Why Didn’t I Think Of That? Seven Symptoms of Incremental Thinking and How to Treat Them

Andrew Razeghi

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3.  CREATE PROPRIETARY OPINIONS VERSUS PROPRIETARY INFORMATION

The third symptom of incremental thinking is a “chasing the headlines” culture.  Chasing the headlines is often evident when organizations counter strategic moves by would be competitors. For example, Pepsi’s recent introduction of Pepsi Twist was an explicit response to Coca-Cola’s Vanilla Coke.  While piggybacking Coca-Cola’s product introduction may be a wise tactical maneuver, creating a proprietary opinion about the changing consumer palette may offer greater rewards.  While Coca-Cola may have been responding to an emerging trend, its non-proprietary application of that information in the form of a new product rendered that information irrelevant.  In other words, the cat is now out of the bag that consumers may have a palette for more exotic flavors.  The proprietary nature of the information while once valuable is now yesterday’s headlines.  Therefore, the organization must return to the creation of proprietary opinions versus protecting information.       

No other industries are suffering more from the entropy associated with “information wanting to be free” than the music, television, and film industries.  With good reason, the organizations that compete in these industries have become paranoid in their protection of ideas and the proliferation of copyright.  For example, in the past 25 years, the Motion Picture Association of America has spent a billion dollars fighting video piracy around the world, enrolling over 80 countries in anti-piracy programs.  Add to this the millions of man-hours and countless sleepless nights of the industry’s executives and one must ask what would have been possible if the industry had only invested that same billion dollars in innovative ways to design and introduce a new economic model.  Meanwhile, nearly 1 million movies are downloaded illegally every day (Viant, 2001).  At risk is a decades old economic model should these industries fail to reduce the bleeding associated with Internet piracy.

Rather than protecting information, perhaps it would behoove industries such as music, television, and film to focus at on innovative economic models, new products and services, and new markets along with their efforts to protect intellectual property and copyright.  Again, while information becomes less proprietary and more accessible, industries dealing in it must seek to embrace innovative ways to capitalize on its creation and dissemination.           

Unfortunately, The Motion Picture Association is not alone.  In a world where information is a commodity, knowledge can be acquired from any consulting firm, and wisdom – quite frankly – has retired, the only source of competitive advantage that an organization has left is its own creativity and opinions about the future.  Creating the headlines requires a new approach to creating competitive strategy.  Namely, in order to be proactive in the development of strategy, organizations must begin to ask new questions:

• What are associated counter-trends to current trends? (e.g. digitally distributed content as a counter-trend to embedded content; outdoor adventure travel as counter-trend to “the Internet Age”, and super-indulgent fast food as counter-trend to the health boom)
• What stories can the organization tell from seemingly unrelated trends?
• What industries does the organization lag?  And, how will their trends impact us? (e.g. semiconductors lagging PCs)
• What disruptive technologies could “put us out of business?”
• What markets are currently underserved by mainstream offerings and our competitors? (e.g. minority groups, micro-markets, 3^rd world, etc.)
• What new product ideas can we create by separating form from function?

4.  IDENTIFY WHAT THE ORGANIZATION DOES WELL VERSUS WHAT IT SELLS

The fourth symptom of incremental thinking is an over-extension of the organization and/or product brand.  In the organizational Garden of Eden, product extension is the sweetest fruit.  Why?  Simply put, an installed base of customers makes for easy economic modeling.  For example, if millions of people use portable personal organizers, wouldn’t it be wise to introduce one with a color screen, audio capability, or swappable faceplates?  Why not take advantage of an installed customer base?  Why not sell new products to an existing market?  The answer is – go ahead.    In fact, the organization would be foolish not take advantage of this opportunity.    However, how long can these methods (i.e. product variations, improved features, and planned obsolescence) contribute to new wealth creation before they begin to cannibalize sales? 

For example, nowhere have products been over-extended greater than at the corner grocery store where the cereal, soft drink, and alcoholic beverage aisles burst with product variations.  Whether it's “Light”, “Lemon”, “Low Fat”, “No Fat”, or “GMO-free”, consumer products manufacturers have learned to stick with a good thing.  Is it any wonder that Reality Television is such a wunderkind of prime time?  Rather than focusing on identifying its core and unique skills, assets, methods, and competencies, most organizations think of innovation in terms of new products for existing markets vs. new products for new markets.  Furthermore, few organizations think beyond products to competencies.           

