Searching for the new idea

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In the 50 years leading up to 2008, UK output per worker almost tripled. This wasn’t the result of some sudden uplift – for example, when we discovered the spreadsheet, or the mobile phone. It was a sustained year-on-year growth in productivity that bulldozed through recessions and crises, as well as technology and communications revolutions. And then it stopped.

What the Office for National Statistics (ONS) calls ‘The Productivity Puzzle’ shows that, in the decade since the global financial crisis, the UK’s productivity growth has hit a wall. By the end of 2017, it was 1.3% higher than it was 10 years earlier. “It is not unusual for productivity to fall during downturns, as happened in 2008-09. What is unusual is the flatlining of productivity since 2010,” commented the ONS in 2015. “If the pre-2007 trend had continued, productivity would now be 16% higher than it actually is.” That gap is now around 20%. Other countries in the developed world are having a similar slowdown in productivity growth, though few compare with the stagnation of the UK economy.

There are various potential solutions to the puzzle, but many centre on the problems of innovation. It now costs more, and takes more people, to innovate. Research published in 2017 by Nicholas Bloom, Chad Jones and Michael Webb, of Stanford, with MIT’s John Van Reenen, investigated how effective innovation was at an aggregate level in technology, medical research and agriculture, as well as in publicly traded firms. They found that the number of people doing R&D was 20 times higher than in 1930, but their collective productivity was 41 times lower. “The only way we’ve been able to roughly maintain growth is to throw more and more scientists at it,” Bloom said. 

Although innovation has never been straightforward, the ‘easy’ improvements for today’s products and services are in the past – although it might not seem so when we read of self-driving cars, virtual reality and smart drugs. Intuitively, it seems as if we are in a golden age of innovation.

Economists such as Robert Gordon disagree. Apart from the massive investment of time and people required for such innovations, Gordon argues that many of them are less impactful than they seem. Self-driving cars, for example, may not make us more productive in the immediate future, because we will spend the same time in them, doing about the same amount of work while we travel. On aggregate, there’s also evidence that the productivity leaders in our economy aren’t getting better as quickly as they were. 

Recent Bank of England research implies that “the most productive firms are failing to improve on each other at the same rate as their predecessors did”, in the words of Patrick Schneider, an economist in the bank’s structural economic analysis division. The top tier of firms are many times more productive than the rest, but the difference is less obvious than it was pre-crisis. 

This is only part of the story, however, because there’s a widening gap between the best organisations and the rest, which is true across all developed countries. A large number of firms struggle to innovate at all. 

Given these trends, it’s not surprising that business investment is down. A long-term focus on cost-cutting, coupled with the higher cost of innovation, means that the search for new ideas is riskier than ever. 

Can market research help solve the productivity puzzle? Agencies and consultants that have helped embed it in their clients’ innovation process argue, not surprisingly, that the answer is yes. For large, pioneering companies, research can help innovators do a better job of finding and selecting new ideas efficiently, and develop radical new ways of thinking. Those who struggle to innovate can use customer insight to kill off zombie ideas quickly and market testing can give companies the confidence to commit to investment.

To successfully offer any of these services, however, research has to position itself in the innovation process, and that’s not always a natural fit. “I find it really interesting, having worked client-side, that innovation agencies mostly focus on the ideas, and research agencies on the consumer and unmet needs,” says Guy White, CEO of crowdsourcing agency Catalyx. “People, historically, put you in a box: either a research or an innovation agency. That’s in two different spaces in a client’s mind.”

Finding new rhythms

One of the most important reasons that innovation is becoming riskier and more expensive is that large-scale innovations rarely involve one product or service, especially in large or multinational companies. “Often, B2B companies are slower to innovate because there is less urgent pressure to do so. But it happens when there is a significant disruptor,” says Andrew Dalglish, managing director of Circle Research. “When that happens, the challenge they face is that the product or service often has very complex elements to it.”

As an example, Dalglish has worked with clients in the cargo shipping industry. There is a global oversupply of shipping that drives incremental innovation, but now shippers are having to rethink everything they do. For one, Amazon’s formidable logistics capability is becoming their competition. Even if they compete successfully with that, there’s a more fundamental pressure on the horizon – digitisation that removes the need for shipping. How does a traditional shipping company react to the emergence of 3D printing?

