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Rumors that Apple is preparing to introduce a tablet device have been around for almost as long as there were rumors that it would introduce a cell phone (and look how that turned out). This week, no less a bastion of salmon-colored credibility than the Financial Times exclaimed that “Apple is racing to offer a portable tablet-sized computer in time for the Christmas shopping season,” so perhaps this year Santa will finally make those rumors a reality. I worry, however, that Apple might not be quite as successful as it’s been with the iPod and iPhone – I’m sure they’ll make a beautiful device, but what if consumers just don’t care?

Device manufacturers (both incumbents in the computer industry and niche players) have been toying with the “tablet” category and others like it for years, but the segment remains sparsely populated and sales have never been very high. So-called “Ultra-Mobile PCs” were aimed at roughly the product category Apple appears to be targeting (something shoehorned in between a laptop and a portable media player like an iPod), and the category received substantial investment from Microsoft through its Origami platform, but the products haven’t gained any traction. The high prices and usability problems that have plagued these devices have undoubtedly been an obstacle, but I think misalignment with consumers’ jobs-to-be-done is an issue here as well.

What jobs would a tablet device do better than existing devices? If I want to do some relatively “light” computing on the go (listening to music, doing e-mail, reading the news, surfing the Internet), Apple will gladly sell me an iPhone 3GS, which has the added advantages over a tablet of being able to make calls and fit in my pocket. Of course, Apple’s tablet will probably be more capable than the iPhone, but it will likely be big enough that it will have to compete with even more capable devices. To take a tablet device with me everywhere I’d need to bring something to carry it in, and once I do that a tablet device isn’t a whole lot more portable than a netbook – and those are cheaper than Apple’s tablet will probably be and have full QWERTY keyboards (which Apple’s tablet might not).

Of course, in comparing a still-theoretical device to other devices that seem roughly similar to it, I may be overlooking other jobs Apple’s tablet might address – Wired, for instance, suggests it might compete with Amazon’s Kindle to replace books. There again, however, I am skeptical; not only does Amazon have a substantial head start in understanding the space, attracting consumers, and establishing relationships with publishers, but its device’s e-ink display (which Apple’s tablet would probably not emulate) simply makes for more comfortable reading than traditional LCD screens. Furthermore, especially since the recent ironic Orwell kerfuffle, consumer skepticism of “e-readers” remains high.

All that having been said, it’s impossible to offer really reliable predictions about the success or failure of a device no one knows much about, and Apple certainly has a mixed track record when it comes to novel innovative products (think MacBook Air, iPod, and iPhone vs. Newton and G4 Cube). Nevertheless, it seems to me at this point that the tablet form factor just isn’t a very good fit with consumers’ jobs; we’ll have to wait and see if Apple surprises us.

Last issue Scott Anthony warned about the “Dangers of Data,” saying that it’s nearly impossible to come up with accurate forecasts for new-to-the-world products. In this issue Kevin Bolen and Krystin Stafford describe how one popular metric – the Net Promoter Score® – can keep innovators focused on the incremental innovation and obscure the path to disruption.  Here is an excerpt:

“The superior man, when resting in safety, does not forget that danger may come. When in a state of security he does not forget the possibility of ruin. When all is orderly, he does not forget that disorder may come. Thus his person is not endangered, and his States and all their clans are preserved."

When Confucius offered this advice in 500 B.C., he could not have forecasted the economic swings of the past 18 months. Yet his words have never rung more true. When economic conditions are uncertain, undisciplined leaders often whipsaw their organizations back and forth between strategies in response to so-called “key indicators.” While such metrics can be powerful allies in the path to growth and value creation, during periods of instability their limitations must be acknowledged and their influences balanced by broader perspectives. In their book by the same name, George Day and Paul Shoemaker call these broader perspectives “Peripheral Vision” and suggest paying attention to the outliers for weak signals that may later become competitive challenges.

