Blog III: The Deployment Process

Introduction

I’ve just completed a consultation project with Njabini Apparel. In order to improve Njabini Apparel’s revenues, my colleagues and I decided to innovate its online sales experience. We discovered that Njabini Apparel’s customers prefer to purchase items in person as opposed to online due to the social recognition aspect of the former. We proposed a two-pronged approach to address this issue: 1) a function allowing online customers to “choose” which woman produces their item and 2) a function allowing customers to “show off” their purchase to their social networks.

The above paragraph describes the innovation process. But what comes next? How does this innovation concept translate into success for Njabini Apparel? This post will focus on deployment, or the process by which innovators with ideas transform into entrepreneurs with successful ventures. I’ll use the innovation described above throughout this post to guide my explanation of the deployment process, broken down as follows:

Figure A. The Deployment Process

Innovation

Companies need to continuously improve and expand their product or service offerings in order to remain competitive in their respective markets. Therefore, innovation across all aspects of the company is necessary. Companies can encourage innovation through corporate venturing or external consulting.

Corporate Venturing

“Innovation is what the weekends are for.”(1) Companies like Google challenge this notion by encouraging their employees to spend 20 percent of their workweek pursuing projects outside their job description. (2) It is from this initiative that Google has produced G-Chat, Google+ and various other “Labs.” This is an example of corporate venturing whereby a company supports innovation and new projects internally. On occasion, innovations resulting from internal corporate venturing can be “spun out” of the company in the form of separate businesses.

Some companies engage in external corporate venturing (ECV) by investing in companies outside their own with the intent of gaining some sort of competitive advantage. For example, Microsoft was an early investor in HubSpot, which was recently integrated with the Microsoft’s Dynamics CRM platform. This integration allows Microsoft Dyanmics to compete with Salesforce in the CRM market. (3)

External Consulting

Njabini Apparel utilized us as consultants in order to innovate its online sales platform. While our consultation has been of great use to Njabini Apparel, we suggest that the company adopts its own practice (like internal corporate venturing) to encourage and support innovation without having to rely on external consultants.

Entrepreneurship

Our innovation has potential to improve Njabini Apparel’s online sales. However, its implementation lies in the hands of Mike Behan, founder and CEO of Njabini Apparel. Can we be sure that Mike will make the most of our innovation concept?

An overarching concept in the study of entrepreneurship is the individual-opportunity nexus. This concept suggests that the potential for success of an entrepreneur cannot be determined solely through the analysis of the individual or the economic potential of his or her innovation. Instead, it is the relationship between the individual and the innovation that speaks to his or her potential for success. Essentially, a bright person needs a bright idea (and vice versa) to become a successful venture. (4)

Figure B. The Seven Types of Entrepreneurs (5)

The Individual

Mike Behan, CEO of Njabini Apparel, is a social entrepreneur in that he uses his keen business sense to spark positive social change. With knowledge he’s accumulated throughout his time in the D’Amore-McKim School of Business, Mike has created a business that turns a profit while drastically improving the livelihoods of the women his company employs.

The Opportunity

Mike Behan established Njabini Apparel in response to two particular needs. First, women of Njabini were unemployed and could not support themselves or their families, so Njabini Apparel provided them with jobs. Njabini Apparel appeals to a second need or, rather, a market – the demand for socially conscious products. The concept for Njabini Apparel is therefore defined as demand-pull in that it was established in response to a particular need.

Commercialization

There are a number of ways to commercialize i.e. bring an idea to market. The chart below provides the various options as to how to do so.

Figure C. Options for Commercialization (6)

Njabini Apparel itself is a (social) start up. The online sales innovation, a product of internal corporate venturing meant to solve an issue within the company, can be considered an in-company venture.

Protection

The online sales innovation, as explained above, is considered an in-company venture. In the event that it brings Njabini Apparel great success, other online retailers – perhaps even Njabini Apparel’s closest competitors - may move to employ similar functions. In order to keep their idea from being copied without their consent or benefit, Njabini Apparel must move to protect its intellectual property. Below are four manners by which Njabini Apparel could do so.

Figure D. Types of Intellectual Property

Njabini Apparel could copyright the code used to run its online sales functions. It could also apply for utility and design patents, given that their offering is original and has not yet been patented. Were Njabini Apparel to secure these protections they would have the option of licensing out their patented technology to other online retailers in exchange for royalties, providing an additional revenue stream.

Financing

Entrepreneurs must secure funding to accelerate the deployment of their innovation in the market. Entrepreneurs can finance their venture by bootstrapping, turning to angel investors and/or venture capital firms. Njabini Apparel has stayed afloat thanks to all three of these avenues for financing.

