What Goliath Can Teach David About Innovation

Turnabout is fair play.

A couple of columns back we argued that large companies had a lot to learn from entrepreneurial firms when it comes to innovating effectively (and that hiring university professors to teach them was an extremely bad idea).

This time, we present four things David can learn from Goliath and the B-school philosophers often hired to show big companies the way.

1. Process is not a dirty word. Proven methods for inventing new products already exist. So why would you want to waste time, money, and other resources "discovering" processes that are already known and working well? Reinventing the wheel is never a good idea.

Successful companies and enlightened professors understand that there are extremely effective innovation processes. Unfortunately, entrepreneurs often hate process because they believe in the fantasy of the big idea. Read: "I will have a big idea, and I will rule the world. Besides, my entrepreneurial brilliance is in defying the rules, so why would I want to do something the way everyone else does it? You wouldn't catch Edison using process, would you?"

Uh, yes, you would. We are not talking about a paint-by-numbers, one-size-fits-all approach. Life is not that convenient. We are saying there are certainly proven processes that increase your chances of innovation success. These processes are the favorite tools of professors everywhere. Used effectively, they keep large companies from making significant, expensive errors. Since losing millions of dollars qualifies as a "significant error," processes make big companies feel strong. We want you to feel strong, too, so if you don't have an innovation process, please borrow ours. We believe—and have proven over the past 20 years—that innovation occurs when:

A) There is a significant need or insight.

B) A product, service, or business model meets that need.

C) There is clear communication that connects A to B.

You need to take the steps in order, because if you start with No. 2 and create a really cool product or service, you may end up with something really wonderful—that no one wants or not enough people want. Examples abound: the Iridium phone; Flooz (Internet currency), and the Segway. But even with the broad strokes of the innovation process defined, literally thousands of different ways to proceed exist. The takeaway here: It is best to follow the lead of Goliath and his sages; when you find an innovation process that works, stick with it.

2. Money isn't free. Neither are your other resources. You can and should make fun of all the obstacles large companies place in front of anyone who wants to start anything new. Some even name processes as hurdles or gates, which we find even funnier. But the underlying premise is right. To their shareholders, wasting money is serious business, and if a hurdle or two saves some bucks, then gosh darn it, we are going to have hurdles and gates.

Besides, trying to start anything new costs a lot. Not only are dollars and resources involved, but also opportunity cost. If you are trying to do X, you can't be doing Y simultaneously. By the way, Y typically has something to do with an existing flagship brand that is paying the bills. (The Greeks call this diaphoranta. Loosely translated, this means focusing on the essential, not the important. See, you really can learn from professors.)

The nuance here is that failure is good as long as you are doing it quickly and you limit the failures to the opportunities/insights that have the most potential. If you have too many ideas happening at once, you will run out of money, energy, and time, so place your bets carefully … which brings us to the next point.

3. Unfortunately, there are no guarantees of success. But you can get a good idea ahead of time if you are going to fail. One of the things that big companies do well is test products prelaunch. Take a page from their book and test prototypes early and often. Yes, of course, change your offering based on what the market has to tell you. But if all the subsequent testing of the revised product/service shows what you have is going to be a long shot, take a deep breath and create something else. If the dogs won't eat the dog food, it is bad dog food. Don't waste your time and money trying to jam anything down a customer's throat. Yes, we just called your customer a dog. Sorry.

4. You should think about co-creating. As the cost of innovating keeps climbing, big competitors are joining forces to create new products and services. Procter & Gamble (PG) and Clorox (CLX) are a good example. P&G was sitting on some technology that could enhance the performance of trash bags—but it didn't sell trash bags. Meanwhile, Clorox owned Glad, a leading bag brand. The results was a new and better bag, one that is selling well.

We still think professors are the last thing most big companies need. Still, the very processes that big companies have in place—the same ones that professors teach—are often just what the doctor ordered when it comes to entrepreneurs. We know many of you ran from school to put ideas into action. Perhaps it is time to run back to school to turn action into focus and focus into consistent success.

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