Appearing in In The Black, November 2016
Competing Against Luck: The Story of Innovation and Customer Choice
By Clayton Christensen, Taddy Hall, Karen Dillon, David Duncan
HarperBusiness, $55, 336 pages, ISBN 9780062435613
Here’s an interesting question: why does someone buy a drill-bit? The answer is not that they need a drill-bit; it’s that they need a hole. This is the sort of thing which is obvious after you hear it, and it is the sort of insight that lies at the heart of this important book.
Christensen is known as a key thinker about innovation, disruption, and product development, and in Competing Against Luck he is joined by co-authors who each supply useful perspectives. Hall was the leader of Nielsen’s Breakthrough Innovation Project, for example, which provides a solid base of research data.
They start with a remarkable statistic: major US companies spend US$680 billion a year on innovation but there is no signiﬁcant relationship between the ﬁnancial performance of these companies and their R&D spending. One suspects that the story in Australia, and globally, is similar. In an era when Big Data supplies huge amounts of information on customers, how can this be?
Christensen et al suggest that the use – or, rather, the mis-use – of Big Data is part of the problem. It supplies information on correlations when what is needed is knowledge about causation. After all, customers often buy a product not because they want the product itself but because they have a job that needs to be done. The real question to ask consumers is: “What job did you ‘hire’ that product to do?” The book calls this the Theory of Jobs to be Done, and sets out a framework for putting it in to practice.
One of the examples examined in the book is Intuit’s QuickBooks, which did well because the company realised that business owners did not want to learn how to do their books. They just wanted their books done. So Intuit offered a package with less functionality than other accounting software, focusing on ease of use and reliability of outcome.
This is the sort of actionable insight that feeds straight to the bottom line, and Competing Against Luck examines cases ranging from dolls to online education to real estate. In many cases, the central problem is working out the right questions to ask. Another good tactic is asking customers to send selfies of themselves with the product, a process which can provide remarkable authenticity.
Christensen et al emphasise that a readiness to listen, and to re-think, is critical. The book has the ring of credibility, and makes its points clearly. If you need to know how to connect innovation to outcomes, it offers a wealth of lessons.
Superbosses: How Exceptional Leaders Master the Flow of Talent
By Sydney Finkelstein
Random, $40, 272 pages, ISBN 9780241245446
There is no limit to what a person can achieve if they do not mind who gets the credit. This is a characteristic of a class of corporate leaders who Finkelstein describes as ‘superbosses’. These are leaders who live the work they do but their real secret is their ability to recruit very good people. In most cases, those they recruit become superstars in their own right, and also become entirely happy and satisfied in their lives.
Finkelstein, a Dartmouth business professor, bases the book on interviews with 200 superbosses, and their willingness to search for people who are unusually talented and capable of driving change is a common thread. Superbosses are willing to ignore the views of the HR division if necessary, and they use nonconventional interview techniques. Some of this might be easier to say than do, but the book certainly provides plenty to think about.
Frugal Innovation: How To Do More With Less
By Navi Radjou and Jaideep Prabhu
Economist Books, $25, 256 pages, ISBN 9781781253755
One of the streams of product development is the constant addition of shinier bells and louder whistles. But there is a trend moving in the opposite direction: innovating with limited resources to create products which are cheap and practical. It began in India – Radjou and Prabhu are Indian academics who now work in the UK – but in the past five years it has spread globally, partly because of the authors’ previous book, Jugaad Innovation (‘jugaad’ is a Hindi word meaning, roughly, “cobbled together”).
The aim of Frugal Innovation is to look at companies that are putting the concepts into practice, and distil the key principles from their experiences. The story of how Renault-Nissan created a $6000 no-frills car called the Logan is particularly interesting but there are many other cases, including plain-vanilla financial products and good-enough medical equipment. There is also a fascinating chapter on how GlaxoSmithKline broke up its massive R&D budget into smaller chunks, forcing researchers to connect with market needs. In fact, several of the principles of frugal innovation deal with collaboration with stakeholders and external partners, as well as finding out what customers actually want.
Frugal innovation might have started in developing markets but is increasingly pertinent in developed countries. The environmental benefit of using less can, in fact, be a critical selling point. Equally, many consumers are under economic pressure, and are seeking value over complexity.
Radjou and Prabhu sometimes seem a bit breathless about the idea and do not always look at the problems that frugal innovation can raise, especially in relation to collaborations. But frugal innovation is a concept that is taking hold in business practice, and looks like one of the roads leading to the future.