It’s also hard to challenge thinking in large businesses that, historically, have been successful, says Julian Dailly, managing director of research and brand consultancy Morar HPI. Repeating innovations that worked in the past, however, will have diminishing returns – not least because good ideas get copied. “We work a lot with fitness businesses and they have an ingrained way of thinking,” says Dailly. “They value return on invested capital, which leads them to want to build gyms and then try to get people to go to them. Their basic equation is people paying monthly subscriptions to visit buildings. Brands such as Fitbit, or subscription-based app services – even people who charge for content on YouTube – have seen a better way to offer people these outcomes.”

Challenging these assumptions can be hard, but Dailly argues that agencies often reinforce that inertia, accidentally stifling meaningful innovation. “A lot of research maintains the status quo. You notice it has a number of key features that basically generate and reinforce bias towards doing nothing. For example, we have some very big clients who like stability in their research, so will not introduce new competitors into their competitive research because it may disrupt the data. For the sake of data stability, they ignore that they are now competing with Amazon.” 

Sometimes, consistency needs to be jettisoned. Morar worked with a company that supplied business cards, and it had consistently high customer satisfaction, measured on delivery. When Morar shifted the research to a year after purchase, however, it found lower levels of satisfaction, and lots of suggestions on how to improve the product. The customer had inadvertently locked itself out of the potential to use research to drive innovation.

In 2016, Richard Walker, a director of Mustard Research, created a research-based innovation service called Popcorn, to optimise product development. He called it Popcorn because it has three stages: harvesting the kernels of insight; popping the ideas; and serving them back to customers.

It may be difficult for clients to create innovation briefs, Walker says, because – by their nature – they are open-ended, will produce ideas across many parts of the business (often combining several of them), and are hard to contain in the normal project template. So knowing there is a well-defined path offers some reassurance that innovation research may create value, even if the client doesn’t know what it is yet.

“The process always starts in a very exploratory way,” Walker says. “You can’t rely on customers to tell you what’s wrong, because people just get on with their lives, doing what they do. If you had pitched text messaging to a consumer 20 years ago, there’s no way they would have wanted it. We always start with observational, ethnographic research.”

A recent project for Jewson, for example, led to Mustard visiting building sites to research cement. “This was the most inert category you can ever imagine; we were effectively shadowing 25kg bags of cement on the journey around a building site – from delivery to use. But the observational stage is always really fun. We find different things that get in the way, little coping mechanisms that people use, and that, effectively, becomes the inspiration for the next stage.”

Stage two of Popcorn involves off-site workshops. “We tell people to get out of their business suits and into whatever they feel comfortable in. It needs that energy. They provide the energy and we provide the process and structure. On a couple of occasions, we’ve also brought customers to those workshop sessions, and that’s been valuable.”

At the end, ideas are shortlisted, road mapped and assigned, and stage three takes this through to development, customer testing and refinement. While the Popcorn process adds some structure, it still implies a lot of trust on the part of the client. “When there are unmet customer needs and frustrations, clients don’t necessarily know what they are,” Walker adds. 

Challenge the organisation

“When I meet teams for the first time, and ask them where the business is heading, they often start by telling me something like: ‘We want another 3% market share,’” says Kevin Gaskell. “I say: ‘I have no interest in that’.” 

Gaskell is a CEO, specialising in turnarounds and creating fast growth. Formerly UK country manager for both Porsche and BMW, he now often works with smaller organisations that have lost their way. For them, he says, cutting overheads or making small, incremental gains seems radical, but actually strangles innovation.

This is another piece of the productivity puzzle. Innovation is part incremental, part radical, but when the scales tip too far toward incremental improvements – often because of economic or organisational pressure – there are few internal incentives to push through radical ideas. So how much does innovation require a change of culture? 

In its Global Human Capital Trends report of 2017, Deloitte publishes a graph of rate of change over time. Technology is changing at an ever-increasing rate, but innovation is held back because people change more slowly. Deloitte is more sanguine about this than some other commentators – notably Google X, the innovation specialist unit at Google, which argues that individuals adapt at a linear pace and technology evolves exponentially. Innovators also don’t have to take the whole population with them – they need to hire and develop innovative thinkers. But Deloitte argues that two flatter curves hold back innovation. Organisations evolve slower than individuals, and public policy the slowest of all.