Paricia Nolan Brown, the serial entrepreneur behind the In-Sight Baby Mirror, swears by bootstrapping, whereby an entrepreneur starts a company with personal finances or from operating revenues of his or her company. Doing so allows the entrepreneur to maintain full control but at the same time places unnecessary risk on the entrepreneur.

While both angel investors and venture capital firms may invest in the same ventures, they usually enter during different stages in the venture’s lifecycle and in different manners. The chart below highlights some of the important distinctions between angel investors and venture capitalists.

Figure E. Angel Investors vs. Venture Capital Firms (7)

Angel investors often bridge the gap between bootstrapping and venture capital. Not all venture capitals are as “cutthroat” as is the above chart may suggest; for example, IDEA at Northeastern is a student-run accelerator than invests in early stage ventures (like Njabini Apparel) without taking an IP or equity stake in the company.

Adoption & Diffusion

Diffusion is a term used to explain how an innovation spreads through a particular culture on a macro level. The rate of adoption is the relative speed by which members of a culture adopt the innovation. There are five categories of adopters, as shown in the S-Curve below.

Figure F. Rogers' Adoption Curve (8)

As Njabini Apparel was established to meet a particular demand it’s more likely to be adopted quickly as opposed to, say, a technology push innovation. However, as shown in the figure above, what comes up must come down. Therefore, companies like Njabini Apparel, despite success with one S-Curve, must constantly innovate to compensate for its inevitable fall.

Conclusion

Were I an employee at a large corporation utilizing the above concepts I’d remain constantly vigilant of opportunities for innovation within and outside the company. If I could identify and define an obvious issue within the corporation, it’s likely I could convince one of my superiors to support the innovation process and “champion” the deployment of my concept within the organization. Were the corporation open to ECV I’d keep my eyes peeled for up-and-comers in the market in which investment could yield great benefit for the corporation. Corporations that utilize the lifecycle concepts for innovation strategy allow for their continued growth and competition in the market and are therefore always on the lookout for forward-thinking, entrepreneurial employees.

Blog II: Design-Driven Innovation

Yesterday afternoon I attended a conference at Northeastern University for undergraduate students interested in innovation. One of the conference’s hosts had reached out to me several weeks prior to ask whether I would speak on a panel about my most recent innovation, EZ Drink.

I was told I’d be joined by two other undergraduate entrepreneurs – one majoring in marketing, the other in engineering – and that the student audience would be most interested in the process leading up to EZ Drink rather than EZ Drink itself. By this I was pleasantly surprised; most student entrepreneurs tend to take as many shortcuts as possible through process to arrive at product.

I’ve come to consider design-driven innovation (DDI) as the ideal way - if not the only way - to create lasting, impactful innovations. I therefore prepared to focus the conversation on DDI. The other panelists, naturally, wanted to go in different directions; the marketing student toward demand-pull innovation (DPI) and the engineering student toward technology-push innovation (TPI).

In order to refute the effectiveness of DPI and TPI as compared to DDI, I started with simple definitions of each.

• Demand-pull innovators rely on market trends, or the directions in which society is headed, to shape their innovations. DPI is rooted in the belief that where there’s demand, there’s potential for innovation. Example: Because the concept of “work-life balance” is trending in American society today, design consultants specializing in human resources are becoming increasingly numerous.

• Technology-push innovators are driven by supply as opposed to demand. These innovators harness knowledge to invent something first and seek out the need for it later. Example: The Defense Advance Research Projects Agency (DARPA) and its virtually limitless research and development budget has resulted in the global positioning system (GPS) and the Internet. It was not until after they were developed that these technologies were adapted to address civilian needs.

•  Design-driven innovators neither rely on market demand nor new technology to satisfy consumers. They instead assign new meaning to things and, in doing so, introduce to consumers solutions to problems they never knew they had. Example: Instead of redesigning their controllers to be more ergonomic, Nintendo improved gamer satisfaction by redefining their experience as a whole with the introduction of Wii.[2]

Figure A

Figure B

Rather than focusing from one specific angle on one specific need from one specific person, design-driven innovators investigate all aspects surrounding a common problem, thus gaining a broad perspective as to how to solve it. This polyangular approach allows design-driven innovators to identify new meanings rather than reinforce existing, unsatisfactory meanings for their consumers.

Henry Ford, the inventor of the first affordable automobile, was once quoted as saying, “Had I asked people what they wanted, they would have said faster horses.” People do not inherently think creatively, and it is therefore foolish to base a potential innovation on what people demand, as do market-pull innovators. In the case of technology-push innovators, it is equally foolish to waste resources on technological innovations in which consumers could potentially find no meaning. Therefore, DDI is recommended (see Figure C).

