Anthony W. Ulwick

THE IDEAS-FIRST APPROACH IS INHERENTLY FLAWED

Many companies adhere to the “ideas-first” approach and
have developed support systems and organizational cultures that reinforce its use. Companies that follow this paradigm believe that the key to success in innovation is to be able to generate a large number of ideas (the more, the better) and to be able to quickly and inexpensively filter out the ideas that will likely fail. They believe this approach gives them a better chance of coming up with a greater number of breakthrough ideas.

IDEA


SCOPING


CREATE BUSINESS CASE

DEVELOPMENT
TESTING + VALIDATION
LAUNCH

Many academics, managers, and consultants support this thinking. Creators and supporters of many of the popular gated or “phase gate” development processes, for example, state that the first step of the development process is idea generation.

Approximately 68 percent of large businesses have adopted some form of gated development, which means that this same percentage have adopted, at least to some degree, the ideas-first mentality. [Robert Cooper, “Winning at New Products: Accelerating the Process from Idea to Launch,” 3rd ed. (Da Capo Press, 2001), 311.] Examples demonstrating the prevalence of this mind-set abound.

In their book, Innovation to the Core, Strategos CEO Peter Skarzynski and Rowan Gibson say that “successful innovation is a numbers game… the chance of finding a big, new opportunity is very much a function of how many ideas you generate, how many you pick out and test with low-cost experiments.” [Peter Skarzynski and Rowan Gibson, “Innovation to the Core” (Chicago: Strategos, 2008), 137.]

Harvard Business School professor Teresa Amabile states in a frequently cited article that “all innovation begins with creative ideas.” [Teresa M. Amabile, Regina Conti, Heather Coon, Jeffrey Lazenby, and Michael Herron, “Assessing the

Work Environment for Creativity,” Academy of Management Journal 39, no. 5 (October 1996), 1154.]
Nearly everyone in a major corporation has participated in a brainstorming session in which, without knowing the customer’s needs, they were encouraged to generate hundreds of ideas and were told that there is no such thing as a bad idea. You can probably still picture walls of Post-It notes.

Others who support the ideas-first approach have promoted the benefits of executing the approach quickly. Many refer to this accelerated ideas-first approach as “failing fast,” the idea being that when many ideas are generated and tested quickly, the best ideas are revealed faster. Since it is accepted that an ideas-first approach is going to generate many failures, it seems logical to try and weed out the failures quickly.

This concept was touted by Tom Peters in Thriving on Chaos. Peters said companies should, “test fast, fail fast, adjust fast—pursue new business ideas on a small scale and in a way that generates quick feedback about whether an idea is viable.” [Tom Peters, Thriving on Chaos: Handbook for a Management Revolution (New York: Knopf/Random House, 1987), 479.]

IBM founder Thomas Watson, who years ago said, “If you want to succeed, double your failure rate,” also
supported this thinking and adopted a management style that did not punish failure.

The fail-fast approach is still well supported today. For example, the authors of the recently published Innovators Guide to Growth believe that “if you fail fast and fail cheap, you have actually done your company a great service.” [Scott D. Anthony, Mark W. Johnson, Joseph V. Sinfield, and Elizabeth J. Altman, The Innovator’s Guide to Growth, Putting Disruptive Innovation to Work, (Harvard Business Press, 2008), 94.]

As a result of this ideas-first thinking, an entire ideation industry has evolved to compete on developing ways to generate and evaluate more and more ideas, faster and faster.

But there is a problem: despite its popularity, academic support, and widespread use, the ideas-first approach to innovation cannot be counted on for predictable growth and is inherently doomed to failure.

There are three reasons for this:

First, generating more ideas does not meaningfully improve the probability that someone will come up with the optimal idea to satisfy unmet customer needs. People are in effect brainstorming ideas without ever knowing what all the customer’s needs are or which of those

needs are unmet. We know that in any given market a customer has 50 to 150 needs (how we know this will be discussed later) and that anywhere from 5 to 80 percent of those needs may be unmet.


The mathematical probability of someone coming up with an idea that satisfactorily addresses all the customer’s unmet needs without knowing what they are or whether or not they are satisfied is close to zero. [Given the number of possible ways that just 15 unmet needs could be satisfied by products and services in any given market, millions of ideas would have to be generated before an exhaustive set of ideas could be created. If you assume three competing ideas for each of 15 unmet needs in various combinations, then you are generating ideas on the order of three to the power of 15, which is 14 million ideas. The chances of any one idea effectively addressing 15 unmet needs are one in 14 million. Furthermore, in most markets, we find there are more than 15 unmet needs.]


Generating more ideas that fail to address unmet customer needs is misguided, and doing something bad faster does not lead to better results.

This approach to innovation is analogous to expecting a sharpshooter to hit a target without knowing what the target is. It is like expecting a doctor to recommend the right treatment without knowing what is wrong or what the symptoms are.

This brings us to a second reason why the ideas-first approach is doomed to failure: the evaluation and filtering processes are flawed.
Because the customer’s unmet needs are unknown, the evaluation and filtering processes used today can easily miss great ideas and fail to filter out bad ideas. Let’s remember what the evaluation and filtering process is supposed to do: separate the useful ideas from the useless ones. Or, in other words, choose the ideas that best address the customer’s unmet needs. And yet, this evaluation and filtering process is typically executed without knowing what the customer’s needs are.

Lacking explicit knowledge of customers’ unmet needs, managers rely on intuition or evaluate proposed concepts using methods such as conjoint analysis, paired comparisons, and forced-choice scaling techniques, along with surveys and qualitative methods such as focus groups. These methods and others like them rely on customers to evaluate how well a proposed idea will address their unmet needs without truly understanding the product or technology and how it explicitly relates to those needs. Such an evaluation and filtering process is faulty in several respects. The first and most obvious one, mentioned earlier, is that chances are great that the best solution is not even in the consideration set. But there is also the fact that customers may not be able to make the connection between the technology and their needs. It is not surprising, then, that companies using the

ideas-first approach to innovation struggle to achieve success rates greater than 10 to 20 percent.

The third reason why the ideas-first approach is doomed is that customers cannot articulate the solutions they want. In most cases, the customer is not a scientist, engineer, researcher or materials expert. They don’t know what solutions are possible, but why should they?

The question I like to ask is, “Why are we even asking customers what solutions they want?”

Why should a company depend on the customer to know the best solution?

Why hire the customer to do the job of the marketing, development, and product planning team?

Coming up with the winning solution is not the customer’s responsibility. It is the responsibility of the company.