The Discipline of Innovation

In the hyper competition for breakthrough solutions, managers worry too much about characteristics and personality: “Am I smart enough? Do I have the right temperament?” - - and not enough about the process. A commitment to the systematic search for imaginative and useful ideas is what successful entrepreneurs share, not some special genius or trait. What is more, entrepreneurship can occur in a business of any size or age because, at heart, it has to do with a certain kind of activity: innovation, the disciplined effort to improve a business’s potential.

Most innovations result from a conscious, purposeful search for opportunities within the company and the industry as well as the larger social and intellectual environment. A successful innovation may come from pulling together different strands of knowledge, recognizing an underlying theme in public perception, or extracting new insights from failure. The key is to know where to look.

Successful entrepreneurs do not wait for innovative ideas to strike like a lightning bolt. They go out looking for innovation opportunities in seven key areas:

1. Unexpected occurrences. These often include failures. Few people know, for instance, that the failure of the Edsel led Ford to realize that the auto market was now segmented by lifestyle instead of by income group. Ford’s response was the Mustang, and an auto legend was born.

2. Incongruities. By the 1960s, cataract removal had become high-tech, except for cutting a ligament, an “old-fashioned” step that was uncomfortable for eye surgeons. Alcon Laboratories responded by modifying an enzyme that dissolved the ligament. Surgeons immediately accepted the new product, giving Alcon a monopoly.

3. Process needs. Two process innovations developed around 1890 created “the media” as we know it today: linotype made it possible to produce newspapers quickly, and advertising made it possible to distribute news practically free of charge.

4. Industry and market changes. The brokerage firm Donaldson, Lufkin & Jenrette achieved fabulous success because its founders recognized that the emerging market for institutional investors would one day predominate in the industry.

5. Demographic changes. Why are the Japanese ahead in robotics? Around 1970, everyone knew that there was both a baby bust and an education explosion, such that the number of blue-collar manufacturing workers would decline. Everyone knew – but only the Japanese took action.

6. Changes in perception. Such changes do not alter the facts, but can dramatically change their meaning. Americans’ health has never been better – yet we are obsessed with preventing disease and staying fit. Innovators who understand our perception of health have launched magazines, introduced health foods, and started exercise classes.

7. New knowledge. Knowledge-based innovations require long lead times and the convergence of different kinds of knowledge. The computer required knowledge that was available by 1918, but the first operational digital computer did not appear until 1946.

Purposeful innovation begins with looking, asking, and listening. Talent and expert knowledge help, but don’t be deluded by all the stories about flashes of insight. The key task is to work out analytically what the innovation has to be in order to satisfy a particular opportunity.