Innovation Can't be Measured in Dollars: Harvard Prof Stefan Thomke
tefan H Thomke, an authority on the management of innovation, is the William Barclay Harding Professor of Business Administration at Harvard Business School (HBS). He is chair of the Executive Education programme, Leading Product Innovation, which helps business leaders revamp their product development processes for greater competitive advantage, and is faculty chair of HBS executive education in India. He is also author of the books Experimentation Matters: Unlocking the Potential of New Technologies for Innovation and Managing Product and Service Development. In this interview, he talks to Forbes India on the various aspects of innovation.
Q. Innovation is a very loosely defined term these days. How do you define innovation?
When I started looking at innovation more than 20 years back, it seemed to be a little crisper in terms of definition. Now it’s all over the place. Interestingly, The Wall Street Journal did an analysis sometime back where it counted the number of times the word innovation appeared in the quarterly and annual reports in the United States in 2011. They counted more than 33,000 times. It’s a much overused word.
Q. So what does the word really mean?
The word innovation itself really means two things. It means novelty and value. The value requirement is a really important point. And that makes it different from the word invention. Invention is a more legal term. It is about getting patents. If you have a name on your patent you know that value is not a requirement to get a patent. It just has to be new and non-obvious to get a patent. There are companies that have a lot of patents which have no value for anybody. So it’s an input to innovation.
Q. Innovation at times can be a really simple idea as well?
I was working once with a company in the area of in-vitro diagnostics. Basically they made equipment to do blood analysis. So when you go to a hospital, they draw blood from you and put it into a machine.
The machine analyses your blood and gives printouts. One of the biggest innovations for their customers was an algorithm, which was essentially a piece of software that ensured quality control. That was one of their main selling points and customers would basically buy their equipment because they highlighted that. They said that I have this insurance that when I run these tests the equipment automatically checks for quality and is actually very reliable. And they marketed that. From an R&D perspective, it was one of the easiest things that they have ever done. It was really just an algorithm that they figured out using data.
Q. That’s really interesting…
Yes. So sometimes, you know, the most expensive things are not necessarily the ones that provide the greatest value to the market and vice-versa as well.
Q. I came across a blog you had written on product innovation where you questioned putting more and more features into a product. Tell us something about that.
I wrote an article together with Donald Reinertsen and we talk about myths. This was one of the myths. Donald is also an expert on product development. And we have been in many meetings where the entire meeting is dedicated to discussing more and more features. There seems to be an assumption that we are basically done when we can no longer squeeze more features into a product. Presumably assuming that the more features a product has, the customer actually sits there and counts the features, and that somehow drives our ability to price it.
Q. And you don’t agree with this approach?
Sometimes you can actually add value to a customer experience by taking features out, by de-featuring. But that rarely happens. I have rarely been to meetings where the main purpose of the meeting was to remove features from a product with the intent to add value. Usually, when we sit around and discuss to remove features, it is usually because it is too expensive, it is not manufacturable. Maybe what teams should do is think about when they can no longer take things out of a product rather than when they can no longer add things to it. It’s a very different way of thinking about it.
Q. Making things simple is difficult…
We often talk about it as a quote attributed to Leonardo da Vinci that simplicity is the ultimate sophistication. To make things simpler is very hard because that requires you to have a very deep understanding of what the user really wants. And once you have that deep understanding, you have the confidence. Mark Twain once said, if I had more time I would write a short letter. In fact, that should be true in your field as well?