There are 6 dimensions used in Predictive Innovation. Finding What, How, When, and Where primarily deal with 3 of these dimensions. Why and Who requires more depth of all 6 dimensions. The 6 dimensions are:
Actors – are people involved in making and using innovations
Desires – are the focus of innovation
Scenarios – are the boundaries of a set of desires
Alternatives – the ways of satisfying desires
Outcomes – are the objective criteria that defines satisfaction
Elements – are the detailed parts of an Outcome
Actors
There are 8 types of Actors. Each Actor can be a single person or multiple people. There is always at least one person who is the User. Users are the central focus of innovation. If the users' desires are not satisfied innovation fails. The 8 types of Actors are:
Customer
User
Beneficiary
Decider
Payer
Provider
Designer
Builder
Seller
Communicator
Customers are divided into four distinct roles: Beneficiary, User, Buyer, and Payer. Roles can be performed by one or more people but someone performs each of the roles. The desires of the person acting in that role are different from the desires related to the other roles.
Users are people who use the product or service. There must be at least one User. Satisfying the desires of the User is essential to innovation. Examples of Users' desires are:
How well the product performs the task
Feelings related to using the product.
Beneficiaries experience the benefits of the product or service. In most cases the User and the Beneficiary are the same person but not always. Products used in performing a service have a different User than the Beneficiary.
Deciders make the decision to purchase the product or service. Examples of Deciders' desires are:
price
warranty
where to purchase the product
Payers supply the money or materials for the innovation. For consumer products the User, Buyer and Payer are often the same person. In business these are usually three different people. Examples of Payers' desires are:
Return on Investment
Total cost
Achieving a larger strategy
Provider is divided into four roles:
designer
builder
seller
communicator
Provider can be divided differently but these four provide a sufficiently accurate description to understand the process. Just like customers these could be a single person or multiple people. The provider could also be the same person as the customer and each of the roles could be shared by people acting in other roles. So the User could be Builder and the other 6 roles be someone else.
Designers convert desires into actionable designs. This frequently is more than one person. Examples of Designers' desires are:
Know criteria to satisfy desires of Actors
Access to technology
Interesting challenge
Builders convert design into real products. For services the builder does the work. Builders are often many different people. Examples of Builders' desires are:
Ease of production
Tools needed
Start up costs
Sellers deliver the product or service to the User. The Seller is involved in the purchase transaction. Examples of Sellers' desires are:
Size of market
Quantity discounts
Turn over
Profit margins
Hassles of delivering products or services
Communicator gathers information and translates between Actors. Examples of Communicators' desires are:
Know the desires of Actors
Able to reach other Actors
Accuracy of communication
Customers act as more than just Users. There are markets and innovations for each Actor in a Scenario. Innovation starts by satisfying Users.
There are several concepts that are helpful to understand in order to get the most out of Predictive Innovation. This section covers these concepts.
Functional Distinctions
You've probably seen products with long lists of features that don't have much value for the primary function of the product. Some products have differences in the primary function but the differences are so small it doesn't matter. Even large differences that don't relate to the purpose of the product do not mean much to users. The important differences are those that noticeably affect the function. These are Functional Distinctions.
The purpose and the result determine Functional Distinctions. The intended goal of using the product determines which functions it must perform.
For a product that is used by blind people, the color does not matter. However, if the product is used by blind people to show sighted people they are blind, such as a white cane with a red tip, color is very important.
Thermometer
Sometimes the amount causes a Functional Distinction. More or less of the same thing often doesn't have a significant effect but there can be differences of amount that cause a functional difference.
Water is a requirement of life but if you have too much you can die. Same thing with heat. Too little heat and you freeze to death, too hot and you burn. There are many Functional Distinctions of scale in science. Water below 0°C freezes and is a solid. Between 0°C and 100° C water is a liquid. Over 100°C water is a gas. Solids, liquids, and gasses each have very different properties and function differently.
