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The 4 Types of Innovation and the Problems They Solve

• Greg Satell

Disruption isn’t the only approach.

Innovation is, at its core, about solving problems — and there are as many ways to innovate as there are different types of problems to solve. Just like we wouldn’t rely on a single marketing tactic for the life of an organization, or a single source of financing, we need to build up a portfolio of innovation strategies designed for specific tasks. Leaders identify the right type of strategy to solve the right type of problem, just by asking two questions: How well we can define the problem and how well we can define the skill domain(s) needed to solve it. Well-defined problems that benefit from well-defined skills fall into the category of “sustaining innovation.” Most innovation happens here, because most of the time we’re trying to get better at something we’re already doing. “Breakthrough innovation” is needed when we run into a well-defined problem that’s just devilishly hard to solve. In cases like these, we need to explore unconventional skill domains. When the reverse is true — skills are well-defined, but the problem is not — we can tap into “disruptive innovation” strategies. And when nothing is well-defined, well, then we’re in the exploratory, pioneering realm of basic research. There are always new problems to solve; learn to apply the solution that best fits your current problem.

One of the best innovation stories I’ve ever heard came to me from a senior executive at a leading tech firm. Apparently, his company had won a million-dollar contract to design a sensor that could detect pollutants at very small concentrations underwater. It was an unusually complex problem, so the firm set up a team of crack microchip designers, and they started putting their heads together.

• Greg Satell is Co-Founder of  ChangeOS , a transformation & change advisory, an international keynote speaker, and bestselling author of  Cascades: How to Create a Movement that Drives Transformational Change . His previous effort,  Mapping Innovation , was selected as one of the best business books of 2017. You can learn more about Greg on his website, GregSatell.com  and follow him on Twitter @DigitalTonto  and on LinkedIn .  

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What Is an Innovation Strategy? And How to Develop One

Our post explains how to develop an innovation strategy and why it's important. We also share best practices to support your strategy, now and into the future.

Carlos Mendes

Co-founder @ innovationcast, march 8, 2024.

Many organizations talk about innovation, and others even implement an innovation program of some kind — sometimes creating entire innovation departments. But few organizations we talk to feel that their innovation efforts are truly effective or are producing the results they want: a consistent stream of new ideas that move the business towards its goals. 

That stems from not having a clear innovation strategy .

An effective innovation strategy defines what your organization wants to accomplish with its innovation efforts. That is, as we’ll explain below, getting clarity on:

The problem(s) you are trying to solve

The goals you are trying to achieve

When you have this, you have clarity on why you want an innovation program in the first place and what it should accomplish (aka, what success looks like). Then, you can build an innovation process to achieve those goals.

(Notably, an innovation strategy is not the same as a process. Your innovation process is the tactical how of getting there: who will do what, what the different stages of the process look like, what systems and tools you’ll use, etc.)

This article describes what goes into a successful strategy and how to create one. At the end, we’ll show how one of our customers used InnovationCast to support their innovation strategy.

You can schedule a free consultation with us to learn more about our approach and solutions.

How to Create an Innovation Strategy

Below are three main steps that we find are effective in developing an innovation strategy.

1. What is the Strategic Problem?

Start by defining your strategic problem. It could be one problem or several problems, but it’s important to get agreement on what these are. Without understanding your main problem areas, your innovation roadmap won’t have a clear destination.

Examples of strategic problems include:

How to expand your existing business in a saturated market or enter a new one.

How to adapt to disruptive innovation by a new entrant with an innovative business model or new technology.

How to cope with increased regulatory scrutiny, such as evolving data privacy laws.

The strategic problem describes the status quo you want to overcome and, once defined, is the stepping stone toward expressing goals and outcomes.

2. What Innovation Goals Do You Want to Achieve?

Your innovation goal answers the question of what you will do in order to resolve your strategic problem.

Let’s take the example of an accounting software provider for solo dentists or small dental practices. Their sales growth has stagnated due to new challengers entering the market every year (accounting software is a competitive space with most products having similar features). The company finds itself needing to spend more and more on ads to maintain the same growth rates as more competitors enter the market. 

This forces a decision between continually growing their marketing spend or diversifying their product offerings to capture new market segments. They note that several customers have suggested offering an inventory management module. Others left reviews of their software, saying the user experience should be improved with a modern and responsive UI.

To decide on which innovation goals to pursue, the company would need to examine the core issues of its defined strategic problem: increased competition, the need for product differentiation, and unmet customer needs.

They might then formulate one or more innovation goals:

Diversify the product by developing new features or products as a technological innovation that addresses unmet market needs for competitive advantage, which would make their product more attractive to both existing users and new customer segments.

Enhance the customer experience by focusing on innovations that improve the user experience, streamline bookkeeping processes, and integrate with other software used by dentists.

Build an ecosystem around their core business by developing a platform strategy where their software serves as a hub for various other tools, like inventory management, customer relationship management (CRM), and appointment scheduling.

Enter into strategic partnerships by identifying potential partnerships with suppliers of dental equipment or other software providers to offer bundled solutions or integrated services that add value beyond traditional bookkeeping.

Once the company sets its innovation goals, these would need to be aligned with its business strategy. For example, the innovation goal of enhancing the customer experience might directly support their overall business strategy of retaining and expanding the customer base. It would also shape their value proposition that states they provide software specifically designed for small dental practices.

To formulate your own innovation goals, think of asking these questions:

Where do you need to innovate the most, and why?

How exactly should you innovate to meet your business targets? And does everyone agree with your vision?

Next, Define How You Will Reach Your Goals

Next, you have to outline the details of how you will arrive at your destination, including:

Who takes responsibility for steering innovation efforts — should it be a dedicated innovation department, for example?

Who participates in innovation — that is, who can provide new ideas and give feedback through active and open discussion? Which innovation channels will you use? Will you solicit ideas from only your employee base or from outside user groups as well?

Which resources will be allocated to testing and validating new ideas, and who will be in charge of such activities and projects?

Which process will be used to achieve the desired innovation pipeline? This entails your phased approach to idea collection, vetting, testing, validation, and ultimately implementation. It’s basically all the tasks, activities, and roles involved.

What does success look like in the first year of your project? This sets expectations around incremental innovation and ensures your vision isn’t just about ideation but is also about achieving tangible results for long-term success.

What are the potential risks and impediments to strategic innovation? What might get in the way? What can we learn from the past?

Note: A key part of your innovation plan is your process . You can manage your innovation processes manually (with templates and disparate tools), or use an innovation management system like InnovationCast to enable collaboration and support your organization’s innovation efforts at each stage of your workflows. 

In upcoming sections, we’ll talk about developing processes and how our innovation management platform can support you along the way. But first, here’s a quick look at a case study outlining how Novo Nordisk determined its innovation strategy and plan. 

An Innovation Strategy Example in Healthcare

Leading life sciences company Novo Nordisk supplies over 50% of the world’s insulin, and is a pioneer in biopharmaceutical technology and scientific discovery. The company — which employs over 50,000 people in 80 offices worldwide — has made innovation a key pillar of its business operations.

