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📄 Contents

  1. Strategic Opportunity Search
  2. Recognizing Strategic Threats
  3. Avoiding the Innovation Dead End: Reconsidering What's "Distant" to Your Core Business
  4. Takeaways
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Avoiding the Innovation Dead End: Reconsidering What’s “Distant” to Your Core Business

So let’s slide down from the executive suite and its focus on strategic opportunities and threats to the innovation laboratories and research and development (R&D) centers. The key question hitting the innovators is: What is the next big thing in my industry? Where and how do I find it? A natural point of departure for this quest is a company’s current products and customers. This makes intuitive sense, but it also poses a fundamental challenge. The behavioral theory of the firm,14 an influential theory in management, has long acknowledged people’s tendencies and the subsequent dangers of searching in familiar taxonomic domains. That is, innovators tend not to look in faraway places for cool new things, but stick fairly closely to things they are familiar with. Take Chrysler as an example. Being in the automotive business commonly makes its innovators focus on its current technologies and its current customers (and their needs today). Scholars and consultants have advised managers for a very long time to search in categories that are distant (rather than taxonomically close) to their own, or else you risk reinventing pretty much the same wheels. Yet everyone owning or driving cars can attest to the fact that the vast majority of things that make up today’s automobile are in no measure radically different from cars in the 1980s. Yes, we have an electronic stability program that helps out when you lose control, but with the vast majority of cars sold today across the world, there are still four wheels, a combustion engine, a radio, a steering wheel, a boot in the back, and so on and so forth. It is this so-called local search that leads innovators to rather incremental improvements such as heated steering wheels and yet another set of side airbags. The results often are overengineered products with too many features that most customers never actually use (the so-called feature creep) and companies that are stuck in an innovation dead end. Recently, some thematic ideas evolved in the automotive industry. Consider, for instance, the navigation systems and associated data services like integrated traffic updates that we all have come to depend so much on. So far, these ideas have not been game changers, but the ones evolving around new technologies are likely to play an important role in the near future.

Managers try to work their way out of such innovation dead ends. Methods such as brainstorming, which aim at identifying such distant domains, are very popular across many industries. For example, in an attempt to move beyond mere product extension, companies often encourage their developers to think outside the box (that is, in taxonomically dissimilar domains) by freeing their imagination to envision products that respond in radically new ways to customer needs.15 However, where does “distant” start, and where does it stop? Notwithstanding the popularity of these outside-the-box approaches, they have been questioned in numerous studies. For example, in a series of studies, Jacob Goldenberg and colleagues found such unbounded methods to be largely ineffective. The main conclusion of these studies is that a search process in distant domains impedes, rather than aids, creativity, essentially because the space of taxonomically distant domains is theoretically infinite, making effective and efficient opportunity search practically impossible. They describe how more often than not, this kind of brainstorming yields a flurry of ideas that, while appealing, are just too far out, given the company’s brand image or capabilities. They are quickly discarded or, if they make it to market, simply flop. A classic example is Scott Paper’s erstwhile and unsuccessful foray into disposable paper party dresses. Whatever the merits of the concept, Scott—known for utilitarian products such as toilet paper—was probably not the company to bring this or any fashion-driven product to market.16

These drawbacks of the thinking-outside-the-box school have led to a second stream of thought, which may be called the thinking-inside-the-box school. Cognitive psychology and research in creative cognition have shown that thinking within a frame of reference enhances the creation of new ideas. Building on established concepts in cognitive psychology (encoding/retrieval, analogical thinking), this school of thought argues that individuals are more creative when limited (or guided) by constraints than when faced with a “blank slate.”17 For instance, think of having guests over for a dinner party on very short notice. You’d like to offer them something nice but have only about ten items in your refrigerator. Chances are, you are more creative under these circumstances than when faced with all the choices at your local superstore. In fact, laboratory studies involving students baking cookies with more or less limited sets of ingredients confirm just that; fewer options with ingredients lead to more creative and simply better tasting cookies.18

Innovators using both a taxonomic and thematic mental model can reconcile the two schools of thought. As such, Thematic Thinking is about the box itself, which one approach aims to break out from and the other advocates to stay within, in order to search for winning ideas for new products or services. The “box” can be addressed in terms of which mental model of similarity is used, with the two schools of thought taking different approaches to similarity apprehension, and hence to framing the box. Consider again Nike and Apple: both had to think outside their taxonomic boxes (sports footwear and apparel versus consumer electronics) but inside the thematic box of “jogging”!

Another example, this time from the realm of sponsorship, is Louis Vuitton donating 15% of its online sales to Al Gore’s Climate Reality Project. With so many organizations to choose from, what would be the appeal for a luxury brand to partner with an environmental advocacy group? We submit that applying thematic similarity to opportunity search makes it clear that “distance” is also a matter of kind (not just a matter of degree) and that a search process in distant taxonomic terms can be close in thematic terms. While distant taxonomically, Louis Vuitton and the Climate Reality Project share the thematic similarity “travel” or, even “frequent (air) travel,” and hence a concern for promoting awareness of the climate change and what can be done to help.

Table 1.2 provides the key to the word triad test at the beginning of the chapter.

Table 1.2 Key to Word Triad Test

Taxonomic

Thematic

dog, cat

dog, bone

saxophone, harp

saxophone, jazz

wine, champagne

wine, cellar

pepperoni, pork chops

pepperoni, pizza

accident, mishap

accident, ambulance

turkey, swan

turkey, thanksgiving

hot dog, steak

hot dog, mustard

demon, ghost

demon, possessed

police car, sedan

police car, police officer

diamond ring, bracelet

diamond ring, engagement

can opener, bottle opener

can opener, can

spider, wasp

spider, spider web

milk, soda

milk, calcium

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