Category Archives: innovation methods

Breaking the Barriers of Creativity

Break_the_barriersWhat holds people back from being creative? Is it a lack of time? Do you not have a budget for doing creative work? Perhaps you work in an industry where there are lots of regulatory or legal barriers that seem to make it hard to generate novel ideas.

For many people, these types of constraints seem frustrating and overwhelming. They appear to be strict boundaries that seem to limit your ability to be creative.

But guess what? Surprisingly, constraints are not a barrier to creativity. In fact, constraints are a necessary condition for creativity to occur. Your brain works harder and smarter when given tight boundaries. The more constrained you are, the more creative you’ll be.

So what is it that seems to limit our creativity? The answer is a condition known as fixedness. Fixedness is a cognitive bias that limits our ability to see the world around us differently than what we’re used to. There are at least three types.

First is functional fixedness. Functional fixedness makes it hard for you to consider an object doing a job other than what it you know it to do. When you see a dry erase marker, for example, you instantly relegate it to the job of...well...marking. If you could force it in your mind to be available to do another job, you end up with a creative idea.

One of my pet peeves is when someone takes a permanent marker and writes on a white board. Okay, maybe I’ve done it once or twice.  When that happens, take a regular dry erase marker and write over it. Voila! Permanent marks are gone! Now that’s creative.

The second type is structural fixedness. This type makes it really hard to imagine objects having a different structure than what we’re used to. Let’s go back to our dry erase marker. Why are these markers always straight? That’s fixedness. What if we could imagine a curved marker or perhaps one with a grip. Instead of holding it like a pencil, we can bend it so it fits in our hand better. Again, that’s creative.

Finally is what we call relational fixedness. This type of fixedness makes it very hard to imagine two objects having a relationship that wasn’t there before. As one object changes, the other object changes. Our mind doesn’t form these connections naturally because of relational fixedness.

Look at our simple whiteboard marker. What if it could change colors automatically when writing on different areas of the white board? Are there certain applications where that would be more convenient. When we find that application, we’ve generated a creative idea. We’ve broken through our fixedness to create new value.

We all have all three types of fixedness, and they hold back our ability to generate new possibilities. The good news is that you can break all three types. But you need a set of cognitive tools to do it.

Innovating to Drive Customer Lifetime Value

CustomersImagine a hypothetical scenario where you’re forced to make a choice between innovating for Customer A or Customer B. Which one would you choose?

Well, it depends on how much they buy from you. If Customer A spends more money on your products than Customer B, you’d select that one. But wait a minute. What if Customer A costs you more in terms of selling and customer service. She may spend more, but you actually earn less on her than on the other customer. So then, you would switch because the net profit is higher.

But hold on. There’s one more factor you have to consider. You make less profit on Customer A, but what if you expect to retain her for a longer period of time than you retain Customer B? You make more profit on one sale from him, but if you can continue selling to this lady for the next ten years, then you’ll do much better.

The way you make this type of decision in reality is with a tool called Customer Lifetime Value, or CLV for short. CLV is a formula that helps an innovation manager arrive at the dollar value associated with the long-term relationship with any given customer. It tells you just how much a customer relationship is worth over a period of time.

There are various formulas to calculate CLV, and some are more complex than others. The simplest way to estimate lifetime value for a typical customer is the following equation:

(unit selling price – variable costs) X (number of repeat purchases per year) X (average retention time in years)

Let’s do an example. Imagine you’re selling men’s wallets. Your wallet sells for $89 and it costs you $29 to make a sell it. The typical customer buys a new wallet every three years, and you expect to retain him for an average of 20 years. The CLV formula gives us:

($89-$29) X (.333) X (20 years) = $400

So what? Well, calculating the CLV helps in several ways. First, it tells us that we wouldn’t want to spend more than $400 acquiring and retaining any one customer. Spending more than that and we start losing money. It also helps you decide which customers are more valuable to acquire and retain, like our example earlier.

CLV encourages innovators to focus on the long-term value of customers instead of investing resources in customers of lower value. And it makes you sensitive to how much you’re spending on acquiring and retaining customers and whether it’s effective.

How and Why You Want to Strip Great Ideas of Their Identity

Don't Judge MeYou've heard that old adage. Don't judge a book by its cover. The same holds true in creativity. You want to resist the temptation of judging ideas depending on who it came from. Yet, its very difficult for us to do this. Here's why. If we like the person who generated it, we tend to like their idea. And if we don't like that person, well, let's just say we might see a few more flaws than we might have otherwise.

Now you and your colleagues might not even be aware that you're doing this. And what this means for you in practice is that you have to find a way to strip ideas of their identity.

You can boost the creative out put of your team just by making sure these ideas don't get thrown out prematurely. Here's how you do it. When you're facilitating a session to generate ideas, announce to the group that there's a new ground rule and the ground rule is simply this, people cannot put a name to any idea. That means that people are, are going to have to stop saying things like, hey that was my idea or hey, let's go back to that great idea that Michael had earlier.

People will find this hard to do. So, you're going to have to be firm about the rule. Another good technique is to tell people that whenever they have an idea, they have to write it down on a piece of paper, again, without putting anybody's name to it. Every so often go around and collect those pieces of paper, and then pass them out randomly to people in the group, and have people take an idea and read it aloud to the rest of the group. That keeps the ideas anonymous.

And finally, another good technique is to have people work in pairs or groups of three. And whenever they share their idea, they do it as coming form the entire group, not just from one team member. And what this does is it makes it more difficult for other people in the group to figure out where that idea came from. It helps them eliminate that natural tendency to have a bias to that idea. Now these techniques might take a little bit more time and may feel a bit awkward, but trust me it's well worth it.

You'll boost you're creative output at work by making sure good ideas don't get thrown out too quickly.