Seeing digital transformation as a pathway towards successful innovation, the company set up a team (called the Business Innovative Garage) to identify and drive growth opportunities created by emerging technology.

They identified three main innovation goals:

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Innovation in Business: What It Is & Why It’s So Important

• 08 Mar 2022

Today’s competitive landscape heavily relies on innovation. Business leaders must constantly look for new ways to innovate because you can't solve many problems with old solutions.

Innovation is critical across all industries; however, it's important to avoid using it as a buzzword and instead take time to thoroughly understand the innovation process.

Here's an overview of innovation in business, why it's important, and how you can encourage it in the workplace.

What Is Innovation?

Innovation and creativity are often used synonymously. While similar, they're not the same. Using creativity in business is important because it fosters unique ideas. This novelty is a key component of innovation.

For an idea to be innovative, it must also be useful. Creative ideas don't always lead to innovations because they don't necessarily produce viable solutions to problems.

Simply put: Innovation is a product, service, business model, or strategy that's both novel and useful. Innovations don't have to be major breakthroughs in technology or new business models; they can be as simple as upgrades to a company's customer service or features added to an existing product.

Access your free e-book today.

Types of Innovation

Innovation in business can be grouped into two categories : sustaining and disruptive.

• Sustaining innovation: Sustaining innovation enhances an organization's processes and technologies to improve its product line for an existing customer base. It's typically pursued by incumbent businesses that want to stay atop their market.
• Disruptive innovation: Disruptive innovation occurs when smaller companies challenge larger businesses. It can be classified into groups depending on the markets those businesses compete in. Low-end disruption refers to companies entering and claiming a segment at the bottom of an existing market, while new-market disruption denotes companies creating an additional market segment to serve a customer base the existing market doesn't reach.

The most successful companies incorporate both types of innovation into their business strategies. While maintaining an existing position in the market is important, pursuing growth is essential to being competitive. It also helps protect a business against other companies affecting its standing.

Learn about the differences between sustaining and disruptive innovation in the video below, and subscribe to our YouTube channel for more explainer content!

The Importance of Innovation

Unforeseen challenges are inevitable in business. Innovation can help you stay ahead of the curve and grow your company in the process. Here are three reasons innovation is crucial for your business:

• It allows adaptability: The recent COVID-19 pandemic disrupted business on a monumental scale. Routine operations were rendered obsolete over the course of a few months. Many businesses still sustain negative results from this world shift because they’ve stuck to the status quo. Innovation is often necessary for companies to adapt and overcome the challenges of change.
• It fosters growth: Stagnation can be extremely detrimental to your business. Achieving organizational and economic growth through innovation is key to staying afloat in today’s highly competitive world.
• It separates businesses from their competition: Most industries are populated with multiple competitors offering similar products or services. Innovation can distinguish your business from others.

Innovation & Design Thinking

Several tools encourage innovation in the workplace. For example, when a problem’s cause is difficult to pinpoint, you can turn to approaches like creative problem-solving . One of the best approaches to innovation is adopting a design thinking mentality.

Design thinking is a solutions-based, human-centric mindset. It's a practical way to strategize and design using insights from observations and research.

Four Phases of Innovation

Innovation's requirements for novelty and usefulness call for navigating between concrete and abstract thinking. Introducing structure to innovation can guide this process.

In the online course Design Thinking and Innovation , Harvard Business School Dean Srikant Datar teaches design thinking principles using a four-phase innovation framework : clarify, ideate, develop, and implement.

• Clarify: The first stage of the process is clarifying a problem. This involves conducting research to empathize with your target audience. The goal is to identify their key pain points and frame the problem in a way that allows you to solve it.
• Ideate: The ideation stage involves generating ideas to solve the problem identified during research. Ideation challenges assumptions and overcomes biases to produce innovative ideas.
• Develop: The development stage involves exploring solutions generated during ideation. It emphasizes rapid prototyping to answer questions about a solution's practicality and effectiveness.
• Implement: The final stage of the process is implementation. This stage involves communicating your developed idea to stakeholders to encourage its adoption.

Human-Centered Design

Innovation requires considering user needs. Design thinking promotes empathy by fostering human-centered design , which addresses explicit pain points and latent needs identified during innovation’s clarification stage.

There are three characteristics of human-centered design:

• Desirability: For a product or service to succeed, people must want it. Prosperous innovations are attractive to consumers and meet their needs.
• Feasibility: Innovative ideas won't go anywhere unless you have the resources to pursue them. You must consider whether ideas are possible given technological, economic, or regulatory barriers.
• Viability: Even if a design is desirable and feasible, it also needs to be sustainable. You must consistently produce or deliver designs over extended periods for them to be viable.

Consider these characteristics when problem-solving, as each is necessary for successful innovation.

The Operational and Innovative Worlds

Creativity and idea generation are vital to innovation, but you may encounter situations in which pursuing an idea isn't feasible. Such scenarios represent a conflict between the innovative and operational worlds.

The Operational World

The operational world reflects an organization's routine processes and procedures. Metrics and results are prioritized, and creativity isn't encouraged to the extent required for innovation. Endeavors that disrupt routine—such as risk-taking—are typically discouraged.

The Innovative World

The innovative world encourages creativity and experimentation. This side of business allows for open-endedly exploring ideas but tends to neglect the functional side.

Both worlds are necessary for innovation, as creativity must be grounded in reality. You should strive to balance them to produce human-centered solutions. Design thinking strikes this balance by guiding you between the concrete and abstract.

Learning the Ropes of Innovation

Innovation is easier said than done. It often requires you to collaborate with others, overcome resistance from stakeholders, and invest valuable time and resources into generating solutions. It can also be highly discouraging because many ideas generated during ideation may not go anywhere. But the end result can make the difference between your organization's success or failure.

The good news is that innovation can be learned. If you're interested in more effectively innovating, consider taking an online innovation course. Receiving practical guidance can increase your skills and teach you how to approach problem-solving with a human-centered mentality.

Eager to learn more about innovation? Explore Design Thinking and Innovation ,one of our online entrepreneurship and innovation courses. If you're not sure which course is the right fit, download our free course flowchart to determine which best aligns with your goals.

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The 4 Types of Innovation and the Problems They Solve

By: Greg Satell

Disruption isn't the only approach.

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Innovation is, at its core, about solving problems — and there are as many ways to innovate as there are different types of problems to solve. Just like we wouldn’t rely on a single marketing tactic for the life of an organization, or a single source of financing, we need to build up a portfolio of innovation strategies designed for specific tasks. Leaders identify the right type of strategy to solve the right type of problem, just by asking two questions: How well we can define the problem and how well we can define the skill domain(s) needed to solve it. Well-defined problems that benefit from well-defined skills fall into the category of “sustaining innovation.” Most innovation happens here, because most of the time we’re trying to get better at something we’re already doing. “Breakthrough innovation” is needed when we run into a well-defined problem that’s just devilishly hard to solve. In cases like these, we need to explore unconventional skill domains. When the reverse is true — skills are well-defined, but the problem is not — we can tap into “disruptive innovation” strategies. And when nothing is well-defined, well, then we’re in the exploratory, pioneering realm of basic research. There are always new problems to solve; learn to apply the solution that best fits your current problem.

