The Innovation Mindset – Eight Essential Steps to Transform Any Industry

And I describe that mindset as an insatiable curiosity, a passion for problem solving and an embracing of change. And oftentimes individuals are intimidated about the word "innovation," and they don't think that they are the equivalent of Edison or Musk or Jobs or Gates or many other innovators (many of whom I've noted have been male personas).

And so I wrote this book because, throughout my career, whether I've been in large corporations as an "intrapreneur" (innovating, making change, bringing new products to market), or as the head of a, the founder of a start-up (the four companies that I had the honor of co-founding), I have found myself relying on that innovation mindset in order to make change, bring new products to market. And through my journey, I made a lot of mistakes.

I found that it was very challenging at times to gather the kind of information and resources and network and access to capital that one needed to be successful. So, as you said in your opening, this being a handbook and a guide, that's exactly what I wanted to create.

First of all, I wanted to demystify it so that every individual that has an interesting idea knows that they can possibly take it to market. And I want more people to try their hand at innovation. And I wanted individuals to have their path accelerated by learning what I learned from my mistakes.

I believe that, in this book, I can accelerate a desiring or a would-be innovator's path to market, as well as help to better craft the innovators that reside inside large corporations.

It can be very challenging to also lead change in a corporation and I think by following these steps in this disciplined methodology, it can help individuals in large corporations march their way through the process with the right kinds of contacts, network, justification for their idea that they need.

Rachel Salaman: Now, you've already mentioned you do have a great track record of innovation, but it actually dates back to your childhood, doesn't it? I wonder if you can tell us how your dad trained you and your brother in the innovation mindset, maybe with the sugar packet example?

Lorraine Marchand: Oh yes, my sugar packet story!

And I'd love everybody, after they hear my story, to think about their own sugar packet story. I believe everybody has a story like this.

Growing up, my dad, who was an inventor (we didn't have the term "innovator" at the time – we were still really focused on inventions in large corporations or independent inventors of new technologies that were seeking intellectual property or patents)…

Around the house, he would always challenge me and my brother to find the solution to every problem that we encountered. We always had to find three solutions. He was never satisfied with one way to solve a problem or one way to do any task; we always had to come up with three. And one summer, he really brought that point home to bear.

We had a diner in our town. It was called the Hot Chops Cafeteria, and he took us there one summer three days in a row, when I was 13 and my brother was 10. And our job as we sat in the big red vinyl booths of the diner, eating our scrambled eggs and orange juice, was to observe what was slowing down table turnover.

So, we had our composition notebooks, we had our three-colored pens, we had a stopwatch... he even got us permission to interview the busboys and waitresses. And at the end of day three we had determined that what was slowing down table turnover was sugar packet dispensing. So, as individuals would put their sugar in their coffee or tea, they'd crumple the packet, the granules would spew on the floor and the table, and it was taking a lot of extra time to clean it up.

So, from there we started brainstorming ways that we could solve the problem. We came up with things like a liquid sugar dispenser, where a trash receptacle could be located – you kind of get the idea. But ultimately what we designed was a product that we called the Sugar Cube. And it held the unused packets, it held the used refuse and then to make sure that it had usefulness beyond just holding sugar packets, we made sure that it had four sides to it and it could display local advertising.

So, we took the idea to the manager of that Hot Chops. She loved it so much she introduced us to the regional manager. And, within six months, our Sugar Cube had gone from MVP into production and was now distributed throughout the Hot Chops Cafeteria in the Greater Baltimore/Washington area of the U.S. where I grew up.

And so, I learned that problem solving was not only fun, but it was lucrative. And it has just stayed with me ever since. And when I tell that story, which is obviously a light-hearted humorous story, but I like to kind of underscore two things.

Number one, for individuals that are telling me, "Wow, I just don't think I'm creative. Maybe I was a long time ago, but I don't know how to get back there," I say, "You know what? The age of 12 and 13 is so formative!" We are (finally!) little adults, I think, and our minds work in interesting ways, and who doesn't dream and do interesting things when they are 12 or 13? So, I think it can really be a great way to tap back into your own innovation spirit.

