Innovation Is What We Don’t See

There are very few names that are as synonymous with innovation as Steve Jobs. But the Steve Jobs most of us got to see was the one on stage demonstrating the latest Apple product. And what we saw on stage was?not?innovation. It was merely the final triumphant act after a long period of trials and tribulations.

The great storytelling in Steve Job’s presentations covered up a lot of craziness that would have happened before that moment. It is a well known reality that most innovation projects produce good outcomes by the skin of their teeth.

In his book?The Psychology Of Money, Morgan Housel states that wealth is what you don’t see. When we imagine wealthy people, we might think of a person driving a Ferrari. But the only thing that we really know about that person is that they have spent money on a nice car. According to Housel, true wealth is actually what a person has not yet spent. These financial assets are usually hidden from view. This is why wealth is what we don’t see.?

This same principle applies to innovation. The things that drive success are the things we don’t see. Below are five examples of what most people on the outside never get to see about the innovation process. This should not be taken as an exhaustive list. These are just examples to illustrate the principle.

1. Finding Good Ideas Is Not Easy

When it comes to innovation, it is difficult to pick the winning idea on day one. According to?Adam Grant, the best way to find good ideas is to have loads of ideas. You have to kiss a lot of frogs and kissing frogs is disgusting. You have to be willing to accept that most of your ideas will fail. So when you begin the work, you don’t really know which of your ideas will succeed. Being comfortable with such ambiguity is not an easy thing to do.?

In some companies, there is a conflation of R&D with innovation. However, having breakthrough technologies does not guarantee success. This is because having a cool technology is not the same as having a great value proposition.?Dieter Rams’?first two principles of good design require that our products are both?innovative?and?useful. In other words, we have to make stuff that creates value for people.?

2. People Don’t Know What They Want?

Creating value for people sounds simple but is actually hard to do. This is because people don’t really know what they want. They might be able to articulate the reasons they buy certain products and services, but these reasons are often made up confabulations. This is what makes talking to customers hard.?

Rather than asking them what they want at the product level, it is better for innovators to try to understand people’s problems, needs and challenges. On the basis of this understanding, innovators can then develop their product or service ideas. In other words, customers own their needs but innovators own the solution.

In his book?The Mom Test,?Rob Fitzpatrick advises innovators to never ask customers questions, that if they asked their own parents, they would lie to them. Instead, questions should always be framed in a way that even our own parents would tell us the truth. We want to ask questions that allow us to develop a deep understanding of our customers and their needs.

3. What People Do Matters More Than What They Say

Talking to customers is not enough. Using The Mom Test principle can help you to have better conversations with customers. However, you cannot base all your decision making on what customers say. This is because what people say only partially predicts what they will do.

A lot of innovation teams have been disappointed by customers who initially showed interest in their product only to disappear at the moment when they are asked to part with some money. So it is important to run some early experiments that measure customer behavior before we invest more in developing and launching our product.

4. You Can Make Products People Want And Lose Money Doing It

Finding customers that are willing to pay for your product or service is a great achievement because it doesn’t happen that often. However, this is not the moment to celebrate success. Revenue and profit are not the same thing. Even with customers that are willing to pay, you still have to figure out the rest of your business model.

A business model describes the rationale of how we create and deliver value to customers. Our business model also describes how we get value back from those customers. We have a profitable business model when the value we get back from customers is greater than the cost of creating and delivering value. Figuring the profit formula for your business idea is not an easy task, but it is a crucial element of the innovation process.

5. A Profitable Business Model Is Not Inevitably Scalable?

Just because you have a profitable business model does not mean that you have a scalable one. Scaling a business model is a really difficult task. In fact, scaling can actually break everything you thought you had figured out. This is because scaling adds complexity.

As an example, your early customers may be different to the new customers you acquire as you scale. These new customers may have different needs and reaching them might require different channels. Those new channels may be more expensive and difficult to use compared to the channels you used to initially launch your innovation. So scaling an innovation becomes another challenge for the innovator to figure out.

A Wicked Problem

Innovation is a wicked problem. Just when you think you understand your customers, it turns out they are unwilling to pay. Even when you get them to pay, it turns out that the cost of creating and delivering value is higher than you expected. The moment you start making a profit, you have to deal with the challenges of scaling.

And we haven’t even begun to address the issues around innovation team dynamics and corporate politics. By the time we see an innovator on stage launching a new product, it is possible that they are smiling just so that they don’t start crying. The real work of innovation has happened before that moment. It is this difficult and challenging work that we don’t see.

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This article was first published on?Forbes?where Tendayi Viki is a regular contributor. Learn more at?www.tendayiviki.com