In this issue's Innovators' Insight, Innosight's President Scott Anthony writes about how Google may be finally beginning to mature as an innovator, and offers advice for the company as it grows its innovation capabilities. Here is an excerpt:

Over the past decade, Google has inspired envy in trench-dwelling managers around the world. It’s not just the unparalleled benefits. It’s the way Google approaches innovation. Engineers are encouraged to dream up pet projects in their spare time. Teams self form around the best ideas. Market-based principles ensure that the best ideas receive funding. It sounds chaotic, democratic … and intoxicating. “Why can’t we do that?” countless managers wonder. “Instead, we have to deal with crushing bureaucracy that favors our leaders’ personal whims over the most game-changing ideas.” Management guru Gary Hamel praised Google in his book The Future of Management, positing that more and more companies would adopt the company’s market-based system. There is indeed much to admire about Google’s approach, and much to learn from it.

Featured in the InnoBlog, the virtual book tour for Scott Anthony's book The Silver Lining: An Innovation Playbook for Uncertain Times has wrapped and listed are links to reviews and interviews from organizations like Business Innovation Factory and FutureThinkTank.  Also Innosight Analyst, Andrew Laing, discusses innovation and how it applies to Japan's bizzare cell phone market.

As always, thanks for reading Strategy & Innovation! All issues are available and free with registration here.

This week's virtual book tour for Scott Anthony's book The Silver Lining: An Innovation Playbook for Uncertain Times has wrapped up. Thanks to all the bloggers who participated. Here's the final list of links to all the reviews and interviews:

Monday, July 20: Chris Flanagan, BIF Speak

Tuesday, July 21: Jeff De Cagna, Principled Innovation

Wednesday, July 22: Josh Kutticherry, futurethinktank

Thursday, July 23: Jim McGee, FastForward Blog and McGee’s Musings (review here; interview here)

Friday, July 24: Boris Pluskowski, The Complete Innovator 

Bonus:  Review and interview with Scott published today by Braden Kelley at Blogging Innovation

• The Pushbutton Web: Realtime Becomes Real, by Anil Dash | Dashes.com

  A look at a set of enabling technologies that the author believes will lead to the next big "upgrade" for the web, "where any site or application can deliver realtime messages to a web-scale audience, using free and open technologies at low cost and without relying on any single company like Twitter or Facebook."

• Mindless Collectives Better at Rational Decision-Making Than Brainy Individuals, by Charles Q. Choi | Scientific American

  "New experiments show how ant colonies don't fall prey to irrational choices as humans sometimes do" - results could be illuminating for understanding how human "wisdom of crowds" can work.

• Open Innovation & Crowdsourcing Examples | OpenInnovators.net
  
  List and links to many services, software, platforms, and providers for open innovation and crowdsourcing, as well as some of the companies that are using these.

• Unboxed - Crowdsourcing Works, When It's Focused, by Steve Lohr | NYTimes.com

  "A look at recent cases and new research suggests that open-innovation models succeed only when carefully designed for a particular task and when the incentives are tailored to attract the most effective collaborators."

   

A meeting I had recently with some folks at Gillette highlighted an important issue facing the would-be innovator — the "curse of knowledge."

Chip and Dan Heath described the curse of knowledge nicely in their 2007 book Made to Stick (highly recommended to all innovators). The basic problem: people who have deep knowledge about a topic sometimes assume other people have that same knowledge. That can lead to major missteps.

The brothers Heath bring this to life by describing a simple experiment run by a Stanford doctoral candidate in the early 1990s. The researcher gave subjects a list of popular songs like "Happy Birthday" and asked them to tap those songs out on a table. Another person had to guess the songs. The researcher asked the "tapper" to predict the percent of songs the "listener" would guess correctly.

The tappers — who could hear the song in their heads as they tapped — assumed that people would get 50 percent right. They actually got 2.5 percent right.

What does this mean for innovation? Managers who have spent their entire lives working in an industry often suffer from the curse of knowledge. They assume customers know more than they do. This curse can blind managers to opportunities and threats.

During my meeting at Gillette, one group member described how "of course" the last place you should shave is around your mouth. As I tend to shave my chin last, I asked him why.

"Well, that part of the face has the most nerve endings," he explained. "So you need to give more time for your shave prep [lotion or gel] to work."

As that was news to me, I wondered if I was alone in my naivety. So I launched a quick survey.

Read the rest at Scott's Havard Management blog, Innovation Insights.

Innosight analyst Curtis Chan recently co-authored the blog post, "Swiffer Solutions for Health Care," with Eva Luo, a regular contributor to the IHI Open School for Health Professions blog. The post recounts the observational research Procter & Gamble did in developing Swiffer and offers up one health-care "Swiffer story":  Project HEALTH, a nonprofit organization located in Boston that through observational research uncovers links between specific poverty conditions and poor health outcomes, then seeks to break those links.

According to the post: "This is the logic: The hospital is the site where health care is delivered — and with just a minor stretch is also a convenient site where psychosocial interventions can be introduced to better and more comprehensively improve the health of kids and their families. The systems redesign answer is a crew of motivated college students stationed in the hospital. If doctors feel their patients need assistance obtaining housing, have food insecurities, or can benefit from utilities bills discount programs, doctors can now refer patients to Project HEALTH volunteers who work with patients to obtain those resources right there in the hospital.

How could health care improve if observational research was more commonly used? Are there Swiffer-like solutions for every health care problem? Following the model of observational research itself: Let’s look and see."

This week's virtual book tour for Scott Anthony's book The Silver Lining: An Innovation Playbook for Uncertain Times  continues. Here are links to all the posts that are up so far: 

• Monday, July 20:  Chris Flanagan, BIF Speak
   
• Tuesday, July 21:  Jeff De Cagna, Principled Innovation
   
• Wednesday, July 22:  Josh Kutticherry, futurethinktank
   
• Thursday, July 23:  Jim McGee, FastForward Blog and McGee’s Musings
   
• Coming Friday, July 24:  Boris Pluskowski, The Complete Innovator

Japan has a well-deserved reputation as a country full of gadget lovers. The Japanese consumer electronics market consistently produces devices in some combination of useful, highly advanced, and downright cute, from Hello Kitty SMS devices to disturbingly detailed squid-shaped USB drives to the toilet in that Simpsons episode that gave Homer restaurant recommendations. Japan’s cell phone market is probably the most technologically advanced in the world – so why, as the New York Times asked on Sunday, haven’t their eye-popping innovations reached the rest of us yet?

Japan’s cell phone market is flooded with incredibly sophisticated devices – Wired characterized it as five years ahead of our own (3G networks, for instance, which have only recently begun unreliably spreading across the United States, showed up in Japan in 2001), and more than twice as many people use so-called smartphones in Japan than in the United States, despite a population less than half as large. While these characteristics make many in the U.S. envious, however, they put both Japanese manufacturers seeking to expand abroad and foreign manufacturers (like Nokia and Apple) seeking to penetrate Japan’s market at a disadvantage, and have led Japanese observers to coin the phrase “Galápagos syndrome” to characterize their woes: their market is just too different.

One useful way to think about these fascinating market dynamics is through the lens of disruption. One might expect that a market so saturated with high-end devices filled to bursting with features like TV tuners and videoconference-capable cameras would be ripe for disruption, but one high-profile device that would arguably look disruptive in Japan while being sustaining almost everywhere else – Apple’s iPhone – has had tremendous difficulty finding eager consumers. Compared to many other devices on the market in Japan, the iPhone has few features, an extremely low-resolution camera, a conservative design, and a low price, but its reception has been lukewarm at best. This appears to be because Japan’s consumers aren’t ready for disruption at all: they aren’t being overshot! The devices they can choose from may be fiendishly complicated (one Japanese engineer even mused that pushing buttons on his phone and discovering new features is “good for killing time”), but for the most part they demand and make use of those features – so much so that many Japanese citizens rely entirely on their phones and eschew PCs entirely.

The rapid technological evolution in this Galápagos of cell phones provides an excellent case study in disruption (or lack thereof) and serves as a reminder that disruptive innovations can only succeed when they’re “good enough” against what consumers consider to be important performance metrics. Perhaps over time Japan’s evolution will converge with some of the rest of the world’s, but then again, in consumer electronics a five-year gap is an evolutionary eternity.

This week Scott Anthony's book The Silver Lining: An Innovation Playbook for Uncertain Times will be featured in a virtual book tour. Five different bloggers will be running reviews of the book, as well as video and/or audio interviews with Scott. The schedule is below. The first review, by Christine Flanagan of the Business Innovation Factory's BIF Speaks blog, is already up! 

•  Monday, July 20:  Chris Flanagan, BIF Speak (http://www.businessinnovationfactory.com/weblog/silver_lining_review)
• Tuesday, July 21:  Jeff De Cagna, Principled Innovation (http://www.principledinnovation.com/blog/)
• Wednesday, July 22:  Josh Kutticherry, futurethinktank (http://futurethinktank.com/)
• Thursday, July 23:  Jim McGee, FastForward Blog (www.fastforwardblog.com)/McGee’s Musings (www.mcgeesmusings.net/)
• Friday, July 24:  Boris Pluskowski, The Complete Innovator (www.completeinnovator.com/)

• Why Fly Pet Airways? | petairways.com

  New airline just for pets. Will be interesting to watch, as its success will depend on whether there's really a sizable group of people who have the unfulfilled job of high-quality, safe pet transportation.

• Why Music Moves Us, by Karen Schrock | Scientific American

  Great article about the neurological and emotional affects of music, such as: "Recent data show, for example, that music reliably conveys certain sentiments: what we feel when we hear a piece of music is remarkably similar to what everybody else in the room is experiencing."

• Innovation in a Recession | BusinessWeek

  Good package of stories on innovating in the recession includes a slide show on "Ten Ways to Survive and Thrive" by Scott Anthony.

• Today's Disruptions are Tomorrow's Incrementals, by Jeffrey Phillips | Innovate on Purpose blog

  "If you want to launch disruptive innovations, learn to do it quickly, outside the normal development life cycle, or make sure the ideas are exceptionally disruptive, since the time lag from concept to product or service may be long enough that others address the opportunity before you do."

One of the key arguments in The Silver Lining is that companies have to find ways to "love the low end" to connect with budget conscious customers and fend off attacks from sharp elbowed, low-cost competitors.

A recent Wall Street Journal story shows how one company has found another benefit of loving the low end — keeping skilled workers gainfully employed as its high-end business shrivels up.

The story describes how legendary guitar maker C.F Martin & Co. has introduced a solid wood product line called the "1 Series" that sells for less than $1,000 — more than 50 percent cheaper than its traditional all-wood guitars (the company also sells cheaper guitars that use laminated plywood).

Customers have, not surprisingly, reacted positively to Martin's innovation. The company's high-end guitars are luxury items that are typically early victims of consumer cost-cutting in economic downturns. Edging below $1,000 made luxury affordable enough that the company's first production run of 8,000 1 Series guitars sold out in April.

As one distributor told the Journal, "It was really smart of Martin to come out with these in the current economy. They seem to be filling the niche quite well."

Finding a creative way to boost sales has another important benefit for the company. Manual labor plays a vital role in the production of the company's high-end guitars. Cutting costs to match declining revenues would have resulted in a loss of accumulated capabilities. Instead, the company quickly re-tooled its processes, and kept expert woodmakers working.

Considering the merits of your own low-end play?

Read the rest at Scott's Havard Management blog, Innovation Insights.

In this Strategy & Innovation, the feature article offers an interview with another well-known innovator: Diane Hessan, CEO of Communispace. She talks about both how her business has innovated, as well as how it helps its clients innovate, and offers solid tips for those wishing to engage their customers in the type of conversation that will lead to innovation.  Here is an execerpt:

RENEE: Please describe Communispace and how it got started.

DIANE: People always think that Communispace was my brilliant idea, but it wasn’t. I got lucky. Communispace was started during the 2000 Internet boom: we wanted to provide the opportunity to apply online community to business by harnessing the collective wisdom of the organization itself, learning from each other, and sharing best practices. During a discussion with Hallmark about creating an internal online community for store managers, our client, Tom Brailsford, said, “40 percent of our growth over the next few years needs to come from products we don’t have. What if we put consumers in the community instead?” So in November 2000, we launched the Hallmark Idea Exchange for parents — a community of 150 moms who had agreed to come online and be part of an ongoing advisory board for Hallmark.

In this issue's Innovators' Insight "The Dangers of Data," Scott Anthony discusses the challenges faced by companies moving into new markets.  Here is an excerpt:

In August 2007, star Morgan Stanley analyst Mary Meeker estimated that the “overlay” advertising model introduced by video-sharing site YouTube would immediately add $720 million in net revenue to parent Google’s pockets. Unfortunately, former Merrill Lynch analyst Henry Blodget pointed out that Meeker had made a mathematical error: Her estimate actually should have been $720,000. Meeker then came up with new estimates ranging from $76 million to $189 million in revenue next year. This isn’t to pick on Meeker. Trying to come up with accurate forecasts for new-to-the-world innovations is incredibly difficult. In fact, the only thing we could reasonably predict is that all of Meeker’s estimates would have been wrong. You see, there’s a pesky thing about how the world works. Reliable data only exists about the past, sometimes only the distant past.

 As always, thanks for reading Strategy & Innovation! All issues are available and free with registration here.

Recently, a couple of interesting articles (here and here) in the New York Times detailed new research into glass. The true physical nature of glass remains somewhat mysterious — one article points out that "although there has long been debate as to whether glass is a solid or liquid, it is now usually described as an amorphous solid (there is no evidence that it flows, extremely slowly, over time as a liquid)." Yet there is still disagreement among scientists about the exact nature of glass.

Scientists are still probing this question because answering it could lead to a number of breakthroughs: "Understanding glass would not just solve a longstanding fundamental (and arguably Nobel-worthy) problem and perhaps lead to better glasses. That knowledge might benefit drug makers, for instance. Certain drugs, if they could be made in a stable glass structure instead of a crystalline form, would dissolve more quickly, allowing them to be taken orally instead of being injected. The tools and techniques applied to glass might also provide headway on other problems, in material science, biology and other fields, that look at general properties that arise out of many disordered interactions. Scientists are also probing into the potential building uses of types of glass other than the typical soda lime glass most often used now. And they are experimenting with new materials and methods that could someday lead to glass structures that are unmarked by metal or other materials. 

Image courtesy of the New York Times

• "The Plural of 'Anecdote' is not 'Data' " by Suw Charman-Anderson | Strange Attractor blog, Corante.com

  Illustration of the dangers of data extrapolation for innovators (and everyone else, to). Twitter and online advertising are "pointless" to teens, says a 15-year-old intern for Morgan Stanley. Says Anderson, "the important thing about businesses like Morgan Stanley, and the journalists who write about them, is that they are supposed to be able to tell the difference between data and generalisations."

• "Thinking about 'Design Thinking' " by Fred Collopy | Manage by Designing blog, Fast Company

  Collopy feels that "design thinking is an unfortunate term for describing what designers have to offer to other disciplines, which seems the most common reason for using the term." Instead, he would propose "to invite lawyers, doctors, politicians and business people to design rather than to engage in design thinking...the product of the former is more likely to be perceived as — and to be — an actual design, rather than a plan, a report, an idea, or some other conceptual or intellectual byproduct."

• "Incandescent Bulbs Return to the Cutting Edge" by Leora Broydo Vestel | NYTimes.com

  Epitaphs were written for incandescent bulbs after Congress passed the 2007 bill mandating tough efficiency standards favoring CFL bulbs. Yet as often happens, the new constraint has switched on innovation in incandescent bulbs: "“There’s a massive misperception that incandescents are going away quickly,” said Chris Calwell, a researcher with Ecos Consulting who studies the bulb market. 'There have been more incandescent innovations in the last three years than in the last two decades."

• "The Extraordinaries: Will Microvolunteering Work?" by Linton Weeks | NPR.org

  Describes the new trend of "microvolunteerism." If you have a small chunk of time available, you can volunteer for a small task that can be done via smart phone, such as adding identifying tags to photos and videos for a museum. "Says Jacob Colker, 26, co-founder of the San Francisco-based Extraordinaries. 'We hope people might look differently at that ride on the bus and not just play video games.' "

   

Comes news today that Google will release a new operating system (OS) based on its Chrome browser. And of course the main question on everyone's mind is what effect this move will have on the incumbent Microsoft. Will the Chrome OS take down Microsoft's Windows?

First, let's be clear that the Chrome OS is not a disruption in and of itself. However, the Chrome OS is built to take advantage of a clear disruption taking place -- the rise of netbooks as an alternative to much more expensive laptop and desktop computers, which were overshooting customers even before the recession hit. Now netbooks are the one bright spot in an otherwise-slupmping consumer electronics industry. Netbook makers Acer and Asus have been disrupting HP, Toshiba, Sony, et al, some of which have released competing products.

