Beware the Cover Art

Change is really hard.

Whenever one considers changing a system, even if it's to innovate and improve that system, there are always a number of good reasons to avoid the change altogether and keep things as they are. Is it worth the effort, the risk and the cost to change something that works now? Will the old way be missed? Will something valuable be lost if there is change? These are all legitimate and often used questions that can and occasionally should stop innovation.

My favorite reason - often persistent, often misunderstood and always ultimately wrong - is the cover art.

In the 1940's and 1950's record companies began to illustrate the covers of records to help sell their products, differentiate performers, and catalogue collections. In the 1960's, 1970's and 1980's, record companies increasingly referred to the cover illustration as "art". In many cases, the cover art seemed to transcend the record album itself. Anyone listening to music in those decades remembers certain album covers in detail and with fond reverence - in many cases, part of the experience of listening to music was related to the imagery on the cover.

A stand out example would be The Beatles' Sergeant Pepper’s Lonely Hearts Club Band, designed byRobert Fraser, Peter Blake and Jann Haworth with a complex and expensive collage of celebrities past and present (the cover cost 100 times as much as the average cover of the time).

The Cover Art became so important to performers and their record labels that some designers and visual artists became known predominantly for their Cover Art, such as the design team Hipgnosis (Pink Floyd's The Dark Side of the Moon) and Roger Dean's work for Yes and Asia. It almost seemed as if cover art had become a separate form of art, collected and in many cases even framed by enthusiastic music fans.

Despite it's value as a branding device and marketing tool, the art on the cover of the record was ultimately of secondary importance. People bought records so that they could easily listen to the music inside – not because of the wrapper. The cover art may have helped encourage them to buy, but it was never the primary reason they did so.

When Compact Discs supplanted vinyl LP's in the mid 1980's, many skeptics of the new format pointed out that a smaller disc size did not allow for the same quality of cover art. In addition to concerns about replacing an existing library and a loss of some sound characteristics of vinyl recordings, music buyers wouldn't accept the format in some part because they wouldn't be able to enjoy the art they loved.

And yet, by the mid-nineties, vinyl records had become a niche product revered mostly by nostalgic collectors, but not a serious part of the music industry. In the beginning of the 21st century, when MP3 players such as the iPod came along with digital music downloads and almost no room for Cover Art, it only took a couple of years for mainstream consumers to throw away their love of cover art and buy songs without it. It turns out that none of the reasons for staying the same, including the cover art, are compelling enough to stop change.

The record companies were selling the vinyl records wrapped in cover art. The "art" was a powerful tool from marketing but at the end of the day, their customers were buying music - not records or art. The instant someone offered them a significantly better delivery device for the music, they would switch.

How important was Cover Art to the buyers? They liked it. They put it on their walls, they collected it. But they didn’t really ask for it; they never bought it.

Cover Art occurs in almost every mature system, whether it’s the record industry, a government, a car company or a bank, "Cover Art" can be identified by the following factors:

• It is something offered that is incidental or even immaterial to the problem a customer is try to solve. In the case of records, the customer was trying to fulfill their desire to hear music – not look at art.
• It is mostly decorative – a way to make something more palatable, more slick, more exciting – but it does not significantly contribute to the problem a buyer wants to solve.
• It is mostly used to differentiate, sell or brand a commodity product. (Branding and advertising can be very important for selling something, but when presented with an alternative to a sales pitch, buyers almost always go with that alternative, even if it costs them more money. As an example, consider television advertising. Most people enjoy well produced commercials, and yet will pay extra to skip commercials through DVR’s and premium cable channels.)
• It is expensive, time consuming and requires specialized skills to produce/deliver.
• The customer will not pay extra for it and won’t go out of their way to get it independently of the primary offering.

Cover Art occurs in all sorts of companies. For example, up until the 1990’s airlines tried to differentiate themselves based on the quality of their hot meals served during flights. Serving a hot meal on a moving airplane is a very difficult and expensive thing to do – even when the food is less than good. Initially, in-flight meal service helped airline passengers feal safe and pampered during flights - as if flying was just like taking the train. But as air travel became a common part of life, that assurance became unnecesary. The meal is incidental to the main need of a passenger – to safely and quickly get to their destination. When someone offered a more attractive alternative without meals, they were willing to switch.

