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LECTURE L12THE INNOVATOR’S METHOD
...a kind of shadow future, hovering on the edges of
the present state of things, a map of all the ways in
which the present can reinvent itself
Steven Johnson
Adjacent Possible
Why is IBM still alive and thriving after so long, in an
industry characterised perhaps more than any other
by innovation and change?
Economist:1100100andcounting
Case Study
Tabulating machinesElectronic machines - MainframesDistributed systems - Minis and PCsServices
Economist:1100100andcounting
Platform Shifts
Economist:1100100andcounting
Platform Shifts
“IBM is not a technology company, but a company
solving business problems using technology” – George Colony
Economist:1100100andcounting
Platform Shifts
Economist:1100100andcounting
Platform Shifts
1. Maintain connection to customers2. Less hierarchical and more open3. Business relevant research4. Globally integrated5. Financial planning – get out of
commoditized business
Economist:1100100andcounting
Platform Shifts
WHAT IS THE SECRET TO BE SUCCESSFUL ENTREPRENEUR?
"There is no real formula." - Peter Thiel
Author: Zero to One
Innovation
In the history of business,
things happen only once
Against the Norm
TRUTH IS SOMETHING EVERYBODY
AGREE ON
MAY NOT BE RIGHT
Economist:1100100andcounting
Against the Norm
WHAT GREAT BUSINESS
ISNOBODY STARTING?
Peter Thiel
Definition of Losers
PEOPLE THAT ARENOT GOOD ENOUGH
ORPEOPLE JUST DOING THE WRONG THING?
"All happy companies are different because they found something
unique to do, all unhappy companies are alike, because they failed to escape the sameness that
is competition." - Peter Thiel
The Nature of Progress
0 to 1
1 to n
Technology doing new things
Vertical
Globalisation copying existing things Horizontal
Peter Thiel: Zero to One
The Nature of Progress
Looking for Opportunities
Targeting overshot customers or non-consumption
“Good-enough” can be great
Do what competitors won’t
Looking for Opportunities
Targeting overshot customers or non-consumption
Removes barriers that constrain the ability to consume
Overshooting customers needs
Hidden beauty in undesirable or invisible markets
Remove barriers that constrain the ability to consume
Remove the skill required for photography
Kodak’s Brownie Camera
Remove the skill required to operated a computer
Apple’s iPad
Remove barriers that constrain the ability to consume
Make computing affordable to more people
The Personal Computer
Remove barriers that constrain the ability to consume
Make access to telephony easier
Mobile phones
Remove barriers that constrain the ability to consume
Make access to niche movies
Youtube LegoStar wars
Remove barriers that constrain the ability to consume
Make buy/selling things fast saving time
Ebay auction
Remove barriers that constrain the ability to consume
1. Creating a Computer Game for mobile
What is the barrier for these:
4. Health Care
5. University level education
2. Making an Music Album
3. Publishing a Novel
6. Rent your house
Remove barriers that constrain the ability to consume
Targeting overshot customers or non-consumption
Make the complicated simple
Don’t let the mainstream derail you
Innovate, don’t force
Targeting overshot customers or non-consumption
Targeting overshot customers or non-consumption
Nintendo Wii
Targeting overshot customers or non-consumption
Gaming for the family
Portable music players disrupted by Apple, 2001
1000 songs in you pocket!
Targeting overshot customers or non-consumption
Mobile phone, 2007
Apple reinvents the phone
Targeting overshot customers or non-consumption
“Good-enough” can be great
Sustainable innovations compete on getting better
Disruptive innovations compete on doing it differently
“Good-enough” can be great
Netflix
Subscribe, no late fees
Do what competitors won’t
Unattractive or uninteresting market
Does not seek head-on collision with established competitors
Personal Computers
Do what competitors won’t
CRM as a Service
Do what competitors won’t
THE INNOVATOR’S METHOD
Case StudyIntuit is a successful software company makers of TurboTax, Quicken and other financial software solutions
However, by 2008 they reached a performance plateau and market value was falling
Intuit was focusing on making things easier to use but did not do many customer reviews
NPS was flat
The Innovation Crisis: Unprecedented Uncertainty
Net Promoter Score
How likely are you, on a scale of 0 (not at all likely) to 10 (extremely likely), to recommend this product or service to a colleague or friend?
A product’s NPS is the percentage of promoters (those who score themselves 9 or 10) minus the percentage of detractors (scores 0–6).
Net promoter score = % promoters minus % detractors
Design for Delight
Most successful companies didn’t just offer products that were easier to use; they offered products that delighted customers.
• Gain deep customer empathy Understand customers better than they understand themselves
• Go broad to go narrowGenerate lots of solutions before winnowing the list
• Experiment rapidly with customers Seek feedback early and often
Innovator’s MethodFour steps to solve high uncertainty problems and turn insight into a successful innovation
Innovator’s MethodStep 1. Insight: savor surprises Step 2. Problem: discover the job-to-be-doneStep 3. Solution: prototype the minimum awesome productStep 4. Business model: validate the go-to-market strategy
Leverage the behaviors, questioning, observing, networking, and experimenting — to search broadly for insights about problems worth solving.
Step 1. Insight: savor surprises
What problem is nobody solving?
Innovator’s Method
Rather than starting with solutions, start by exploring the customers’ need or problem— the functional, social, and emotional job-to-be- done— to be sure you’re going after a problem worth solving.
Step 2. Problem: discover the job-to-be-done
What is the customer really buying?
Innovator’s Method
People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.
Job to be Done
Instead of developing full-scale products, leverage theoretical and virtual prototypes of multiple solution dimensions. Then iterate on each solution to develop a minimum viable prototype and eventually a minimum awesome product.
Innovator’s MethodStep 3. Solution: prototype the minimum awesome product
Once you’ve nailed the solution, you’re ready to validate the other components of the business model, including the pricing strategy, the customer acquisition strategy, and the cost structure strategy.
Innovator’s MethodStep 4. Business model: validate the go-to-market strategy.
NEXT
L13 The Rise of the Machine