Gaskell, who regularly takes time off work to indulge his other passions as a mountain climber and polar explorer, favours company-wide ambition. He sets extreme organisational goals to reset employees’ concept of success, and then devolves responsibility for creativity as far as he can.

For large organisations to keep up the pace of innovation, it is important to create a structure, or a process, says Natalie Turner. Formerly a market researcher at Research International, she is now founder and CEO of innovation consultancy Entheo, which works with organisations such as Kelloggs, Singapore Airlines and Cisco to improve their innovation culture. She is also the author of Yes, You Can Innovate, which explains the methods Turner uses with clients – which she calls the Six ‘I’s.

A fundamental benefit researchers bring, she says, is stopping the client from talking to itself, or only to its best customers. “Clients are often very focused on what they’re doing, but that’s only half the equation,” says Turner, who often introduces new “rhythms and rituals” in large organisations that want to be innovative. “A small ritual could be ‘walking work’ – define a challenge, then go out of the building and discuss it as you walk around. You take stimulation from nature, get the business out of its normal space.”

One of the problems, she says, is that creating a process of innovation means dismantling some of the existing organisational structure. Large companies are structured to prioritise processes and a single culture, but this can accidentally squeeze out new thinking – or restrict innovation to silos, when radical change will need a cross-functional team. Before she founded Entheo, Turner experienced this in a brief stint as head of internet strategy at BT. “The company was bringing in people like me, from the outside, to think differently – but within a couple of years we had mostly left. It was such hard work to go up against the organisation. Unless human beings see an advantage to innovation, they would rather stay as they are.”

Other organisations respond to this inertia by playing with their structure. One of the most popular innovations has been internal start-ups, with their own, separate, cultures and responsibilities.

Paola Criscuolo, deputy head of innovation and entrepreneurship at Imperial College Business School, has studied the impact of GSK’s 2001 decision to introduce Centres of Excellence for Drug Discovery, now called Discovery Performance Units (DPUs). These employ between 50 and 60 scientists, and compete against each other for financial resources, she explains. “They also have a high degree of autonomy in managing their budget and in deciding with which company they want to collaborate, which makes them much more agile.”

The idea was to mimic the structure of biotech start-ups. Each DPU has three years to achieve defined milestones, and if these are not reached the unit is dismantled.

Criscuolo’s colleague Andreas Eisingerich is programme director of Imperial’s MBA programme, which uses examples such as this to teach entrepreneurial thinking to students. “It’s mostly about the mindset we bring from school,” he says. “From a very young age, we are taught to conform; the people who won brownie points are the people who do well in standardised tests. We need to change that mindset, so we have processes such as innovation week – an intense, boot-camp experience. We teach that we have to embrace change to keep up and survive.”

Chris Thompson, director of innovation at Freshminds, believes clients can develop a culture of innovative thinking. “Businesses have almost organised themselves to remove distractions and creativity because, otherwise, they don’t get the margins in their product. They are machines that turn out their existing products, so to expect them to come up with the next big thing beggars belief.”

Freshminds has worked with innovation-aware clients such as O2, Amazon and Ocado – so what does Thompson think is the best way to set up a culture where the client and agency can work together? “It is absolutely critical that the business invests in innovation as a discrete activity,” he says. “You don’t want an entire business devoted to inventing products and services into which the company then has to plough resources. What you want is a very lean, mean fighting machine.”

His first recommendation: don’t even consider a large chunk of research about how to be more creative. Instead, work to identify those inside the client who don’t have the brownie-points mindset.

His second recommendation: identify a safe group of customers or business partners to work with, and achieve some quick results over six weeks. “If the business says, ‘we’re setting out on a five-year journey to figure out what our innovation strategy should be’, you’ve lost people at hello. Businesses always have ideas that already exist. Tap into them, explore them, and take some to prototype. It costs almost nothing to experiment.”

Finally, use creativity internally to uncover and sift ideas. “You can identify the great ideas that you’ve got through workshops and Dragon’s Den-style activities,” Thompson says, although he has found that the internal start-up model to incubate ideas has not led to better outcomes for most clients. Instead, he says, firms are finding it more productive to focus on collaboration and co-creation with target customers.