Netbooks need operating systems too, and their introduction has offered a blank tablet for someone to come in and compete with Miicrosoft. Linux brings with it a host of compatibility issues, and Microsoft Vista has proven to be unsuitable for netbook use. Microsoft has made available a lighter version of XP and has Windows 7 coming out this fall, which is meant to be compatible with netbooks. Google poked its toe into the OS world with Android, its mobile OS, but Android does not play well with the x86 chip architecture of netbooks and isn't meant for them.

So enter the Google Chrome OS. Google and Microsoft are both giants -- neither is a come-from-nowhere upstart (sorry, Google fans -- those days are long past). So far there is no disruptor here, just two incumbents duking it out. If Microsoft wins, it gets a toehold in the never-ending fight to evolve and adapt with the technological times. It gets to keep playing as the PC evolves from desktop machine stuffed with standalone software and storage to netbooks and phones using the World Wide Web as a de facto OS, running applications and storing data in the cloud. If Google wins, it gets to build on and evolve from its search roots, gaining a platform from which it can grow its increasing apps-based business -- think Google Apps, Docs, and even Google Wave.

Disruptions that bubble up from seemingly out of nowhere can happen quickly. Witness the way netbooks suddenly exploded onto the scene. Chrome vs Windows is about evolution, though, and like any evolution, this one isn't going to happen quickly. It will only be in years to come that we'll know how this story ends.

UPDATE:  Innosight President Scott Anthony has weighed in on this news over at his Harvard Business Publishing blog.  His view: There is in fact real disruptive potential in Google's approach, with two substantial hurdles standing in the way of success. First, Google has to demonstrate that it can go from merely flinging "good enough" products into emerging categories to actually building viable businesses. Second, Microsoft must move from the defensive netbook strategy it appears to be taking today (designed to insulate its core business) to a more offensive approach. Click here to read Scott's post. 

The blogosphere's response to Google's announcement late yesterday about its plans to release an operating system in the second half of 2010 was swift and strong. "Google Drops a Nuclear Bomb" on Microsoft crowed TechCrunch. "Google Launching OS, Firing Torpedo Into Microsoft (and Apple)," announced Silicon Alley Insider.

It continues to amaze me that any twitch by Google garners such breathless press when — publicity aside — the company has never materially impacted a market other than its core online advertising market (though, to be fair, it's had pretty monumental impact in that market!).

My own view is that there is in fact real disruptive potential in Google's approach, with two substantial hurdles standing in the way of success.

Before we discuss the hurdles, however, let's look at the disruptive potential. Google's introduction of the Chrome Internet browser last year heralded a more direct assault by Google on Microsoft's core applications and operation systems businesses. While that browser hasn't had huge market impact, it allowed Google to learn more about application development.

Chrome OS could continue Google's disruptive march. Google is smartly targeting the emerging netbook market. Netbook users don't want all of the features packed into operating systems created for more powerful laptops or desktops. Google is betting that it can optimize its operating system for the unique demands of netbook users.

Also, while Microsoft has made public proclamations about the strategic importance of the netbook market, it's always harder for companies to prioritize smaller, less profitable markets. Google's approach of starting simply and moving up-market is right out of the disruptive playbook.

What's in it for Google? As always, the easier Google makes it for people to browse the Internet, the more it can grow its core advertising business. Plus it makes strategic sense for Google to distract Microsoft from its widely publicized — and increasingly successful — efforts to crack into the search market.

Now, about those hurdles.

Read the rest at Scott's Havard Management blog, Innovation Insights.

The following is a guest post by Juan Pablo Vázquez Sampere. 

"Your innovation strategy is great, kid, but is it going to give me growth in the next quarter?” Chances are your CEO has responded this way to your innovation initiatives. Here’s a way to answer this question affirmatively. As Scott Anthony points out in his new book The Silver Lining, low-end disruption can bring growth.

Our research in Europe has shown that a strategic cost-reduction initiative coupled with a low-end disruption helps meet two corporate goals with just one initiative. Low-end disruption and cost reduction are two sides of the same coin. They are two extremes of the same continuum, just as the same enzyme is used in the body to balance two biological processes.

When it comes to cost reduction, European managers try to apply one of these alternatives:

1. Rank the Income Statement cost and expenses account by size and determine a percentage of reduction for each.
2. Negotiate a layoff with the government (a step that would be unnecessary in the United States).
3. Kill the product features managers think the customer won’t notice.

Instead of relying so much on your gut, we propose this methodology to deliver a high-growth product along with a significant cost reduction.