In order to manage the risk associated with overextending a brand and in order to identify the organization’s latent and core skills, managers must begin to ask new questions about capabilities.

For example, Kinko’s sell copies (or does it?).  As the back office to aspiring entrepreneurs, Kinko’s clearly has the ability to deliver on a much larger brand promise than hassle-free document reproduction.  Kinko’s has the ability to give entrepreneurs scale, speed, and operational support to grow.  When defined in this manner, a world of possibility is afforded the Kinko’s brand.  Could Kinko’s become the single-source provider to entrepreneurs?  It isn’t unimaginable that Kinko’s could package and market “entrepreneur kits” to the “going solo” world of independent consultants.  Where can independent consultants turn today for group health insurance, discounted legal services, or tax preparation services. Certainly options are available, but distribution is fragmented and fees are often sky high.  Who will win this opportunity?  It could be H&R Block?  It could be Charles Schwab?  It could be an insurance company?  But who owns the customer’s time more than any single one of these providers – Kinko’s.  The difference between defining and designing new products and identifying and exploiting core competencies begins with a new set of questions.  In order to surface core and latent competencies, organizations must begin to ask:  

• What do we have the ability to do?
• What were unexpected successes over the past 3 years?  Why did we succeed?
• What were unexpected failures over the past 3 years?  Why did we fail?
• What were customer segments that bought our products unexpectedly?  Why?  Did we exploit this opportunity or miss it? Why?
• What have we chosen not to do?  Why?  (This will help surface why and how the organization chose its current business which will help surface competencies)

5.  CREATE INNOVATON TEAMS VS. BUCKET BRIGADE INNOVATION PROCESSES

The fifth symptom of incremental thinking is the pervasive bucket brigade innovation process, otherwise known as the pass the baton (and responsibility) method, or more popularly known as the “it’s not my job” process. 

Most organizations are not organized to innovate.  They are organized to operate.  In other words, the matrix structure that has become so pervasive in large organizations (i.e. functional activities vs. product lines) acts as a barrier to innovation.  Why?  Simply put, bucket brigade innovation is a fancy method for outsourcing responsibility, which in turn compromises the integrity of the original idea. Like seasoned politicians, managers lobby for modifications to new ideas to nauseating extremes.  The resulting product, service, or business is a far cry from what was originally intended.  For example, the five extra inches of legroom afforded to airline frequent fliers, while a welcomed improvement, may perhaps be one such filibustered idea.  Was this truly the organization’s original intent?  This phenomenon is evident amongst many consumer products companies such as food, fashion, retail, and music.  They all tend to organize themselves in a classic matrix structure (i.e. functions and product lines).  Consider the food  industry for example.  Food manufacturers are typically organized around functional areas such as product development, manufacturing, marketing, and sales & distribution.  The challenge when applying this structure to new product development is in getting new ideas to market quickly, effectively, and with integrity.  The more “involved” the organization design, the greater risk of an ill-defined product introduction.  Witness the McLean, Crystal Pepsi, or Olestra-infused potato chips – all of which are examples of products which have suffered from the complexity of their organization’s product development processes.  The latter of which was clearly “technology” in search of a business model vs. a business model in search of a customer. 

Although a great metaphor for creating new ideas, factory-like processes do not yield innovative concepts.  Innovation is a non-linear process that requires a non-linear structure.

In order to begin to develop methods for creating innovation teams, organizations need to adopt new behaviors including:

• Create cross-experiential teams (vs. cross-functional teams) not just for the life of the “research”, but through market testing, experimentation, and product launch.  (i.e. from basic research to product launch
• Offer incentives to business units and divisional vice presidents who “donate” their best employees to special growth projects
• Create an internal supplier network of experts who act as adjuncts to growth projects versus passing off responsibility
• Encourage teams to syndicate funding from internal and external sources of capital
• Allow customers and non-customers to be the judge and jury along with the internal venture board 
• Create a skunkworks responsible for generating new ideas, sourcing existing ideas amongst internal staff, and managing new venture development.  In fact, many of the unspoken heroes of Edison’s Lab – affectionately referred to by Edison as muckworkers – were proud of their skunkworks culture.