But should researchers challenge themselves to think more innovatively, before expecting clients to do the same? Danny Wain, a former researcher who now trains insight professionals to think creatively, argues that research agencies or departments must bear some responsibility if their clients struggle to break out of routine.

“When I first started training very bright graduates who were joining market research, 20 years ago, one of the real bugbears for me was that we recruited creative, innovative, thoughtful people then pushed a lot of it out of them,” Wain says. 

Today, he sees the same problem magnified by trends in the industry, and warns that the drive toward automation and big data within clients is – in some cases – leading to too much template-based research. “We don’t have clarity, a story, a message at the end of it. I train relatively junior, but very bright, researchers, and they’re saying, ‘I wouldn’t be allowed to do that – the client wouldn’t want me to do it; we use this process, this methodology, this technology’. We don’t have time to question and think about doing things differently.”

Working together

Many research organisations have found it useful to work with partners who focus on creating innovation, and some are supplementing their own efforts with non-exclusive partnerships to achieve the same thing. The inspiration comes partly from MIT’s legendary Building 20, which – after World War II – was effectively a warehouse for researchers for whom there was no room. 

By accident, people in different disciplines were stuck next to each other, talked to each other, and created ‘knowledge spillovers’ between disciplines because of this day-to-day proximity. Among other creative ideas, Building 20 gave us the first video game. 

If investment in new ideas has suffered during the great recession, the risk aversion is understandable. Individual business units have been targeted as profit centres, reducing the possibility of speculative cross-functional cooperation. The risk of a misguided investment can threaten the entire future of the organisation. 

As Thompson points out, working with groups of customers directly not only generates ideas, but also creates confidence that the client is worthy of investment. It can also identify quickly those ideas that have no future, and kill them off. This can be done using agile techniques in which innovation results from constant iteration and bad ideas can be abandoned based on rapid feedback.

Verve has a dedicated innovation practice that drives the community panel specialist process using the firm’s community panels model. Charlotte Paris, director and innovation lead, tends to work with client innovation teams, so they can be part of the process from the earliest moment. “We have been successful at bridging the gap between the insights and the innovation teams,” she says. “Companies see that a different type of research is needed to support innovation. We think being agile and quick-developing helps support that.”

Community panels can give fast feedback on ideas as they are iterated, but can help in other ways, too. For example, they give a constant sense check on an innovation. Paris agrees with Catalyx’s White that market research has, too often, become divorced from early-stage employee innovation, so organisations don’t test ideas on their customers until a large amount of resource has been wasted on a zombie idea. “First screening for those zombie ideas is often lacking. If you’ve got ideas coming through all the time, it is worth putting in place a systematic approach to innovation that enables you to sift through them in an effective manner,” she says.

Community panels, depending on their composition, can be “critical friends who are happy to help you develop things”. Or they can be more out-there early adopters, who are used to solving problems because they make them for themselves, as their search for novelty and innovation means they use technology before it is ready. Their engagement in a lifestyle that feeds on, and into, the innovation process is a valuable resource.

But be prepared, says White, because the wisdom of the crowd might take you and your client further than you think. If Henry Ford had asked what the public wanted, White doesn’t believe they would have chosen a faster horse. “Some people say you need creative consumers. We think it’s up to us – as the crowdsourcing agency – to get the creativity from the consumer. Everyone has an opinion and we want to capture all of that, because the crowd is always in the background, and we can go back to them. We can prove a point, but then say, ‘what do we do?’, and they come up with lots of ideas, and all in a month.

“The endpoint is not necessarily known until we get there,” White adds, “but that’s innovation.” 

Recruiting for innovation

For clients and agencies alike, having the wrong people to innovate – or the right people in the wrong jobs – is a major impediment to identifying and following through on ideas. Can researchers help to identify and target those people internally, in the client and in their own teams? 

At Freshminds, director of innovation Chris Thompson finds that creative thinkers often reveal themselves. “They tend to spot you. That’s the beauty of them. They tend to be people who are willing to put their head above the parapet in the business; they are restless, passionate people who are more interested in taking a new product to market than they are in their pension.”

Rose Cartolari, a leadership strategist and executive coach who teaches at Columbia Business School, says that the process should stretch back further – to human resources and recruitment. 