• Step 1: Understand that company insiders can almost never truly understand what features the customer actually values. The reason is that companies analyze the market in from the point of view of the way they make money. They never see the actual shape of the market. It is next to impossible for a company to understand the job its customers are hiring it for, let alone try to improve its products based on that job. This is a well-proven reason to seek outside help in understanding the rugged landscape of customer jobs your company is making money from.
   
• Step 2: Create a Base of Competition/Product Matrix: Pick one of your products and create a spreadsheet for it. Insert a column for each and every one of its features. Also, insert five rows in the matrix with the following entries: “Functionality 1”, “Reliability 1”, “Convenience 1”, “Adaptation 1”, “Personalization 1”.
   
• Step 3: For each row, classify the features listed in each column as follows: If the feature listed describes a Functionality, then insert a mark in that row. Then create an additional row beneath “Functionality 1” with the name “Functionality 2”. Continue doing this with the rest of features and bases of competition until you have them all assigned.
   
• Step 4: Prepare a mini-survey with the content of the matrix. Interview no more than 25 customers. Using customer-friendly terms, ask them, essentially, “by what percentage is this feature overserved?” Tell them that if they answer 100 it will mean the feature is just good enough. If they answer less than 100 that will mean the feature is underserved, and if they answer more than 100 it will mean they are overserved. The amount over or under 100 will be the percentage by which customers are over- or under-served. Please don’t make this survey statistically significant — the sample very small deliberately, so the sample error can prevent you from reducing reinvestment in features that might still be slightly underserved.
   
• Step 5: Calculate the mean of the percentages from all rows exceeding 100 that refer to a functionality or a reliability. Then subtract to that mean 100. Now subtract the mean from all the percentages. Convert to a dollar amount using your current cost-allocation budget. Chances are this is a significant cost reduction.
   
• Step 6: The number in dollars you calculated from the previous step is your total cost reduction. Decide how much of that you want to keep, and use the rest to launch a low-end Disruption.
   
• Step 7: You have now a great starting point to launch a low-end disruption. Just pick the matrix of the product you just prepared and reinvest the desired amount of money in the rows that contain the words “convenience”, “adaptation” or “personalization.”

The next time your CEO asks you how to use innovation to deliver short-term growth, show your new low-end disruptive product concept and explain the rationale used. Our experience in Europe with this has been very positive. Results obtained with this methodology are usually counterintuitive for senior managers, and they normally consider that refreshing. We have used this methodology several times now during the current economic crisis and still haven’t found a CEO unwilling to give it a try.

In times of crisis, the objectives of cost reduction, growth for the next quarter, and making a successful, more convenient, and affordable product are not inversely related. They are actually regulated through the same enzyme — your company’s values. You can’t change them, and values are put to the test in times of crisis. If you can build a solid argument to launch a simplified, more personalized product to a customer who is now much less willing to pay, you will create a precedent that will prove really helpful for your company’s future strategic positioning.

Juan Pablo Vázquez Sampere is a partner at Stratemic and an Associate Professor at IE Business School in Madrid, Spain.  

About two months ago, a colleague convinced me to sign up for Verified Identity Pass' Clear service. I dutifully filled in the forms, had the company capture my fingerprints and take pictures of my iris, forked over a couple hundred bucks, and received my Clear pass in the mail.

I wouldn't quite say the Clear card changed my life, but the next couple months of travel (at airports that had special Clear lines) were a breeze. I made at least one flight because of Clear. I started recommending the service to my colleagues.

Then, last week, a sad email arrived in my inbox:

"At 11:00 p.m. PST today, Clear will cease operations. Clear's parent company, Verified Identity Pass, Inc. has been unable to negotiate an agreement with its senior creditor to continue operations."

I'm honestly not all that surprised at this outcome. Clear was a beautiful technological solution. The machines worked reliably, processing my fingerprints almost instantaneously. The service delivered on its value proposition.

But I couldn't help but notice how Clear employees always outnumbered Clear customers in my visits to Boston, New York, Washington, D.C., and Cincinnati.

While I have no inside knowledge about Verified's operations, I'm willing to wager that the company fell into two traps that make it hard for innovators to build new growth businesses.

Read the rest at Scott's Havard Management blog, Innovation Insights.