Innovation: The Hot American Business Topic – Part 2

This article is the third in a series on what causes a firm’s value to increase and is Part 2.

In the last article, I built the case for why your firm should think about whether the innovation revolution that is sweeping publically traded companies would be right for it. In Part 2 I want to give you a glimpse of some of the “secrets” to innovation some leading firms are using. There are many approaches being used but I like the approaches by IDEO, Strategos and Booz and Company the best.

The common themes to nearly all of the productive approaches to innovation are 1. Quick Prototypes of products or services developed in conjunction with “early adopter” customers and 2. something called Open Innovation.

Quick prototypes are nothing like the lengthy approaches to market survey research done in years past. In 1984 Coca Cola engaged in the most sweeping market research and analysis to date before deciding on and launching its New Coke brand. The product launch was a disaster with the product being pulled after six months. Good market research is always needed. It is just that quick prototypes, even on three dimensional e-drawings, balsa wood or foam mock ups, can give early adopter customers all they need to know to tell your firm that they will buy.

Open Innovation is casting a net far and wide for innovation ideas outside of the boundaries of a given organization. Did you know that in two clicks at Richard Branson’s Virgin Corporation website ( you can begin the process of offering them an innovation idea for mutual benefit? While someone has to keep up with all the proposals, firms embracing Open Innovation feel the benefits outweigh the costs. What would it be like for your firm to entertain innovation proposals, possibly from all over the world via the net?

Both quick prototypes and open innovation are part of a larger explicit innovation process. IDEO, Strategos, and Booz each have their own processes.

IDEO ( is the leading company that helps firms develop new products and services. ABC News Nightline gave IDEO a test challenge. A team had four days to completely redesign the standard shopping cart. The main team was divided into four teams for internal competition. In phase one of their process, Understand/Observe, the teams went to grocery stores to observe people using shopping carts. The teams then Visualize/Realize what would serve user needs not only better, but to “wow” users. Then a series of rapid prototypes in balsa wood, foam and plastic moves the process forward quickly. Concurrently they asked how the emerging ideas could be produced at a desired cost and price point. They then synthesized the four teams’ brilliant ideas into one final prototype in the last phase of their process. Their solution earned IDEO a new product award – and all in just four days.