and present, then deciding what you think
the future should look like. It just takes some proper organization,
contextualization, and a little bit of inspiration.
PAST PRESENT FUTURE
What has happened. What is happening. What you think
should happen.

To deal with ambiguity, and to identify what’s important in the broad
spectrum of possibilities, companies need generalists who are deeply
curious, can manage interdisciplinary teamwork, and, to paraphrase
XPLANE founder and author, Dave Gray, “get from point A to point B
without knowing what point B looks like.” Most of all, they need both
people who are passionate about creating experiences that are deeply
human, and people who understand that the “obvious” never is.

NOTES
1. Peter F. Drucker. 2003. The Essential Drucker: The Best of Sixty Years of Peter
Drucker’s Essential Writings on Management. Collins Business.
2. Christopher Alexander. 1964. Notes on the Synthesis of Form. Cambridge:
Harvard University Press.
3. Theodore Levitt, “Marketing Myopia,” Harvard Business Review, July 2004,
http://hbr.org/2004/07/marketing-myopia/ar/1.
4. Clayton M. Christensen, Scott Cook, and Taddy Hall, “What Customers Want
From Your Products,” HBS Working Knowledge (blog), Harvard Business School,
posted January 16, 2006, http://hbswk.hbs.edu/item/5170. html.
5. John Naisbitt Quote, Great-Quotes, accessed March 24, 2013, http://www.great-
quotes.com/ quote/39460#.UO8KL4njnQ0.
6. Think Exist.com, accessed August 9, 2013, http://thinkexist.com/quotation/
never_before_in_ history_has_innovation_offered/147274.html.
7. Matthew Panzarino, “Amazon’s Bezos: ‘People don’t want gadgets, they
want services’,” posted September 6, 2012, http://thenextweb.com/
mobile/2012/09/06/amazon-stats/http://thenextweb.com/mobile/2012/09/06/
amazon-stats.
8. Carmen Nobel, “Why Companies Fail—and How Their Founders Can Bounce
Back,” HBS Working Knowledge (blog), posted March 7, 2011, http://hbswk.hbs.
edu/item/6591. html.
9. Kevin Kelly, “The Shirky Principle,” The Technium (blog), posted April 2, 2010,
http://www. kk.org/thetechnium/archives/2010/04/the_shirky_prin.php.
10. Saul Kaplan. 2012. The Business Model Innovation Factory: How to Stay Relevant
When the World is Changing. New Jersey: John Wiley & Sons, Inc.
11. Noreen O’Leary, “Starbucks Brews Success With Via,” Adweek, posted
August 6, 2010, http://www.adweek.com/news/advertising-branding/
starbucks-brews-success-103004.
12. Clayton Christensen, “Disruptive Innovation Explained,” YouTube video from
the Harvard Business Review, 7:52, posted on “Disruptive Innovation,” Clayton
Christensen’s website, accessed March 23, 2013, http://www.claytonchristensen.
com/key-concepts.
13. Clayton Christensen, “Disruptive Innovation,” Clayton Christensen’s website,
accessed March 23, 2013, http://www.claytonchristensen.com/key-concepts.

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