Organizations are always trying to create the next big thing. What drives these organizations to create something new to bring to the marketplace? These are solving problems, creating opportunities, removing barriers, etc. What do all these things add up? They create value. How do you find out what people value? Look at who is going to benefit from what you are creating. You may think you know who they are, but odds are, you’re wrong. I’ll bet you are wrong. Why? You are too close to what you are creating. On today’s show, we will walk through perspectives and the value of innovation.

Identifying the Customer’s Wants

When I was at HP, there was an engineer who was pitching new features for a product line. At the end of his pitch, I asked him what the customer asked for the specific function. Did it come from a feedback form, a customer care call, or user surveys? The engineer replied, “I came up with this idea because it is a feature that I would really want.” Why did I ask this question? Because of the complexity that the feature would add to the product. It would take an HP engineer to figure out how to use the feature. The engineer mistakenly put himself in the position of the target customer.

It is vital that you, as the creator of a product/service, get out and observe what the customers want. During my years at HP, I frequented Best Buy on my weekends. If a customer looked at an HP laptop and ended up buying another computer, I’d hand them my business card and ask them a simple question. What caused you to look at this product and buy another? The answer to that question showed me what they valued. In today’s show, I am going to be discussing what the value of innovation is.

Understanding the Value of Innovation

How do you find what the customer values? You need to know their perspective. