Corporate Innovation: How to Find the Next Big Thing

I’ve had the pleasure of discussing and in some cases collaborating on the innovation programs at a number of corporations. Clearly, on the whole, changing an established corporation into an innovation powerhouse isn’t what any reasonable person would call easy. If it was, we’d see more of it.

That said, certain things are easy. If you’re like most managers, you want to get going on the hard things while scoring some quick and easy wins to build momentum and morale.

In this piece and its sequel, I’ll offer you some ideas on how to do this across three major aspects of running a corporate innovation program — Finding the Next Big Thing, Funding the Next Big Thing and Forming Innovation Teams. I’ll start with some observations on what I’ve found is typically hard vs. easy for the corporation and close with ideas on how to create wins.

First things first: new ideas.

Finding the Next Big Thing

How do you identify disruptive new ideas that will drive organic growth and renew the corporation?

The Hard Thing: The hard thing is that your solution is already awesome. The corporation that’s so big it’s hard to change has gotten big by doing something well. The catch is that while Blockbuster Video was great at stocking video cassettes, Netflix disrupted them by fundamentally rethinking how they could deliver value to the customer, rather than by outdoing Blockbuster at what they did well. BMW has wonderfully efficient gas engines, and they’re great at making them even better. Where do you think they should focus now?

Concerning their industry-leading laundry detergent, Tide, former Procter & Gamble CEO A.G. Lafley tells the story of how they had to go out and watch consumers wash clothes to realize their next big innovation might come from packaging innovations like better containers and capsules, as opposed to making their already excellent formula even better.

Finding the next big thing likely won’t come from doing what you already do even better — but it isn’t as hard as you might think.

On that note, let’s move on to The Easy Thing.

The Easy Thing: The easy thing is that all you need to do is look at your existing customers a little differently. Finding the next big thing comes from diligent curiosity. In my experience, cultivating that curiosity is relatively easy, it just takes a little instruction and practice. We can substantially initiate that instruction over the next ~60 seconds.

The basic idea is to explore what fundamentally matters to the customer or user, independent of your particular solution you’re already offering. I’ll use the term “problem scenario” to describe this fundamental need, job or desire that exists independent of your particular offer.  In the P&G detergent example, some example “problem scenarios” might be:

Cleaning Clothing

Selecting the Right Soap and Cleaning Process

Dispensing and Measuring the Soap

Correctly Adding the Soap to the Washing Equipment

Periodically, it’s critical to look at your target problem scenarios objectively and fundamentally by not only asking your customers open-ended questions, but also observing them engaged in your target problem scenarios.

For example, when A.G. Lafley tells the story of P&G’s investigation about Tide, they had previously asked customers about Tide’s current packaging and the customers generally said it was good. It was only when the P&G teams went out to watch their customers do laundry that they realized many of them were keeping a flathead screwdriver on hand to open the package (not great!).

This is where alternatives come into play: Make sure you understand the most prevalent, most preferred alternatives to all your relevant problem scenarios. If your customer’s current alternative for dispensing your (or a competitor’s) soap is a flathead screwdriver, then you may be on to your next big thing, or at least a valuable thing. I do this kind of work all the time, and please believe me when I say there are lots of flathead screwdrivers out there.

Now we come to the exciting part: value propositions. With an understanding of the relevant problem scenarios and alternatives, you have a highly testable basis for evaluating innovative new value propositions. You just need to ask yourself “Is this particular idea of ours [the value proposition] better enough than [the current alternative] at delivering on [some important problem scenario] that the customer would [buy it, use it, pay a premium, etc.]?” Let’s call a potential answer to this question a “value hypothesis.” The next step is to test the value hypothesis.

Is changing a whole corporation over to thinking this way easy? No. However, getting a few curious, energetic managers doing it and scoring early wins is relatively easy and infinitely doable, and it will pave the way for strong work on organic growth and innovation.

That’s where I recommend you start when you’re Finding the Next Big Thing. For the next steps — Funding the Next Big Thing and Forming Innovation Teams — check out “Corporate Innovation: How to Fund and Execute the Next Big Thing.”

I hope you’ve found some things you can use here. I love hearing from other practitioners — please get in touch anytime at cowana@darden.virginia.edu.