I received an email from a regular reader of this blog asking the following question:

I need to think about an interesting topic to do a 10 min presentation to my Global Consumer Insights Vicepresident. If you were him, what would you like to hear about from a CI manager of a WW consumer goods company?

Here are a few thoughts from conversations I've had with clients recently:

Remember that the consumer is a source of information, not answers.

Think about what you really mean when you talk about statistical significance.

Insights are derived, not observed.

Innovation is not random.  There is a way to identify and evaluate the market relevance of opportunities before investing in development.

When taking the time to derive a consumer's motivations, remember that the most valuable result of the work is to pose the right (ie: market relevant) problem for the organization to solve.  Don't shortcut this work and jump into problem-solving mode before you know whether or not you're solving the right one!

I'm sure others could add to this list, and I would love to know what you think.

This weekend I read a fascinating article by Columbia professor Dr. Robert Jervis in the Boston Globe.  He wrote about the way our brains make connections, how these connections inform our decisions, and how this process could have contributed to the incorrect decisions the CIA has made when drawing conclusions about terrorist threats.  He made two points that were of particular interest to me.

The first point is his assertion that humans are very good at recognizing patterns and making connections that are relevant to our world view.  In the work I've been doing, I would call this a linear connection.  The second point is that once humans reach a conclusion, they are not very good at questioning their initial assumptions.  They tend to disregard or manipulate data that could call their conclusions into question. (I'm sure we've all had frustrating experiences with this human trait.)

After reading the article, I was struck by the similarities between the problems the CIA is experienceing, and th eproblems many companies have when trying to innovate.  And as is often the case with companies it became clear that, while I'm sure the CIA has plenty of good problem solvers among their ranks, I would bet they are lacking people with good problem-posing skills.  Successful innovators are very good at questioning assumptions, making non-linear, synesthesia-like connections, and posing new problems.  These people are more open to finding the path that reconciles the data they have, rather than paying attention only to the data that reconciles the path they have chosen.  Sound familiar?

All of this then made me question one of my own assumptions.  I believe that people who can make relevant (as opposed to random) connections between seemingly disparate ideas have a heightened ability to make cognitive connections.  I have imagined this very physically, as a brain with more physical connections being made. But is it really this way?  Maybe these people lack the ability to make the well worn connections that others make, resulting in the need to make new connections more often.  Or maybe it's not physical at all.  Is it due to a difference in the way we perceive information, or a tendency to suspend judgment until all data is reconciled?

I don't have an answer as to why this happens, but as I work to build models to objectively select people with good problem posing abilities I'm realizing that the need to identify and nurture their skills is broader than I had anticipated.

Of course your company isn't running a casino on purpose. But is it running one accidentally? You can tell based on its approach to innovation investment.

Does your company solicit new ideas for products and technologies in a more random fashion, investing in those that either can be executed with current resources, or do not pose much risk to the status quo?  Do people know the success criteria for a breakthrough idea?  In other words, is there a way to tell if a new offering with no current benchmarks is likely to succeed?  Usually the answer is no.

Does this sound familiar?  If it does, then your company probably casts a wide net in terms of investing in innovation.  Since most ideas are likely to fail, it's better to invest in more, and more varied, options to hedge your bets.  Notice I said bets, because that's exactly what the organization is doing.  The innovation process is essentially providing a mechanism to place bets knowing that most will lose, and hoping that the one(s) that succeed will cover the losses.  Isn't that what happens in a casino?  It provides a place for people to come and place many bets, hoping that a few wins will cover the losses.

On the other hand, does your company understand its market, define new opportunities to better meet the market's needs, and develop technologies that enable new products and services to satisfy those opportunities?  This may not be nearly as sexy an option at first glance, however it does provide a way to tell if radical new ideas have a chance of succeeding before investin in their development.  The chance of failure in developing something truly new and different is greatly mitigated. This is the difference between investing and betting.

In a real casino, the house always wins when most bets are lost.  In a real company, the only way the house always wins is to ensure success.  So why are most companies pursuing the casino model?