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Innovation on Low (or No) Budget

December 23, 2011

While invention may require significant investment, it’s more about creativity; developing the proper mindset is crucial

The Boeing 787 Dreamliner can seat up to 250 passengers and haul a half-million pounds. The Boeing (BA) jet has a range of up to 8,200 nautical miles and reaches a maximum speed of nearly 650 miles per hour. Its development required an investment of some $30 billion.

The new Big Dinner Box from Pizza Hut (YUM) can haul two medium pizzas, eight wings, and five breadsticks. It has a range of a few zip codes and reaches a maximum speed of what the delivery driver can get away with. Its development required, well, a different kind of cardboard box.

My point? How simple some innovations can be. You don’t have to have a monstrous research and development budget (or even a test kitchen, for that matter) to innovate. You just have to be alert to your customers’ needs and wants—and creative and responsive in addressing them.

Some innovations do require many years and billions of dollars to develop; witness the Chevy (GM) Volt, which took nearly four years and more than a billion dollars to go from concept car to street legal. (The verdict is still out as to whether it will become a commercial success.) Contrast that with Dr Pepper 10, a soda that targets men who don’t like the taste (or the idea, perhaps) of diet soft drinks. By using a different sweetener and throwing in a tad of good, old-fashioned high fructose corn syrup, Dr Pepper Snapple Group (DPS) came up with a formula that is showing such positive initial returns that the company is already expanding the concept to five of its other brands.

“A Better Way to Deliver Value”

The key to innovation is to not wring your hands about what you don’t have—a giant research budget and staff of PhDs—and focus on what you do have: a relationship with your customers.  Saul Kaplan, founder of the Business Innovation Factory, defines innovation in very simple terms: “a better way to deliver value.” In a recent interview, Kaplan explains what he means: “It is not an innovation until it solves a problem that a customer is having—it delivers value in the real world, solves a problem, and helps get a job done that a customer is trying to do. A lot of people confuse innovation with invention, and think that they just need new technology to solve a problem. But an innovation is not the same as an invention.”

He’s right. Inventions are almost always innovations, but innovations don’t have to be inventions. They just have to be a better way to deliver value. This Christmas, many personal-care product makers such as Procter & Gamble (PG) and Unilever (UL) are putting together gift boxes of toiletries as prosaic as deodorant and toothpaste. If that sounds like the contents of your medicine cabinet, it is. Still, by packaging their products as “affordable luxuries,” these companies are meeting consumers’ needs for simple, inexpensive stocking stuffers. That may not work so well in neighborhoods with circular driveways, but for the rest of us, it’s a gift we could really use. And while our gift-giver stretches his or her budget by (literally) getting a package deal, the manufacturers get to increase exposure and move more product.

Who would have thought a handful of personal-care items would make a great Christmas gift? Not me, but some enterprising packaged goods makers were paying attention to what highbrow cosmetic brands have done for years and have simply applied the concept to their own customers. That’s a helpful template for fostering creativity in innovation—combining two previously unrelated ideas into something refreshing and new. Dr Pepper found something refreshing by combining a diet soda and a regular soda and positioning it for people whose desires weren’t being fully met by either. P&G discovered something new by combining consumer staples with fashion thinking to create a simple, practical gift for challenging economic times. Pizza Hut combined a delivery box with a confectioner’s sampler so it could sell more of every kind of product it serves.

Ask: What’s Bugging Your Customers?

Ideas. That’s what innovation is all about. It’s true that the more resources you have, the more you can throw at R&D, but each of us has time, a brain, and the ability to observe our customers in their natural habitat. You might even try talking with your customers and getting them to open up about what isn’t working for them—or what isn’t working as well as they would like. Don’t expect them to suggest solutions, and don’t assume that any suggestions they do make are ideal; chances are they don’t know what’s possible.

Instead, take each little frustration or unmet need and begin to brainstorm ways of making it better by comparing and contrasting your industry to others. You may come up with a simple variation in the product; you may think up a new kind of packaging; you may identify a different pricing option; you may develop a combination of all of these. Go for tonnage in your idea generation, giving birth to lots of possibilities that are allowed to live without judgment for at least a few days. Some will (and should) die a natural death while others will continue to germinate and grow.

Like everyone else, I enjoy the benefits of computers, smartphones, and medical advances that represent the height of new invention. But in some ways the little innovations surprise and delight me more—pizza by the slice, a curved shower curtain rod, one-click ordering. In my line of work, I get to witness (and occasionally abet) a fair amount of these innovations myself; it’s one of the most rewarding aspects of my job. We all know the free market’s invisible hand is always at work, but there’s nothing more thrilling than seeing it move. Entrepreneurship is nothing less than a form of innovation borne of a belief that there’s a better way.

There is always a better way. Don’t disregard that thought. If you hadn’t found a better way when you launched your company, it wouldn’t be here today. There are more “better ways” just waiting to be discovered. There’s more collective brainpower in small businesses around the world than in all of the aerospace companies, restaurant chains, packaged goods manufacturers, and other Fortune 500 companies combined. All it takes to activate it is a little inventiveness.

Steve McKee is president of McKee Wallwork Cleveland and author of When Growth Stalls: How It Happens, Why You’re Stuck, and What to Do About It. Find him on Twitter and LinkedIn.


From → Innovation

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