I first heard the germs of those ideas in late 2000. At the time I was one of Christensen’s students at HBS. Like all professors, Christensen used his final class lecture to share broader observations and reflections. The speech resonated with me, so while serving as his lead researcher in 2001 and 2002, I returned to his classroom to hear it again.

Ahead of the book launch, I had a long discussion with a reporter about Christensen. The reporter’s question was basically: Why him? He’s smart, but so are many other people. He’s a great storyteller, but there are lots of great storytellers in the world.

My own view is that there are three secrets to Christensen’s success:

1. An eternal quest for truth. Christensen’s mission is to help leaders make decisions using robust, well-grounded theories. His basic two litmus tests for a good business theory are something that explains the different circumstances facing managers and the causal connection between an action and a result. His disruptive innovation theory, for example, says that incumbents that listen to their best customers — when their offering has already overshot the mainstream — leave themselves susceptible to attack from companies armed with simpler, more affordable solutions. Past experience as a consultant and practicing manager ensure Christensen focuses on high-impact issues, and his work manages to be both robust and usable.

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

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

A: 1% of a huge, established market?
or
B: 100% of a completely new one?

If you work for Apple, you might have picked B. But too often when companies embark on innovation projects, they pick A: that is, they start by believing that nothing could be easier than to capture a small chunk of a very big, existing market.

But to unleash the power of innovation to capture big markets, what matters is not how big any existing market is but how many people are wrestling with some problem that no current offering really solves, what we here at Innosight call the “important and unsatisfied jobs” of consumers — and non-consumers. When sizing an innovation opportunity, what you should be looking for are jobs what are widely held and currently poorly served, not lots of people who haven’t bought your own products yet.

To see what I mean, consider what happened to Kellogg when it first attempted to enter the Indian market in the early 1990s.The logic behind its decision appeared to be unassailable. With $3.8 billion in revenue and a whopping 40% share of the U.S. ready-to-eat cereal market, Kellogg was the market leader in its home base. And with sales in nearly 150 countries, it already had a formidable international presence. India was home to 950 million possible new consumers.  If Indian consumers would eat as much cereal, on average, as Americans, then just 2% of the population would generate more revenue than the entire U.S. market. Surely, Kellogg could capture 2% of this vast group with a little bit of innovation.

Buoyed by this optimism, Kellogg invested $65 million in establishing an operational and marketing presence to launch Corn Flakes, Wheat Flakes, and its “innovation” — Basmati Rice Flakes — throughout the country.  “Our only rivals,” declared the managing director of Kellogg India, “are traditional Indian foods like idlis and vadas.”

Unfortunately, these rivals turned out to be formidable. The company’s significant investment failed to gain Kellogg much of a foothold in the Indian breakfast market and, 12 months later, by April 1995, it could claim to have less than 0.01% of those 950 million potential consumers. Over the years, Kellogg continued to invest in the market — repositioning products, launching new brands of ready-to-eat cereal, and marketing heavily. But by 2010, Kellogg had managed to capture considerably less than 1% of the population, generating revenues of only $70 million.

How is it possible that Kellogg could envision building a $3 billion business in India, invest $65 million in the first year alone, and end up, 16 years later, with only $70 million in annual revenues?  And how can other business leaders avoid making similar mistakes?

Read the full article on Harvard Business Review here

Robyn M. Bolton is a Principal at Innosight.

A similar type of irrationality affects innovators. Talk to an entrepreneur or a scientist about the idea they are working on — it’s just like talking to a parent of young children. They feel unduly proud when their team does something without needing their help. They endlessly worry about things that are well beyond their control.

It’s hard to understand these types of feelings until you actually experience  them. Actually, I’d even go a step further. As much as I love my kids, it’s hard for me to have the same connection with them as my wife does — for obvious reasons — but with innovation … well, it’s the closest a man can get to giving birth.

Irrationality can be a strong asset. Sure, a vast majority of new businesses fail, so a fairly rational person could easily justify maintaining the status quo. But our world is — unquestionably — a better place because people take risks that don’t quite make logical sense. Of course, irrationality presents challenges too. It can blind innovators to real problems and to important signals telling them to do something different. Yes, perseverance may be an underappreciated skill, but when paired with passion, it often leads to fanaticism.

So how can you toe the line between irrationality and fanaticism without pursuing a doomed idea?

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

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

First, start with peripheral customers. MIT Professor Eric von Hippel has long advocated spending time with what he calls lead users. Because of their unique needs, these cutting-edge users often come up with novel solutions to problems and can provide you with powerful innovation insights. Look, too, at young customers, who are usually the first to snatch up new technologies because they don’t have to unlearn ingrained behaviors. Also, consider customers facing extreme constraints. For example, a few years ago, we helped a company looking at hydration opportunities to investigate the workarounds created by soldiers in Iraq.

Second, investigate peripheral companies. Look to interesting start-ups or established companies that could creep into your market one day. In other words, avoid the temptation to limit yourself to traditional industry demarcations. As markets increasingly converge and collide, the company that will transform your industry will most likely start in a completely different industry. Also, investigate companies solving the same problems that your customers face. Pay particular attention to the ones who are dealing with those issues in different ways or targeting completely different customer groups.

