Source of Innovation
1: Unexpected Success and Failures
According to Drucker, the best source for successful innovation is from an Unexpected Success or Failure. Exploitation of this requires analysis simply because an unexpected success is a symptom.
For example: A competitor is having unexpected success in a particular market segment. Management must find out why this is happening, asking themselves what it would mean to them if they exploited it.
Unexpected Failures can also lead to other opportunities for innovation as suggested by the following quotation by a former CEO of Johnson and Johnson:“Failure is our most important product.”
R. W. Johnson, Jr., Former CEO, Johnson & Johnson (1954)
As an example, the Ford Motor Company developed a new automobile, the Edsel, in 1957. The auto's design stemmed from extensive market research about customer preferences in appearance and styling, yet the Edsel became a total failure immediately after it was introduced. Barely a soul wanted it.
Instead of blaming the "irrational consumer", Ford's management decided there was something happening that was not in line with general auto-industry assumptions about the reality of consumer behavior. After reinvestigating the market, they discovered a new "lifestyle segment" to which they quickly responded by producing the superbly designed and produced Thunderbird model - one of the greatest successes in US auto history. Will the highly acclaimed innovation, the GM Chevy Volt follow in the footsteps of the Edsel should be interesting to follow?
“You can learn from success, but you have to work at it; It’s a lot easier to learn from failure.” Lewis Lehr, Former CEO – 3M Corporation
Drucker described an incongruity as a discrepancy, a dissonance, between what is and what "ought" to be, or between what is and what everybody assumes it to be. Like the unexpected event, whether success or failure, an incongruity is a symptom of change that has already occurred, or change that can be made to happen.
Incongruity between the Reality of an Industry, and the Assumptions About it
This type of incongruity is characterized by management in an industry having a misconception of the reality of the industry, and therefore makes erroneous assumptions about it, resulting in misdirected efforts. They concentrate on the area where results do not exist, and offer an opportunity for an innovator who can perceive and exploit it.
An example of this incongruity existed in the ocean-going freighter industry that was believed to be dying in the 1950s. The major assumption about the industry was that the main expense of the ship was while it was traveling from point A to point B. Considerable efforts were directed at getting faster and more efficient ships, fewer crew members, etc., in order to reduce costs. An innovator concluded that these assumptions about the industry were wrong, and that the major costs were while the ship was idle in port, awaiting cargo unloading and new cargo to be loaded.
The result was the innovation of the cargo container and the roll-on, roll-off ship and the container vessel. Overall costs were reduced by 60 percent, and the industry survived and has grown dramatically ever since. Actually the shipping container was developed by Malcolm McLean in the late 1950s and saw its original application by the government in shipping supplies for the Vietnam War. What assumptions are being made within your industry that may be contributing to this type of incongruity, and how can they be exploited?
Incongruity between Perceived and Actual Customer Values and Expectations
Of all incongruities, this one may be the most common. Producers and suppliers typically misconceive what it is the customer actually buys. They assume that what is "value" to them is equally of "value" to the customer, whose expectations and values are usually different. The customer seldom perceives what...
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