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Connections for “Leaner” Innovation

Matt Phillips, President, Phillips & Co.

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As part of its upcoming Member Seminar, WTCA has once again invited Phillips & Co. to lead several sessions, one of which is on “Lean Innovation.” Because connection is central to the theme of the event and the process of reinvention — and to the value of belonging to our global network — we asked Matt Phillips, founder and president, to offer some ideas on connection as a preview of that workshop.

Silicon Valley innovators and small startups often innovate faster and cheaper than larger organizations. But by developing new connections and using a “Lean Innovation” approach, established organizations can innovate at startup speed.

With the rapid pace of change in today’s world, everyone needs to innovate. Innovation — the use of new methods to achieve your team’s goals — is now required of all organizations to stay relevant. For many people, innovation brings to mind technology: smartphones, electric cars and the latest cool app. It turns out that the methods used to create these innovations can be used by any organization to drive change faster and more cost-effectively.

Connections: Power of the People

Creating anything new is a lot like building with LEGO® blocks. Most innovations are simply the combination of something that already existed with something that’s new to a market or industry. In fact, many of the world’s greatest ideas came from connections made by two people with different expertise. Cirque du Soleil, the multi-billion-dollar Canadian entertainment leader, was founded by a circus performer and an expert in Broadway theater. Without this unusual human connection — connecting these two pieces — Cirque wouldn’t exist. As an innovator, part of your job is to seek out new “LEGO® pieces” that, when combined with something else, create something new and valuable.

A New Mindset: Lean Innovation

Typically, innovation is seen as very risky. People fear building something that fails in the market and losing the investment that went into it. “Lean Innovation” is a new approach that makes the process of inventing and launching new ventures easier, with lower risk.

Consider the “Pareto Principle,” which says that 20 percent of what you do often produces 80 percent of the results. In Lean Innovation, we try to do just the 20 percent of work that will give us most of the impact.

Another idea behind Lean Innovation is to test ideas early and often with real customers to figure out what they want before fully investing in a new idea. This is very different from the approach many organizations use, which often can take far too long, cost too much, and become so complicated that innovation projects run out of budget or time. In Lean Innovation, teams try to move quickly and experiment often, avoiding lengthy meetings and complicated approval processes. Using simple prototypes, they work to understand what people want before fully investing in launching it.

Zappos.com

Zappos is a global online retailer that sells shoes, bags, clothing and more. However, back in 1999, when entrepreneur Nick Swinmurn first had the idea to sell shoes online, few companies sold apparel on the internet making it a crazy, foreign idea. Most people assumed that shoe buyers would always want to go into a shoe store to try shoes on – so an online shoe store simply wouldn’t work.

In an interview with Fortune Swinmurn talked about how he came up with the idea. “One day I was at the mall and couldn’t find a pair of the Airwalk desert boots I wanted. So I thought, ‘why not do an online shoe store?’”

At this time, large organizations followed a typical process — they would commission a study, research the market for 6-12 months, and perhaps then begin to invest in a staff, facility, inventory, financial systems, and more to make their idea a reality. But that’s not what Swinmurn did. “[To test my idea] I went to Footwear Etc. in Sunnyvale, California and said, ‘I’ll take some pictures, put your shoes online, and if people buy them, I’ll buy them from you at full price.’ The store said ‘okay,’ and I got a few orders,” said Swinmurn.

Swinmurn did something brilliant — instead of trying to raise millions of dollars or build the perfect online store, he built an imperfect first website and put shoes on it, selling them without a profit. While this clearly isn’t a path to building a sustainable organization, it gave him something extremely valuable at this point in developing the idea: proof that people would actually take action and buy shoes online. This was incredible insight in 1999 that would later shape what e-commerce is today.

Due to the success of his small website (which was originally called Shoesite.com), Swinmurn was able to raise money from outside parties to cover the cost of slowly growing the company. Along the way, he changed the company’s name to Zappos, a play on the Spanish word “zapatos.” In a short amount of time and little cost, he had achieved what some organizations spend months or years trying to do — to see if an idea is a good one.

Eventually, this online shoe store grew rapidly and, according to Forbes , was purchased by Amazon for US $1.2 billion dollars. In this example we see the value of taking a “Lean” approach by quickly testing ideas and, by connecting with a local shoe store, he was able to build a prototype far faster than working alone.

Innovating with Connections at Scale

Global giants like Apple, Proctor & Gamble, and Samsung regularly look outside of their companies to find the best ideas, quickly spotting new technologies and identifying new partners. This concept is called “Open Innovation,” meaning that instead of looking inside of their organization, executives reach out to the rest of the world. Many organizations have built partnerships with local universities, inventors, and companies to create and launch ideas they couldn’t achieve on their own.

A key benefit of being a WTCA Member is access to the association’s global network of business and non-profit leaders, and their collective wealth of knowledge. By fully tapping into the WTCA network, Members can quickly share their expertise, test new business ideas regionally or globally, and launch new ventures with less risk and greater certainty.

Matt Phillips is president of Phillips & Co., an innovation consulting and training company based in Chicago, Illinois. For more than 15 years, Phillips & Co. has helped mid-sized and Fortune 500 organizations invent and launch breakthrough products, experiences, and brands. Their clients include Dell, Paramount Pictures, and Hyatt Hotels. Learn more at phillips-co.com.