FEATURES/Real Issue | Nov 9, 2013 | 19124 views

Innovation Can't be Measured in Dollars: Harvard Prof Stefan Thomke

The most expensive and inventive things are not necessarily the ones that provide the greatest value to the market and vice-versa as well, says Stefan Thomke
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?

This article appeared in the Forbes India magazine issue of 15 November, 2013
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Comments (4)
Ik Way Dec 29, 2013
Thanks for a great read.
But then the title of this article itself is elitist. While soothing and confidence building and trying to motivate the innovators, this is claiming the very people you want to adore and embrace your innovation are not capable of valuing it.
Dr David Hill Nov 11, 2013
In the West we have a very elitist system when it comes to innovation and where so-called gurus of innovation never read what the history of science and technology tells the. For in reality for innovation to drive an economy it has to be pluralistic in nature. I.e. the laws of probability dictate that the more who are involved with an enterprise and the more chance of economic success.
Dr.a.jagadeesh Nov 9, 2013
Excellent post on Innovation.
Innovation leadership involves synthesizing different leadership styles in organizations to influence employees to produce creative ideas, products, services and solutions.
The key role in the practice of innovation leadership is the innovation leader. Dr. David Gliddon developed the competency model of innovation leaders and established the concept of innovation leadership at Penn State University.

As an approach to organization development, innovation leadership can be used to support the achievement of the mission or vision of an organization or group. In a world that is ever changing with new technologies and processes, it is becoming necessary for organizations to think innovatively in order to ensure their continued success and stay competitive. In order to adapt to new changes, “the need for innovation in organizations has resulted in a new focus on the role of leaders in shaping the nature and success of creative efforts.” Without innovation leadership, organizations are likely to struggle. This new call for innovation represents the shift from the 20th century, traditional view of organizational practices, which discouraged employee innovative behaviors, to the 21st-century view of valuing innovative thinking as a “potentially powerful influence on organizational performance€.

In Innovation theory there are two approaches: Technology Push and Demand Pull. Technology push is a part of a business strategy of a company. In the innovation literature, there is a distinction between technology push and market pull or demand pull. A technology push implies that a new invention is pushed through R&D, production and sales functions onto the market without proper consideration of whether or not it satisfies a user need. In contrast, an innovation based upon market pull has been developed by the R&D function in response to an identified market need. The case of Box Type Solar Cooker is a fine example of Technology Push while success of Mobile Phone and Mineral Water refer to the latter approach in India.

Innovate or Perish is the present Mantra in Industry.
Dr.A.Jagadeesh Nellore(AP),India
Qais Sami Nov 9, 2013
very informative article, but I have comment on Prof Stefan Thomke answer to this question "Innovation should also lead to some profit. How do you explain the disconnect in the case of Google?"
Traffic ecosystem is not the only reason to make Google AdWords business model perform better, Google is a data-driven company, and they giveaways amazing services
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