The Secrets of Learning to Become Innovative

The Secrets of Learning to Become Innovative!

by

Charles R. B. Stowe MBA, JD, Ph.D

     Can one learn to become innovative?  Yes.  The first step is in understanding that innovation are better ways to solve problems.  All innovations contribute to solving a problem – profitably.  If the cost of innovation exceeds the value people are willing to pay for it, then you have an aestic or clever idea but it has little utility.  Innovations by definition are those ideas that produce greater profit through better service or quality. 

    The second secret is learning to spot innovations.  It is really tough to become innovative if you can’t recognize innovation.  And the trick is that many of the best innovations are hidden. For example, is Wal-Mart’s “every day low pricing” innovative?  The answer is no.  K-Mart tried to imitate Wal-Mart and the result was they filed for bankruptcy protection 9 months later. K-Mart dropped their prices but the innovation was in figuring out how to drop the costs! The innovation was not the concept of everyday low pricing.  The innovation behind Wal-Mart’s success is that they developed the most sophisticated logistics system in the world.  For years, Wal-Mart connected their store’s cash register scanners to relational databases and then connected to their major suppliers to enable them to price DOWN their inventory.  With the sophisticated ordering/inventory system, they were able to reduce their supplier’s cost of sales by eliminating their need for sales representatives.  Taking this a step further, the chain has direct ordering direct to some of their supplier’s manufacturing sites.  

      Here is another example of hidden innovations:  the management of information.  A major printing company discovered that with a 10% drop in sales they had a 40% drop in profits.  And all this after investing in several brand new printing plants with high speed equipment.  The problem, it turns out, was that sales staff were sending in orders for printing to the plant nearest their customers.  The result was that some plants were running overtime while others were sitting idle paying out wages with no production!  The company implemented a centralized ordering system that would book production runs to the plants that were readily available.  The system would compute the costs of shipping to make sure that the overall strategy reduced idle time and reduced overtime.  Managing business requires managing information.  So many innovations may be discovered by looking at how and when information is used for decision-making.

      Third, some innovation is visible.  Apple Computer is great at designing a look that screams: innovative, fun, exciting and sophisticated while easy to use.  Porsche autos emit the image of sports cars for the executive!  Toyota (despite recent issues which I am sure they will conquer) built their company on interior design that is ergonomic and functional and stylish. 

      Fourth, the strategy to become more innovative is to become more observant.  Don’t look at competitors to see what they are doing wrong, look at what they do that keeps them in business!  Read more trade publications where competitors brag about their great innovations.  Learn to recognize different places or strategies that promote innovation:  sizing up a product (building the largest buildings), sizing down (computer IC chips), using information, asking how something works (take it apart), visualize alternative designs. 

Charles.Stowe@gmail.com