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

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

The reflexive response is that it is a human capital problem — that is, that most people just don’t have what it takes to successfully innovate. I reject that view. Academic research in fact shows that almost anyone can become a competent innovator (with sufficient practice). I’ve seen countless examples of ordinary individuals displaying the creativity, ingenuity, and perseverance of the world’s great innovators.

Those people can only be effective in the right context, but, ironically, many of the things leaders do to encourage innovation actually kill it. Look carefully at your company and you might spot one of four types of unintentional innovation assassins.

1. The Cowboy. Itching to create a corporate culture tolerant of creativity and innovation, the Cowboy says something along the lines of, “No boundaries! Just great ideas!” Of course, companies should continually evaluate and push their boundaries. But every company has a set of things it simply will not do. Saying innovation has no bounds when it does just leads people to waste time working on ideas that — honestly — have no hope of ever being commercialized.

Instead, consider issuing highly-focused challenges. For example, a few years ago Netflix offered a $1 million prize to any team that could improve the performance of the algorithms that determine which movies it should suggest to consumers by at least 10%. More than 250 teams rose to the challenge, and two actually exceeded the target. Focus is one of innovation’s best friends.

2. The Googlephile. Inspired by stories of how Google and 3M ask engineers to spend 15% of their time dreaming of new ideas, this executive asks everybody to spend a bit of time on innovation. Maybe carve off a half-day during the third Friday of the month for everyone to focus on innovation.This approach feels participatory and inclusive. But it rarely works, unless the company has sophisticated systems to select and nurture ideas. Too frequently these efforts lead to a long list of suggestions that never get implemented. Cynicism takes hold quickly, and more and more employees find excuses to miss Innovation Friday.

As an alternative, executives should ask a small number of people to spend a significant amount of time on innovation. Remember, most start-ups fail — even with entrepreneurs spending every minute of every day obsessively focusing on their business. One person spending all of his or her time on innovation often trumps 1,000 spending 10% of their time on it. The math doesn’t work — except for when it does.

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

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

While TEDMED is best known for presenting breakthrough technologies and approaches to fighting disease, this year’s edition had a behavioral bent. The audience of 1,700 voted via app to prioritize a long list of “Great Challenges” in health and medicine, and what came out on top was “inventing wellness programs that work.”

To that end, Mark Hyman of the Institute for Functional Medicine sent a charge through the audience with what may have been the biggest idea of the whole show, a way to apply the super-force of religion to the mega-problem of “diabesity,” the conglomeration of diabetes and obesity, which is fast on its way to affecting one in two Americans. He pointed out that obesity not only leads to heart disease but also many forms of cancer, a message that was reinforced earlier in TEDMED with a preview from the new HBO documentary, The Weight of the Nation, which presents fat as the country’s #1 health problem.

While the classic notion of “faith-based medicine,” healing disease through prayer, would no doubt be anathema to this science-steeped crowd, Dr. Hyman received a standing ovation for his idea of harnessing the power of the pulpit to get millions of Americans to live healthier lives.

Along with Rick Warren of the 20,000-member Saddleback Church, Hyman last year rolled out the Daniel Plan: God’s Prescription for Your Health, which is all about getting religious institutions to preach the gospel of eating right, exercising, achieving mental resilience and doing it all in group activities ranging from daily jogs to sermons on nutrition to Zumba classes. The daily battle against bulge is reinforced through social media and motivational videos that entertain as well as inform. “You need to watch the things you’re eating, unless you want the diabetes,” sings Pastor Jack from Saddleback Church, in one video on the site.

So far, about 50,000 people have lost about 250,000 pounds on the plan, according to Hyman. “We are using community as the delivery system,” he says, “where the group is the medicine.” His vision is to scale the Daniel Plan program to a billion people worldwide.

It seems as if the idea struck a chord precisely because so many advances in science and medicine don’t address the core problem of behavioral change. If we can find ways to motivate people to take care of themselves, it will reduce healthcare costs dramatically and free up funding for everything else.

The “everything else” was also on display at the healthcare variety show that is TEDMED. Following the short talk format, a parade of breakthrough thinkers served up medical provocations ranging from a  disruptive plan to recruit college students to deliver basic healthcare to uninsured patients in hospital waiting rooms (Rebecca Onie of Health Leads) to a call to the FDA re-calculate risk in approving radical treatments to “incurable” diseases (Jonathan Glass of Emory University) to a vision for developing personalized cancer therapies (Lynda Chin of the MD Anderson Cancer Center) to a dire warning to drug makers not to mess with the forces of natural selection (Andrew Read of Northeastern) to a way to implant soft silicon chips into your heart to collect continuous cardiac data (David Icke of startup MC10) to several approaches to turning those torrents of real-time diagnostic data into actionable knowledge.

The data-driven revolution was taken up a few notches by Leslie Saxon of the USC Center for Body Computing, who unveiled everyheartbeat.org, an ambitious plan to get 8 billion heartbeats online via a simple diagnostic device that links to smart phones and continually takes your pulse and scans your heart for irregularities.

