Innovation = Creativity * Risk Taking

Innovation is now the centerpiece of corporate strategies and initiatives.  Teams need to be the backbone of the IDEO method. “Hot project” teams are infused with purpose and personality. To IDEO, teams always beat individuals.  Hot Project Teams should:

  • Come from widely divergent disciplines.
  • Be empowered to go get whatever is needed.
  • Merge fun and project.
  • Be as small as three or large as a dozen.
  • Have clear, tangible goals (seemingly unreachable),  and serious deadlines.
  • Be passionate.

Strategy is not:

  1. Aspiration: goals, objectives, or visions.
  2. Best practices: trying to be better than instead of different from the competition.
  3. Caution: being tentative and restrained, afraid to make trade-offs.

Business strategy is defined as “the intelligent allocation of limited resources through a unique system of activities to outperform the competition in serving customers.”

Principle of Competitive Exclusion: “No two members of the same species can coexist that make their livings in the identiacal way/”

There are two lenses of strategy:

  1. Performing different activities from the competition.
  2. Performing similar activities in a different way from the competition.

There are levels of competition:

  1. Industrial
  2. Organizational
  3. Individual

Competitive advantage is defined as “an offering of superior value based on differences in capabilities and activities.”

Three Value Disciplines:

  1. Product leadership-best total product
  2. Operational Excellence-best total cost
  3. Customer Intimacy-best total solution

Insight is the product of 2 or more pieces of information combined in a unique way: Context, customers, questions, and models.  There are 4 primary sources of insight that can be mined to further enhance one’s acumen:

  1. Context
  2. Customers
  3. Questions
  4. Models

Context is the cirumstances in which an event occurs, a setting.  There are 3 pitfalls of context to avoid in ordert to be successful:

  1. Annual Assessment
  2. Relative versus Absolute Performance
  3. Prescription without Diagnosis

Tools used to gauge the context of the business:

  1. Strategy Tune-up Sessions
  2. OODA loop
  3. Contextual Radar

Customers can verbally provide insight on current offering but not future ones.  Observing customers’ behavior can provide insight into future offerings.

Three effective question techniques to generate insights:

  1. Creative Insight Generation Process
  3. Innovation Box

A model is a visual description of an idea, theory or system that accounts for its known or inferred properties and may be used for further study of its characteristics.

It is important to use models to generate insights in the four areas of business:

  1. Market (PEST Analysis and Five Forces of Competition)
  2. Customers (Business Driver Matrix and Value Factor Analysis)
  3. Competitors (Competitive Strenghts Assessment and Strategic Group Map)
  4. Company (Opportunity Matrix and SWOT alignment)

SCAMPER technique created by Michael Michalko.  Uses an array of though-provoking questions around 7 areas to initiate new ways of strategically thinking.  Changing your perspective often opens up uncharted areas of discovery to you that can lead to innovation.  SCAMPER (Substitute, Combine, Adapt, Magnify/Modify, Put, Eliminate, and Reverse/Rearrange.


  • What product features could I substitute?
  • Are there other external resources that can replace what I’m using?
  • Is there something more cost-effective or environmentally friendly I could use in place of what I’m currently using?
  • Is there another source for the raw materials?


  • What product can I use in combination with it?
  • Can I combine this product with a comnplimentary service offering?
  • Are there any unusual combinations I haven’t though of?
  • Which successful service from other industries can I combine with my offering?


  • How can this service evlove into something new?
  • What changes could be made to update this product?
  • Are there any products in other industries that perform a similar function that I could model this after?
  • How have past successful products in this industry adapted to maintain market leadership?


  • Which product attributes can be maginified through promotion to increase sales?
  • What opportunities can be magnified to capture greater market share?
  • How can the service be modified to satisfy additional customer needs?
  • Can we mnodify the sales channel to reach more of the target market?
  • What features can be changed to make the service appealing to other demographic market segments?

Put (to other uses)

  • How else can this product be used?
  • Have customers used this product in any innovative ways?
  • Are there product line extensions that make sense?
  • Where can I reallocate my resources to become more successful?
  • Which strategic initiatives have underperformed, and where can I reallocate their resources for greater success?


  • What part of the customer purchasing process can I eliminate to make it faster and easier to buy?
  • Which reports or paperwork can I eliminate to give the sales force more time to be in the field selling?
  • What steps in the service process are not adding value and can be eliminated?
  • Which customers are not profitable to service and can be let go through attrition?


  • How can I rearrange the sales and marketing functions to be more customer friendly?
  • What could we do to reverse the sales process—having our customers come to us instead of having our employees go to them?
  • Could we use interactive technology to have our customers rearrange the product offering to tailor it to thier individual needs?
  • How would reversing the product development process affect the output?

Three categories of resources:

  1. Tangible-Physcial assets and financial resources
  2. Intangible-Culture, brand, reputation
  3. Human-Knowledge, competencies, and skills.

In order for resources to be a key component in successful strategy, four criteria need to be met:

  1. Replication difficulty-the resource is challenging for others to copy.
  2. Value generation-the resource must lead to superior value for the customer.
  3. Sustainibility-the resource is plentiful enough to be used repeatedly.
  4. Lack of substitutes-the resource cannot be readily substituted by other resources that perform a similar function.

Focus demands the discipline to allocate resources to specific areas and activities, rather than spread them evenly across the business.  Focus comes from the ability and willingness to make trade-offs.  Strategy is much about what you choose not to do, as it is about what you choose to do.  3 pruning pitfalls when it comes to making trade-offs:

  1. Safety-Comfortable Complacency
  2. Health-Political Consensus
  3. Aesthetics-Unproftibale Growth


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