Jun 21, 2017

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Information Technology

Harvard Business Review Digital Article

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The Importance of an Innovation Strategy: Aligning Efforts for Success

• September 20, 2023
• Business Strategy & Innovation

In today’s rapidly evolving business landscape, companies that lack a clear innovation strategy risk falling behind their competitors. According to recent data, 82% of successful organizations credit their innovation strategy as a key driver of their growth and success.

By aligning their innovation efforts with their overall business strategy, these companies are able to stay ahead of the curve and meet the ever-changing needs of their customers.

In this article, we will explore the importance of having an innovation strategy and how it can significantly impact a company’s ability to achieve success in today’s dynamic marketplace.

Table of Contents

Key Takeaways

• An innovation strategy aligns innovation efforts with the overall business strategy.
• Companies without an innovation strategy may end up with a grab bag of approaches.
• Routine innovation leveraging existing capabilities is important, not just disruptive innovation.
• Innovation strategy promotes alignment among diverse groups within an organization.

Understanding the Role of Innovation Strategy

The role of innovation strategy is crucial in aligning efforts and ensuring the success of an organization’s innovation initiatives. It plays a vital role in driving business growth by providing a roadmap for innovation that aligns with the overall business strategy.

Innovation strategy is not just about creating new products or services; it also encompasses the relationship between innovation strategy and organizational culture. An effective innovation strategy considers the values, beliefs, and norms of the organization, and how they can support and encourage innovation.

It sets the tone for a culture of creativity, experimentation, and risk-taking, which are essential for driving innovation. By integrating innovation strategy with organizational culture, companies can create an environment that fosters innovation and enables them to stay competitive in today’s rapidly changing business landscape.

The Components of an Effective Innovation Strategy

Senior leaders must actively define how innovation creates value for customers and the company in order to develop an effective innovation strategy. To grab the attention of the audience, here are three key components of an effective innovation strategy:

Continuous Improvement: An effective innovation strategy focuses on continually improving products, processes, and services to meet the ever-changing needs of customers. This requires a commitment to ongoing learning, experimentation, and adaptation.

Customer Centric Innovation: A customer-centric approach is essential for an effective innovation strategy. By understanding the desires, pain points, and preferences of customers, senior leaders can guide innovation efforts towards creating solutions that truly add value and enhance the customer experience.

Strategic Alignment: An effective innovation strategy aligns with the overall business strategy. It ensures that innovation efforts are in line with the company’s goals, objectives, and competitive circumstances. This strategic alignment helps in making trade-off decisions and allocating resources effectively.

Incorporating these components into the innovation strategy enables senior leaders to drive a culture of innovation and create sustainable competitive advantage for their organization.

Consequences of Neglecting an Innovation Strategy

Neglecting to develop an innovation strategy can lead to missed opportunities and hinder a company’s ability to adapt and thrive in a rapidly changing market. Without a well-defined strategy, companies may find themselves struggling to prioritize and align their innovation efforts. Conflicting priorities can arise, causing confusion and inefficiency within the organization.

Additionally, the adoption of best practices without proper alignment can further exacerbate the problem. While best practices can provide valuable insights, they may not necessarily be the right fit for every company’s unique circumstances. An innovation strategy helps address these challenges by providing a framework for decision-making, ensuring that resources are allocated effectively, and enabling the organization to focus on the right elements of the innovation system.

Advantages of Implementing an Innovation Strategy

Implementing an innovation strategy enables companies to effectively allocate resources and make informed decisions about which elements of the innovation system to focus on. This strategic approach brings numerous advantages to the table, including:

Creating an innovative culture: An innovation strategy fosters a culture that values creativity, experimentation, and continuous improvement. It encourages employees to think outside the box and contribute new ideas, driving the organization forward.

Overcoming innovation barriers: An innovation strategy helps identify and overcome barriers that may hinder the innovation process. It allows companies to proactively address challenges such as resistance to change, lack of resources, and risk aversion, enabling them to navigate these obstacles with confidence.

Driving sustained growth and competitive advantage: By implementing an innovation strategy, companies position themselves to consistently generate new ideas, products, and services. This continuous innovation fuels growth, enhances customer satisfaction, and gives organizations a competitive edge in the market.

With an innovation strategy in place, companies can cultivate an environment that nurtures creativity, break through barriers, and drive long-term success through innovation.

Exploring Different Types of Innovation

Crowdsourcing is a practice that leverages the collective intelligence of a diverse crowd to solve complex problems and generate innovative solutions.

When exploring different types of innovation, it is important to evaluate innovation performance and stay updated on innovation trends.

Different types of innovation, such as routine, disruptive, radical, and architectural innovation, each have their own unique characteristics and benefits.

Evaluating innovation performance involves assessing the effectiveness and impact of these different types of innovation in achieving business objectives and creating value for customers.

By understanding the strengths and limitations of each type, companies can make informed decisions about resource allocation and strategic direction.

This exploration of innovation trends and evaluation of innovation performance allows organizations to stay at the forefront of innovation and continuously improve their ability to generate breakthrough solutions.

The Significance of Routine Innovation

Routine innovation, which builds on existing technological competences and fits with the existing business model, plays a crucial role in fueling a company’s growth and maintaining high margins. It is not just about disruptive innovation or radical breakthroughs; routine innovation is an important component of a company’s overall innovation strategy.

Here are three reasons why routine innovation is significant:

Enhances Organizational Culture: Routine innovation promotes a culture of continuous improvement and learning within the organization. It encourages employees to constantly seek opportunities for incremental advancements, fostering an environment that embraces change and encourages creative thinking.

Optimizes Resource Allocation: Routine innovation allows companies to leverage their existing capabilities, maximizing the utilization of resources. By focusing on incremental improvements, companies can allocate their resources more efficiently, avoiding the risks and costs associated with radical innovations.

Sustains Competitive Advantage: Routine innovation helps companies stay ahead of the competition by continuously enhancing their products, processes, and services. It enables companies to keep up with changing customer demands and market trends, ensuring that they remain relevant and maintain their market share.

Incorporating routine innovation into an organization’s culture and resource allocation strategy is essential for long-term success and growth. It drives continuous improvement, optimizes resource utilization, and sustains a competitive advantage in the dynamic business landscape.

Unleashing the Power of Disruptive Innovation

Unleashing the power of disruptive innovation requires companies to embrace new business models and challenge existing industry norms. Disruptive innovation challenges the status quo by introducing new products, services, or processes that disrupt established markets and create new opportunities.

It is not solely dependent on technological advancements, but also on the ability to create a business model that can capture value and transform industries. To harness the potential of disruptive innovation, companies must be willing to take risks, experiment, and adapt their strategies.