The word “innovation” is so widely used and misused it has lost some of its meaning. It is essential that you understand what is meant by innovation. This book defines innovation as:
“Profitably satisfy an unmet desire”
The essential words in that definition are satisfy and desire. People have desires. All innovation starts with people. The primary person is the user. What desire does the user have that they want to be satisfied? Understanding users' desires is the crucial first step to innovation.
Inventing does not equal innovating. There are many inventions that don't satisfy an unmet desire. Those inventions might be novel and even do something better than any other way, but if no one desires it done better, the invention will fail as an innovation.
Furthermore, if the product or service never gets to the user it can't satisfy the desire. Unused products don't innovate. Products can fail to get to users because of many reasons including: it's never built, the users never find out about it, or it's too expensive.
Anything that can be made or done must be able to be described. If you can't describe it there is no way for you to do it.
Once you describe it, you can also describe the ideal version. The ideal does what you want, when you want, where you want, the way you want, with whom you want, for the price you want with no hassle. If you start from the ideal then go backwards to what is available today, each step is an innovation.
What, How, and Doing it
To innovate you need ideas and to put those ideas into action. Ideas fit into two basic categories: what to make and how to make it. Only when you correctly identify what to make and the most profitable way to make it can you actually make your product or service. Additionally, to accurately measure your performance you need the correct criteria.
This book shows you the basics of how to determine what to make and how to make it. It's up to you to put those ideas into practice.
You need to know what you will make before you can figure out how to make it; but, the ways to make things influences what to make. A pocket MP3 player depends on electricity, which depends on batteries, which depends on the materials to make a battery.
Each step affects the next step. Choices of what to make interact with how to make it. You will use different parts of Predictive Innovation depending on if you are focusing on what or how. You will want to learn all the Core Skills but this table shows which parts to focus on for either What or How.
Designed and built by
an international team
of volunteers in just 3 months
Your competition is global, constantly improving, and can always undercut your price. You must innovate to survive.
Cheap foreign labor is not your biggest threat. Automation and user collaboration are dropping prices below cheap all the way to free. Can you compete with free?
If you use old methods you will fail. Even if you copy their methods you will never catch up. The only way to get ahead and stay ahead is to think and act predictively.
Thomas Edison's trial and error approach died 100 years ago with the horse drawn wagon. Fail-fast, fail often only leads to failure. You have limited time and budget but infinite competition. You need to know what customers will want before they start demanding it. You also need to know the most profitable way to deliver it before you start. Plus, you need to see future challenges and have solutions ready when challenges pop up.
Return on investment is the point of innovation. Regardless of how creative or fashionable a product is, if everyone involved doesn't receive a significant benefit it will fail. That means investors, workers, and customers all must receive enough benefit to get them to be happy with their investment of time and money.
Maximize profits and minimize investment. That means providing the most benefit to the most people while using the least time and materials to do it. You need to know both what to make and how to make it. You also must see the entire market so you don't miss valuable opportunities. Random approaches can't guarantee you collect all the value in the most efficient order. Only a structured system like Predictive Innovation can minimize investment, reduce risk, and maximize reward.
Old Way
Staged Gate has 40% Failure Rate at Launch
The most common approach to innovation is:
Brainstorm a lot of creative ideas
Filter out bad ideas
Launch the product
Pray
That process is called Staged Gate. It's used by companies worldwide. Despite over 50 years of improvement, 40% of products launched, fail. Nearly random!
The average Staged Gate process requires 300 ideas to get 1 success. (Stevens & Burley 1997) All of that filtering costs a lot of time and money. It costs 9 times more than just launching a single project. That extra expense means that only ideas expected to have huge profits are even considered. The smaller less risky projects are ignored because they won't make up for all of that time and money wasted on filtering.
It also means you need a huge up front investment to start. For small companies that just isn't possible. The smaller company can't risk the failure of trying to innovate so it is guaranteed the failure of competition.