While most airlines continued to spend money on their hot food programs, Southwest Airlines offered peanuts for food and a less expensive ticket price. Despite their lack of “Cover Art” hot meals, today they are the most profitable airline in the history of aviation.

Computer software and hardware makers have recently been surprised by the market’s embrace of small, less powerful computers that rely on Internet based applications and data storage. They have long thought that their customers wouldn’t give up the Cover Art of abundant features, massive hard drives and large numbers of applications. But customers don’t buy massive hard drives – they buy a way to send e-mails, type up a letter, handle their bank account and surf the Internet. As soon as someone offers them a way to avoid buying a massive hard drive, they embrace it.

Where else is there cover art? Credit card companies have been offering elite gold, platinum, and black plastic cards for years. Although people love the status of the different colors, it is incidental to what they are buying – a cash flow management system. That status is very important, and it has been a very successful marketing strategy for the commoditized offering of credit. However, if someone offers a better cash flow management device that does not include the status Cover Art, will the platinum card be as endangered as an LP or in-flight meal? Are there other places that platinum card users will look for their status symbols in the future?

There are numerous examples of Cover Art throughout industries and organizations. Valuable to any company contemplating change, an assessment of the potential Cover Art can reveal significant opportunities for innovation. Customers don't buy marketing (cover art) or delivery devices (records), they buy a solution to something (music). Even though marketing and delivery devices are essential for a successful business to sell to their constituents, they should never be confused with products and can always be trumped by a better solution.

And therefore, robust and mature Cover Art is a leading indicator that innovation and change is possible and even likely. Does your company offer the best Cover Art in your industry? Are your customers open to better delivery options?

Is it time you innovated?

Want innovation? Start laughing.

Laughter seems to be closely linked to innovation. When teams are solving problems, when individuals are able to overcome their fears and create solutions – more often than not, they are laughing. Breakthroughs and laughter often seem to go hand-in-hand. And when no one is laughing - innovation seems to slow down as well.

When Brian Marshall of the Alliance for Strategic Alliance ran a technology company in the '90's, his engineers, “worked 12, 16, 18 hours a day, sleeping in their offices…and they were high-fiving each other, telling jokes, having a good time. We just gave them a deadline, near impossible objectives, some t-shirts, beer on Friday nights and an unlimited amount of free soda pop – and they were in heaven.”

And they delivered innovation. Without the laughter, very little risk taking, developing, or building takes place. According to Patrick Lamb, Founding Member of Valorem Law Group, “you know when people are in survival mode when they aren’t laughing.”

David Johnson, CIO of Jones Lang LaSalle sees tangible risk to this loss of fun in his development teams, “It is hard to hold on to your best people when they’ve been so demoralized by cost cutting, project cancellations, and an ever increasing load of administrative work. As the markets improve, they will be tempted by new jobs in new companies that let them innovate. For this type of employee, change is a good thing.”

But maintaining a sense of humor may be a good place to start mitigating that risk. According to Buckley Brinkman, innovation consultant of Launchpad Partners, “the fun thing is trying to figure out how to get people engaged even when things are tough. The ship is burning; we’re five miles from shore, its taking on water, but stay anyway.”

Fun and laughter can be managed, and even encouraged. According to Patrick Lamb, “The people who run things need to be out there walking, talking and joking. Take a fair amount of time doing stuff that gets people comfortable. If you make it easier for people to laugh, they will laugh.” If they are laughing, they can start to solve problems.

According to Kevin Conlon, president of Conlon Public Strategies, “the intangibles of values and culture with our team and our clients make a big difference when times are difficult. We’ve even had to say no to client opportunities that didn’t fit – but staying true to our shared values and chemistry helps us weather the difficult times.”