One way to foster disruptive innovation is through crowdsourcing for problem-solving. By opening up the process to a diverse crowd, companies can tap into a wealth of ideas, perspectives, and expertise to solve complex challenges. Crowdsourcing allows for faster, more efficient, and more creative problem-solving, leading to breakthrough innovations that can reshape industries.

Embracing Radical Innovation for Transformation

Embracing radical innovation requires companies to explore new technological and business model disruptions that have the potential to transform industries and drive growth. This form of innovation, characterized by its pure technological focus and the need for significant investments in research and development, can be a game-changer for companies with a few high-margin products.

However, the adoption of radical innovation and its successful integration into an innovation strategy can present challenges. Some of the key challenges in implementing an innovation strategy that embraces radical innovation include:

• Overcoming resistance to change and fostering a culture of experimentation and risk-taking.
• Balancing the allocation of resources between routine and radical innovation efforts.
• Managing the integration of radical innovation into existing business models and processes.

Addressing these challenges requires strategic thinking, strong leadership, and a willingness to challenge the status quo.

Harnessing the Potential of Architectural Innovation

Architectural innovation combines technological and business model disruptions to create new ways of earning profits from products or services. It is a form of innovation that shapes the future of business models, offering exciting opportunities for companies to stay competitive in a rapidly changing market.

Embracing architectural innovation challenges organizations to navigate through uncertainty and explore uncharted territories. By reimagining how products or services are designed, produced, and delivered, companies can unlock new sources of value and differentiate themselves from competitors.

Architectural innovation requires a strategic mindset that balances risk-taking with careful analysis of market trends and customer needs. It involves thinking outside the box and being willing to break traditional boundaries.

Companies that successfully harness the potential of architectural innovation can revolutionize industries and propel themselves towards long-term success.

Balancing Innovation Types for Optimal Results

To achieve optimal results, companies must carefully balance the different types of innovation based on their specific needs and the rapidly evolving market they operate in. This requires making trade-offs and effectively allocating resources.

In the pursuit of innovation, companies face the challenge of choosing between routine, disruptive, radical, and architectural innovations. Each type has its own benefits and drawbacks, and finding the right balance is crucial.

By understanding the innovation trade-offs and considering factors such as the company’s competitive circumstances and the need for technological breakthroughs, companies can make informed decisions about resource allocation.

Whether it’s focusing more on radical innovation in rapidly evolving markets or investing in building and extending platforms for growth, the allocation of resources should align with the company’s strategic goals.

The Leadership Role in Crafting an Innovation Strategy

Senior leaders play a crucial role in crafting an effective innovation strategy that aligns with the company’s objectives and guides resource allocation. They are responsible for setting the direction and vision for innovation within the organization.

By understanding the market, identifying opportunities, and evaluating potential risks, senior leaders can shape the innovation strategy to drive growth and stay ahead of the competition.

Additionally, senior leaders play a key role in fostering a culture of innovation and creating an environment where ideas can thrive. One way they can do this is by incorporating crowdsourcing into the innovation process.

Crowdsourcing can bring fresh perspectives, diverse ideas, and increased creativity to problem-solving, leading to faster and more efficient innovation outcomes. By leveraging the power of the crowd, senior leaders can tap into a wide range of expertise and insights, ultimately driving innovation success.

Leveraging Crowdsourcing for Innovation Success

Leveraging the power of the crowd, companies can tap into a wide range of expertise and insights to drive innovation success through crowdsourcing. Crowdsourcing, when done effectively, offers numerous benefits for organizations striving for innovation:

• Access to diverse perspectives: By involving a large number of individuals, companies can gain insights and ideas from a diverse range of backgrounds and experiences.
• Accelerated problem-solving: Crowdsourcing allows companies to quickly gather a multitude of potential solutions and test them efficiently, leading to faster problem-solving.
• Enhanced creativity: The collective intelligence of the crowd can spark new and innovative ideas that may not have been generated internally.

However, there are also challenges associated with crowdsourcing:

• Quality control: Ensuring the quality and relevance of contributions from the crowd can be a challenge, as not all submissions may meet the required standards.
• Intellectual property concerns: Companies must carefully navigate intellectual property rights and protect their own innovations while engaging with the crowd.
• Managing expectations: Setting clear guidelines and expectations for the crowd can be crucial to avoid misunderstandings and ensure productive collaboration.

Despite these challenges, companies that effectively harness the power of crowdsourcing can gain a competitive edge in driving innovation and achieving success.

Creating a Culture of Innovation

Creating a culture of innovation requires fostering an environment that encourages creativity and embraces risk-taking. In order to foster creative thinking and build an innovative workforce, organizations must create a safe space for employees to explore new ideas and take calculated risks.

This can be achieved through open communication channels, flexible work environments, and supportive leadership. Encouraging collaboration and cross-functional teams can also stimulate innovative thinking and problem-solving.

Building an innovative workforce involves attracting and retaining top talent who are curious, adaptable, and willing to challenge the status quo. Providing opportunities for professional development and offering incentives for innovation can further motivate employees to think outside the box.

Ultimately, creating a culture of innovation requires a commitment from leadership to champion and support the exploration of new ideas, fostering a mindset that is open to change and continuous improvement.

Overcoming Challenges in Implementing an Innovation Strategy

To effectively implement an innovation strategy, organizations must address the challenges that arise and find ways to overcome them. Overcoming implementation challenges is crucial in fostering an innovation culture within the organization.

Here are three key challenges that organizations commonly face when implementing an innovation strategy:

Resistance to change: Many employees may resist new ideas and processes, fearing the unknown and potential disruptions to their routines. Overcoming this resistance requires effective communication, training, and creating a sense of urgency around the need for innovation.

Lack of resources: Implementing an innovation strategy often requires additional resources, both financial and human. Finding ways to allocate these resources effectively and securing buy-in from stakeholders is essential.

Organizational silos: Collaboration and cross-functional teamwork are vital for successful innovation. Breaking down silos and fostering a culture of collaboration can be a significant challenge but is crucial for implementing an innovation strategy.

Measuring and Evaluating the Impact of Innovation Strategy

In order to ensure the success of an innovation strategy, it is crucial for companies to measure and evaluate the impact of their innovation efforts. Measuring innovation impact allows organizations to assess the effectiveness of their strategies and make data-driven decisions. By evaluating innovation effectiveness, companies can determine whether their initiatives are meeting their objectives and generating the desired outcomes.

To measure innovation impact, companies can use various metrics such as revenue growth, market share, customer satisfaction, and employee engagement. These metrics provide insights into the overall performance and effectiveness of the innovation strategy. Additionally, organizations can conduct surveys, interviews, and focus groups to gather qualitative feedback and understand the perception of stakeholders.

Evaluating innovation effectiveness involves analyzing the outcomes achieved through innovation initiatives and comparing them to the set goals. This evaluation helps organizations identify areas of improvement, refine their strategies, and allocate resources more effectively.

Frequently Asked Questions

How can companies measure and evaluate the impact of their innovation strategy.