Before you blame Staged Gate, that 40% rate doesn't happen to everyone who uses it.
Study at Fortune 500 Companies shows Predictive Innovation approach 95 Times More Profitable
A study of 576 projects at 360 Fortune 500 companies revealed a dramatic difference in results. (Stevens & Burley 2003)2
All of the projects use similar Staged Gate processes but the Top 1/3 had a 96% success rate and were 95 times as profitable.
What did the top performers do differently?
There are two types of innovation systems: Thinking Systems and Doing Systems. Staged Gate is a Doing System. It manages risk.
Creativity is:
Unpredictable
Unreliable
Unfocused
Inefficient
Emotional
Person Specific
The creativity brainstorming approach to generating ideas causes all of the risk that Staged Gate tries to manage. Replace the Thinking System and all that risk goes away. You can get 96% success and 95 times more profits.
New Approach: Predictive Innovation®
Using Predictive Innovation for your Thinking System turns everything upside down. Instead of starting with a bunch of random ideas, it starts with objective criteria organized into a structure so nothing is overlooked.
Instead of filtering down, you build up. You start with a stable foundation that supports growth of a family of interrelated products.
You multiply profits while reducing risk. All of your work and investment supports future innovation. Profit margins increase over time instead of decrease. And instead of struggling for new ideas it gets easier and easier as you build on your strategy.
Seeing the entire idea space makes the difference.
Studying patents and product literature of thousands of products shows that most products cover less than 1% of their innovation potential and most industries only cover 13%. That leaves over 80% of the idea space unexplored.
That unexplored idea space is missed opportunity. It's also increased risk from competition or that the easier higher profit idea was never tried. Notice that the ratios of the idea space are nearly identical to the profits of the projects in the Staged Gate study. The Top performers explored more of the idea space resulting in 96% success and 95 times more profits.
Benefits
Increase profits
See all the ideas customers will want, and ideas they won't
Start development and launch at the right time
Make a family of products & services to multiply value
Build on a core you control
Reduces Risk
Start earlier while avoiding rushing
Reduce time to market
See all the alternatives so you choose the best for you
Quickly find solutions to technical challenges
Maximizes ROI
Higher profit margins with the right product at the right time
Higher success rate
Find hidden value
Lower costs by avoiding building costly infrastructure
Quicker break-even
More projects by seeing connections between projects
Secures Long Term Value
Stay ahead of competition
Use competitors to your advantage
Block threats with advanced knowledge and having strategies in place to deal with change
Develop markets you can own
Quickly respond to events
Ways to use Predictive Innovation
New product development
Finding and developing new products and services is one way to use Predictive Innovation.
Traditional new product development (NPD) and even Agile/Lean approaches tend to require:
Different design for each product generation.
Different manufacturing processes for each product generation.
Expensive and time-consuming launches for each new product generation.
Difficulty standardizing components & supplies.
Using Predictive Innovation for new product development (NPD) turns all of that around, it enables:
one design for multiple products & multiple generations of a product thus multiplying return on investment
one manufacturing process for multiple products and generations, with easy switching from one to another thus multiplying productivity
efficient standardization of components and supplies thus simplifying processes and reducing overhead & startup costs.
Process improvement
Improving your processes helps you gain an advantage even if you are selling a commodity product. Internal innovations are one of the most valuable ways to use Predictive Innovation.
Business strategy
Strategy turns a good idea into a successful business. The full spectrum view only available with Predictive Innovation gives you the advantage of the most successful strategies.
Marketing
Knowing how to communicate with customers is just as important as having what they want. Predictive Innovation gives you a structured approach to understand and translate fuzzy desires into objective results you can measure.
Intellectual Property
Smart people recognize that intangible assets have become more valuable than tangible assets. Protecting their intellectual property is often a major concern to inventors & business people. However, that isn't your goal. Your real goal is to maximize the value you receive from all available intellectual property. Only Predictive Innovation can do that.