John Ahlber, president of technology consulting firm, Waident, always tries to figure out if a candidate enjoyed his colleagues’ sense of humor, by getting people together over a meal and allowing everyone to joke around a bit in the presence of the candidate. If the prospect laughed or even joined in with their goofiness, it was a leading indicator that there may be a strong cultural fit. Laughter, for Waident is almost a requirement for collaboration.

Shared values, fun and laughter can help promote more innovative teams, but it can also indicate when people are starting to work on the problem instead of being paralyzed by it. As we begin the second half of 2009, more and more business leaders seem to be joking about how difficult business is – instead of just complaining about it or worse yet, denying that there might be a problem. This may suggest that the economy will be able to improve in the second half of 2009.

Are you laughing yet? Maybe it's time to start.

(This blog post is the final of three excerpts from a Branson Powers, Inc. B2B Executive Innovation Roundtable that was held on June 19th, 2009. If you are interested in reading the full report, you can view the pdf file. If you are interested in participating in future roundtables, please contact Gunnar at gbranson@bransonpowers.com.)

Fear and Innovation

There’s quite a bit of fear in the economy today. But that can be seen either as an advantage or a disadvantage for innovation. In some ways, it’s both.

Fear pushes companies to try new ideas and new approaches. As one leader of a small business recently told me, “We would be out of business three years ago if we hadn’t innovated.” Most innovators I talk with list fear as a source of strength. If you are losing customers, if money is scarce, and there is no other choice; you have to innovate.

At the same time, more than lack of capital, lack of good ideas, or lack of economic imperative; fear of change can be the most stubborn impediment to innovation.

According to David Johnson, CIO of Jones Lang LaSalle, “Middle managers think Innovation is such a big word. Innovation is too scary.” Employees have their fill of change right now, and innovation is just one more demand for change.

And fear can cripple innovation. Different people react differently to an environment that challenges their existence, and many will deny a new reality, resist change, and sometimes become paralyzed. As Tony Reynes, partner in a recruiting firm that is re-writing their entire business model, put it, “Some people just freeze up but I think a successful innovator says, “Okay, I’ve got to do something different.” Everyone is facing the same fear and everyone has the same opportunities. The innovators act on the new environment.”

Tracy Williams, a leader in agricultural ventures and former military officer, pointed out that the responsibility of a leader is to create a feeling of safety, to help those who are paralyzed take action. As he put it, “Look, part of my job is keeping my people safe from the people on top. Go make a mistake. As long as you haven’t done anything illegal, as long as it makes business sense, as long as you tell me when things go wrong, I can get you out of anything you get into. So let’s go do something.”

Another, more Machiavellian approach may be to avoid telling everyone that they are innovating. With some projects, it is possible to position the work in such a way that it does not seem to overtly threaten the status quo. Eventually, innovation always changes things – but to avoid unduly frightening the people whose work lives will change some innovators will use a Trojan Horse approach.

The Trojan Horse approach presents something new as if it were merely a slightly modified version of something old. The iPod, for example, was really just a digital version of a Walkman. A personal computer could be seen as just a typewriter with a screen. A car as a horseless carriage. Televisions, at first, were perceived as radios with pictures. Look at most successful innovations, and likely you will also find an analogue to an older technology or process that was used to get people comfortable with the idea.

At times, the Trojan Horse approach goes well beyond offering comfort. It can also cloak the true implications of an innovation - forcing us to change our lives without realizing it. Few people buying a computer in 1990 were buying into the complete transformation of our work and personal lives that took place in the next 15 years. If companies knew that the Internet would force them to share more information than they had ever shared before, would they have started creating Internet sites?

According to David Johnson, “anytime you are saying that you are innovating, you will get an initial buzz. But, as soon as everyone sees it as changing what they do, they become very opposed to it. So, when there is the slightest problem with developing a new innovation, everyone jumps to, “Aha, I told you this was never going to work! And the project gets killed.” Instead, try “…unveiling bits and pieces of it at a time. Emphasize how a certain function is made simpler, but avoid talking about any larger plans or potential for industry change.”

