Jello Mountain Approach to Product Innovation

In my forthcoming book, “Innovative Kids: A Workbook for 8 to 12 Year-olds”, I explain both invention and innovation to kids and their parents. USPTO (US Patent and Trademark Office) has conveniently defined “invention” for us. There are 3 requirements: novel, useful and un-obvious. The first two are clear enough. “Un-obvious” means that your idea is not a simple extension of a previous one or evident in the sense that the idea existed in some clear form previously. “Innovation” is where only the first two are operational - novelty and usefulness; plus you don’t need any certification from USPTO! Anyone can do it - anytime, anywhere!

The book attempts to teach Innovative Doing, Communicating and Thinking to kids using three key tools for innovation: Approximation, Tenacity and Savvy Smarts. Innovative Doing is teachable using the workbook exercises; Innovative Communicating to a lesser degree; Innovative Thinking is much harder to “teach” – kids grasp it intuitively based on how successfully they understand the first two steps.

If you come up with something novel it is often useful in that it has value: it brings you and your loved ones some pleasure and occasionally, you can monetize it. But in a business context, how do you give rise to product innovations and translate those innovations into business value?

Back in 2002, I wrote a whitepaper, “Ubiquitous Rate Optimized Connectivity for Wireless Data Services”, in which I cast data service product innovation in the context of optimization. To quote,

“For the technology and business to succeed, the following factors have to be simultaneously optimized:

1.       Data rate

2.       Cost to the end user

3.       Productive use for work and entertainment

4.       Revenue for the service provider

5.       Useful mobile life (blended active and stand-by battery life)

The dynamics of jointly optimizing the above factors will lead to many local optima, thereby providing business entities with many opportunities to experiment with various combinations of factors. Your business enterprise will have to be highly skilled to identify and exploit the dynamic local optima before moving on to capture the next opportunity.”

For the engineering-oriented reader, this is a classic multi-dimensional optimization problem.  For complex problems such as Wireless Data Services (or allocation of aircrafts to multiple locations and routes by a major airline), non-linear optimization techniques will have to be employed that give rise to many local “optima.” There may or may not be one grand *best* solution; even if there is, it may not be easily reachable. But there will be many “pretty good” solutions – in this case, money-making wireless data service business options. Finding the optima is doubly challenging in real life (business) problems since the optimization problem is non-stationary: they keep changing over time.

In common parlance, optimization solution surface is like a mountain range with many sub-peaks (with pretty good views) and a few high peaks (with fabulous vistas). In addition, the mountain keeps moving around or jiggling - hence the “Jello Mountain” metaphor.

For a product strategist, the challenge is to identify and get to the closest sub-peak (a new product) and do this repeatedly (create the product roadmap). Innovation allows you to jump from one sub-peak to the next and create “breakout” value at each sub-peak.

How do we apply the Jello Mountain Approach to a specific product or service development example?

•        Identify the key factors involved in a successful product or service; for mobile data service, the five factors were listed earlier.

•        Create innovations in *each* of the factors; they will tend to happen in different time scales.

•        When a sizable group of innovations have happened in some of the factors, blend them and create a prototype product or “proto-product”.

•        Test the proto- product with a lead customer and then expand testing. If the business value becomes demonstrable, roll out the first product. (This is sub-peak #1).

•        In the mean time, innovations in some of the other factors are ongoing. Collect them, create a new proto-product, test and roll out. (This is sub-peak #2).

•        Continue innovations on all factors, repeatedly culling features that are ready and good, to create other new proto-products.

Notice that with this approach, the non-stationarity or variability or “Jello-ness” of the environment is accommodated through the rapid prototyping, releasing and repeating, which is a highly desirable characteristic feature of any adaptive process.  It is also likely that some of the innovations are large enough that a new product line could emerge out of the current product line.

The major challenges in the Jello Mountain Approach are: (1) proper identification of the optimization factors and (2) continuous micro-innovation. #1 is dependent on the quality of domain-expertise that is available to you (i.e., your team and consultants). #2 goes back to the level of team members’ skills in Innovative Doing, Communicating and Thinking. As I mentioned earlier, some can be taught but others have to be abstracted by the team members. Specifically, coaching in the development of the skills of Approximation, Tenacity and Savvy Smarts will help your team navigate the Jello Mountain!

Enjoy the haiku . . . PG

  

 Daylight Saving Time Dilemma

Magnolias are half in bloom, the other half in bud

Robins are chasing but no worms to be had

Is it Spring or the clock just sprang ahead?

-          by PG

Google Neuroscience

Following up on my last blog on “Google Googly” (http://pgmadblog.blogspot.com/2009_11_01_archive.html), I take a deeper look at why the Google business model works and what other businesses can learn from it.

Google is into everything these days but Search and AdWords are still their “bread and butter” business. Search was their initial focus and it took a while for them to figure out how to monetize it via AdWords. As I mentioned in the last blog, their core DNA is this: Wherever the user is searching “content”, Google wants to provide the most popular results while proffering some paid-for ads.

Why has this model been so very successful? It has to do with neuroscience – how our brains work!

Once we have made a purchase decision and acted on it (made the purchase), it is pretty obvious that we will have little interest in additional ads. The “Purchase Funnel” on the left shows the various relationships. “Branding” has an important place in advertising but it is a long drawn-out awareness creation process. Plus there are no easy metrics such as CPM (one of the many so-called “click metrics”) to connect the ad to influencing the eventual consumer decision and action. Google happened to have landed, by design or luck or both, in the perfect spot in the Purchase Funnel!

When we “Search”, we are in the information collection phase (by definition). We are willing to explore and click through various informational pieces on the screen such as text ads – if they seem relevant and related to the information we are after, the more likely that we will click through. But after such explorations, consumers want to move on to the Decision and Action phases if their search was driven by a purchase need. Once we have finished the Action, we have no real patience for more ad watching – we have made our purchase and we want to enjoy it; this isn’t the time for more awareness-generating branding-type ads either. We are in a satiated state after a purchase action and our brains are not looking for more information to process.

In summary, in the information acquisition phase, we see significant consumer “traffic” and the click through of many links in an effort to gather the best information. This is Google’s realm – they provide very good search results and provide many good opportunities to click through, thus generating massive revenue via AdWords business model. But once I click through to a final destination such as a Wall Street Journal article by Mossberg, I am keen to read it rather than pay attention to any ads; I am in the satiated state – I do not care about banner ads that create awareness about random products, let alone make the effort to click through other ad links. Ads in the IDD (Interest, Desire, Decision) stages are most directly useful to the consumer and most monetizable via measureable “click” metrics.

This explains to me why Google business model works so well for them and why content business cannot monetize increased traffic (provided by Google) to their “terminal” sites. It is neuroscience!

Are there other cases where Ads in IDD (AIDD) will work? Look for opportunities when consumers are “searching” in a purchase context; at that time, provide them with “useful” ads and generate metrics to monetize.

I will reveal an AIDD business that parallels Google in the mobile world in my next blog. In the mean time, think of other cases where AIDD will work. Let us hear about it . . . after you have patented it. J

PG