Our approach to growth is different. Very different. It’s called Outcome-Driven Innovation (ODI) and it is the key to our exceptional two-decade record of success. ODI is what differentiates us as an equity partner because it enables us to create growth plans that work for you.
To demonstrate how different our approach really is, let’s start with a definition of innovation. Of course, innovation is the key to growth, but what is innovation?
Unfortunately innovation is a term that gets used and misused all the time. Which is, of course, part of the problem. So we define innovation very rigorously. Let’s be clear about what innovation is not. Innovation is not technology. Innovation is not R&D. Innovation is not invention. And innovation is not product development.
Innovation is the process of creating and validating a solution concept that meets customer needs.
Why do we define innovation this way? Because in order to be useful, innovation needs to be separated from product development. Product development is the process of engineering a concept that has been approved for launch. In other words, product development is the process of making something. But development is not innovation. Innovation is the process of deciding what solution to make in the first place.
The goal of innovation is to grow profitably by satisfying customer needs better than your competitors.
Of course every solution (in other words, your product or service) has to satisfy customer needs. So what is a “customer need”? It turns out that 95% of all companies don’t even agree on what a customer need is. This is the fundamental problem: without agreement on what a customer need is, it is almost impossible to identify market growth opportunities and create solutions that meet customer needs. It’s like asking a doctor to diagnose your illness without revealing your symptoms.
It is relatively easy to build stuff. Companies do it all the time: invest capital, hire people, develop and ship a new product. The reason 80-90% of growth plans fail is not because a new product can’t be developed; it is because the product fails to meet customer needs.
So understanding customer needs is the hard part. And after two decades, we discovered a few things about customer needs.
First, customers don’t need your product. In fact, they don’t need products at all. What they need is to get things done. We call these things the customer “jobs.” Think about this for a minute: it is very logical. Customers “hire” products and services to get jobs done. No one needs a microwave, but they do need to prepare food quicker. No one needs a cell phone, but they do need to communicate while mobile. And no one needs a stent, but they do need to minimize restenosis (the recurrence of coronary artery blockage).
Harvard professor Theodore Levitt realized this decades ago when he famously remarked that people don’t want drills, they want holes. And he was right. So innovation needs to focus on the customer job, not on the product and not on the customer.
Second, we discovered that in any job (and we have studied thousands of jobs), there are 50 to 150 different metrics that customers use to judge how successfully they can perform the job. This make sense. Customers want to get jobs done quickly, efficiently, and with predictable results. And speed, stability, and output are categories of metrics that can be measured. We call these metrics “outcomes” (thus the name Outcome-Driven Innovation).
Third, we discovered that jobs and outcomes are knowable and quantifiable. This is great news because you don’t have to guess if there is a market need for your product. With ODI you can quantify it. And you don’t have to brainstorm hundreds of ideas. With ODI you can generate just the best idea to satisfy the customer needs. And you can test if that idea meets your customer’s needs before you spend any capital to develop it.
With these discoveries (and a few more), we created Outcome-Driven Innovation. And with ODI, we created our Zero Burn investment model.
So how is our investment model different? We use ODI to do the hard work of creating and validating a strategic growth plan and product road map that gives your company a much higher chance of success.