Jonathan Rutman of CB Richard Ellis uses a three ring binder to make fear of innovation less of an issue, “Every step of the process will go into this binder, every study, every point of data, and every decision we make will be captured on paper and put into your binder. Fear can be managed if you package it.”

But if you don’t use a Trojan Horse, it is important to acknowledge fear upfront, to be honest about what the real dangers, the real risks of any new project might be. Instead of pretending that there is no danger, there is a real need for innovators and leaders to be able to say, “This is difficult. It could fail. Let’s see what we can do to make it succeed.”

Brian Marshall, a consultant on innovative sales strategies, offered a different way to think about fear that could help explain why some are able to innovate now and others cannot. “Fear is nothing more than pain that hasn’t happened yet…the most compelling emotional motivator is pain – more so than fear.” The immediate pain of changing something right now will always trump the fear of something that might happen.

An example Brian used was the US auto industry, “The unions are now suddenly the most innovative group of people you will ever meet – but it may be too late. They are now able to make substantial change because they are in tremendous pain. The fear they felt two years ago was not enough to overcome the immediate pain of change.”

“What is innovation? It is a direct threat to the status quo. So those who are a part of that status quo will kill innovation if they see it threatening how they do things now. When they start to feel real pain, then they become the champions of change and innovation.”

Brian continued, “Great leaders and drivers of change are those that can take the fear of the future and bring it into the pain of the present before it’s too late.”

Fear is a powerful motivator for innovation, but it must be controlled, acknowledged, and worked with to overcome the natural resistance to change.

(This blog post is an excerpt from a Branson Powers, Inc. B2B Executive Innovation Roundtable that was held on June 19th, 2009. If you are interested in reading the full report, you can view the pdf file)

Uncomfortable Innovation

In order to change something, an innovator has to be comfortable with new ideas and at the same time be uncomfortable with the status quo. They have to be uncomfortable enough to want to change it – and willing to use untried approaches, unfamiliar skills, and even the wrong tools to make something better.

Tony Reynes, a principal of Tesar Reynes made this very clear to me recently when he said, “Instability and comfort with being off-balance certainly is a big part of why I’m an innovator.” Being comfortable with discomfort may be a crucial character trait for innovators.

Patrick Lamb of Valorum Law Group helped clarify the importance of discomfort by describing his new exercise regimen. His physical trainer requires Patrick to stand on an unstable platform whenever he performed an exercise. According to the trainer, the instability of the platform helps to build core muscles that are constantly compensating and trying to maintain some kind of internal balance. Translated to business and innovation, that same ideal holds, “if we are able to operate in an unstable way, we become stronger and better able to emphasize the positive sides of change.”

If people are unable to accept discomfort, they may not be able to innovate. Kevin Conlon of Conlon Public Strategies pointed out that traditional printers in the seventies and eighties, when negotiating new contracts with newspapers passed up the opportunity to take control of emerging electronic printing and remote printing technologies. Those printers, however, were very comfortable in their skills as traditional trainers. “They were given the opportunity to embrace new and unfamiliar technology – and instead opted for contracts that allowed them to be traditional printers forever with no burden to evolve professionally. There are now virtually no traditional printers at any of the major newspapers.”

It should come as no surprise then, that innovators often seem to straddle multiple worlds, multiple cultures, and quite often don’t completely fit in. They often don’t have the standard credentials or formulas for a problem – and therefore by default look at things in a fresh or unique way. And even when they know the formulas well, they are willing to put them aside.

People who are comfortable with how things are done right now, have little reason to change. The rational course of action for someone in that position is to avoid changing what they are doing, even if there's a chance that things could become very uncomfortable in the future.

Jonathon Rutman of CB Richard Ellis has pointed out, “Those people who are the most successful in an old system are the last to see the reason to change – or to make any kind of change. Why give up what you have?”

Innovators are better able to find new solutions to old problems, not because they choose to – but because they have to. They are too uncomfortable to continue as they are.

Innovation needs to be uncomfortable.

