21 October 2016
Sal Khan created an online educational institution that benefits millions of people after he saw a pattern while tutoring his cousin in math. Photo: YouTube
Sal Khan created an online educational institution that benefits millions of people after he saw a pattern while tutoring his cousin in math. Photo: YouTube

Six paths to innovation

Innovation is a common goal among startups, corporates and non-profit organizations. But our education system and work environments have trained us to pass tests, follow orders and respond to requests. No wonder true innovation is still rare.

Fortunately, we all at some point in our lives experienced curiosity, which is the first step of innovation.

The next steps are simply to observe, ask questions and experiment. But what should people be looking for when observing? Which questions lead to insight? How can experiments be most helpful?

The following six paths have worked in the past, sometimes spectacularly well. They all start with curiosity and end with innovation, but each path is different.

Innovation Path 1: Connections

When the iPhone was first introduced, it was presented as a combination of phone + music + the internet. All of those individual components had existed before the iPhone.

Nokia was one of the world’s largest companies providing mass market phones. Apple itself had a thriving iPod music player business at the time and internet access was widespread in other forms.

The combined value of making connections is non-linear, with the biggest benefits typically emerging as surprises. The app store was not mentioned in the original press release, and yet apps became the defining idea of the iPhone.

Innovation Path 2: Outliers

In 1988, Christian Sommer was snorkeling on the coast of Italy collecting sea creatures for further study. He collected hundreds of these and observed them in his petri dishes, recording their life cycle.

One rare species, Turritopsis dohrnii, did something very strange: it appeared to age in reverse, getting younger until reaching its earliest stage of development, and then reversing and starting to age again.

This process contradicted a basic law of nature, that life progress forward until death. It was an outlier of huge magnitude.

Sommer, to his credit, did not ignore the observation. Even decades later, we still do not know much about what is really going on in this case, but this jellyfish may hold the secret to immortality.

Innovation Path 3: Patterns

Imagine spending some time tutoring your cousin in math over the phone. Things go surprisingly well and so you also start tutoring the cousin’s brothers. Word spreads, a few more people ask to be tutored.

Scheduling becomes a real challenge because you have a full time job, and so you start posting videos online. More and more people keep watching.

This is the pattern that Sal Khan experienced starting in August 2004 and it led to the formation of Khan Academy, impacting millions of lives and resulting in more than one billion questions answered.

Humans are natural pattern spotters and so the challenge is to remain objective enough to separate true patterns from the ones we wish would appear.

Innovation Path 4: Gaps

Seeing what’s missing is just as important as seeing what’s there. These missing pieces are gaps. The most direct opportunities related to gaps come from problems and frustrations encountered in everyday life, seemingly obvious and yet undiscovered.

Sara Blakely identified a gap in the market for undergarments. Rather than simply forget about it or complain, she found a solution. Then, she went through the process of filing a patent on her idea and continued on the journey of turning the solution into a very successful business, Spanx.

The company has evolved to include multiple products based on the original foundation of seeing what’s missing and filling the gaps.

Innovation Path 5: New applications

Sometimes, existing constraints help the creative process. When creating a new game for students to play in the winter, physical education teacher James Naismith re-purposed what already existed.

A ball was important, but rather than kicking the ball or running with it, he focused on passing the ball and then throwing it at a target. The target was also a new application for an existing object, a peach basket. Combining the two key components gave the new sport its name: basketball.

The score in the first game was 1-0. Clearly, the game has evolved over time while having a tremendous impact on society.

But at the start, there were no grand plans of creating an empire, just a simple goal of creating a new sport to play in the winter using existing tools.

Innovation Path 6: First principles

In order to build SpaceX and Tesla, Elon Musk used a first principles approach. Rather than relying on analogy and observing what other people were already doing, he focused on truly understanding limitations at a physical level.

Pushing those limitations created the opportunity to simultaneously create new performance standards and reduce costs by up to a factor of 50x.

This is not an easy approach to take and patience is definitely required, but the potential upside from breakthroughs is substantial as SpaceX and Tesla have proven.

Every one of these paths to innovation starts with curiosity but each approach is unique. Understanding the core idea underlying each approach is helpful as a rough guide.

Of course, the biggest innovations usually require going completely off any path and into the unknown.

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Managing Director of Fresco Capital. He is involved in all aspects of investment and operations. He has been investing, working and living in Asia since 1999.

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