Monday, June 6, 2011

Combating Four Innovation Lies

Innovators have to deal with particularly insidious lies — things that people say that they believe are true, but actually aren’t.

Lie #1: Target customer, “Of course I’ll buy that.”

Innovators working on new ideas often show early versions to customers to assess “purchase intent.” But customers do a poor job of reporting what they’ll do in the future, particularly if they’re responding to a novel idea. One company that I worked with found that the accuracy of market forecasts for new-to-the-world ideas was roughly equivalent to using the results of a random number generator.

Instead, trust actions over statements. Don’t look at what people say they will do. Look at what they are already doing. If they aren’t spending money or time solving a problem today, they might not spend money or time to solve that problem tomorrow. Alternatively, consider a way to get a customer to pay for an early version of a product. My Harvard Business Review article with Procter & Gamble Chief Officer Bruce Brown, “How P&G Tripled Its Innovation Success Rate,” describes how P&G uses “transaction learning experiments” to try to more accurately assess the demand of new-to-the-world ideas.

Lie #2: Product developer, “We’ll be ready to ship in six months.”

There’s a great term in the psychology literature called the “planning fallacy.” Basically, human beings are really terrible at estimating the amount of time or money it will take to accomplish a task, even when they have previous experience with the task. Product developers have every intention of finishing development on time, but invariably things take longer and cost more than people projected. There’s one project I’ve been watching that has literally been three months away from shipping for 18 months now.

The easiest way to address this lie is to change the development paradigm. Borrow from the Agile software development movement and push for many rapid development cycles instead of a single long cycle. Don’t try to put everything into the first release of a new offering, start with what Steve Blank calls a “Minimal Viable Product.” That is, something that is just good enough to start the in-market testing process.

Lie #3: Salesperson, “Of course I can sell that.”

Read the rest at Scott’s Havard Business Review blog.

Scott D. Anthony is managing director of Innosight Asia-Pacific.

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