(This blog post is an excerpt from a Branson Powers, Inc. B2B Executive Innovation Roundtable that was held on June 19th, 2009. If you are interested in reading the full report, you can view the pdf file)

Commercial Real Estate Innovation

Many of my friends, colleagues and clients work in the commercial real estate industry. Even after the credit markets come back, commercial real estate will be engaged in some exciting and fundamental transformation. A comment left on my real estate blog at The Real Corner elicited two interesting questions from Mark Waligora of Pinetree Commercial. He asked,

"What are the trends that we can anticipate and take advantage of as stakeholders (principals, brokers, lenders, tenants) during this transformative cycle? Where are the hackers in our industry?"

As I attempted to answer the questions, I decided to focus on two key trends that help me to understand what is happening and what may happen in the future. There are, of course, many macro trends affecting this sector; demographic trends, changes in technology, economic growth, debt and equity, legal structures and a new regulatory environment are all very important. But I believe that these two sometimes overlooked trends have a tremendous amount of potential to transform commercial real estate. They are:

1. Office and Retail need less space per person.
2. Sustainability and Energy Use issues will not go away.

To start with, it is time to acknowledge that that square feet use per person is on a downward trend - both in office space and in retail - and is unlikely to jump back up once the recession is over. The second baby boom will help offset the loss of square footage demand as new workers enter the workforce, but as the use of the Internet, mobile networking, flexible office space and on-line retailing only increases, population growth cannot keep up with the fundamental shift in how our society uses real estate.

When it comes to office space, why do businesses need to have large private offices when the average desk chair is only occupied 30% of the time from 9 to 5 Monday through Friday? They don't - and more and more businesses large and small are reducing their square footage per person. It's no longer a flaky idea to have flex office space and telecommuting. With everyone using a laptop computer and a cell phone, offices no longer house all the tools for people to work. The remaining purpose of office space may ultimately be to conduct meetings and brainstorming, not sitting at a computer and taking calls, that can be done in any number of places. Commercial real estate service companies have been advising corporate clients for quite some time on how to better use - and ultimately decrease the total amount of space they use for offices. Owners of office buildings that understand that will have far more luck keeping their buildings occupied.

In retail real estate, some of the most imaginative, innovative and frankly brilliant real estate pros work in retail. However more and more people now use the Internet for entire categories of purchases - such as books, electronics, groceries, and clothing. Even though there will always be a need for some form of in-person retailing - it will require a lot less space. Retail real estate must come up with another use for all those empty shopping centers - otherwise yesterday's community big box center will become tomorrow's community problem. For more on retail vacancy read this interesting overview in a blog regarding "ghost boxes" here.)

Secondly, energy and sustainability issues will not go away - they will only become more important. A third of the energy used in this world and almost half of the release of carbon in the atmosphere is related to buildings. That means that real estate is equally as important as manufacturing and transportation when it comes to solving the issues of global warming and energy use. This is about more than getting a LEED certification on the corporate headquarters building. Every real estate investment and every lease needs to be looked at with energy use and carbon in mind - not because it's the right thing to do - but because it will have more and more of a financial impact on the profitability of that asset every year. Do not be fooled by temporary lower energy prices and a slow government's reluctance to initiate a carbon tax. This stuff is coming, and those real estate players - whether they are investors, developers, owners, brokers, managers or corporate users will get burned if they don't pay close attention.

At some point very soon, the environmental impact of a building may have as much importance as its location. The players that figure that out first will have the advantage.

Who are the hackers?

You can find them everywhere - they are the people who are trying to redefine their jobs and their companies - the tenant reps that are positioning themselves as portfolio consultants, the investment sales reps that are figuring out where the new sources of capital are coming from, and the owners, brokers, tenants and managers who are figuring out how to make the energy and environmental crisis work for them.

Why are they hacking?

Recently an industrial real estate guru and friend, Sam Foster, sent me his insight on innovation that is particularly relevant to that question,

"No one innovates until survival requires it. Yes, there are the neurotic few that can't help themselves, but for most of us, not so. Getting laid off and not being able to find another job requires one to innovate."

