The Innovation Biome

A Sustained Business Environment Where Innovation Thrives

Kumar Mehta PhD

• Publisher: River Grove Books
• Year: 2017
• Print ISBN: 9781632991560
• eBook ISBN: 9781632991577
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

When companies innovate, all our lives get better.  ?The Innovation Biome is among the most authoritative books about how companies can consistently create high-value products and offerings that enhance societal value and, in doing so, generate vast profits and shareholder value. Written in an engaging, easy-to-read style, this book helps managers:  
• understand the foundational elements that drive innovation 
• implement a framework so innovation becomes institutionalized for their organization and is not solely the domain of specific individuals Let The Innovation Biome revolutionize your company and gain the rewards that go along with releasing one innovation after another.

CHAPTER 1

Types of Innovation

We all know something is innovative when we see it and touch it for the first time. The first time I held an iPhone in my hand, I thought it was the greatest piece of engineering ever created. Remember, it was released in 2007, when tech-savvy people were using the triple-tap technique on a cramped keypad, most likely a flip phone or a Blackberry, to uncover the limited amount of information you could access from your mobile device at the time.

The concept of a phone with a touch screen, a full web browser, and the ability to pinch and expand and tilt seemed like a mindblowing idea to me at the time. Now, for most of us, the novelty of the iPhone has worn off, and it is a utility device that we use every day—even though the value it provides increases each day and with each new app. However, everyone would agree that this is an innovation that remarkably changed how we live, access information, and communicate.

So, while we don’t need to define an innovation—since we know one when we see one—I would like to start by framing the concept of innovation with my favorite definition (out of the countless definitions out there). The US Patent and Trademark Office describes innovation as a process or “a series of steps that begins with human imagination and creativity and results in the creation of something of value for society to enjoy. Innovation is not defined by just a single event or even a single brilliant idea. The creation of intellectual property takes vision and perseverance and often involves people from different backgrounds and expertise collaborating in order to transform an idea into something that is real and tangible.”⁹

One of the reasons innovating is difficult is that it has been classified in countless ways, and people think about it in different ways. Sometimes innovations are described as any of these terms:

• Product innovations
• Process innovations
• Service innovations
• Platform innovations
• Business model innovations
• Frugal innovations
• Radical innovations
• Open innovations
• Architectural innovations
• Design innovations
• Disruptive innovations
• Breakthrough innovations

And there are many other forms of innovation. In fact, probably more than a hundred types of innovations have been published.

It is important to have a clear and lucid view regarding the types of innovation, because different types of innovation require different activities and tools. Using a set of tools for one type of innovation that is designed for another set of activities is a waste of time, money, and effort, and promises to be a frustrating process.

Three types of innovation create most of the societal value, and they are the focus of this book:

• Incremental innovation
• Breakthrough innovation
• Transformational or experiential innovation

The first of these, incremental innovation, includes improvements to offerings that are already available in your organization. This type often generates the next version of or improvements to your product. It may include logical extensions to products and services, improvements in design or manufacture, usability improvements, or ways to reach more customers. The next version of a smartphone, next year’s model of an automobile, the next generation of a razor (e.g., adding another blade), a localized version of software, and a better formulation of a drug are all incremental innovations.

Breakthrough innovation includes brand-new creations without a precedent. This is a new discovery or invention with the potential to significantly enhance lives, often through the advancement of science and technology. This type includes most of the innovative discoveries developed through original R&D, such as penicillin, the Internet, the automobile, and the airplane.

Transformational or experiential innovations create new experiences. They may not be brand-new inventions; instead they repurpose existing inventions and functionality to create new experiences. Examples include commercial aviation (not the invention of the airplane itself, but the use of airplanes to transport millions of people every day), online shopping (again, not the Internet but its use as the world’s largest shopping mall), the iPhone, and Uber. Each of these offerings transformed the lives of millions by synthesizing existing (already invented) capabilities and technology to achieve the transformation.

These types of innovation are fairly easy to identify, but the crucial point—and what many companies fail to realize—is that each of these categories requires a certain set of activities. The wrong activities will not only hinder your innovation efforts but may actually damage them. The correct pairing, though, is what will allow your company’s innovation biome to flourish. We’ll discuss these pairings at length later in the book, but for now, let’s get back to basics.

9US Patent and Trademark Office, “Innovation Overview” (2017), https://www.uspto.gov/learning-and-resources/outreach-and-education/science-innovation-video-series#overview.

CHAPTER 2

First-Principles Innovation

People love their burgers. Americans consume close to ten billion burgers every year, making it the most popular food in the country. People love the texture, the taste, the aromas, the emotional appeal, and the feeling that comes from every juicy bite they chew. However, burgers are not good for the planet.

Plant-based burgers have been widely available for a long time and in many varieties, but they have always remained a niche and been consumed almost exclusively by vegetarians. Meat lovers, the vast majority of burger consumers, have found these plant-based versions lacking in many of the attributes they desire and crave and have consequently never warmed up to them. Environmentally, the problem with burgers and meat-based food is that the required livestock and production process consume a lot of resources. There is simply too much inefficiency when a cow or chicken on a vegetarian diet gets converted into a protein-rich food source for humans. Animal agriculture uses around 30 percent of all land and a third of all fresh water on the planet and creates as much greenhouse gas as all cars, trucks, trains, ships, and airplanes combined.¹⁰

Enter Impossible Foods, a company that decided to make a burger entirely from plant-based resources without compromising on any of the attributes that are so endearing to meat lovers. In effect, it attempted to recreate in a lab every appealing aspect of the burger while using (according to their estimates) 95 percent less land and 74 percent less water, as well as emitting 87 percent less greenhouse gases.

