1. Book review ‘The Innovator’s Method’: What an idea

Book review ‘The Innovator’s Method’: What an idea

The Innovator’s Method is an interesting book that provides several examples of how innovation can be initiated in different areas...

By: | Published: January 25, 2015 12:19 AM

The Innovator’s Method
Nathan Furr
& Jeff Dyer
Harvard Business Review Press
Pp 268

WHEN GODREJ and Boyce realised that there was too much competition in the market, which affected its sales, the company decided to introspect. Given that 80% of the country did not have refrigeration facilities, there was obviously something missing in the way in which they operated. Rural India was the most likely target, but the typical household lives in a small home with limited space. Further, given their income size, they do not have too much food to store in the fridge anyway. Also, the absence of electricity for several hours meant that the product had to offer some back-up. Therefore, the company had to come up with customised products. The result was the creation of ‘chotuKool’, a small refrigerator, which addressed all these issues and was custom-made for such households. The rest, as the cliche goes, is history for the company.

This entire process of relooking at the business model and then coming up with new solutions is what goes into what Nathan Furr and Jeff Dyer call ‘the innovator’s method’. Furr and Dyer believe that often we are scared to do anything, which might have uncertain results because of the fear of the unknown. Most of these ideas die a natural death, as these plans rarely get implemented. This holds even more for companies, which do not want to experiment, as the possibility of failure hangs in suspension. But for those who have the innovative streak, it is this uncertainty that poses a challenge. They overcome it with solutions and come out as winners.

The authors in their book, The Innovator’s Method, give the example of how a college student found that her sister’s expensive wedding dress would probably never be used again. Her mind started working and she ended up starting a rental agency (Rent the Runway) with a partner, where expensive dresses could be hired for a fee. The clue here was to do things in an unconventional manner without a business plan and go by instinct. They did not hire professionals, but split their responsibilities. They didn’t develop a website, but launched a beta version of its service.

Blow up this situation and several companies, too, have shown how they can do things differently through innovation. The authors give examples of companies like Amazon, Google, Salesforce, IDEO, etc, which continuously innovate to move ahead. It becomes a part of their DNA and the companies start being known for taking chances and coming up with something innovative. Then there are companies like Hindustan Unilever and Procter & Gamble, which reignited innovation to progress once they realised that there was something amiss in their existing models. The authors also draw up the final outcome of ‘innovation performance’ for companies, which is expressed as a ‘premium’. It ranges between 17% and 95% after the companies have opened up to innovation and this helps increase market capitalisation as well for shareholders.
In fact, the authors give the example of Hindustan Unilever, where the CEO actually asked everyone to take time out to go to the customer and find out what was going wrong with their products. With great reluctance, several seniors moved from their comfortable offices, but finally reconnected with customers to bring about changes.

Furr and Dyer reduce the innovator’s method to four stages. The first is developing ‘insights’ into the business, which is the starting point of innovation. For this, we need to have open innovation, which is possible, provided we have creativity and ideation in the organisation. The focus is entirely on thinking. The second stage is the identification of the problem because without this goal, one can never find a solution, which is the third part of the puzzle. One must remember that whenever we think of innovation, it should address some lacuna in the system, which has not been widely explored. Lastly, one needs to have a business model to really get things going. And this should be scalable because, at the end of the day, any innovation has to make commercial sense.

Who do the authors address in this book? They identify three sets of audiences in this context. The first is managers from any discipline who want to innovate and solve problems characterised by uncertainty, but are not aware of the steps that have to be taken. This class holds for any organisation and is hence universal. The second is leaders who face the challenge of declining growth or have a challenge of sustaining growth to retain momentum, as well as talent. The third is groups of entrepreneurs who are self-driven and would like to do something different after doing the same thing several times over.

The book inspires all these classes of people to think and, more importantly, think differently. While the four stages mentioned here are not necessarily textbook steps, intuitively, one can see the wisdom in pursuing this path. The example provided of Banco Davivienda of Columbia is a good one that shows how one can work around this issue. To reach out to the unbanked population, the bank focused on opening accounts with low fees. But it did not find any takers and when they sent their officials to find out why things did not work, the answers were simple. The requirements were quite different. By listing out the elements of a bank account and what people expected, they realised that every requirement could actually be met through this account, provided there were innovative tools used. Realising that almost all customers had cellphones, they integrated the account with the phone to make payments such as bills and allow for banking transactions so that one could move away from branch, cards, application forms, etc. This made the product attractive now.

This example can be used in our own attempts at financial inclusion, where presently the focus has been on opening bank accounts, which have mostly nil balances. By linking these accounts with various activities of account holders, the account can be made active, serving several requirements of customers.

The Innovator’s Method is quite an interesting book that provides several examples of how innovation can be initiated in different areas and while there are several theories and jargon propounded during this discourse, it will surely inspire the reader to think of innovation in whichever domain he/she is in.

Madan Sabnavis is chief economist, CARE Ratings

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

  1. No Comments.

Go to Top