“I work a lot with HR teams,” she says, “and we know that, for people to become creative, they need a psychologically safe environment, and teams that have cognitive diversity. But we don’t interview for that – we don’t test for that. Diversity, for us, means cultural diversity.”

An American woman of colour, who has spent much of her career in Italy, Cartolari says: “In many organisations, I will be considered a diverse hire – but, believe me, in my thinking I am a mainstream hire. I have been working with a fintech that is super-frustrated by the way it is hiring. So we looked into it, and the questions it asks are all about what have you done, and past experience. We really should be asking how do you fail? How do you bounce back? Interviews need to change.”

Danny Wain, an ex-researcher who trains insight professionals, agrees. Researchers cannot inspire innovation in their clients, he argues, unless they are innovative and diverse themselves. In his experience, however, they naturally tend to recruit skills they recognise easily. “I recently worked with a small agency,” he says. “If you look on its website, the word innovation is probably there two-dozen times – and it’s led by a guy who is really innovative and creative. But the irony is that all of his team are like mini-mes–  they all do creative things exactly the same way he does.”

The Cillit Bang Challenge

When Reckitt Benckiser wanted to come up with ideas for the new generation of Cillit Bang products, the traditional, in-house ideation methods tried by InSites Consulting weren’t working. So it launched a challenge for an open community of creative consumers, curated by eÿeka. The brief was posted on eÿeka’s website. 

Reckitt Benckiser “was amazed by the quantity and quality of ideas generated by crowdsourcing with creative consumers”, says Mathilde Levy, senior consumer and insight manager. Among the winning suggestions were toilet bombs (not literally), while the first prize went to a “beauty mask of deep cleansing for the bathroom tap”.

We asked Tom De Ruyck (TDR), managing partner at InSites Consulting, and François Pétavy (FP), CEO at eÿeka, how they structured the challenge.

What sort of techniques did you use for the internal process?

TDR: For the internal ideation, we used a classic set of brainstorm techniques. We did everything we could to get to great ideas with marketing and innovation people, but didn’t get there. The ideas were not based on the insights, but were things that people within the company liked themselves. There were too many incremental innovations, rather than disruptive ones. We did not have enough ideas; there were only 19, and most of them were weak. 

So, what was the task for the community? 

FP: The brief was: ‘Can you dig into your own experience and knowledge of household cleaning and help Cillit Bang find its next breakthrough?’ We had 317 members who read the full brief, 87 of whom submitted an idea.

TDR: The community thinks more out of the box. They make links with what they see in other industries – they don’t know the brand or category, so they think without limitations, and their different cultural perspectives also lead to fresh insights.

The eÿeka community is positioned as ‘creative’ consumers – what does that mean?

FP: We are open to anyone who thinks they have a good idea. Eÿeka is a playground for truly creative people, whether they are freelancers, school students, amateur creatives or professionals. Their core motivation is to express their creativity and use abilities that they are not employing on a daily basis. They are looking for opportunities to be challenged. They learn new skills, get feedback and, when they win, they feel validated. 

So how do you recruit the one in 100 people who you say are very creative?

FP: At registration, we qualify creators based on their creative abilities – graphic design, video, copywriting and so on. This means anyone registering believes they display at least one of these creative skills. The members who deliver the best ideas see their creative reputation increase, and they move up in the hierarchy.

What’s the reward for the community?

FP: A prize pool of €2,500 euro was split among three winners. But, more broadly, participants are motivated by the 4Fs: fulfilment, fun of creating, fame, and finance when winning.

What is the prize for Reckitt Benckiser?

TDR: We created six concepts for product extensions, which are now being pushed through the innovation funnel.

Start-up thinking at Unilever

In 2014, Unilever launched Unilever Foundry to partner with start-ups, with the goal of accelerating its global innovation. Businesses chosen to partner with Unilever brands get the chance to scale their business quickly, while the company benefits from access to bright start-up ideas.

“Unilever has always had an innovative culture within its brands and functions, and these parts of the business continue to generate their own ideas – but we believe that start-ups play an integral role in driving innovation,” says Jonathan Hammond, head of Unilever Foundry.

The process by which the stable of start-up innovators is adopted is called Pitch-Pilot-Partner. Start-ups fill in an application, and some are invited to do a pitch in person to the local Foundry team. Those that pass get the chance to be matched to Unilever brands around the world that have submitted briefs that might suit their product or service – and, maybe, a longer-term relationship. 