Companies can measure and evaluate the impact of their innovation strategy by analyzing key performance indicators, conducting customer surveys, tracking market share, and assessing financial metrics. This helps determine the effectiveness and success of their innovation efforts.

What Are Some Common Challenges That Companies Face When Implementing an Innovation Strategy?

Resistance and skepticism are common challenges companies face when implementing an innovation strategy. Overcoming resistance to change, managing skepticism, and effectively implementing the strategy are crucial for ensuring the success of innovation efforts.

How Can Companies Create a Culture of Innovation Within Their Organization?

Building an innovative workforce and fostering a creative environment are key to creating a culture of innovation within an organization. By encouraging collaboration, providing resources, and supporting risk-taking, companies can inspire their employees to think outside the box and drive innovation forward.

What Are Some Strategies for Overcoming Resistance and Skepticism Towards Innovation Within a Company?

To overcome resistance and skepticism towards innovation, companies can implement strategies such as building trust through transparent communication, creating incentives for innovation, providing training and support, and showcasing successful innovation projects to inspire others.

How Can Companies Effectively Leverage Crowdsourcing to Drive Innovation and Problem-Solving?

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A Powerful Methodology for Creative Problem Solving

By the Mind Tools Content Team

Projects don't always run smoothly. Even with all the analysis and data you need at your fingertips, sometimes you just can't see a way forward. At times like these, you need to develop creative solutions to the problems you face.

Chances are you already know about brainstorming , which can help with this sort of situation. But brainstorming depends on intuition and the existing knowledge of team members, and its results are often unpredictable and unrepeatable.

TRIZ, however, is a problem-solving philosophy based on logic, data and research, rather than on intuition.

It draws on the past knowledge and ingenuity of thousands of engineers to speed up creative problem solving for project teams. Its approach brings repeatability, predictability and reliability to the problem-solving process and delivers a set of dependable tools.

This article walks you through the essentials of TRIZ.

What is TRIZ?

TRIZ is the Russian acronym for the "Theory of Inventive Problem Solving," an international system of creativity developed in the U.S.S.R. between 1946 and 1985, by engineer and scientist Genrich S. Altshuller and his colleagues.

According to TRIZ, universal principles of creativity form the basis of innovation. TRIZ identifies and codifies these principles, and uses them to make the creative process more predictable.

In other words, whatever problem you're facing, somebody, somewhere, has already solved it (or one very like it). Creative problem solving involves finding that solution and adapting it to your problem.

TRIZ is most useful in roles such as product development, design engineering, and process management. For example, Six Sigma quality improvement processes often make use of TRIZ.

The Key TRIZ Tools

Let's look at two of the central concepts behind TRIZ: generalizing problems and solutions, and eliminating contradictions.

1. Generalizing Problems and Solutions

The primary findings of TRIZ research are as follows:

• Problems and solutions are repeated across industries and sciences. By representing a problem as a "contradiction" (we explore this later in this article), you can predict creative solutions to that problem.
• Patterns of technical evolution tend to repeat themselves across industries and sciences.
• Creative innovations often use scientific effects outside the field where they were developed.

Using TRIZ consists of learning these repeating patterns of problem and solution, understanding the contradictions present in a situation, and developing new methods of using scientific effects.

You then apply the general TRIZ patterns to the specific situation that confronts you, and discover a generalized version of the problem.

Figure 1, below, illustrates this process.

Figure 1 – The TRIZ Problem-Solving Method

Here, you take the specific problem that you face and generalize it to one of the TRIZ general problems. From the TRIZ general problems, you identify the general TRIZ solution you need, and then consider how you can apply it to your specific problem.

The TRIZ databases are actually a collection of "open source" resources compiled by users and aficionados of the system (such as the 40 Principles and 76 Standard Solutions, which we look at, below).

2. Eliminating Contradictions

Another fundamental TRIZ concept is that there are fundamental contradictions at the root of most problems. In many cases, a reliable way to solve a problem is to eliminate these contradictions.

TRIZ recognizes two categories of contradictions:

• The product gets stronger (good), but the weight increases (bad).
• Service is customized to each customer (good), but the service delivery system gets complicated (bad).
• Training is comprehensive (good), but it keeps employees away from their assignments (bad).

The key technical contradictions are summarized in the TRIZ Contradiction Matrix . As with all TRIZ resources, it takes time and study to become familiar with the Contradiction Matrix.

• Software should be complex (to have many features), but simple (to be easy to learn).
• Coffee should be hot (to be enjoyed), but cool (to avoid burning the drinker).
• An umbrella should be large (to keep the rain off), but small (to be maneuverable in a crowd).

You can solve physical contradictions with the TRIZ Separation Principles . These separate your requirements according to basic categories of Space, Time and Scale.

How to Use TRIZ Principles – an Example

Begin to explore TRIZ by applying it to a simple, practical problem.

For example, consider the specific problem of a furniture store in a small building. The store wants to attract customers, so it needs to have its goods on display. But it also needs to have enough storage space to keep a range of products ready for sale.

Using TRIZ, you can establish that the store has a physical contradiction. The furniture needs to be large (to be useful and attractive), but also small (to be stored in as little space as possible). Using TRIZ, the store owners generalize this contradiction into a general problem and apply one of the 40 Principles of Problem Solving – a key TRIZ technique – to it.

They find a viable general solution in Principle 1 – Segmentation. This advocates dividing an object or system into different parts, or making it easy to take apart. This could lead the owners to devise flat-pack versions of their furniture, so that display models can take up the room that they need while inventory occupies much less space per unit. This is the specific solution.

You, too, can use the 40 Principles of Problem Solving, or the 40 Inventive Principles, and the Contradiction Matrix to help you with your problem-solving.

Five Top TRIZ Concepts and Techniques

TRIZ comes with a range of ideas and techniques beyond the basic principles outlined above. Some are conceptual and analytical, such as:

• The Law of Ideality. This states that any system tends to become more reliable throughout its life, through regular improvement.
• Functional Modeling, Analysis and Trimming. TRIZ uses these methods to define problems.
• Locating the Zones of Conflict. (This is known to Six Sigma problem-solvers as " Root Cause Analysis .")

Some are more prescriptive. For example:

• The Laws of Technical Evolution and Technology Forecasting . These categorize technical evolution by demand, function and system.
• The 76 Standard Solutions . These are specific solutions devised to a range of common problems in design and innovation.

You can use one such tool or many to solve a problem, depending on its nature.

TRIZ is a system of creative problem solving, commonly used in engineering and process management. It follows four basic steps:

• Define your specific problem.
• Find the TRIZ generalized problem that matches it.
• Find the generalized solution that solves the generalized problem.
• Adapt the generalized solution to solve your specific problem.

Most problems stem from technical or physical contradictions. Apply one of hundreds of TRIZ principles and laws to eliminate these contradictions, and you can solve the problem.

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Author Talks: Why problem solving is the key to innovation

In this edition of Author Talks , McKinsey Global Publishing’s Raju Narisetti chats with Dr. Sheena Iyengar, S.T. Lee Professor of Business at Columbia Business School, about her new book, Think Bigger: How to Innovate (Columbia Business School Publishing, April 2023). Iyengar shares insight into her research on problem solving and explains how adaption and critical decision making affect innovation. An edited version of the conversation follows.