But it also underscores the methodology that I lay out in my book, which I learned from my dad, which is that every innovation has to solve a problem that a customer is willing to pay for. And that was what I really learned in that Hot Chops Cafeteria experience.

We looked at a problem, we confirmed that it was an issue or a pain point for our customer, and with them by our side, we designed a solution that they thought was useful and that they wanted to pay for. And we went through a very tried and true methodology of bringing that product to launch.

And it's simplified, I know, and a lot of people love the simplification of it, and it makes it accessible and that's what I want to do. I want more people to bring their ideas forward and I hope, with that story, they can see just how simple and basic and foundational the process can be.

Rachel Salaman: It is such a great story and it is a great springboard, in fact, into the first step of the innovation process as outlined in your book, which is identifying the right problem to solve. And that's the key, isn't it, that it has to be the right problem. How do we find that right problem?

Lorraine Marchand: I think that identification of the problem requires observation. So, I talk about observing the problem in its "natural habitat."

This happens a lot, for example in the healthcare field or in the consumer products field, where we can watch what's going on, let's say, in the waiting room of a doctor's office, what's happening in that queue, what's working and what's not working? Or, if we are looking at consumer products and the features that individuals like or don't like…

These are places where you can observe the problem, the customer, in the natural habitat, and find evidence of the problem. And I do like to say that a problem isn't a one-off. You do have to have evidence that it's happening at a repeated basis.

And then I think that that identification has to also include a series of questions. And so, in order to really understand the problem, again, I'd like to look at it through the eyes of the customer, the consumer, and really assess: what work do they do, what is their day-to-day like, what's happening when they are experiencing that problem, how long are they are experiencing, when, how?

And then also, just how significant a problem is this? Because, as I mentioned, it needs to be something that the customer is willing to pay for so it needs to be a fairly significant impediment or affect a lot of individuals, or lead to something that would be greatly revenue producing or cost saving. So, those are some of the ways.

And when people tell me that, "Wow, I don't really think I'm very good at that," I say, you know what, this is your homework. I'm going to give you some homework. Get yourself a notebook, your electronic notebook or your composition book that I used when I was 13, and become an observer every day. Every day write down three problems that you observe.

Not only will it make you more observant about what's going on at your work, at your children's school, when you're going to the gym, when you're walking the dog, when you're filling up with gasoline or petrol at the gas station, but you'll also be a student of recording these things.

And at the end of a few weeks, as you look back at your journal, you'll find out that perhaps there are a lot more problems than you realize that affect you and other individuals. And this can be the place from which you choose the problems you want to solve and where you can drive and foment your own change.

Because I do believe that the problem... it isn't some problem "over there, across the pond" that someone else is dealing with. The best problems to solve are the ones that you have personal connection to, that you have personal involvement with, and that you have the credibility and the credentials to actually solve.

So particularly, if you are just getting started, I think you need to find a problem close to home that you have some personal knowledge and experience with.

Rachel Salaman: OK, so let's say that we've identified a problem that we want to solve. Now we need ideas or solutions, and your book is full of tips and advice about how to think of those. You share the five rules of brainstorming: could you briefly tell us what they are?

Lorraine Marchand: Yes, absolutely.

I think one of the important rules of brainstorming is it does have to be time bound. (I usually say 30 minutes is a good time session for a brainstorm.)

It has to be non-judgmental. (So, it's a participatory sport, everybody has got to participate, they've got to feel safe participating and there is no judgment of the ideas as they are being offered.)

You also have to keep one idea at a time. (So, it's not as though a brainstorm is an unstructured free-for-all where everybody is talking over each other. It really is a very structured type of process where you allow one person to contribute, put something on the whiteboard, share an idea, and then someone builds off of that.)

And then, finally, after you have all of your ideas, you do need to go through a process of prioritization or criteria that will help you determine how you are going to down-select the best three solutions and then the one that ultimately fits.

So that's just a little bit in terms of some of the brainstorming approaches as well as some of the rules that I like to put in place as we are brainstorming. Despite the fact that it sounds like a fun free-for-all, it actually does need to be a structured process.

