Innovation is a top priority for nearly every company. Yet, it is still a highly unpredictable business process.

That is why we want to focus on the root cause of this—specifically, why does innovation fail?

Innovation is the process of devising solutions that address unmet customer needs. According to Tony Ulwick, founder and CEO at Strategyn and the creator of Outcome-Driven Innovation, the way to win at innovation is to separate the innovation process from the product development process. The goal here is to exit the innovation process with a product concept that, before you even develop it, you know it is going to win in the marketplace.

A snippet from Tony Ulwick’s session during the Innov8rs Connect Unconference, June-September 2020. To watch the full session recording, join Innov8rs Community with a Content or Premium Pass.

Two Different Innovation Approaches

Companies use two different innovation approaches:

The Ideas First Approach: Companies either ask the customer for solutions they want, brainstorm ideas, iterate, and pivot, or have a limited understanding of customer needs. When you approach innovation this way, the innovation and development process are intertwined. This means you do not know if you have a winning product before you start developing it. Consequently, it is an inefficient way to learn about customer needs.

The Needs First Approach: In this approach, the company first comes up with all the customer needs, figures out which ones are unmet, and then decides on a solution. This approach has the company separating the innovation process from the development process. This means that the output of the innovative process is a solution that the company knows addresses the unmet needs because they tested it. From there, the company will create a product that they know is going to succeed.

The Problem With Innovation

The problem with innovation is not that the customer does not know their needs. Instead, the problem is that companies do not know what a “need” is.

We cannot blame the customers for not knowing their needs. The real issue is that a company needs to do a better job of defining what a need is.

This sets up an interesting paradox- somewhat comical, yet tragic. In a typical customer interview, neither the researcher nor the customer understands what inputs are being sought. Even worse, they do not know what information, if discovered, will lead to successful innovation. As a result, these researchers do not ask the right questions, and the customers do not provide the right inputs. These researchers end up gathering an extensive amount of information, including thousands of inputs. But they still fail to discover the inputs that take the guesswork out of innovation. Why? Because the need has not been defined.

What Should A “Need” Be?

A need is a statement that tells a business where there’s a lack of customer value. Needs are just the problem or lack, not the solution. It’s the task of the innovation team to identify potential solutions based on what customers actually want to achieve, not what’s failing in their interaction with the current product.

The “job” is the process the customer is using a product to achieve. This shift of focus aligns product design with the customers’ needs. Instead of making the product more desirable, it’s better to focus on how users want to get their job done. Companies can do this by creating a job map that captures the entire “job” to obtain a full understanding of the steps.

After creating a solution, innovators can ask customers about what factors of the new solution are (i) important and (ii) satisfactory. The area for growth is where product performance is important but not currently satisfactory. That’s the best area to address in nearly any market.

How To Fix the Innovation Problem

What we want to do is flip this around completely. Making sure that both the interviewer and the customer know what a need is. This way, when both understand precisely what piece of information they are looking for, they can then create a complete set of needs.

This is a piece from The Innovator’s Handbook 2021. If you’re keen to dive into the best and latest on corporate innovation, request your copy here. To discuss anything Business Design join our upcoming Innov8rs Connect online event, 7-11 December.