What problem are you trying to solve with this book?

Think Bigger: How to Innovate is a book that walks you step by step through how you can create a solution to any problem you’re trying to solve.

It seems like everything that there is to know about innovation  or that we could know about innovation has already been done. Yet if you read all those books about innovation carefully, essentially all of them are based on knowledge that’s old.

Our current practices in the business world—and even, I might add, in academic settings—have not updated their approaches to teaching people how to be creative, how to ideate in line with those recent advances. We still tell people, effectively, to either mind wander—sort of daydream—or to brainstorm. Brainstorming was invented in 1930, although we have updated it and made it better than it was in 1938. Given our current knowledge about the way the mind works, we can do better than waiting for a mind wander to have a result or a so-called aha moment or a flash of insight to happen. We can do better than brainstorm.

Essentially, the problem that the Think Bigger: How to Innovate methodology solves for is the question, “What do you need to do to have an idea?” It’s not about waiting for an aha moment. It’s not about going out and brainstorming. It’s what you can actually do, step by step, to get an idea.

There is also a personal reason behind the book for you.

There is a very personal, emotional reason. I was born with a rare eye disease: retinitis pigmentosa. I have a rare form of it; I went blind as a very young person. One of the things that happens when you’re growing up disabled is that you’re forever told about all the choices you can’t have. At the same time, you have this message that you’re always given, particularly in American culture, that you can grow up and do and be whatever it is you want to do and be, as long as you put your heart and mind to it.

If you think about it, both those messages are essentially extreme and incorrect. It’s not the case that I can’t do anything. It’s not the case that I can do anything. The questions are, how do I figure out what choices I have? What choices can I create?

That was a lifelong struggle for me. It was something that I very much started to try and tackle growing up and then as an undergrad. And certainly my dissertation and much of my research up until Think Bigger: How to Innovate had to do with choice and how I, as a disabled person, have choices.

What I also began to realize, though, is that my way of creating choices, either when there are no known choices out there for me or when people just don’t realize what choices might be available to me, could be a method that was based on science. What I realized is that this isn’t just me who has this struggle of, “How do you create meaningful choices?”

When I look around me, every single person is wondering, “What dreams are possible for me? Which of those dreams can I turn into reality, and what’s that process, step by step?” Rather than waiting for chance encounters or waiting for an aha moment to hit you, maybe I can actually make it more systematic for you, so you have a how-to toolkit.

As step one, why is it important to choose the right problem?

Let’s take the invention of ice cream. Who made ice cream this globally accessible thing? She was a woman by the name of Nancy Johnson  who, in the 1800s, was the wife of a chemist. She was a 50-year-old woman who was a missionary. Well one of the things that happened back then is that, yes, you had ice cream, but it was very, very expensive. George Washington paid close to $200 for a little thing of ice cream when he was president.

In the early 1800s, Nancy Johnson asks the question, “How do you make ice cream accessible?” Now back then, they would take a bowl, and they would fill it with ice. Then they would take a smaller bowl, fill it with cream, and then stir, stir, stir, stir, stir, stir. It would form lots of lumps, and it would get harder and harder to stir as it’s thickening. It was backbreaking labor.

The first question was, “How do you keep it cold as you’re stirring it?” Because it would often melt as they would be stirring it. “How do you make it easier to make so it’s not backbreaking labor, and how do you keep it from forming lumps?”

What does Nancy Johnson do? She takes a water pail, which had been around already for 400 years. But the pail was much bigger than the bowl. She then fills that with ice, and then inside it, she puts the cream into something made of pewter. She asked herself, “How do you keep it cold? Well when men go to the tavern, what do they drink their beer in that keeps it cold? Pewter.”

She puts the cream in the pewter container, then said, “How do I make the labor less backbreaking?” Well let’s use a hand crank,” which was used for grinding up spices and coffee. “Let’s attach to that hand crank spatulas.” But the spatulas would have holes in them so that as you’re stirring, the liquid could go through, which would make it a lot easier to stir. She learned about the role of spatulas with holes in them from runaway slaves who were often coming from sugar plantations where they had to mix hot, sugary liquids to make molasses. And to prevent it from forming crystals, they would have these holes in the spatula.

Essentially, you create a culmination of water pail, plus the pewter bowl, plus the hand grinder, plus the spatula with the holes in it. You’ve now created what was dubbed as a disruptive technology back in 1843.

What are the steps here? You define the problem, which is step one. You break it down into its most important subparts: How do I keep it cold? How do I make it less cumbersome to make? How do I reduce the formation of lumps? For each subpart of your problem, you search far and wide so you can go beyond your industry. You go beyond your main domain  of inquiry. You ask yourself how other industries solve for this subproblem—for example, with pewter, the hand grinder, the spatula with the holes in it. You now combine those pieces together in a unique way. And voilà, you have an innovation that not only solved the problem but now becomes scalable .

That is essentially the Think Bigger: How to Innovate method; that is essentially what I teach people how to do. In step one, you start by defining the problem . Most of the time, it’s actually not as self-evident as, “How do I make ice cream accessible?” I would suspect that even Nancy Johnson took a while before she understood how to define that problem. As Einstein was reported to have said, “If I had an hour to save the planet, I would spend the first 55 minutes thinking about the problem and the last five minutes thinking about the solution.”

Step two is to break the identified problem into subcomponents?

Once you have your problem statement, which we always phrase as a question—"What’s the problem I’m trying to solve?”—in order that you can have an open mind, you then break it down. You break it down into its most important pieces.

Every problem has a bazillion things that have to be solved. You’re never going to solve everything. I call it “the 80 percent rule.” You break it down into the highest-priority parts. If I were to solve for these three to five different subparts, then I’ll solve for about 80 percent of my problem.

Let’s take a sport that’s very near and dear to our hearts: basketball. The guy who invented basketball was James Naismith, who, in 1891, was this gym teacher in Massachusetts. He was asked to come up with a sport that young people could play in the winter. In spring and summer, when the weather was nice, they could play football, they could play rugby, they could play lacrosse, and they could play soccer. But how do you keep them occupied and burn off their energy in the winter in Massachusetts, when there was a lot of snow?

What were the things he had to solve for? Well he had to make sure the sport was playable indoors. He had to make sure that whatever sport they played wouldn’t be so rough—you couldn’t have them falling on the ground; it was going to be a rough floor, and that could hurt somebody. It had to feel challenging. It had to be fast, competitive, and burn off some energy.

He’s looking around at soccer, football, et cetera, and says, “What if we take a ball, like from soccer? Think about a ball, what can I do with it indoors? Well passing it sounds like a good idea. But obviously we don’t want to push. That could lead to injury. But I don’t want to have them throw the ball to a line; that seems awfully easy in an indoor space. A net seems a little too complicated. What do I do? Well how about this sport that nobody ever really knows about? It’s called ‘duck on the rock.’ A little ‘duck’ sits on a rock, and you throw things at it to get the duck to fall off. What if we did something like that indoors?” He took a peach basket, and he made a hole in it. “What if we throw the soccer ball into that?”