 The vision for continuous monitoring of vital signs is a sound one, but if all we are doing is increasing our intake of data on failing health, it won’t do us much good. That’s why the TEDMED consensus that all healthcare must be linked to the social science of behavior seemed so refreshing.

 Evan Schwartz is the Director of Storytelling at Innosight.

I’m a huge fan of this work and suggest that all innovators study the movement closely. One area that deserves particular attention is the notion of the minimal viable product (MVP). The concept is pretty simple. Because it’s next to impossible to be sure that your idea is good until you bring it into the marketplace, don’t waste time trying to fine-tune a product that is destined to be wrong. Instead, put something “good enough” in the marketplace. Let real customers use the product and learn from their feedback (Henry Mintzberg dubbed this process “emergent strategy” in an influential 1985 article [PDF]).

Sometimes, though, a Minimal Viable Product turns into a Mediocre Value Proposition. A company might introduce a product in the marketplace. A few customers find it interesting (you can always find a few customers). Results fall short of expectations, but the company says, “Well, it’s just a minimal viable product for learning.” The company makes a few tweaks, scales up spending . . . and falls flat on its face.

Part of me wonders if this isn’t what happened to Maghound. In late 2008, while prepping for a presentation to some magazine industry bigwigs, a colleague happened on a new venture that had been recently launched by Time, Inc. — “Netflix for magazines” — where consumers could get different magazines every month without having to have a fixed subscription to those magazines. Sounds great, doesn’t it?

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

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

Such a radical shift into the world of Internet television requires Intel to develop a completely new business model, in which it creates a service it sells directly to consumers. Developing a new business model inside a large company is the triple flip with a half-twist of management challenges. Intel has never successfully designed or sold anything directly to the consumer. In fact, it’s bombed on several occasions. Remember Intel Online Services, the company’s failed attempt to shift into the Web-hosting business?

The television business is ripe for reinvention. Despite the emergence of Netflix (NFLX), Tivo (TIVO), Hulu, and numerous other small startups, over half of Americans still put up with big cable (a number that exceeds 70% if you include satellite television) despite cable’s 1990s-era user experience and 1980s-era customer service. None of the newer digital companies has nailed the mass market consumer experience.

Read the rest on Bloomberg BusinessWeek.

Alasdair Trotter is a Principal with Innosight.

Inbreeding presents real problems. Recessive genes carrying debilitating diseases are more likely to pair. Problems perpetuate from generation to generation. Adaptation slows. “Project Frozen Dumbo” aims to collect genetic material from wild elephants in South Africa to stop the cycle. Generally, cross-breeding drives generally increase a species’ long-term odds of survival by introducing new combinations into the gene pool.

Inbreeding isn’t just a problem for captive elephants. Leaders seeking to drive innovation ought to ask themselves the degree to which their ideas are suffering because of innovation inbreeding. In many companies, it runs rampant, leading to staid ideas and disappointing performance.

Innovation inbreeding is when innovation efforts are consistently led by the same group of people who have lived their life within the company. Even worse is when innovation efforts are contained within individual functions, geographies, or product lines.

One common theme that carries across the innovation literature it is that breakthrough ideas almost always come from intersections where different disciplines brush up against each other. Consider research by British economist John Jewkes in the 1950s. Jewkes found that at least 46 of the 58 major inventions that had occurred to date in the 20th century occurred in the “wrong place” — in very small firms, by individuals, by people in “outgroups” in large companies, or in large companies in the wrong industry.

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

It’s a hard question to answer because there is so much high-quality material out there. And specific recommendations depend on the specific topic about which you are most curious. But in thinking it through, I did eventually end up with a highly personal list I call “The Masters of Innovation” (which appears in my latest book). My intent was to provide a simple entry point to innovation literature by describing people I’ve found consistently insightful, distilling their key lesson to a single sentence, and pointing to where to go to learn more. To see my selections, click here.

So what makes a Master? I didn’t create any kind of ranking algorithm while making my choices, but did consider three basic criteria:

1. Do the individual’s ideas bring clarity to the quest of improving the predictability and productivity of innovation?
2. Are the ideas presented in a way that a practitioner can put them to work immediately?
3. To what degree has the person’s work affected me personally?

These three questions lead to obviously biased selections. For example, I’m sure that most innovation practitioners wouldn’t put baseball researcher Bill James on their list, but his mission to find patterns, develop theories, and overturn orthodoxy has greatly influenced my own thinking. Michael Mauboussin doesn’t write about innovation, but his clear writing that blends finance, strategy, and psychology puts him on my list. Some readers have asked why I put A.G. Lafley and not Steve Jobs on my list. While Jobs and everything he accomplished at Apple is certainly worth studying, in my mind Lafley is a better role model for practitioners. After all, Lafley’s bent is to manage innovation in a systematic, disciplined way. From everything I’ve read, Jobs’s approach relied more on his singular genius. It’s much easier to become more disciplined than to become more of a genius!

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

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