You're listening to Expert Interview from Mind Tools.

Rachel Salaman: So, you end up with your three best solutions: how do you choose between the three best ones?

Lorraine Marchand: So that is absolutely a process of prioritization and determining the fit of the solution. So what I normally like to say is that after you've chosen three solutions, now what we're going to do is, we're going to analyze each of them.

And we're going to look at the pros and the cons of each of them, we're going to go back to that original problem statement, we're going to go back to our understanding of the customer and their pain points, and now, we are going to say which of these solutions best fits the customer.

And then, with the pros and the cons, we also have to figure out what is the likelihood or the ease of effort of implementing this solution, and then what's the impact. So, if we think about the impact of the solution, which solution is going to fit the problem, or solve more components of the problem, the most?

But then we also have to look at which of these solutions is the hardest or the easiest to implement. Because if you have a solution that hits all of your needs but it's going to be very resource intensive, time intensive, to implement, it may not be the best one to take forward – especially in the early stages of a start-up where you want to get out in the field, you want to get your MVP and your voice of the customer going. You might want to take something that's not quite as intense to develop.

So in the book I lay out matrices that help you make these kinds of decisions and choices. And ultimately that will help you choose the best-fit solution, the most impact, the greatest ease of implementation that you can then move into your minimal viable product or minimal viable prototype, which now allows you to create a bit of a test case that you can take forward with your customers.

Rachel Salaman: Yes, and what can you tell us about that next stage with the minimal viable product, MVP?

Lorraine Marchand: The benefits of an MVP are that it allows you to test your idea very early with a minimal investment.

And what I mean by that is the purpose of the MVP is to test as few features as possible just to determine whether you are going to get customer acceptance or customer buy-in.

Let me just give you a quick example.

Zappos was one of the first online shoe companies and it was founded in Los Angeles, California. And when Nick Swinmurn decided that he wanted to try testing the idea of whether people would buy footwear online, he started with two very difficult-to-procure shoes in the LA area.

It was a low-profile boot and a running shoe, and these were difficult to find in the local retail stores. And he figured that maybe other people were struggling to find their favorite footwear and that maybe online could be an option for them.

When he created his MVP, he just wanted to test whether people would go online to buy footwear. So what he did is he created a flyer, he put the two shoes on the flyer, he went to one zip code in LA, he dropped the flyer in everybody's mailboxes and then he created the landing page of a website. And when individuals came on to the landing page, they could click and determine which shoe they wanted to buy.

He didn't take any money from them. He just had their order. And then, what people don't know is that, behind the scenes, he was actually driving all over California in order to purchase the shoe that the person wanted, and hand deliver it to their homes.

After several months, he had enough traffic coming through on the website, and enough confirmation that individuals were willing to buy shoes online, that he launched Zappos. And it was very successful, and he exited to a very large online retail conglomerate some years later.

So, I like to bring that example up because: think about the minimal product that he created and you have to think about, "what is it that I really want to know?"

I really don't want to know whether people are willing to click through and give me their credit card at this particular time, I really don't need to know whether people are going to want to choose from 20 different kinds of shoes, or how long they are willing to wait, or whether I can get the delivery people to bring them on time.

All I really want to know is, are they willing to buy a shoe online?! And he proved that they were.

So, he got early customers through that process. (And an MVP is a great way to get your product in front of early adopters and start to build a customer base.) He tested his idea before he sunk a lot of money into it and then he was able to build on that very basic premise of a product.

Rachel Salaman: That's a fantastic example and it leads into the next step, which you've mentioned earlier, which is about seeking out the voice of the customer. And in your book, you say we need at least 100 of them, which will sound really daunting to a lot of people. Could you talk us through some ways to gather that all-important voice of 100 customers?

Lorraine Marchand: Yes. A couple of things.

You have multiple ways that you can do this customer research (and I will comment on it), and number two, your customer research isn't just a moment in time and something that you're done with.