Patents & copyrights are frequently associated with innovation but that is a very incomplete view of the total value. Only a portion of all intellectual property can be patented or copyrighted.
Patented
Not Patented
Patentable
Your patents
Unclaimed idea space
Non-patentable
Other people's patents
Public domain
As much as 75% of the idea space can't be patented or copyrighted but you still can profit if you know how.
Predictive Innovation increases the value of intellectual property more in ways traditional approaches can't because Predictive Innovation can efficiently describe the entire idea space. Seeing the entire idea space helps you maximize the value of intellectual property, minimize the risk, and neutralize threats.
When you describe the entire idea space you can:
Build Patent Fences to protect the entire idea space
Find alternatives to litigation
Increase the overall value
Limit damage from infringement
Discourage litigation from patent trolls
Avoid conflicts in the market place
This is just a sampling of the ways Predictive Innovation helps with intellectual property.
Investment decision making
Predictive Innovation is the only way to measure the true value of ideas before spending time or money on development.
Calculate the full value and the real risk. See the amount of the entire idea space your investment will buy, not just a share of a market.
Core Skills
The goal of this book is to provide you with the core skills needed to start using Predictive Innovation. You will learn the basics that apply to everything else you will do with Predictive Innovation.
There are six key pieces of knowledge provided by Predictive Innovation: What customers want; How to make it; When to make and release it; Why customers want it; Who uses, buys and makes it; and Where to focus on.
What
The most important part of innovation is knowing what customers want. Predictive Innovation shows you in advance what customers will want so that you are always two steps ahead. What isn't just the basic idea but the precise requirements needed to satisfy both customers and providers of innovations. Knowing what to make in advance also makes it possible to create business strategies that neutralize competition. You are in control.
How
A good idea isn't good if you can't profitably deliver it. Predictive Innovation shows you how to solve technical challenges. You eliminate barriers to develop and deliver products, services and strategies.
You are prepared with inexpensive easy-to-do responses to even unexpected changes. That keeps you focused on profitably satisfying customers' unmet desires.
When
Predicting the right time to start developing and the right time to release a new product is a key value of Predictive Innovation®. Starting too soon will lead to wasted effort and money and starting too late increases risk of competition and reduced profit margins. Predictive Innovation will help you create a step-by-step strategy to deliver exactly the right product at exactly the right time to maximize profits and minimize risk.
Where
Where is more than a geographic location. Where is about relationships. Where in your organization or process to focus efforts to improve? Where are your products in the progression of innovation towards the ideal? Where helps you measure your success, how far yet to achieve, and pinpoint the best use of your resources.
Who
Who are your potential customers? Who will make it? Who will invest? Innovations satisfy desires of people. Understanding Who is crucial to successful innovation.
Finding new customers for existing products is the highest profit, lowest risk way of innovating. Predictive Innovation® will guide you in finding all the potential markets for your existing and new products. This helps you achieve your goals faster and easier.
Who will make the product or deliver the service? Doing everything under one roof is not the only way to deliver a product. Finding the best combination of in-house, outsourced, open-sourced, and un-sourced can be the difference between success and failure. Predictive Innovation® shows you all of the options and how to quickly identify the best combination for you.
Investors want assurance of low risk and large profits. Again there are more investors than the traditional sources. Seeing all sources of investment gets your idea off the drawing board and into customers' hands.
Why
Understanding Why customers want a product is essential for creating the most effective communication. Also you need to know Why you are making it, Why investors will support it. To communicate most effectively you need to speak using the words and feelings they associate with getting What they want.
Get Started
Learn the core skills and start thinking predictively.
That unexplored idea space is missed opportunity. It's also increased risk from competition or that the easier higher profit idea was never tried. Notice that the ratios of the idea space are nearly identical to the profits of the projects in the Staged Gate study. The Top performers explored more of the idea space resulting in 96% success and 95 times more profits.