The reason that James Naismith was able to create basketball was that he understood what subparts of his problem he needed to solve for. That’s what enabled him to create the game.

Step three is asking what the problem will solve for?

You’ve got your problem, and you’ve broken it down. Now most people tend to start generating solutions. That’s certainly a very natural temptation to have. I always say, at that point, create a “sparking lot.” These are just sparks. Whatever solution you’re going to come up with right now is partial.

It’s important at this stage, when you know a bit about the problem, to step back and ask yourself, if you were to find the ideal solution, how should it feel? How are you going to know what solution is better for you versus worse for you? By really knowing how you want that solution to feel.

You know, we think feelings are bad things and shouldn’t be a part of any creative or decision-making process. That’s incorrect. Feelings are the only things that can truly guide you in determining what your selection criteria is. You still have to be systematic about it. You can’t be random about when you use your feelings. That’s why we do it right now in step three.

How do you want your final solution to feel? You have to uncover your wants. You know there’s the famous story about Bill Gates. It is about when he first created his basic software; he attached his software to a desktop computer called Altair. People really weren’t interested in the computer, but they were very interested in his software. He kept finding people who were pirating his software. It made him mad, and he would write these nasty letters to all these computer hobbyists saying, “You guys are just pirates.”

He was pretty angry about it as long as he thought his fate and his desires were attached to Altair. Then one day, when he was walking around a conference floor with computer hobbyists, he discovered they were all using his software. They were exchanging it on all kinds of machines. And then a light bulb went off in his head. “Wait, what is it that I really want? Is it that I want Altair to succeed? Or is it that I want people to start using this software?” After he had that insight, he essentially terminated his contract and went on to take his software to IBM and other companies. The world has never been the same.

Step four is to search both in and out of the box?

Once you get to step four, you’re now ready to start the ideation process, the solution-generation process. Step four I call “search in and out of the box.” The reason that I call it that is, so often, we tell people to do out-of-the-box thinking. Then we stick them in the room and tell them to brainstorm.

Well, brainstorming is a great way to share the knowledge  that’s in the room. But it’s not out-of-the-box thinking. Out-of-the-box thinking requires you to search far and wide for how different industries and different people at different points in time have solved for analogous problems.

Out-of-the-box thinking requires you to search far and wide for how different industries and different people at different points in time have solved for analogous problems.

You collect those tactics or strategies. Let’s take the case of Henry Ford and the invention of the Ford car. Henry Ford did not invent the car. Henry Ford did not invent the assembly line. Henry Ford did not invent any of the elements that went on to create the Model T. He searched far and wide and found the pieces he needed to put together.

Back then, a car cost $2,000, which was unaffordable. So Ford thought, “How do I reduce the cost of labor? How do I reduce the amount of time it takes to make a car? How do I reduce the cost of materials?” Very simple, subparts to the problem.

“How do I reduce the cost of labor? Well by creating specialization.” The assembly line was actually already being used by Oldsmobile. Now you have a system where one person knows about putting together the engine, another person knows about putting together the frame, and so forth. Each person has to learn only their particular thing, which makes them faster and faster at doing that thing.

“How do I reduce the amount of time that it takes to make a car?” At that time, it took 12.5 hours to build a car. When one of Ford’s engineers was visiting the slaughterhouses of Chicago, they observed something very interesting. In the early 1900s, when they would take an animal apart to pack it and send it on a train to various locations, they would use something called “the moving disassembly line.” Ford already had an assembly line for the car. What happens if you add the moving business to this? It reduces the amount of time it takes to build a car from 12.5 hours to about two hours. That’s huge!

“Now how do I reduce the cost of materials?” Back then, you could have your car any color you wanted. But Ford was famous for saying you could have your car in any color you wanted, as long as it was black. That’s because there was this new paint that had come on the market called japanning. It looked like a black lacquer—very much like Japanese art— and would dry in less than 24 hours. The average paint color back then would take about seven to 14 days to dry. Once you put together japanning with a moving assembly line, not only do you reduce the amount of time it takes to build a car, but you also can bring down the price. They brought down the price of that car to around $250. It was tremendous.

Notice what’s happening here. It’s not like Ford’s trying to become an interdisciplinary businessperson or scientist. No, he’s just learning from different industries and importing into his own world tactics that worked in other industries. He’s importing them into his world and adopting and editing them for use for his problem. And that’s the core to thinking bigger, whether it’s creating a business, whether it’s being a revolutionary scientist, whether it’s being a revolutionary leader .

What does step five, choice mapping, do?

In Think Bigger: How to Innovate , the alternative to brainstorming that I present is choice mapping. The way to think about choice mapping is just that it is a more efficient and deliberative approach to getting that flash of insight. Rather than waiting around for that flash of insight to happen, perhaps randomly, I am essentially telling you what you can do for your cognitive functioning to have that flash of insight. I’m very structured about it and very deliberative about teaching people how to do it.

The alternative to brainstorming that I present is choice mapping. The way to think about choice mapping is just that it is a more efficient and deliberative approach to getting that flash of insight.

Let me give you an example of how choice mapping works. I’m going to use one of our great heroes. Up until now, we’ve mainly talked about products. But the Think Bigger: How to Innovate method is not just to use for products, big and small. It also explains the ways ideas are formed. That’s true of any idea, including such big ideas as democracy, for example.

Let’s consider Mahatma Gandhi. He was not just an amazing person who did an amazing thing in his lifetime, but he essentially created a technique that we use even now for how to voice discontent when you don’t have power. Now when we analyze somebody like Gandhi, we try to analyze what his childhood was like. We try to analyze what his character was. What was the complexity of his character? Who were the people he knew? What were the ideas that influenced him? All of that is a really interesting part of his narrative. But those are not the elements that made his idea.

Stepping away from his story—the story itself is of course amazing, and everybody should learn it—I want to just focus in on the pieces he brought together to create his idea. He is trying to solve the problem of getting a large group of people who are very different from one another—different in caste, different in religion, different in language—in a bazillion different ways. It’s a very diverse population, the Indian colony. Now he wants to help them get freedom. How do they create a form of rebellion that has some likelihood of success, given that they’re fighting against a mighty power?

First, is there any method that anybody’s ever used to go against powerful entities and win? Turns out he has an example from the Brits themselves: the women’s suffragette movement. Hunger strikes. In fact, Gandhi notes in various writings how the Indians should take a page from the women’s suffragette movement. Then he was influenced by the work of Tolstoy and the communal farms that he created in Russia. In fact, if you look at the original farms that Gandhi created in South Africa, they have many of the same elements that Tolstoy created.

Now Gandhi has the problem of how to bring a bunch of people who are very different from one another to all agree with each other and have a kind of common cause. That’s where, drawing from Tolstoy, he creates the ashram.

