Three Sources of Innovation

One of the most common questions asked of a person who has presented an innovation is “where did you get that idea?”    It is, perhaps, an obvious question to ask because every act of innovation is based upon the application of an unusual idea, as usual ideas can be applied by the usual methods, and generally effect no substantial changes or improvements to business as usual.   And it is precisely because the ideas are unusual that makes innovation so difficult to comprehend and so difficult to practice.

There is no defined process that can be reliably applied to produce innovative ideas, so studying innovation often involves inspecting instances in which someone has been innovative and attempting to reverse-engineer the process to determine the source.    Having studied the topic for some time, I don’t have a clear answer – but I do think I have gained a perspective worth sharing, which points to where the answer may be found, or perhaps at least divined.

Specifically, I have come to the sense that innovation may be classified according to its source – i.e., the domain of knowledge in which an innovative idea takes root – and while information about the creative process is scant and often secretive, I’ve come to recognize that innovations tend to be rooted in one of three basic sources: engineering, marketing, and design.

Engineering Innovation

In the present age of scientific progress, many of the innovative ideas that impact the life of the average person are based on engineering.   I say “engineering” rather than “technology” because there are few instances in which a company invents a new technology and far more instances in which a company applies a technology that someone else has invented.  It is only when technology is applied through a process of engineering that it renders an innovation.

Engineering innovation considers the capabilities of technology and then seeks to identify needs to which these capabilities might be applied.   It is fairly easy to do, because the capabilities can be objectively observed: one can see that a thing has certain properties and merely needs to make a list of those properties and consider the way in which each might render some useful benefit.   This is not to say that engineering innovation is of little value and does not require hard work – because it is of considerable value and requires a lot of meticulous and deliberate analysis to arrive at an innovative conclusion.

However, it can also be observed that engineering innovation very rarely leads to radical or substantial innovations.  Instead, it tends to lead to technical or efficiency improvements that make existing solutions faster, cheaper, more efficient, more durable, etc.    Engineering generally does not result in a new device, but an improvement to a device that is already in use.   Its product is an innovative mousetrap, not an innovative solution to the problem of mice.  Engineering innovation is the most common form of innovation in the present day.  Witness that new devices are very rare, but better devices are very common.

Another distinctive quality of engineering innovation is that it is an entirely internal process, which can and must take place in a laboratory where specialists analyze solutions to problems (or discover problems for solutions).   This is not something that the average person can do because highly specialized domain knowledge is required to do it.   A person may recognize the desire for a more fuel-efficient automobile, but his desire does not give him knowledge of physics necessary to conceive of an efficient engine.

The drawback to engineering innovation is that it does not produce a unique or sustainable competitive advantage.  The qualities of a thing can be easily observed by anyone, and the “innovator” is simply the first to recognize the application of those qualities and bring them to market.   Any other firm that investigates the same phenomena will inevitably stumble across the same solution.

Marketing Innovation

An alternate approach to innovation begins with the customer rather than the product, on the plausible premise that people know what they want and would gladly embrace it if it were offered to them.   And so, customers are observed and studied, sometimes even included in product development exercises, so that the firm can find unique ways to provide the value that customers want of them.

The obvious problem is that the premise, while plausible, is quite flawed: customers do not know what they want – they know what problem they are trying to solve, but do not know what would solve them, and often speak in terms of their experience with existing products.  So the outcome is often an improvement to one of those familiar and existing products rather than a radically innovative product that is much better at solving their problems.

Take for example the phrase “If I had asked people what they wanted, they would have said ‘faster horses.’” While Henry Ford never actually said this, there is some truth to that: people are rooted in the known and can’t conceive of the unknown. While no-one believes that customers have the expertise to know how to breed a faster horse, it seems to be accepted that they have the problem-solving skills to know that a faster horses is what they need, when they clearly do not tend to consider other possible solutions to the problem of speed in travel.

This is not to say that market research is at all a bad thing, simply that the results of market research are too often taken at face value, with too little thinking about what desires or frustrations cause customers to say the things they do about existing solutions.   So a company that considers what the customer says he wants rather than trying to understand what he really needs will not be radically innovative as a result of this approach – they will simply uncover opportunities for minor improvements and adjustments.

Oh, and the distinctive quality of a firm that engages in marketing innovation is the involvement of the customer, through market research and participatory exercises – though attention must be paid to whether the customer was actually involved.   There are many who speak of “what customers want” while never actually having listened to the customer, and others who outright lie about having done market research when they are speaking from their own imaginations.

Design Innovation

A third approach to innovation employs a process of design, and as the word “design” is often misused, it’s worth pausing a moment to define it:  design is the process of creating or improving a practice by which a goal can be achieved. It is often misunderstood that design is about an object (a good) rather than the practice that is facilitated by the thing, and recognizing that the practice is the aim of design enables design thinking to be applied to all products (services as well as goods).

It is generally recognized that design innovations results in the most radical and substantial improvements to products because the process of design is parthenogenic and idiosyncratic.  Two engineers who look at the same technology are likely to come to the same conclusion as to how it can be applied, two marketers who use the same survey to study the same market segment are also likely to come to the same conclusion, but two designers who look at the same problem very seldom have identical ideas about how it can most efficiently and effectively be solved – hence their conceptions are often unique.

The distinctive characteristic of design innovation is the designer himself, a person who has the insight to formulate a wild and unusual idea and the charisma or power to get others to collaborate with him to bring it to  fruition.   Firms that leverage design innovation are often led by visionary figures such as Thomas Edison or Steve Jobs, who champion unpopular ideas and score dramatic victories when they succeed where critics were adamant that they would fail.

Unfortunately, that is also the chief drawback to design innovation, in that a “wild and unusual idea” is not necessarily a very good idea, and a designer who completely ignores the culture of his market, the capabilities of technology, the necessity of sustainability, and often the basic principles of reality, comes up with very impractical solutions that result in disaster rather than triumph.

Design innovation is extremely rare in the present culture, which clings to the tried-and-true and fears the new-and-unproven ideas that a design innovator suggests.  Skepticism is healthy when it causes wild ideas to be considered carefully, but quite deadly to innovation when it causes wild ideas to be dismissed without consideration – and the latter describes the function of most organizations: the larger the firm, the more defenses it has against radical innovation.

Classifying and Adjusting Innovation Efforts

People tend to be creatures of habit: they find that something produces good results and repeat that activity to get the same results, even in instances where another approach might be more fruitful.   This is what causes firms to settle into a routine and to fail to be innovative – but it is also the same quality that causes firms to gravitate toward a specific kind of innovation.   To determine how a firm innovates, consider how it approaches innovation:

• Technical – New ideas are discovered in a research laboratory that focuses on the capabilities of the product itself.
• Marketing – New ideas are discovered by surveying, interviewing, observing, or involving the customer, focusing on their preferences.
• Design – New ideas come from insiders, whether subject-matter experts or executives, by reconsidering how the customers’ needs can be met.

Then, consider what kind of innovations are the most advantageous.   Technical and marketing innovations tend to result in minor changes to the product that create a temporary advantage – but in some instances that is quite enough to sustain a firm.   Design innovations require major changes, which are not always desirable: the existing product may be selling profitably, the firm may not be able to absorb the effort and expense to make major changes, or the design innovation may be rejected by the market.  

With this in mind, the firm’s usual, familiar, and comfortable method of innovation may be entirely inappropriate (and ultimately ineffective) in a given situation, and the best approach is to keep all three tools handy so that the right approach can be applied to a given problem.   Often, multiple stratagems must be employed in tandem to achieve the best possible outcome.