How do firms come up with new ideas? And how do they use those ideas to create successful new services, businesses, and solutions? Leading-edge organizations use seven key strategies:

How do firms come up with new ideas? And how do they use those ideas to create successful new services, businesses, and solutions?

Creative ideas will always have an element of serendipity to them and will never be producible on demand. But today’s present economic climate of stalled growth and fewer ideas has caused a small but growing group of organizations to rethink how ideas happen and examine what they can do to implement better innovation processes.

Most companies are consistently disappointed in their innovation results, according to global surveys of executives. But a minority of organizations recognizes the need for change if their results are to improve. These leading-edge organizations use seven key strategies:
– Invite everyone in the quest for new ideas.

  • Involve clients in the process of generating ideas.

  • Involve clients in new ways.

  • Focus on the needs that clients don’t express.

  • Seek ideas from new client groups.

  • Involve suppliers in product innovation.

  • Benchmark idea-creation methods. **
    Clearly the client plays an important role in these strategies for strengthening the organizational idea factory. It only makes sense. The goal is to create ideas—the building blocks of new products, services, processes, and strategies—the users of which are clients and customers.

Strategy 1: Involve Everyone in the Quest for Ideas

While suggestion boxes have been around for over 100 years, innovation-vanguard organizations are wiring their suggestion boxes so that they become a powerful, energizing force for corporate creativity.

Bristol-Myers Squibb (BMS), a global pharmaceutical firm, does not restrict its definition of innovation to activities related to finding the next breakthrough drug. Rather, it sees the need for new ideas in much broader terms and involves employees constantly in the quest.

When the patent was about to expire on Glucophage, an oral medication for type 2 diabetes, MacArthur helped coordinate a campaign to solicit ideas on how to get more people to use the drug. Rather than classifying this as a marketing problem and letting the people in that arena alone work on it, the ideation campaign was a call for ideas from all corners.

Meetings were set up for the team to describe the problem in greater detail: How do we drive patients to their doctors’ offices? How do we get patients to switch from the medications they’re currently using? Tip lines were set up on BMS’s intranet site so employees could submit their ideas. One idea was to run a national campaign declaring war on diabetes. Another, to create a museum for diabetics.

That single ideation campaign generated 4,000 inquiries from 429 employees all over the world.

Lesson: Organizations can enlarge their pool of ideas by including more employees in the process of new product and service development and in solving vexing organizational problems. Start by encouraging them to listen to customers. Don’t allow managers, technical specialists, or purchasing, finance, or HR professionals to participate in new product/service/market development unless they spend at least 20 percent of their time with customers and suppliers.

Strategy 2: Involve Clients and Customers

If you think “focus groups” when the subject of involving customers comes up, think again. Vanguard firms are going well beyond such techniques to seek more powerful insights and ideas.

To maintain its market positioning as the “ultimate driving machine,” BMW constantly seeks new technologies and design features that keep it ahead of the pack. To accomplish this, BMW created what it calls a Virtual Innovation Agency (VIA) to listen directly to customers. Car buffs access the VIA website and join online discussions to share their ideas with other enthusiasts around the world, and with the BMW Group. If an idea has potential, it’s routed to the appropriate working group at BMW. Four thousand ideas were received in the first week after VIA was launched in July 2001.

Lesson: The traditional focus group needs more focus. Form advisory boards of key customers to serve as sounding boards. Identify customers who tend to buy the latest versions of your products. These “lead adopters” can provide you with insights about where the market may be headed and how your organization can best position itself.

Strategy 3: Involve Clients in New Ways

Organizations evolve and embrace new ways of doing things at different rates. Nowhere is this more evident than in the ways they listen to customers. For instance, customer surveys may be old hat to retailers but they blow the lids off homebuilders.

KB Home, a Los Angeles homebuilder, began surveying customers in the late 1990s; their answers shattered KB Home’s preconceived notions about what homebuyers wanted. In Denver, KB Home built houses with fireplaces and basements, assuming that’s what everyone wanted; however people were more than willing to do without basements when omitting them cut the price by 20 percent. In Phoenix, where covered porches were thought mandatory, fewer than half of the buyers said they cared about them.

By polling for preferences, KB Home opened up its business to budget-minded buyers. But it also discovered amenities that customers were willing to pay for; for example coffee bars in the master bedroom, built-in home offices, and higher-quality windows. This “amenity customization” proved popular for buyers and traumatic for competitors still locked in to the one-size-fits-all housing approach.