Real estate professionals, even if they still have a job, are seeing their old sources of income shrink or even dry up. When buildings aren't flipping every couple of years or companies doubling in size every couple of years, real estate, by necessity, has to figure out how to make a living again. Commercial real estate is a transaction business at its heart, and when the transactions slow down, the best people in the industry will work towards finding the next great opportunity.

It is not an easy time to work in commercial real estate, but it may be one of the most important times. If real estate professionals can solve for the two trends of diminished per person space and sustainability, they will go a long way towards building a brighter future.

What's Your Trojan Horse?

According to the Kauffman Foundation, 78% of Americans believe innovation is important to our economic health. Western governments are trying to figure out how to stimulate innovation. CEO's speak eloquently about innovation as they strategic advantage.

And yet...

Most companies seem to be doing anything but change. Instead, they go the standard and sometimes necessary playbook that calls for laying off workers, closing lines of business, selling assets, and praying that the economy will change before they run out of money. Changing a business model or process, creating a new product or new market is often overlooked as too expensive or risky ventures.

And yet...

According to Dane Strangler of the Kauffman Foundation, (“The Economic Future Just Happened” 6/9/09), over half of the current Fortune 500 companies began during a recession, bear market or both. If historical patterns continue, this isn’t a time to wait. New companies, new technologies, new processes and new markets are always found in times of challenge.

And yet...

According to an executive I interviewed recently, “Middle managers think Innovation is such a big word. Innovation is too scary.” Employees have their fill of change, Innovation now seems like yet another demand for change.

More than lack of capital, lack of good ideas, or lack of economic imperative; fear of change can often be the most stubborn impediment to innovation. This suggests that it would be a strategic mistake for an innovator to tell everyone that they are innovating.

A key strategic tool for innovation is to position the work in such a way that it does not seem to overtly threaten the status quo. Eventually, innovation always changes things – but it’s important that those affected by that change are not unduly concerned or frightened.

Consider using a Trojan Horse.

In Virgil's The Aeneid, the Greek armies, after 10 years of trying to defeat the city of Troy, built a huge statue of a horse out of wood. The Trojans took the seemingly harmless but massive statue into their city. At night, soldiers from the Greek army snuck out of their hiding places inside the statue in order to take over the city.

The Trojan Horse approach, then, is to present something new as if it were merely a slightly modified version of something old. The iPod is really just a digital version of a Walkman. A personal computer is really just a typewriter with a screen. A car is really just a horseless carriage. A television is really just a radio with pictures. Look at most successful innovations, and likely you will also find an analogue to an older technology that was used to get people comfortable with the idea.

At times, the Trojan Horse approach goes well beyond offering comfort. It can also cloak the true implications of an innovation - forcing us to change our lives without realizing it. No one buying a computer in 1990 was buying into the complete transformation of our work and personal lives that took place in the next 15 years. If companies knew that the Internet would force them to share more information than they had ever shared before, would they have started creating Internet sites?

According to one executive I spoke with recently, “anytime you are saying that you are innovating, you will get an initial buzz. But – as soon as everyone sees it as changing what they do, they become very opposed to it. So, when there is the slightest problem with developing a new innovation, everyone jumps to, “Aha, I told you this was never going to work! And the project gets killed.” Instead, try “…unveiling bits and pieces of it at a time. Emphasize how a certain function is made simpler, but avoid talking about any larger plans or potential for industry change.”

If you are going to innovate – and therefore subvert the existing state of things – be ready to ride inside the belly of a wooden horse.

Customer Hacking

From the moment you start selling a product or service, it is becoming obsolescent. Initially, you may solve a problem for a customer - you help them do something they couldn't do before - you do a better job at something than anyone else, but then things begin to change.

Customer expectations change - as your solution becomes the new floor for what is expected in the future.

Customer needs change - as their businesses change, as their objectives change, as they themselves change.

Markets change - as competitors figure out new ways to take business away from you.

How fast your product or service becomes obsolescent depends on a lot of factors - but it's as reliable as entropy, death and taxes that your product or service has an expiration date on the lid.