I believe that customer research is something that you're doing in an ongoing fashion. Not 100 every time, but it should be something that you are doing on a regular basis. And if you are, you will constantly be getting in fresh perspective and make sure that your product is viable.

Ways that you can do your customer research… I usually like to suggest that you start with some one-on-one interviews with a select group of customers and this can be maybe 10 customers you reach out to one-on-one.

You have a 30-minute discussion and, again, the point of this is to really understand the problem as they see it, not your solution at this point. You really want to understand the problem they are experiencing, the pain points, how they would describe it, how the problem is fitting into their day-to-day, what they've tried, what's worked, what hasn't worked, what are they willing to change, what are they willing to give up in terms of solving that problem?

So that one-on-one can really help you get a lot of great information about how your customer's thinking.

From there, you can start to put together your hypothesis about the problem, and maybe even some early ideas around your solutions or your MVP. And now we can move on to some small groups, so we could call it a focus group, maybe a group of five to eight, five to seven or eight different customers.

You could do this through social media, you could do a Facebook event, you could do a LinkedIn event, you could invite people to a virtual meeting and have a session with them. And you can really benefit from hearing these customers discuss the problem and have a real richness around the situation and just listening to their conversation about it.

And then finally, you want all of this to inform a survey. And clearly a survey now could go out to maybe 40 or 50 individuals. Again you can use something like LinkedIn, you could use Facebook, you could use Survey Monkey. But now you take your hypothesis about the problem, you take some of your ideas about the solution and obviously, a survey is quantitative.

So now I could say "On a scale of one to 10, how big of a problem is this for you? On a scale of one to 10, how do you feel about this particular solution?"

So now, with all this qualitative information and now this quantitative information, I have a very nice package that I can put together to describe the problem, to describe the customer, what they are experiencing, and how well my solution is going to fit their needs. And you can present this research in a nice package that reinforces each other.

Rachel Salaman: And it doesn't have to cost a lot, does it? I mean something like Survey Monkey, you just have to put in the time to do it properly.

Lorraine Marchand: I think because of the advent of social, it is so much easier and so much more cost-effective now to do research than ever before.

And I also find that we just live in an era where people are very… Think about it. You give your Amazon reviews, we give our reviews to just about everything now, anything that we do online… And so people are actually very comfortable and they enjoy giving the feedback.

So I think culturally we've moved into an era where consumers want to be asked for their opinion and they like taking the two or three minutes that it takes to give their opinion. So I think you can mostly find that there are customers out there ready and willing to speak with you.

If you do have a more sophisticated question… so obviously in some situations you may need to incent your target audience with a gift card. If you're interviewing someone, let's say a physician, whose time is very precious, you may need to pay a small stipend.

And for that there are consulting agencies that have databases or lists of different types of professionals, I would say. And you could go through those types of organizations in order to get professionals like investor types or physicians or more skilled or difficult-to-reach types of individuals… so there are agencies that you can use for that.

Rachel Salaman: Now, even if you do all that, you're still experimenting with your innovation and it's not likely that you'll get it right first time. It's interesting that you say that rather than think of this as failing, we should think of it as pivoting, which you say in the book is "a change in strategy without a change in vision." Could you expand on that?

Lorraine Marchand: Yes, that's one of my very favorite laws, is the pivot, because I find that if you are willing to do it, it can make all the difference in the world and if you are not willing to do it, it can also make all the difference in the world.

So a lot of time, success or failure – even though I don't like the word failure – they do hinge on the pivot. And so when you're really staying tuned in to the customer, when you're looking at those market dynamics, when you're looking at all of those external factors around your company, then you can see those opportunities that would encourage you to pivot and move in the direction that will make your company more viable.

And there are also times when you turn a blind eye, as a big video distributor in the U.S., Blockbuster, did. And they didn't believe that people actually coming in and renting these little bulky DVDs, they didn't believe it was going to go away and that an entity like Netflix was going to come in and offer streaming. And they didn't change, and they ended up by becoming defunct.

So, a little bit about the pivot: really, really important.

