How to Innovate Repeatedly

Most innovators don’t know the secret of success. In myrecent post, I quoted Bob Metcalfe, inventor of the Ethernet, when he stated that ““most successful entrepreneurs I’ve met have no idea about the reasons for their success. My success was a mystery to me then, and only a little less so now.” I asked the question: why does innovation see so hard. Let me explain a little now.

 ”It Took Me 25 Years to Unlearn What I Thought I Knew”

 Last week at the Startup Lessons Learned Conference in San Francisco, I heard Mitch Kapor, the legendary founder of Lotus 1-2-3 (the spreadsheet software that transformed personal computing) say the same thing. Mitch humbly acknowledged that his success at Lotus was completely atypical of any startup (Lotus sold over $50M in software the first year). In the meeting, Mitch confessed that although he thought he understood how to innovate, it took him 25 years to “unlearn” all the mistaken lessons he learned by getting lucky.

 So What Is the Secret to Repeated Innovation?

Innovation shouldn’t be so hard and although we often ascribe successful innovation to the person, the truth is we should be looking more closely at the process. How did these innovators stumble on their innovation? On occasion they are lucky but more often big innovations come from spending time understanding how customers struggle with a fundamental problem. For example, although Mitch suggested that Lotus was born a success, he admitted a few interesting facts. First, before founding Lotus, Mitch, who was unemployed at the time, spent an immense amount of time hanging around customers in retail computer stores. He heard the customers talk about how they used computers and their frustration with the existing spreadsheet solutions–they just wanted software that was easier to use and more powerful. He also picked up the vibe around the emergent PC as a potential exciting new technology. Lastly, he brought a new perspective to the problem, recognizing that there might be a way to use the unique capabilities of a PC to improve existing spreadsheets. When Lotus conducted a demo of their product concept at Comdex, they landed $1M in orders in a single day for a product that wasn’t even built yet.

It’s the Process: Reducing Your Innovation Risk

So why couldn’t Mitch repeat his success until recently? Primarily because he didn’t recognize the process that made him successful in the first place. Mitch confessed that he was a Lean Startup “fanboy” because it describes the process to reduce your risk when you innovate. The process focuses on creating a learning loop of Build-Measure-Learn to quickly validate your innovations in the market.

 The goal is to discover what to build before you waste your time and money. So how do you do it? First, you identify your most critical assumptions (usually around what problem you are trying to solve), you develop the minimum product that will allow you to learn about that assumption, and then you test it with customers to find out if what you believe is true. I’ll illustrate with a few examples in my next post and dive deeper into what you actually should do. The important thing is not the exact steps in the loop but the focus on the process of learning while you validate your assumptions. Mitch and I have talked off-line in a number of contexts, including when he was running Foxmarks and the more experience he has, the more he emphasizes the need to validate your assumptions.

Lean Startups Are Not about Saving Money–They Are About Avoiding Waste

Lean Startups represent one approach to solving the mystery of repeated innovation by helping you find out what customers will actually buy. Contrary to what it may sound like, Lean Startups are not about doing things cheaply but instead focus on quickly discovering where you are right and where you are wrong so that you have more time to change. All ventures have limited resources and so how to efficiently use these resources to discover what to build before you run out of time and money is the key challenge.