Third, how to get people who are naturally suspicious of foreign ideas to adopt the principle of nonviolence and more of a community feeling with one another? That’s where he brings in very traditional garb and very traditional language from Hinduism.

Bring these elements together, and you have Gandhi’s idea of nonviolent civil disobedience. I would say the best demonstration of how he put all these pieces together was the Salt March.

Step six, the final one, you call ‘the third eye.’

The third eye is asking the question, “Do you see what I see?” Imagine at the end of step five, you’ve generated a whole bunch of ideas. Choice mapping can generate a lot more solutions than any other method. They’ll be unique solutions to the problem that you’ve set forth. Now that you’ve picked a solution, and you like it, it’s up in your head. Now the question is, how do I figure it out if it’s worth taking to the next level?

We have a method for that. That method is not to go out and ask people, “Do you like it?” We don’t even know if they know what we’re talking about. What is this thing we want them to either like or dislike? The third eye is learning what others see or hear or experience or imagine as we present to them our idea.

This is not prototyping; this is before that. One of my favorite examples of someone who very effectively used the third eye, without calling it that, was Paul McCartney. I had the honor and privilege of being able to interview him when I was working on my book. We talked about the process he used when creating the song “Yesterday.” The apocryphal story that we often hear is just that he woke up one morning and the tune was in his head; that was it. That’s certainly a true part of the story, but it’s not the whole story.

He woke up one morning with this tune in his head, and he didn’t want to forget the tune. So he put some nonsensical words to the tune, and then he began to hum the tune to people. He wouldn’t ask them, “Hey do you like it?” He would ask them, “Have you ever heard this tune before?” He would hum this tune to lots of people, his fellow band members, other professional musicians, strangers, and friends. Again and again, what he heard was, “Well no. It sounds familiar, but I’ve never heard this tune.” Little by little, as he’s doing this, and he’s watching their reactions, he’s realizing there is some magic to this tune.

This inquiry is not just about discovering yes or no. He’s continuing to iterate, building out his tune. As he’s building it out, he finally gets to the point where he is sitting in a car in Portugal, and he starts coming up with lyrics.

Visit Author Talks to see the full series.

Sheena Iyengar is the S. T. Lee Professor of Business at Columbia Business School. Raju Narisetti is the leader of McKinsey Global Publishing and is based in McKinsey’s New York office.

Comments and opinions expressed by interviewees are their own and do not represent or reflect the opinions, policies, or positions of McKinsey & Company or have its endorsement.

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Innovation: Your solution for weathering uncertainty

What is innovation?

Amid shifting landscapes and ever-evolving technologies, one constant drives innovation and impact – Design thinking. Putting the user at the heart of the solution, this set of strategic and cognitive practices creates fresh perspectives capable of achieving what matters most to customers and, when applied cross-operationally, can propel a business forward.

As the world becomes increasingly interconnected and complex, we face new challenges daily; from climate change to a global pandemic, recessions to hunger. We are in constant flux; whether you’re a business owner or beginning your career, launching a start-up, or simply adapting to an ever-changing plan, we all need to thrive in unprecedented change and uncertainty. Design thinking provides a tool to tackle these problems with a solution-focused, action-oriented and human-centred framework. As Albert Einstein said,  "We can't solve problems by using the same kind of thinking we used when we created them."

Tim Brennan of Apple's Creative Services department drew a picture that illustrates design thinking: he drew a question mark to the left, an entangled line as a road map in the middle, and a dollar sign to the right to convey that questions can be converted into profits with design. Unlike many other problem-solving methodologies, design thinking is not problem-focused. This process draws upon reason, intuition, imagination, and systemic logic, to explore possibilities of what could be.

A design-driven mindset considers humans behind devices, users behind applications, and desired outcomes behind problems. The process starts with a   deep empathic understanding and a set of strategic and cognitive practices focusing on what matters most to users. Rooted in motivation to create desired outcomes that benefit customers, empathy builds a deep understanding of what we design. One can design the way to operate, lead, create and innovate. As Roger Martin, author of  The Design of Business  and former Dean of Rotman School of Management, states, "Design-thinking firms stand apart in their willingness to engage in the task of continuously redesigning their business… to create advances in both innovation and efficiency — the combination that produces the most powerful competitive edge."

Producing innovative solutions with design thinking

To remain competitive, organisations must innovate new approaches and techniques to stand out. Successful leaders of design-centric companies in the S&P 500 are aware of the Design Value Index results and the return on investment of design. These leaders know that they can   leverage their business if they blend people’s desires with technologically and economically feasible solutions. Innovative thinking and design skills are most relevant at this intersection. 

Consider the design of one of the United States' most impressive urban spaces: Central Park in New York. In 1857, the country's first public landscape design competition was held to select the plan for this park. The fundamental challenge — allowing intercity vehicular traffic without disturbing the park's pastoral atmosphere — was deemed impossible by all the other participants in the competition. Of all the applications, only one — by Calvert Vaux and Frederick Law Olmsted — met all design requirements. Unlike other participants, Olmsted and Vaux applied design thinking to their problem-solving approach and dispelled the assumption that the park is two-dimensional. Instead, they imagined the park in three dimensions and submerged four roads 2.5 meters below its surface to create one of the world’s most iconic parks. Design thinking nurtures fresh perspectives that spark imaginative and unconventional solutions.  

Human-centred approach and empathy

The design thinking approach converts empathy-based, facilitated, and structured processes into actionable strategies. Think of Microsoft, one of the biggest companies in the world; wherever you go, you will see its logo — a reason why Bill Gates is one of the world’s wealthiest business magnates. Microsoft made computers user-friendly and affordable, thus allowing more people worldwide to work more efficiently. Moura Quayle, the author of  Designed Leadership , asserts, "Great leaders aspire to manage by design, with a sense of purpose and foresight. When applied to management, lessons learned from the design world can turn leaders into collaborative, creative, deliberate, and accountable visionaries."

The world's most successful entrepreneurs understand the relationship between design thinking and impact. Impact, driven by innovation, requires a design mindset to empathise with users truly and properly define the problem to shape sustainable solutions. Tim Brown, CEO and President of IDEO, puts it, "It’s not ‘us versus them’ or even ‘us on behalf of them.’ For a design thinker, it has to be ‘us with them’."

Strategy, design and impact

Strategic design is the backbone of innovation. This mindset cultivates creativity with new ways of thinking about people, products, processes, business, leadership, and management so companies can adapt to rapid change. Applying design thinking principles to a business strategy’s foundation meets customer needs in a way that future-proofs businesses. 

Organisations of all sizes benefit greatly from embedding design thinking across operations. Embracing this problem-solving method requires trial and error and the guidance of trusted partners. The possibilities are endless with design thinking. 

About the author behind the article

Ogan  Ozdogan is a senior leader in the IT industry with over 15 years of experience in sales, data management and consulting and he worked with large enterprises, government entities and senior executives and has an entrepreneurial spirit. Ela Unlucerci is a Strategy and Execution Analyst at Metyis, who has international experience in management consulting, financial analysis and organisational development.

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