Figure C

The Swiffer is a product of DDI. In 1994, Proctor & Gamble approached Continuum, a design firm, asking them to find a better alternative to the mop. Continuum sent researchers to watch people clean their floors and came to the following point of view: people need a tool that combines sweeping and mopping that doesn’t need to be clean while being used. This eventually led to the development of the Swiffer, which has annual sales of $500 million.[3]

EZ Drink is also a product of DDI. We first identified a problem: difficulty getting a drink at the bar in a timely manner. Setting our biases aside, we dove into interviews with more than 20 respondents and shadowed individuals at random as they waited for drinks. We used analytical tools to identify opportunity areas within our ethnographic data and eventually came to a point of view: people need a way to receive their drinks quickly and pay for them securely while enjoying the crowded bar atmosphere. With this point of view came EZ Drink, a touch screen machine on which customers can order and pay for drinks while circumventing crowds at the bar. The idea survived concept testing and therefore can be implemented.

I’m currently consulting with a business called Njabini Apparel and am, again, in the throes of the demanding yet rewarding DDI.

• Problem: Low revenues due to poor online sales
• Research: Interviews with potential customers
• Point of view: People need to feel as though they’re buying directly from the source when they’re buying online

While we’ve yet to develop an innovation concept from our point of view, we trust that DDI will yield success.

DDI differs greatly from its market-pull and technology-push alternatives. Had Continuum utilized TPI, they would’ve likely wasted a great deal of resources creating a product unrealistic for use by homemakers. Had we used MPI to solve the demand for quick drinks, we would have developed a technology that eliminated crowds, therefore dissatisfying customers. DDI is applicable and ideal for product, service, business model, and all other types of innovation.

As explained earlier, DDI is centered around the concept of meaning. While MP3 players were introduced in 1997, it wasn’t until Apple gave meaning to the MP3 player in 1991 that this technology came to its full potential. Such epiphanies are hard to come by while innovating; often it’s not until you focus your attention elsewhere that they occur. I’ve yet to experience an EZ Drink-related epiphany most likely because I’ve yet to revert my attention from it. Given the close relationship between DDI and TPI (see Figure B), I’ve continued to seek new meaning by brainstorming new radical technologies, and vice versa, for EZ Drink. While I'm disappointed I've yet to experience an epiphany, I've enjoyed prolonging the innovation process - talking about innovation doesn't hold a candle to actually doing it. On that note, I'll leave you with a joke.

What's the difference between using the bathroom and being innovative?

Using the bathroom is something everybody's doing but nobody's talking about.

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[2] http://www.designdriveninnovation.com/processDDI.html

[3] http://continuuminnovation.com/work/swiffer/

Blog I: The Brain, Creativity & Innovation

Your Boring Brain

Close your eyes and imagine yourself sitting in a classroom. Now, close your eyes and imagine yourself standing on the surface of the moon. Why is it more difficult to imagine the moon scenario? It’s because your brain is a lazy piece of meat.

While complex, the human brain can be “broken down” into four major functions: sense, process, store and act. The brain uses our sensory organs (eyes, ears, nose, etcetera) to help us create an internal representation – or, more simply, a memory - of the external world. Once our experiences are translated into neurons, the brain begins to process these incoming signals, called afferents. The brain categorizes each incoming afferent based on previously stored information. For instance, war veterans may be severely startled by a car backfire or firecracker due to their memories of warfare. Finally, once these afferents are processed, the brain reacts accordingly through actions called efferents. From the previous example, the war veteran may drop to the ground in the event of a car backfire as he would in the event of enemy fire. [1]

So, what makes your brain lazy? It always takes the path of least resistance. Because the brain is efficient, it uses past experiences to shape your perception of new ones. For this reason, it is much easier to close your eyes and imagine sitting inside a classroom – something you’ve experienced before - than it is to imagine standing on the surface of the moon.

Imagination is essentially perception in reverse i.e. it forces your brain to go against its experience-dependent categorization process. There is a class of people who, for whatever reason, seem to see and perceive things differently than most e.g. Walt Disney and Steve Jobs. These “iconoclasts” do not give into their brains laziness and instead are imaginative in all their endeavors. [2] In order to stimulate the systems that allow for imagination, the rest of us need a novel stimulus. Whether it is new information or an unfamiliar environment, a novel stimulus allows individuals to think outside the box by simply stepping outside of it. [3] For example, artist Dale Chihuly became world renowned only after losing an eye in a car accident – a tragedy that forced him to see the world from an angle most cannot. Similarly, it took a car crash – and a broken jaw – for Kanye West to become one of the world’s most famous hip hop artists.