“Since Foundry started, we’ve staged hundreds of pilots and almost half of these have progressed to a brand partnership,” Hammond says. “Last year, more than two-thirds of the brands we collaborated with experienced an increase in revenue, and three-quarters had above-average campaign engagement.”

An example is Good-Loop, an adtech start-up that converts advertising money into free charity donations – a natural match for Unilever’s ambitions to show social purpose. Amy Williams, the founder, met The Foundry team after they saw her at another pitch event. 

“The Foundry team has been our partner over the past 12 months,” Williams says. “It is working to ensure we’re finding the right opportunities to test and learn, and – crucially – help us to define the hypotheses and KPIs needed for each pilot to be considered successful.” 

For example, through Good-Loop, Knorr achieved more opt-ins to watch its advertising by linking it to generating donations for soup kitchens and homeless shelters.

Williams has advice for start-ups – as well as other large organisations – who want to innovate using this model: “Work in partnership so that, together you can craft the proposition to suit the needs of the business, and fit as seamlessly as possible into what they are already doing. It’s a model I’d love to see implemented in more large corporations.”

Six ‘I’s of innovation

Natalie Turner, founder and CEO of innovation consultancy Entheo, argues that, as innovation becomes an existential challenge for large organisations, researchers who embed themselves in the process are not only helping themselves, but helping the client. 

“Market researchers can play a far more instrumental role in innovation than just focusing on testing the outcome. But, because innovation is evolving so fast, the research industry has to rethink how it supports clients who want to innovate,” she says. “In this market, you have to become more of a partner.”

Entheo’s model of innovation identifies a process that has six Is, all of which have a research implication:

• Identify: organisations systematically identify opportunities, by understanding trends and customer needs
• Ignite: they use this insight to create novel solutions to the problems they identify
• Investigate: as they develop prototypes, they are constantly testing and refining
• Invest: the process means they can confidently create business models and plans for capital investment
• Implement: the innovation is launched and marketed
• Improve: customer feedback allows the company to optimise the idea, leading to another area of opportunity.
  
  

Asking the right questions for innovation 

Andrew Dalglish, managing director, Circle Research 

Not everybody is convinced that customer insight should be at the core of innovation. They roll out the father of the modern motor car Henry Ford, who purportedly said: “If I’d asked people what they wanted, they’d have said faster horses.” 

Or they cite another great innovator, Steve Jobs, co-founder of Apple: “It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.”

Their point? Customers can’t be the source of innovation as they can’t think beyond what they already have to what could be.  

But I think Ford and Jobs are being unfairly used to support the argument against insight-led innovation. They weren’t necessarily saying “customers can’t guide product innovation”, but rather “customers can guide innovation, but only if you ask them the right questions, in the right way”.  

Ask them how they would improve the horse and cart and, of course, they would place boundaries around their thoughts; the question is framed in this way. 

The trick is to ask customers not how they would change an existing product, but to explore the underlying fundamentals that the product addresses. To explore problems, to generate innovative solutions. What goals – practical and emotional – are the product meeting? What frustrations are experienced with existing solutions, and what outcome – assuming absolutely no limitations – would the ideal deliver?

Jobs also made another valid point when he said customers can’t always articulate their thoughts. So, as well as asking, good product-development research also observes – it watches customers in their natural environment to see the challenges they face, unfiltered and first hand.

Perhaps if the ‘Henry Ford question’ had been posed differently, the answer may have been more insightful. 

He could have asked the tradesman: “What do you use a horse and cart for?”“To move my heavy goods,” answers the tradesman. “What’s the downside of a cart?” continues Ford. “It can be uncomfortable, requires me to make two journeys to move all my goods, and the horses need to rest frequently,” responds the tradesman. Finally, Ford asks the critical question: “Forget about the horse and cart, what would the ideal outcome be?” 

“Arrive quickly, refreshed, with all my goods and without the need to care for tired horses,” dreams the tradesman, “but no horse could do that.”

No horse could, but with insights into the fundamental purpose – and limitations – of the horse, a dose of technological innovation and a leap of imagination, the mass-produced motor car is a small step away.

This article was first published in Issue 22 of Impact.