I was facilitating a group of senior leaders who were tasked with leading the innovation effort in their organization. I started with a simple yet profound question:
“How do you define innovation?”
The best answer I received is:
“Innovation is applied problem solving leading to generation of value.”
The natural follow-up question is:
“Which problems are worth solving and where do we find them?”
This is the first step in the innovation process. If we don’t pick the right problems, no matter how interesting our solutions are, we will end up struggling to generate value.
I believe that there are four ways to find interesting problems worth solving.
1. Solve a problem you already face
This is the easiest path to innovation. In the course of going through our days, we come across many things that frustrate or anger us. Processes that add more bureaucracy, tools that don’t work the way they are expected to, processes that reduce the productivity of our employees, customers, or partners. These problems are all around us if we look for them.
Everyone in an organization should be expected to look and call out these problems and solve them, if possible. Maintain a list of the problems that can’t easily be solved; make sure everyone in the organization can access the list and the organization’s leaders continuously monitor it.
The problem at the top of the list should be addressed as quickly and decisively as possible. This does two things: It helps increase overall productivity levels within the organization and it sends a message to the entire organization that innovation is an ongoing process, the organization’s leaders take it seriously, and everyone else should, as well.
2. Observe a problem and solve it
Look at the world (outside and inside of your organization) for interesting problems you could potentially solve. This is where the power of observation comes in handy. You will be surprised at how easy it is to miss seeing problems all around us. Watch employees, customers, prospects, and partners going through their days and see what causes them agony or frustration – not enough for them to list it as a problem to be solved but enough to get them to wince.
These are problems people may have gotten so used to that they don’t even register as problems anymore. By observing people, we can identify them as problems that need solving, problems that everyone can see but few identify as opportunities.
By deciding to observe a specific set of people (e.g., employees, customers, prospects, or partners), we are being intentional about what kinds of problems we are looking for. Hence, these kinds of problems typically lead to innovations that either make it easier to do business with you or produce a new product or service that serves your existing customers or adds a new customer segment to your business.
3. Anticipate a problem and solve it
This is a difficult thing to do. But, when done well, solving these problems can lead to significant gains or even a competitive advantage for the business. Look at the trends that are playing out in the marketplace and sort them into hard and soft trends. Soft trends (e.g., commoditization of machine learning) have a decent chance of playing out, while hard trends will definitely play out (e.g., the aging population in a specific market). Look at the long-term and short-term trends.
If you extrapolate these trends and imagine how they will play out in the life of your customers, partners, prospects, and employees, you can identify the types of problems they will likely create. Once we can imagine these problems, we can imagine ways to solve them. Since these solutions address problems that are either not currently faced nor currently observable, you can use this early lead to drive competitive advantage for your business.
By the very definition of how we identify these problems, the future might not play out the way we expect it to; hence there is a risk that we create a solution for something that never becomes a problem. However, that is a risk that we need to take if we want to out-innovate our competition.
4. Create a problem and solve it
This is the hardest way to innovate but, when done well, it can create significant value. In this scenario, you turn something that people are perfectly happy with into something they’re frustrated with. This path to innovation is all about creating and managing perception and influence. Hence, it requires a visionary to challenge the status quo with something outlandishly different. It also takes a significant amount of resources, comes with significant risks, and requires an intimate understanding of the people whose perception you’re challenging. It also requires you to have an antagonist to go up against.
This is what Apple did to Microsoft when it made Microsoft look uncool. This is what Steve Jobs did when he unveiled the MacBook Air by taking it out of an envelope and making all other laptops suddenly look bulky and old. This is how Gmail made Yahoo Mail look uncool by offering unlimited storage space.
Each these paths to finding a problem to solve leads to a different kind of innovation. One improves internal productivity, another makes it easier for others to do business with you. One rides trends that are unfolding around you, another creates a trend you can ride. Each one comes with a different risk/reward ratio.
Truly innovative businesses work two or three of these pathways. This enables them to manage a portfolio of innovation projects that will have different success rates and risk/reward ratios. This also allows us to constantly find some success to celebrate, some failures we can learn from, and ways to make our employees’, partners’, and customers’ lives more interesting.