Innovation versus Business

Last night one of my colleague had asked me a question, what you want to be:
An innovator or a businessperson

I don't know why he asked such question but it seems that people have such sort of perception that innovation most of the time don't bring you any business, its by old and hard way you can do business and bring business but I think it is not true,

Most of the people will consider innovation as only in product/service as product/service development and they to consider it as a risky proposition, and yes to certain extent it is a risky proposition to put your bet on new concept but there are also other innovation that gives you competitive advantage

For illustration

1. Innovation in finance: Most popular example that comes in to my mind is of Reliance that how they convert debenture in to equity and they get rid from there debt.
   
2. Innovation in marketing: Try to innovate the way product appears in the market, say you can make a commodity based product like coffee in to a emotional product like Starbucks did (yes it take time and patience )
3. Innovation in product : This is the most common innovation try to create a new product a better product with higher efficiency low cost etc
   

Need a business idea look for pain !!

If you really want to innovate your business and improve your revenue look for the pain, usually that customer face daily.And they complain about it and you become a deaf on the problem, in latest I had a discussion with one of friend he want to go in to start his own business of computer and related products. So we tried to focus on where is the pain lies in this business, as he belong to that industry he simply said that its service of assemble PC is a pain for every customer, nobody (vendor) want to take a long term shot on the assembled PC, why not no body is providing a long term committed maintenance service for the domestic user, so I try to figure it out what service you can provide that may give some relief to the customer

1. Give him a long term option may be of two to three years by charging him a lump sum amount of maintenance fees no other charges neither for hardware, software nor for service.
   
2. Or give him a option to choose from the check list given say did he want to cover services only, or he also want to cover hardware and if hardware which one RAM, motherboard etc and charge accordingly
3. Guaranteed service with in a time period also if problem can't be fixed at the users house a temporary replacement of that CPU etc so user can continue his work without getting affected
4. Try to offer discount as you have no fund blockage in working capital
5. And the most important is risk as there is almost no risk as you have to invest a few thousand of Rupees....
   

Instead of counter thinking go for parallel thinking

Arguments, this is the one of the common way through businesses either small or big one make decision.

The following is the process algorithm that is used in the argument

1. Hypothesis
2. Argument on assumption supported by evidence
   
3. Counter argument on assumption supported by evidence
   
4. Go to step 2, until and unless a solution comes out.....

1.Hypothesis : It is a statement given that is under fire of the argument.
for example : Product of ours is better deliverable than competition or in simple terms our product is better than competitor's product

2. Argument on assumption: May be in this step the one who gave hypothesis, try to justify his assumption through evidence
Like wise he may say that "Our product have higher number of function than the competitors product"

3. Counter Argument on assumption: This time another person may give counter argument like wise "But the competitors product have higher number of function relevant to the users; They have quality rather than quantity "

4. Processes go on and on: This process will go on and on and on until decision came out...

But what the problem in this type of process of thinking ?
One of the biggest problem is that it is a highly time consuming method of thinking despite of than we are not sure that when decision will come. Beside that this method is exclusive not inclusive in nature, means in this way question of winning an argument comes in the mind instead of making a decision.....

But there is another way to improve speed of decision making better than anybody. This method is attributed to Dr. Edward De Bono which he mention in his book "Six thinking hats"

This is parallel thinking
The method is simple

1. You have to right down the hypothesis
2. Wear a notional thinking black hat (For example say you choose to wear a hat of critical; from now onwards whatever you think you think critically, analytically and logically negative about the problem)
3. Right down the solution which came through this hat
4. Change the hat color following are the other hats
   

Following are the other hats and there meaning

• White hat: Neutral , Facts based, objective and Information based
• Red Hat: Emotion, hunches, intuition guts and feeling
  
• Yellow hat: Sunshine, optimism and logical positive
• Green hat: Creativity, growth and possibility,ideas
• Blue hat: Cool, agenda based, process based ,organizer and decision.....

Why this method is better than argumentative method

1. Less time consuming
   
2. Inclusive, here emphasis is based on giving more on more input in same direction in relevance to the problem rather than opposite inputs to justify once own point of veiw
   
3. Chance of getting a result increases.....
   

Avoid Arguments

Know Thy customer than innovate...

Following is a example that is given by Peter Drucker the famous management guru on innovation 

"In 1920 during the British era there is a one company in Britain which makes and export locks to India, company was the best seller in the market for years. As of now the locks available in the market are not so of good quality, any  person can also open them with a Little push there is no key requirement to open than as par say. Company was doing good, so owner of the firm decided that to redesign the lock make it better and safer. Hence the company did the same  and replace the old locks with the new one. But company starts loosing it sales". 

