Innovation Now!

When most people think about the future, they typically take 98% of the industry orthodoxy as a given. That means that before they start, they've already limited their potential for innovation to about 2% of the available "space." To innovate, you need to spot the absurdities that no one else has spotted, to ask the stupid question that no one else has asked, to take some existing performance parameter and push it so far that suddenly you have illuminated a new possibility.

A good place to start is by looking for trade-offs, situations where a competitor is telling itself or its customers, "You can have one or the other." Twenty years ago, the U.S. auto industry said that you could have either quality or low cost. Toyota offered both. The U.S. airline industry said that you could have the lowest fares or the highest customer satisfaction. Southwest managed to deliver both. When you hear "or," it's an invitation to innovation.

Radical innovators spot the trends that are already changing but have gone unnoticed. I'm not a big fan of forecasting or scenario planning, because I don't believe that you can predict the future. What you can do is ask, "What are the things that are already changing that most people (especially my competitors) haven't noticed yet?" The way to find new answers is to look where your competitors aren't.

Most executives will not have heard of a woman who goes by the name of Chyna. She had a book on the New York Times Best-Seller List, so you would expect that to have brought her some notoriety. But I'll bet that less than 5% of the country's CEOs know that Chyna, a glamorous amazon taken to wearing star-spangled bikinis, happens to be one of the divas of World Wrestling Entertainment (formerly known as the World Wrestling Federation). In the fall of 2000, Monday Night Raw , the wrestling group's premier television show, outdrew Monday Night Football by 47% among young American males. If I'm leading a company that's trying to sell something to adolescent males, and I've never heard of Chyna, then I don't understand my own customers, and I can't out-innovate my competitors. Every CEO needs to spend some time on the fringe -- the fringe of technology, entertainment, fashion, and politics. It is on the fringe where new possibilities first present themselves.

Radical innovators learn to live inside the customer's skin. This is not another plea to be customer focused. Getting "close to the customer" rarely provokes fundamental innovation, because you're talking to the kinds of customers that you already serve, and you're listening to what they're saying -- not paying attention to what they're feeling . Innovation almost never comes from an articulated need; it comes from an insight into an unarticulated need. We never asked for eBay, Starbucks, or downloadable music, but somehow, we got all of those things. Radical innovators have a boundless empathy with human frustration that allows them to see beyond articulated needs to the deeper, unexpressed need.

In order to get to that need, you must begin by developing an experiential sense of what it means to be a customer. My company recently worked with a major hospital that was trying to create a more customer-centric experience. We took a slice of the hospital's employee base -- a dozen or so people from senior medical personnel down to admitting clerks -- and we asked them to list the 10-best service experiences that they ever had. Maybe it was a day at Walt Disney World or a first-class flight to London on Virgin Atlantic. Then we asked the employees to take cameras and notepads and go enjoy some of those experiences. Any time something they experienced evoked a great feeling -- any time they felt respected or that their expectations were exceeded -- we asked them to take a picture, make a note, and tell us exactly what happened.

Next, we asked the same team to live through the experience of being patients in their own hospital, to lie in bed for a day with an IV, to use a bedpan, to traipse around in one of those gowns that flap open in the back, to put up with a procession of medical personnel poking and prodding them. Not surprisingly, the inpatient experience teased out some not-so-great feelings. You have to do two things to get at deep, unvoiced needs: Get an experiential insight into what it feels like to be your own customer, and assemble an inventory of first-person analogies (like the Disney World or the Virgin experience) from which you can draw out potential solutions.

When it comes to innovation, the key point is this: People get the courage to try new things not because they are convinced to do so by a wealth of analytical evidence but because they feel something viscerally . It's not that the analytics aren't important. It's just that until you feel something in your gut, until you've experienced it and know it to be true, you simply won't have the courage to act.