Lesson: Survey clients and customers for their input. Companies on the leading edge of customer surveying are often the early adopters of ideation techniques.

Strategy 4: Focus on Unarticulated Client Needs

Another reason traditional focus groups are inadequate idea generators is that they respond only to existing ideas. How do you get feedback on ideas that don’t exist? One approach is to probe the unarticulated needs of customers, asking them to consider hypothetical products and prototypes to see how they respond.

One great innovation-vanguard organization is Callaway Golf, creator of the Big Bertha. Callaway’s innovators visited country clubs and public courses and observed how golfers approached the game, quizzing them on how they felt about their skills. The observers discovered that many golfers felt frustrated and intimidated by the game. The unarticulated need was simply to succeed at something they loved doing.

Callaway’s breakthrough Big Bertha club features a large and forgiving “sweet spot” and a longer shaft, making it easier for golfers to hit the ball and hit it farther. As a result, new players took up the sport and old players traded in their drivers for Big Berthas. By focusing on customers’ unarticulated needs, Callaway’s innovators created a blockbuster.

Lesson: Learn from customers by observing what they are not doing, listening to what they are not saying. Recognize the sources of their frustration and find potential ways of eliminating it.

Strategy 5: Seek Ideas from New Customer Groups

Most organizations should have a good idea of who their customers are. But if you expand your definition of customer, you can also expand your ability to generate winning ideas.

The medical products division of Philips Electronics had assumed its only customers were doctors in hospitals, since they were the ones making decisions about medical supplies. But Philips managers looked more deeply at changes in the health-care industry and saw that more services were being provided in nontraditional environments, such as in outpatient clinics, in homes, and even on the street for homeless people.

By asking what customers in non-hospital environments might need, Philips came up with such products as a stethoscope with improved acoustics to filter out voices, traffic, and other background noise, making it easier for caregivers in chaotic settings to hear heart murmurs or breathing problems.

Lesson: Look at your customers’ customers and your competitors’ customers. Instead of looking at only the present, look also at former customers and at anyone you haven’t done business with yet. Ask how you might meet those customers’ needs.

Strategy 6: Involve Suppliers in Problem-Solving

Suppliers can be key partners in the idea-creation process, but the request for information must be specific. The chief purchaser for a leading consumer products company used to visit suppliers and try to solicit ideas by saying, “If you have any new ideas or technologies you think we’d be interested in, let us know.” Result: zero new ideas.

Now, he presents them with a specific problem: “Do you have an adhesive that would work well on elderly skin, sensitive skin, bruised skin, diseased skin, and five other kinds of skin that we’ve identified?” This approach encouraged suppliers to contribute to the company’s idea-creation process, the manager reported. “Even one of our notoriously noncreative suppliers developed two proprietary materials for the company in the last 12 months. It’s unbelievable how excited some of our suppliers get when we ask them to be creative on our behalf.” And the seemingly routine procurement process added value to other departments in the organization, from R&D to marketing.

Lesson:: Just as you look to your customers for new ideas, think of your organization as your supplier’s customer. You, too, have unarticulated needs. Try articulating them and get your supplier’s idea-generating capacity working in concert with yours.

Strategy 7: Benchmark Ideation Methods

Innovation-vanguard organizations actively manage the ideation process by examining its effectiveness and questioning how the ideas-to-results process might be improved. Ideation is not something that should be left to chance. Innovation-adept firms invest in ideation sessions, read books, attend seminars, and constantly seek to improve their skills. The goal is to generate as many new product ideas as possible: No idea is too radical.

Lesson: Organizations that rely on innovation need to seriously examine the climate in which ideation takes place and access outside information to make the process better, more productive, and more innovative.

Monday Morning at the Idea Factory

Given the torrid pace of change, the rapid commoditization of products and the convergence of strategies, firms that rely on yesterday’s ideas, yesterday’s products, and yesterday’s assumptions are clearly vulnerable.

Organizations need a constant stream of new ideas if they are to create exciting and prosperous futures. Yet, in most organizations, there is resistance to change the approach to innovation lest it upset the status quo. Most companies today have allowed their methods of encouraging, nurturing, and acting on new ideas to languish while they focused on more immediate concerns, such as taking costs out of existing processes and products and services.

Yet because of the present economic climate, firms must be willing to rethink their most central of processes: How to innovate. Any one of the seven strategies can surely help any company to generate new ideas.

Robert B. Tucker is the author of Driving Growth through Innovation: How Leading Firms Are Transforming Their Futures. He is a Senior Fellow of the Design Futures Council.