In his new book, Hidden in Plain Sight: How to Find and Execute Your Company’s Next Big Growth Strategy, author Erich Joachimsthaler outlines three steps that companies must take in order to remove their blinders and see new innovation opportunities:
First, the company must forget: “It must be able to temporarily forget and let go of its current business, strategies, products and brands as it observes how people go about their daily routines.” It must develop a balanced, complete worldview of how changes in people’s lives affect their behavior. This points to a growing need for ethnography – observing how customers use your company’s products, and making inferences about their “pain points” and unmet needs.
Second, the firm must move beyond its assumptions: “It must go beyond its own perimeters of products, markets and competencies; let go of and challenge the assumptions, common practices and golden rules of doing business still held today… Only then can it conceive of entirely new opportunities by innovating across people’s behaviors… It must know how to define the spaces of greatest opportunity that no one has yet even imagined.” Unfortunately, I think this may be the hardest step for companies to accomplish, because most firms are trapped by their cultures and orthodoxies, and are better at identifying incremental opportunities than making the leap to entirely new products, services and business models.
Third, the company must see itself from the outside in: It must “formulate strategies around people’s behaviors, not just seek to satisfy customer needs and wants or requirements… It must create transformational life experiences, not just communicate features and benefits.” It must have concrete plans for helping customers to adopt its innovations as a part of their daily lives.
Joachimsthaler calls this outside-in model “demand-first innovation,” because it forces companies to first take customer needs and behaviors into account before looking at its own portfolio of offerings. He acknowledges that transforming an organization’s worldview in this way is very challenging. But from a competitive standpoint, can you afford not to do it?