But hey!! why did this happen why the company start loosing its sales beside they are improving there products?

One of the common thing that can came in any body's mind is that improved product will certainly result in improved cost, yes this is one of the main reason that company lost its businesses. 

I have another idea, let see the problem with different prospective, let see the function of the product we are providing not the product itself and try to match it with the what function that user of product needed.

So what is the function that a user need from a lock in India during that time? 

To provide a mental assurance or say a magical symbol that house is safe and it needs some extra effort to break in the house with lock than a house without a lock. So presence of lock either working or non working itself act as thief repellent 

So what is the function that lock is providing to the user before and after improvement? 

Before improvement primary function of the lock that was available in the market during that time is to provide a cheap and easily operable solution to lock the house so easy that there is no need to carry key, as lock can open manual force also. But after improvement the lock certainly become costlier than the previous scenario also lock also lost it easy operates know it can't be open manually you certainly need a key to open it.

Hence there is a mismatch between function that a customer needed and what a product is provided which ultimately results in loss of sales and market share.....

Another example that is coming in my mind is of major company which makes washing machines and they are trying to improve there sales in the Punjab state of India. 

Innovation came from the side of a sales men which see the function of customer required and function that is product is providing instead of a product itself....

Let see again the function

What is the function that washing machine is providing ?

It is a device that is providing a simple churning solution where in general you put water (liquid resistance) , clothes and detergent and clothes get cleaned by simple churning...

What is the function that customer required? 

Customer (Lassi Maker) in that region required a solution that can make a popular local beverage known as lassi (Buttermilk) in which they need to churn curd, water and sugar. Which is by coincident is the function provided by the Washing machine and bingo they got the immediate sales 

But we can't rely on conincident so what we have to do?

May be observation is the key here say try to observe your own and others behaviour like what function that if provided will make you and other happy and if what function is not provided that makes you crazy like a hell...

Conventional is old be unconventional

Unconventional thinking can help be a help for lot of entrepreneurs and businesses. Following a conventional wisdom you can only sustain in present situation but not in future, which is highly uncertain and subjected to change.

We can learn a lot from a big business of present how they hadn't followed the conventional wisdom.

Some of the example that is coming in my mind is Starbucks a retail chain that is famous for providing coffer brewed and served in the Italian way. The founder of Starbucks know that coffee is the largest traded commodity  in the world after oil,  conventional wisdom says don't invest in such sort of business market is stagnant and highly competitive, but what the Starbucks, they actually reinvented coffee to get the market, instead of serving tasteless general coffee available in the market they sold freshly roasted premium coffee and with new way of brewing the coffee with the option to customize it.

Another example that is come in my mind is classic 3M's post it, company had invested million of dollars in making a industrial adhesive but instead of a strong adhesive but  they actually made a adhesive which is quite weak and can't be used for industrial purposes, conventional wisdom say that investment got waste but using the unconventional wisdom mangers of 3m used this adhesive  to create post it, where there is no requirement of a strong adhesive and now this product of adhesive is huge success...... 

Small businesses and Innovation

What we should see while innovate?

See beyond the product or service 

Rather looking for the product or service, you must see the function of the product and services and that should be your core business, I would be inappropriate to say that my business is of selling cars because you are actually tunnelling your vision, I think as a business owner we should see the function of the product that is making an individual life easier, in this case I would rather say that I am in the business of providing a better and comfortable transportation options to the user.

Say in case of spice people tend to put the mission like that we are in the business of selling the quality spices but it would be more appropriate to say that we are in the business of enhancing the taste and flavour of the food.

Look for frustration and Pain 

To innovate business of yours you must see is the pain and frustration, as some one says 

"Need is the mother of innovation" I will rather say that pain and frustration of the user is the key to innovate. Look for the most polarized customers either they overwhelmingly like your product or service or hate it. A costumer who hate your product and service most might prove the best one to make your product better, because he go through the suffering from your product.

Look for the free resources 

No doubt Internet emerges as the one of the biggest mine of resources, use it if you don't know how to use it learn it beside that go for the community libraries etc. They can also provide you a lot of input that will help you to innovate your product.

One thing you must consider, for enhancing your creativity you must go through various subjects as it will help you to look out side the box, just don't stick to business section, go for literature, science, fiction etc.....