Making Innovation Cheap and Easy

The price of starting a company has never been lower, and science is unpacking the common characteristics of entrepreneurs

An important change is taking place in the world of innovation. Put simply, innovation can be done very cheaply.

It used to be that innovation was relatively expensive. For example, one case taught in Harvard Business School's entrepreneurship program describes how Robin Wolaner came up with an idea for a high-quality magazine targeting parents in the mid-1980s. Wolaner's original plan suggested that it would cost $5 million to develop the idea. Before she attempted to raise that amount of capital, she decided to run a simple market test. She sent a sample issue of her magazine to a set of parents. Each test issue included a reply card that people could return to indicate interest in subscribing. High levels of response validated the market interest in the idea, and Wolaner was off and running. She eventually sold her magazine (Parenting) to Time Life, Inc., for about $10 million. This test cost Wolaner about $150,000 to run.

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Contrast Wolaner's story to the two bright entrepreneurs my colleague and I met in Singapore in September 2010. The duo had an idea for a Web site that would democratize tools used by designers of a type of chip called a field programmable gate array (FPGA). It's a big market -- the companies that sell FPGAs are multibillion-dollar enterprises, and the leading tool providers are big companies, too. The founders had built a functional Web site with real, live tools. They had run a marketing campaign to attract a couple hundred users to the site. The company had earned modest revenues.

"Wow," we said. "A functional Web site, a marketing campaign, and early revenue. Who are your investors, and how much have they invested to date?"

They looked at each other sheepishly. The total out-of-pocket investment was less than $1,000. They had done the Web site themselves in their spare time. They did focused advertising on Google to attract early customers. Now that's what I call doing things on the cheap!

If Wolaner was launching her magazine business today (perhaps a dubious proposal in the current media market), there is simply no way she would need to spend $150,000 running tests. You could probably run the same set of tests for less than $5,000 using primarily free or easily available tools on the Internet.*

The low cost of innovation affects all of us by giving us more options. Think about weight loss. Instead of just relying on willpower or going to a specialist weight-loss clinic, innovators have given us an incredible variety of dieting applications in Apple's App Store. One application allows you to take pictures of everything you eat in a given day to get a reasonable assessment of your caloric intake. Or you can buy small, wearable devices connected to online services that show much exercise you did in a given day, with a whole community of weight-loss seekers supporting you. Further, scientists increasingly throw out new mechanisms to lose weight, with ideas transmitted in a blink of an eye on Facebook, Twitter, and other networking tools.

Another reason that innovation is achievable is that the specific traits and behaviors common to successful innovators are coming into sharper focus. Do you think successful innovators are different in some meaningful way? Most people would answer that question with an emphatic yes. But academics struggled for a long time to isolate those differences.

A recent stream of research by Jeffrey Dyer from Brigham Young University, Hal Gregersen from INSEAD, and Clayton Christensen from Harvard decodes the innovator's DNA. The professors found that a successful innovator is good at what they call associational thinking. That is, good innovators make connections between seemingly unconnected inputs. Watch HBO's hit show Entourage to see associational thinking in action. It takes ten seconds for the character Ari Gold and the other agents to describe screenplays they are considering. They don't go through long descriptions of the plot. Instead, they offer a short summary with an anchor analogy (what this movie resembles) and a twist (what makes it novel). For instance, the movie Speed with Keanu Reeves was pitched as "Die Hard on a bus." Imagine hearing that pitch. You'd say, "Die Hard. Huh. That was a pretty successful movie. On a bus. Haven't heard that one before. That might be interesting." In their book Made to Stick, Chip and Dan Heath dubbed this technique the Hollywood pitch.

Sounds great, but can you improve your own associational thinking? The professors describe how successful innovators follow four time-tested approaches to gather stimuli so they can make these connections:

-- Questioning: asking probing questions that impose or remove constraints (e.g., what if we were legally prohibited from selling to our current customer?)

-- Networking: interacting with people from different backgrounds and who provide access to new ways of thinking

-- Observing: watching the world around your self for surprising stimuli

-- Experimenting: consciously complicating your life by trying new things or going to new places

There's nothing here that you can't do.

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*My favorite low-cost tools are Google SketchUp (for design), SurveyMonkey (to gather data), Skype (for communications), LinkedIn (to find industry experts), eLance.com (a tool that helps you find individual contractors), Wix.com (for designing Web sites), Google AdWords (for targeted marketing), and legal- zoom.com (for basic legal services). There are tons more.

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Excerpted from the forthcoming book, The Little Black Book of Innovation: How It Works, How to Do It by Scott D. Anthony.

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