Inventions vs. Innovations

Let’s go back to those iconoclasts mentioned earlier. Were Walt Disney and Steve Jobs famous simply for their ideas? No. Walt Disney and Steve Jobs were more than thinkers, more than inventors – they were innovators.

It’s important to note that while the term innovation implies the creation of something new, it is not synonymous with invention. While invention is the first occurrence of an idea for a new product or process, innovation is the first implementation of the idea. Successful innovators are distinguished from inventors in that they have commercialized an idea rather than simply construing it.

Many inventors have failed to commercialize their idea due to unsustainable business models, exaggerated demand, disconnected value chains, etcetera. Innovators, on the other hand, can revolutionize markets with even the least inventive products. Steve Jobs, for example, achieved great success with his iPod despite the number of MP3 players that existed on the market before it. Jobs didn’t invent the MP3 player. It was the aesthetic, ergonomic, and utilitarian aspects of his iPod that drove its success. Invention, therefore, is not required for innovation but can contribute to it. [4]

Types of Innovation

There are two major definitions of innovation. Some assert that innovation refers to the idea and its introduction to the market, while others suggest the innovation lies in its implementation in the market. While the latter tends to be more widely accepted, keep both definitions in mind as we discuss the various categories and types of innovation in this section. There are two major categories of innovation with which everyone should be familiar: sustaining and disruptive innovations. Sustaining innovations can be either incremental or radical.

The majority of innovations are defined as incremental. This term is used to describe modest changes to existing products or services. For example, while GPS was originally created for use by the army, it has been adapted to function in cars and on smartphones. A radical innovation is one that uses new knowledge, resources and technologies to offer an even more improved product or service to the market. Netflix’s online streaming service, for example, is a radical innovation to the entertainment market.

Disruptive innovations are once-radical innovations that have since rendered existing products or services non-competitive or obsolete (see figure below). The cassette tape, for example, was a disruptive innovation that made records obsolete. Compact discs later disrupted the cassette industry. Eventually, MP3 players will render compact discs entirely obsolete and thus be considered a disruptive innovation.

[5]

Innovation and Business

As made evident in the previous section, innovation is key to becoming a competitive player in global markets. As a result, consulting firms often have entire departments focused on innovation strategy. In 2007, Doblin became a part of the global strategy firm, Monitor Group. Doblin helps its clients to improve their competitive advantage by innovating across all aspects of their enterprises. Doblin developed a framework, used by industry leaders across the globe, of the Ten Types of Innovation most integral to improving competitive advantage.

Type of Innovation	Definition	Industry Example
Profit model	The manner in which the company generates income.	Skype’s “freemium” model
Network	The company’s value chain.	“The Shops” at Target
Structure	The company’s human capital.	The Whole Foods Team
Process	The company’s strategy.	Zara’s “fast fashion” strategy
Product performance	The distinguishing features of the company’s product.	Ferrari’s commitment to excellence
Product system	Complementary products offered alongside the company’s product.	Apple’s App Store
Service	Services offered alongside the company’s product(s).	Zappos’ WOW service
Channel	The manners in which the company gets it product(s) to its customers.	Starbucks’ Gold members
Brand	Representation of the company.	Virgin
Customer engagement	Interactions between the company and its customers.	Microsoft’s Help Center

While most would assume the product performance and service aspects of the company are most in need of innovation, Doblin asserts otherwise; according to this innovation strategy giant, innovating the profit model and customer engagement aspects of the company are most conducive to a higher return on investment.

As mentioned before, many global industry leaders are pushing their employees to introduce innovative approaches to the manner in which they do business. But the question remains – can anyone innovate? Can you innovate? In order to assess whether you’re capable, it is critical to understand your core attributes – your behaviors, motivators and competencies - and how they might contribute to the innovation process. Are you analytical? Versatile? Collaborative? Are you motivated by the process or the result? Can you problem solve? Are you organized?

While we may not all be born with “it,” as were the iconoclastic Walt Disney and Steve Jobs, we all have particular attributes that can contribute to the innovation process – it’s just a matter of harnessing them.

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[1] The Amazing Brain and Human Development

[2] Neurscience Sheds New Light on Creativity

[3] Creativity and Novelty

[4] Innovation vs. Invention: Knowing the Difference Makes a Difference
[5] Disruptive Innovation
[6] Ten Types of Innovation
[7] Can Anyone Innovate? How to Build an Innovator