Reinventing innovation for 25 years
Inspired by failure
Early in my career as a product engineer, I experienced the ultimate professional disappointment: for 18 months I put my heart and soul into creating a product that failed in the marketplace. It was 1984, and I was part of the IBM PCjr development team. We were working on a product that was supposed to revolutionize home computing. In advance of its release, the Washington Post wrote, “the PCjr will quickly become the standard by which all other home computers are measured.” So you can imagine my surprise when instead, the day after we introduced the PCjr, I woke up to read the headlines in the Wall Street Journal declaring, “PCjr is a flop.” I was shocked! As we learned over the next few months, they were right. It was a flop, an embarrassment that cost IBM over a billion dollars and put a blemish on its reputation.
The humiliation of failure had a profound effect on me. I was determined to never let that happen again. In the weeks that followed I wondered how the Wall Street Journal had been able to see this correctly, and so quickly. It occurred to me that if we knew what metrics they (and potential customers) were going to use to judge the value of our product well before we introduced it, we would have the opportunity to design our product to address those metrics and achieve a positive result. This set me on a mission: as an engineer and a product planner, I wanted to figure out a way to identify the metrics that customers use to judge the value of newly released products early on in the product planning process.
Over the next five years, I studied and tried out many new tools that looked promising, including voice of the customer, quality function deployment (QFD), TRIZ, Six Sigma, and conjoint analysis. I studied everything that was written about these tools and used them in my product planning activities. I conducted hundreds of customer interviews and dozens of quantitative studies. I also worked with IBM statisticians to learn how to best apply conjoint, factor, and cluster analysis to segment markets in a meaningful way. I worked as an internal IBM consultant, using what I learned to help different IBM teams formulate market and product strategies. IBM management was very supportive throughout this process, which is something I appreciate to this day.
I was in Sydney, Australia, with an IBM team in 1990 when I had a mental breakthrough. It occurred to me that we could apply Six Sigma principles to innovation if we studied the process that people were trying to execute when they were using a product or service, rather than studying the product itself. Once we made the process the subject of our investigation, we’d be able to break it down and study it in detail. The challenge would be uncovering the metrics that customers use to measure success and value as they go about executing these processes.
Validating the process
In 1991, I left IBM and founded The Total Quality Group. The goal of this one-man consultancy was to apply my newly envisioned process, which I called CD-MAP (to denote the concept of customer-driven maps), to product strategy and planning initiatives. One of my first clients was Cordis Corporation, a company that was trying to reinvent its line of angioplasty balloon products. I interviewed interventional cardiologists to break down and analyze the process they went through to restore blood flow in an artery. Through this qualitative research effort, I constructed 75 uniquely defined customer need statements that I called desired outcomes. The statements contained the metrics that interventional cardiologists were using to judge and measure their success as they tried to restore blood flow in an artery. With those inputs in hand, I conducted quantitative research to discover which of those outcomes were underserved—which ones the cardiologists struggled to achieve satisfactorily. I discovered several. I then facilitated a series of strategy sessions to help the Cordis team use these insights to create a new product line. In less than 18 months, the company launched 19 new products, all of which became number 1 or 2 in the market. Cordis’s market share increased from 1 percent to more than 20 percent, and its stock price more than quadrupled. Needless to say, I was thrilled: this was validation that my method worked.
I engaged in dozens of innovation initiatives over the next several years, achieving similar results with companies such as Motorola, Pratt & Whitney, Medtronic, AIG, Telectronics, and Allied Signal. Making process refinements with every application, I learned how to apply the process in multiple industries and for hardware, software, and service offerings. The process became very robust as I continued to rid it of inefficiencies and variability. As the decade progressed, I decided to rename the company and offering to communicate its focus on strategy and innovation, and around 1999, the company became Strategyn and the process became Outcome-Driven Innovation (ODI).
In 2000 I had the distinct pleasure of introducing ODI and our research and segmentation techniques to Harvard Business School professor Clayton Christensen in a series of meetings in Cambridge. He was quick to key in on the fact that the focus of our approach was not on the customer or the product, but rather on the underlying process the customer was trying to execute, or, as he came to call it, the “job” the customer was trying to get done. Clay was kind enough to cite Strategyn and me as originators of these practices in his 2003 book, The Innovator’s Solution, in which he popularized the idea that people “hire” products to get a “job” done. To this day, Clay continues to be a champion of jobs-to-be-done theory and a key contributor to its development.
One of the highlights of my career came in 2002, when Harvard Business Review (HBR) published an article I wrote called Turn Customer Input into Innovation, which described ODI and its successful application at Cordis. The success of that article helped to grow Strategyn as a business and inspired me to write a book on Outcome-Driven Innovation called What Customers Want. Released in 2005, the book explains in detail how ODI transforms jobs-to-be-done theory into an effective innovation process. Since that time I have had the honor of writing other articles that were published in HBR and MIT/Sloan Management Review.
The road ahead
My career has been an ongoing learning experience. I have worked with the best and brightest people in industry, and have seen innovation through the lens of many companies. I’ve had the privilege of contributing to the creation of products that save and protect lives and other products that make those lives more enjoyable. Today I continue to work with dozens of companies each year, helping them address their unique innovation challenges and improving the ODI process. We have built a great team at Strategyn and are well poised to achieve our vision—which is to make ODI the standard innovation practice in companies across the world.