That's why everyone must innovate - not just if they want to succeed, but ultimately if they want to survive.

Thankfully, people are, by nature, adaptable...and so are your customers. More often than anyone wants to realize, customers are very good at adapting your product or service so that it solves their problem.  In a process not unlike jamming a square peg into a round hole, customers will take what you give them, then adjust, support or work around it to get what they want.

For example, in the days of vinyl records, music lovers wanted to hear music, so they were willing to buy large and akward plastic discs that scratched and degraded easily, just so they could hear a song. Music lovers bought huge stereo systems to play the records, took over entire closets to store the records, they learned how to clean the record with special brushes, to gently handle the record by the edges and to delicately place the needle in the right groove. They even learned to bump the record player when the needle got stuck.

And record companies learned to help music lovers by giving them the same thing they already had, only a little better. They reduced prices by manufacturing poorer quality vinyl. They made the large discs more interesting by packaging them with "album cover art".  

For decades, to love music meant to love vinyl records.  The symbol or "brand" associated with music was often that of a record.

Customers were willing to use a technology decades past it's expiration date, not because it consistently and easily delivered good music - but because there wasn't anything else available - and they adapted to the existing technology.

And when they were presented with something better, such as CD's - it took less than five years for everyone to switch. When they were presented with something even better at delivering music on demand, the mp3 player, they switched even faster.

It is extremely dangerous to rely on customers' willingness to adapt. The moment someone has a better answer - the adaptation will end and they will abandon you.

But if you discover the adaptation first, your customers can guide you to innovation.

Asking customers what they want is pointless at best, and destructive at worst. When asked what customers want in the future, most likely they will describe a version of what they can get now - only with a little better quality, some slight changes in design, and at a much lower price. Surveying customers with direct questions around innovation can even help you persuade yourself not to innovate.

"Research shows that customers love album cover art, they even hang it on their walls; they'll never buy a small disc or a digital file."

So instead of asking customers what they want, perhaps you should observe how they are adapting your square pegs to their round holes.

The best customers to watch are the "hackers". By "hacking", I mean a certain kind of creative development practiced by computer giants such as Steve Wozniak or Linus Torvalds and all the behaviors, methodology and thought processes that allow them to develop new approaches to problems. Not to be confused with the criminal exploits of those trying to obtain credit card numbers or infecting computers with viruses, true hackers adapt whatever is at hand in order to create very useful products, services, and systems.

Jon Erickson introduces his book, Hacking: The Art of Exploitation, with the following:

"The essence of hacking is finding unintended or overlooked uses for the laws and properties of a given situation and then applying them in new and inventive ways to solve a problem - whatever it may be."

Substitute the word "innovation" for "hacking" and suddenly Mr Ericson's quote becomes a useful definition for innovation. At the same time, it's a useful model for the kinds of customer behavior you might be need to observe.

For example, when Harley-Davidson's business was pummelled in the 1970's by Japanese competitors able to deliver a better quality motorcycle for less money, customer "hacks" allowed them to find a new definition for their company, their products and their customers.  Even as new bike sales continued to drop, their accountants were able to see that their after-market parts business remained strong.  It became clear to the company that their best customers were customizing their bikes - "hacking" them to make them more personal.

The accounting insight led to a realization that they could innovate the motorcycle business. Instead of selling the best quality or the highest performance motorcycles, instead of rejecting the dark images of motorcycle gangs, they could embrace their hackers and become a premium lifestyle company.  They could sell customization, club membership and the romance of an old-fashioned, rebellious, and incredibly loud experience.  Motorcycle sales jumped upwards, along with branded clothing, accessories, tatoos, and of course, after market parts.

Despite some difficulties in recent years, the turnaround of Harley-Davidson remains one of the more innovative re-inventions of a company.  All because they noticed how their customers were hacking their product.

Are there customers hacking your services or products?  Are they using them in a different way than you think they are?  

Find out, and you may be able to find meaningful - and profitable - innovation.