So, you want to be an innovator, but don’t know what to innovate. When looking for an opportunity, seek something that demands true innovation. Look for tension, workflow conflict, and systemic discord to find the greatest greenfield of innovation opportunity. Sure, the challenge is greater, but the competition in a new space is significantly less.
The Golden Gate Bridge is a great measure of a difficult problem to solve. Accessible only by ferry San Francisco’s growth rate was retarded for a major US city. There was tension and conflict on how to change that. The golden gate (the waterway) is to this day, one of the most violent tidal straights. Joseph Strauss, an engineer and poet, came up with an idea and executed it to achieve the impossible – fixing systemic discord in the local economy.
What To Innovate
It’s all too easy to do something that’s been done before, or just pump out the next smartphone app. The statistics for success with a smartphone app are abysmal. A few make it big, but most fail to do much in that environment and market place. In general, people need very small few smartphone apps, and adding one more to the thousands of personal and social information solutions, is not very unique.
The really good innovations are solutions to tough challenges and problems. In reviewing ideas, business plans and pitches, I’ve begun to get a sense that there are three categories. Solutions without problems, automation of processes and solutions to difficult problems.
I want to convince entrepreneurs to focus on really ugly, challenging, and difficult problems of the third category. A concentration of creativity on the really hard problems will have a much greater impact – and achieve significantly greater commercial success.
Solutions Without Problems
These are easy to see. To the outside observer, the focus is obviously on technology for technology’s sake. Most people have already thought of the idea – it isn’t all that original. The strategy is, “We built it, and customers will come.” Customers were not involved in refining the idea and iterating on the user experience.
When questions about customers are asked, confidence wanes. Often, the customer persona is not identified. Nor is there a clear reason that the customer would need the solution. The discussion quickly transitions to, “We need money to figure that out.”
Most value claims for the solution are described with an inward looking perspective, about the company, and the technology – not the customer. In terms of a business model, the customer experience (from purchase, installation, configuration and product use) demonstrates lack of thought in terms of business, customers and an exchange of value for a fee.
Automation Of Processes
Sadly, this is what all too many entrepreneurs are focused on. And, it’s a very competitive direction, with more losers than winners. These ideas are also easy to spot – by their weaknesses. The solution is usually framed in terms of differentiation, but without a clear basis for why the current process is not working. Unqualified soft terms like “better,” “faster,” “smarter” are used to describe the new method.
Objectively, these usually are only incremental improvements, if at all. That’s not all bad – but there needs to be some protectable intellectual property (I.P.) Something the category leader could not quickly develop and crush a new entrant. Without protectable I.P., “first mover advantage” is a myth.
Taking an existing desktop or browser solution and moving it to a smartphone is a good example of automating something that is not a business. Discussions reveal how little thought for why customers would switch from to the new solution over waiting for their current provider to respond to a market trend.
You can piece together a scenario how these projects come about. A team assembled and asked “What smartphone app can we build?” Someone says: “I don’t like how SalesForce.com’s mobile app works…, so let’s build our own CRM.” You surely see the problem with that. Other good examples of bad ideas would be anyone thinking of creating (and then competing with) a DropBox, Google Drive, SkyDrive for cloud storage. Or entering the market to compete with OneNote or Evernote for recording real-time thoughts into a persistent digital notebook app. It’s been done, the business model has no barriers to entry (free to start) and the leaders have the category locked up. Time is better spent on something bigger with more potential.
When looking at customer context, there is no consistent theme for these beyond, “It’s on an iPhone or Android.” Often, no one to knows who the customer is, and why they would buy it – but the app is “very cool,” and perhaps even interesting. But if it creates no customer value, the business cannot capture that value and turn it into a revenue stream.
Solutions To A Really Difficult Problem
When teams focus on solving meaningful problems, customer are involved in the project from the beginning. Members of the team may well have even personally experienced the tension resulting from the problem in their own lives. That kind of personal awareness grounds the solution in real experience.
This kind of team knows what questions to ask customers to ensure the outcome is one that is truly and measurably, going to address the problem. Moreover, because they already possess a deep understanding of the problem and its surrounding effects, they will have insight into what the outcome and result must be to make the solution profound. In fact, these teams are focused on the customer and outcome significantly more than the solution itself.
In recognizing a problem that is big enough to look for sources of social tension. Look for workflows or institutional ecosystems that have observable and systemic discord. These spaces could be found in industry, academia, government, and other institutions. Some good examples of places where really tough problems exist are healthcare, banking, energy, transportation, education and government at all levels. Some of these are super-laggards in adopting technology. That creates pent up demand that alone means that opportunity to deliver innovation and achieve success is much greater.
My colleagues and I spend five times more time reviewing solutions that that go after the big challenges, than we do in evaluating a business plan for what the founder calls “the next killer smartphone app.”
Pivot Vs. Micro-Pivot
There is a lot of talk about start-ups and the importance of readiness to hard pivot to some new direction, strategy, or project. That can also be a bad sign.
Notwithstanding teams that have a track record, it’s surprising to read of investors’ sole interest in a team sans the idea they developed. These seem attached. It’s unlikely that an untested team without an idea is a reason to invest. While it may happen, observe that team came up with and invested time and money on a bad idea. The latter point to me is more telling than the résumés of the people on the team.
Building solutions that will re-engineer healthcare are worth doing – and require stamina to stay the course. If at every bump in the road, the team does a hard pivot, starting over, how can the solution move forward.
Perhaps we need to create a new term: micro-pivot? Small shifts in strategy, where the vision and mission remain constant are good. I like teams that have a good idea, and are more hesitant to pivot with a stop and start, but instead have courage to get more customer information to understand how the original vision and idea must manifest to be successful.
Ponder Your Innovation
True innovative solution developers always look for the hardest problem to solve. Edison invented and innovated, while also collaborating to change infrastructure and build a new utility business ecosystem to support it. That’s a hard problem and one that continues to have profound lasting impact while clearly resonating with both customer need, and customer willingness to buy.
Ask if the problem you are solving is a difficult problem. A problem that today creates tension between customers and suppliers (banking comes to mind)? Is there conflict between affected parties that can be eliminated (energy use and conservation comes to mind)? Is there systemic discord in an economic workflow (healthcare as an industry across patients, physicians, hospitals, providers, and insurance payers come to mind)? Is your project one characterized by the first or second type? If so, do you have a clear vision and mission with supporting protectable I.P. to ensure success? It’s possible you do. Be sure that you do.
While this is a guideline, don’t misunderstand me. Sure, some innovations can come from other approaches, and even luck. Forget about competing for SEO visibility or app store space for your idea of the latest contact information manager. Build something new, go for big impact, and take on the really big challenges. Investors will come running.
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