Rachel Salaman: Yes, and there are plenty of tips in your book. Your book also offers some detailed practical tips on business plans and business models which is the next step in the process that you outline in your book. What are some general tips people might find useful in this area including if they need to sell an idea internally rather than to investors?

Lorraine Marchand: And a lot of times that's exactly what we have to do.

So what's important in developing your business plan is the fact that it's a process that encourages you to deliberate, to talk to customers, to check the market factors, to talk to other stakeholders… And so in building your business plan, you're really testing and interrogating the very essence of your business and your business model.

So it's the process that really matters, not so much what ends up on paper. But, in the book, I lay out a pitch deck [of presentation slides], after you have your business plan together. And the steps that we're talking about [are] really more or less the order of your business plan and your pitch.

An investor, whether it's your boss at your company that you're trying to present your idea to because you want funding for the 2023 fiscal year, or if it's colleagues that you just want to make some sort of a change to the way you're currently doing things... The process is still the same.

They really have to understand that there's a problem that customers are willing to have solved and pay for. They have to see that you've gone through the solution fit process that I described, and that you down-selected the solution against the pros and the cons: the one that fits, the one that's going to have the most impact but it's not going to take three years to execute.

They are going to need to see that you've developed your data or your prototype or your minimal viable product. They're going to need to see those 100 voice of the customer interviews that you've conducted. So, your business pitch is actually going to follow those very steps.

And then ultimately, you have to get to the "ask." So, the ask is: I need to raise capital, I need resources, I need introductions to strategic partners.

So you want to be really crystal clear in terms of what you're asking for as you present your business plan, your pitch. Ultimately, this gets distilled into 10 compelling slides so you want to be able to present it to someone. And they [the slides] have to show that you're following some sort of a disciplined process to make it to market.

So, what I mean by that is based on the customer research, this is what we've learned, this is the roadmap that we're developing for a product, this is when we're going to add this feature based on customer input, this is what we'll be able to do if we garner this kind of capital, this is the audience you'll be able to reach if we are able to secure this kind of strategic partnership...

So, you have to have milestones that now attach to what it is you're asking for from that person to whom you are presenting your idea. And then ultimately, you do have to be a great communicator, you've got to believe in your own idea, you've got to be passionate, and you have to make it very simple.

So, you have to give it that 25-word, two-minute cocktail conversation test that we all like to joke about. If you had two minutes with your grandmother, what would you tell your grandmother about your idea in order to convince her?

So that's not a bad thing to keep in the back of your mind because the person that you're pitching [to] may or may not be an expert in the same way that you are and they still have to fall in love with your idea, whether they are an expert in that topic or not.

Rachel Salaman: You dedicate a whole chapter to the unique challenges women innovators face. Why did you think that was important and what are your main takeaways from that?

Lorraine Marchand: Well, as we've been discussing, Rachel, my goal is to make innovation accessible, accessible to all. I want to make it something that feels very equitable.

But when we look around, we still see that [among] venture capital investors, only about two to three percent of the partners are represented by women. Even fewer are represented by underserved minorities, people of color for example. And when we look at the companies that are invested in, still only around two to three percent of founders or co-founders are women.

So clearly there's a lot more that we can do in order to lift women up and get them to think more strategically, creatively, about being innovators and knowing that this is something that's available to them.

So I wanted to draw attention to it in a very positive way, to be encouraging. And I created an innovator women hall of fame so that we could look back at history and see some of the exciting women innovators [such as] Marie Curie and radiation or Hedy Lamarr and the first precursor to what became GPS and WiFi.

And I also created a women innovator resource guide, so that women could know: where do I go for education, for networking, to find investor groups that might be interested or have a pension for investing in women?

And so that's what that chapter attempts to do, is not only encourage women but give them some resources and some models to guide their path.

Rachel Salaman: Lorraine Marchand, thanks very much for joining us today.

Lorraine Marchand: Thank you, Rachel.

Rachel Salaman: The name of Lorraine's book again is "The Innovation Mindset: Eight Essential Steps to Transform Any Industry." I'll be back in a few weeks with another Expert Interview. Until then, goodbye.