Innovation is critical for growth. For companies to truly stand out in a crowded market, they must find ways to innovate. Craig Groeschel, in his leadership podcast (episode 34), shared “the innovation equation”. It’s a great model for wrapping your head around what it takes to be an innovator.
The Innovation Equation
Groeschel shares this about innovation:
It’s safe to say that the most successful companies in the future will be doing things no one is doing today. Think about the four companies that made the headlines in the 1980s: GM, Walmart, Exxon, and Ford. Today, the four companies you hear about are Apple, Amazon, Facebook, and Google. They’re doing today what no one dreamed was possible just a few decades ago. They are leading the way in innovation.
His “innovation equation” states that there are four key components needed for innovation:
A Problem to Solve
+ Limited Resources
+ A Willingness to Fail
+ A Crazy Idea
A Problem To Solve
If you read my blog on “7 Obvious Questions Entrepreneurs Fail to Ask“, you know that the first question is “Does Anyone Care?”. When no one cares, there is no problem to solve. If there is a problem, then someone will probably care.
The challenge comes in finding problems that people want a solution and are willing to pay for it Once you find that, you have the first part of the innovation equation. So where do you find these problems? And how do you determine if they are willing to pay for it?
First, I will assume you are looking to solve a problem in your industry. First, there is likely some form of industry association, trade groups, chamber of commerce organizations or some other affiliation that has regular publications and/or events. If so, this is a great place to start. See what people are talking about. Focus on what they are complaining about. Find ideas in the pains that people in your industry are facing.
Talk to your boss, your customer and maybe even your competitor. Ask them what their biggest pain points are. What are the things that are causing them frustrations?
To figure out if someone will pay for it, you have to come up with an idea of the current costs of not having a solution. And are the costs real hard dollars or are they efficiency costs? The “harder” the costs, the more likely someone will pay for a solution.
Limited Resources
Continuing with the idea of the cost. You need to recognize if the need is impacted by a lack of resources. For example, we have a shortage in laborers in America right now. Unemployment is at a very low level. People aren’t willing to do low-paying menial tasks. Therefore, resources are limited in that context right now.
With limited resources comes an opportunity for more innovation. Would self-service kiosks be a solution if labor were abundant and cheap? No, of course not. Therefore, innovations such as these have taken hold in recent years because people are more tech-savvy and the price for having one clerk oversee a bank of self-service kiosks is much less expensive than having a bunch of clerks working individual checkout lines.
Limited resources, especially in labor, are going to drive much of the innovation in the coming years. Shortages in healthcare (doctors and nurses, in particular) are driving much more innovation in that space as well. Telehealth solutions, for example, are finally taking off as it is now more important to see a doctor than to see my doctor.
A Willingness to Fail
I have written several times about the idea of creating a “culture of failure”. This is a common idea in places like Silicon Valley. But where I am in the Midwest, failure is frowned upon. In fact, many careers have come to a screeching halt because of a failed idea.
If you want to promote innovation in your organization, you have to create a culture where failure is okay. I am willing to put some boundaries around that statement. For example, in healthcare, failure is not okay if it unnecessarily puts a patient’s life at risk. The same can be said in the automotive industry, for example. But failure taken on calculated risks, where lives aren’t at stake, should be celebrated. Because only when celebrating the failures will you encourage others to take risks that will drive the big innovations.
A Crazy Idea
And, yes, finally you have to have a crazy idea. Any idea that led to a tremendous innovation was originally seen as crazy. A computer in every household? Tom Watson, CEO of IBM, thought that idea was ludicrous. A telephone in your pocket? I didn’t see it coming. The hundreds of thousands of innovations just caused by the smartphone industry are astounding. All of these sound crazy when looking at them through a 1999 mindset.
Put the Innovation Equation to Work
If you want to create an innovation mentality at your work, you should consider how you can integrate the innovation equation in your company. Encourage employees to take risks. Be public about the ideas you want to solve. Create a network for sharing ideas and collaboration. Encourage and reward failure. Celebrate wins and losses. And look at every crazy idea as the next big thing.
Creating high performing teams that lead change in the culture is one of my favorite things to do. Contact me today and I’ll help you build this culture in your organization.