With Innovation, You Don't Get Points for Difficulty

Someone in India recently asked me what I thought about an innovation strategy featuring a heavy dose of "imitation." My response was, "Innovation isn't Olympic diving."

What did I mean? An individual diver's scores for an event are a factor of two things: how well they execute their dive, and the "degree of difficulty" of their selected dive. The more twists and turns you have, the more points you can earn.

You don't get points for degree of difficulty for innovation. You get points for producing profits. Sometimes you do have to take higher risk, more uncertain approaches to produce those profits. But the goal isn't making things any more difficult than they need to be. The goal is to find the quickest, cheapest path to profits. If that involves imitation, then so be it.

My diving quip was an homage to Michael Lewis's book on baseball, Moneyball. It describes how the Oakland Athletics exploited market inefficiencies to compete against baseball teams with more financial resources. Early in the book there was a discussion between A's general manager Billy Beane and his team of scouts. They were discussing a prospect, a University of Alabama catcher named Jeremy Brown. The scouts didn't like Brown, pointing to his "soft body" and "low energy." Beane's analytical team loved Brown, citing some of his performance statistics. A debate ensued. Beane shut discussion down with a succinct phrase that summarized his organizational philosophy: "We're not selling jeans here." Brown became the 35th overall selection in the amateur draft.

Beane's point was that he didn't care about a player's physical attributes; he cared about whether the player would perform. And his philosophy was that statistics provided a better way to identify high performers than a player's physique or mental makeup. In this case, the scouts might have had a point — Brown ended up with a grand total of 11 major league plate appearances (where he did bang out two doubles and a single). Nonetheless, Beane's admonition is a useful reminder that innovation leaders should make sure they are asking the right questions and focusing on the right variables.

I generally ask five questions to determine whether an innovator has the seeds of a transformational idea:

1. Is there an important problem that customers can't address because existing solutions are expensive or inconvenient? In Innosight's parlance, is there a high-potential "job to be done"?
2. Is there a disruptive way to solve the problem in a simpler, more convenient, or more affordable way?
3. Is there a plausible hypothesis about an economically attractive, scalable business model? I don't need a detailed financial model (because I know it's wrong anyway), but I need a sensible story that's at least conceivable — and a plan to turn that plan into reality.
4. Does the team have the "right stuff" to course correct based on in-market learning? Remember, the odds are high that the first idea isn't quite right. A team that is dogmatic and keeps trying to prove it is right is the wrong team for many innovation efforts.
5. Can early profitability be a choice? Ultimate success requires a profitable model. The sooner there is a line of site to profits, the better. You might make a strategic decision to be unprofitable by investing in marketing, sales capability, and so on, but at least you know the core part of the model works.

Have you heard any good innovation one liners lately?