It achieved its mission by disintegrating the traditional burger to the molecular level, understanding the makeup of every component, and then diligently finding the right plant-based materials to create a new burger with the same sensory attributes. Although the Impossible Burger is not made of beef, at the root level all of the flavors, textures, tastes, and smells are designed to be the same as a beef burger’s.

This decomposition of the burger into its most fundamental and basic root attributes is akin to first-principles reasoning, in which a topic is disintegrated or deconstructed in the same way. First-principles thinking was used by Aristotle over twenty-five hundred years ago and involves breaking down an argument or an assumption into its most basic truths or undeniable principles.¹¹ A first principle is a “basic, foundational, self-evident proposition or assumption”¹² that cannot be deduced from any other proposition or assumption. They are universal principles that all knowledge and science is built on.

Using the Impossible Foods burger as an example, the thinking is that if we can break down and isolate every single component of a meat-based burger into its most basic and elemental form, find the exact same individual components from other sources, and then put them all together in the same proportions, we should be able to recreate the qualities of the original burger using only environmentally friendly components. Only time will tell if the Impossible Burger is a first-principles innovation that will disrupt the multibillion-dollar hamburger industry, but it has had largely positive reviews and has been successful in raising over $180 million from investors who share in the vision. And since these burgers are designed in a lab, they are always getting better, and there is virtually no limit to how good they can get. For example, they can always adapt to changing tastes and preferences, something beef burgers cannot do.

Elon Musk, the celebrated and successful innovator and founder of PayPal, SpaceX, and Tesla, shared in an interview how he uses first-principles thinking.¹³ People normally reason by analogy, Musk said. But first principles let us see beyond common expectations. He described a simple example: the battery. Rather than simply accepting that batteries are expensive and that this cannot change, in a first-principles approach a company would break down a battery into its core materials—things like nickel, aluminum, and carbon, all inexpensive components. If the materials that make up a battery were bought separately and combined ingeniously in the shape of a battery, its total cost can be orders of magnitude cheaper, giving rise to endless new possible uses.

This is an excellent example of how first-principles thinking can drive innovation in ways that conventional thinking will never allow. You are able to rise to a higher level of abstraction and develop more creative solutions by narrowing the focus to understand the basic, necessary, and unalterable truths. First-principles reasoning can apply to any application or industry, because it provides a level of clarity that is not possible using any other method of thinking or reasoning. It brings into question every assumption we take for granted.

This book is an application of first-principles reasoning. I’ve attempted to break innovation down into its most basic building blocks and components. Since innovation is a complex and inexact process driven by countless individual factors, it is not possible (at least not yet) to have a concrete set of components, along with their individual contributions, that can be isolated and recreated like the Impossible Burger. However, we’ll discuss many of the core elements of innovation that I consider foundational. If other researchers and authors went through the same exercise that I did, they would likely come up with a similar or slightly different set of foundational components. If you are looking to build your innovation capability to produce more innovations more frequently, the principles presented in this book are a good place to start.

Your own innovation journey can start with first principles. Strip your product or offering down to its most basic and essential components. Question why each component is present, whether it really needs to be there, whether it can be replaced, and whether the components can be configured differently. Ask how every piece is contributing to the customer experience. Question every assumption. Assumptions that were made a long time ago may not hold true today. If you started creating your product from first-principles components rather than from existing product versions, could you develop something that is cheaper or more valuable to users?

First-principles reasoning works for any product or service. Take, for example, the case of an everyday product like cough syrup. Your basic components might be a cough suppressant, a pain reliever, a decongestant, and some flavoring, as well as alcohol to help dissolve the other ingredients. Alcohol is cheap, but some customers would prefer to avoid it. The cough suppressant is not water soluble, but your pain reliever and decongestant are. You can remove the alcohol if you replace the cough suppressant with a different formula. You can also save some expense if you remove the decongestant and focus on the core goal of reducing pain and discomfort from coughing rather than the general symptoms of a cold or flu virus. You might think that cough syrup must be cherry flavored or have that cloying, nondescript medicine taste, but if there is no reason behind the choice, why not use something more exotic—say, fig flavoring. Now, maybe you add in some caffeine so that the user feels awake rather than groggy. Finally, if you exchange your chemical suppressant and pain reliever for natural plant ingredients that perform the same function, you’ve created a new market: a natural cough syrup that is alcohol free, provides an energy boost, tastes good, is less expensive, and is likely different from everything else out there. Simply by questioning and rethinking some assumptions and reconfiguring components, you could have a new product that enhances the customer experience; as an added benefit, the production costs might decrease, and you could have a fresh offering that is in line with today’s tastes and not yesterday’s assumptions.

This is a valuable exercise to engage in periodically during a product cycle so that you are not caught up in doing things a certain way because they have always been done that way. This is the type of thinking that creates new value. In the cough syrup example, the resulting changes could result in incremental (yet valuable) innovation. In other cases, first-principles reasoning can lead to more radical changes, creating transformative innovations.

10Bryan Walsh, “The Triple Whopper Environmental Impact of Global Meat Production,” Time (December 16, 2013), http://science.time.com/2013/12/16/the-triple-whopper-environmental-impact-of-global-meat-production.

Huffington Post, “Animal Agriculture’s Impact on Climate Cha...

Table of contents

• Cover Page
• Title
• Copyright
• Dedication
• Contents
• Preface
• Part 1: What Is Innovation?
• Part 2: The Attributes of Innovation
• Part 3: Implementing the Innovation Biome
• Part 4: Nurturing the Innovation Biome
• In Closing
• Index
• About the Author