"If I had asked people what they wanted, they would have said faster horses." Henry Ford

I admit it, I first heard this quote the other day and I loved it. Why? Because it gives me the perfect opportunity to talk about the trade off of innovation. I will explain what I mean by that in a minute.

The danger of following Henry's advice

What Henry is telling us is that if you base your innovation methodology only on inputs you get from your potential customers, you may never leap. Sometimes you have to just go with your vision hoping to have done enough homework to convince yourself and your stake holders that you are not insane. Indeed imagine what people around Henry though when he announced he was going to build this weird, expensive and smelly new horseless carriage and that everybody would buy one. In reality Henry was not that much of a visionary in that the technology and the product already existed in another incarnation. Gottlieb Daimler already invented the petrol engine and the automobile, what Henry did was to realize that the time was ripe for a new positioning of the product. That was daring, visionary and indeed risky. In the quest to realize his dream Henry did end up innovating the industry by introducing the assembly line etc. But I digress. The point here is that there is a trade off between timing, risk and knowledge. Before diving into that, let's talk about the converse approach.

The danger of *not* following Henry's advice

Not doing anything that is not supported by evidence from your target audience has the advantage of reducing your risk considerably. Think for example a tire manufacturing company that introduces a new tire that is marginally more expensive but claims to save you $200 a year in gas. In this economy that tire manufacturer knows very well that this will give them a competitive advantage at low risk. It is a relatively safe bet. Now imagine another tire company that introduces a new type of tire that looks blue instead of black and that has no sidewall (incidentally such tire does exist, though it is not blue but brown, see Michelin here). The company claims that this new tire lasts 4 times longer than the old ones and that it never go flat (I am making this up). Despite the significant benefits of this product, this tire company will be taking a much higher risk introducing it since it has to convince its customer base to get over the fact that the new tire looks so very different and yet does what it promises. It is indeed a leap of faith where the only asset that the tire manufacturer can spend is its own credibility with its core customers and early adopters. This is what Amazon did with the Kindle. High risk, big reward. Note that Michelin is not as brave and this distruptive new tire has yet to see production. We will skip the discussion as to why that is but the author agrees with Michelin, the new tire is indeed innovative but not enough to take the risk.

The literature calls following Henry's advice disruptive innovations and not following it, evolutionary innovation. Obviously you can make or break your company with either so you need to be careful engaging with both. Further, the hidden danger of evolutionary innovation is the lack of challenge it presents to the R&D organization that eventually can become completely incapable of disruptive innovation.

Let's go back to the automotive industry. Clearly this industry has thrived on evolutionary innovation for more than a century, let's face it the gasoline engine is very old. But the party is over, the worldwide financial crisis and the renewed public opinion attention to gas mileage numbers is nearly killing many of the big players. Some (Toyota, Honda) saw the end of the gasoline engine in sight and started working on the next paradigm (hybrids, fuel cells). Others (GM, Ford) are playing catch up, they missed the warning signs and they just did some electric car trials as a marketing stunt, there was no company realignment behind it at all. Meanwhile the whole industry was so comfortable with evolutionary innovation that they left the door wide open for new players to come in with nearly no barrier of entry: enter Atom, Tesla and many other big and small ventures trying to be next Toyota or GM. The lesson to be learned here is that every product has a life cycle during which you do need evolutionary innovation but your organization should always encourage disruptive innovation or your will end up like Pontiac and other GM divisions now on the chopping block.

That is nice but how does that help my business

It should be clear by now that you need both types of innovations and that there is no single recipe to help you figure out how much of it do you need. Here are some commons sense guidelines that may help:

1. know where your product line up is on the life cycle curve. Are you in the ramp up? Are you still able to charge a premium on it and enjoying the plateau at the top? Or are you starting the downward slope to commodity? You want to stop working on evolutionary innovation some time during the plateau and redirect your efforts to disruptive en masse then and there. Depending on the size of your company and your industry you may need anywhere from 2 to 5 years for your next big thing to hit the market so you better make sure you have that much time left in the life time of the current line up.
2. know your talent pool. Do you have individuals in your organization with a track record for evolutionary innovation? how about disruptive innovation? Depending on (1) you want to take the necessary action to re-balance or retrain your team, if possible. And do so with plenty of notice, smart people have big egos and they resist change to their day to day life fiercely, no matter how creative they are at what they do. That used to include the author, I admit it.
   
3. innovation should be always on. Innovation is not an event, it is a process that start the moment the founders start a company and ends when the company dies. Or some time before that and probably that is the reason why the company died in the first place! Morale, keep innovation going at all times.
4. encourage employees to discuss innovation. Particularly listen to your support organization and your development/manufacturing organization. They talk to your users all the times and they know what the problems (aka opportunities) are. Most importantly, have these two organizations talk to each other and to your R&D organization...every day if you can! One caveat follows.
   
5. do not listen to your sales organization! Sorry for anybody in sales but this is the single most harmful thing you can do to keep track of what your customers and potential customers want or need. The sales organization is trained to talk, not to listen. They may think they know the problems facing your customers but they do not. They are not there when your product is deployed and when its flaws or missing features emerge. Support is. Development and manufacturing is. They know becouse they have to deal with screaming users and customers. They may not understand the full picture of how your customers live the daily interaction with your product or service but they are your best and low cost tool to feed the innovation process. Further, your sales organization most often does not talk to the people using your product or service but to the people buying it: depending on your line of business these may be very different people. One example will help here: say you manufacture a new medical device for blood test. Your users are nurses. Your buyers are controllers and office managers and your stake holders and decision makers who authorize your juicy PO are doctors. Note how the decision makers and buyers in this example will never use the product and yet those are the only people that sales will talk to. QED, do not listen to sales. Of course I do not mean it literally or ever but you get my point, if your VP of sales tells you it is time to make pink elephants, tell him/her "good idea! we will look into it" and keep going. But if your support organization (or the data collected by it) tells you that more and more of your customers are painting the elephants they bought from you, it is time to call them up to find out why and what color would they like.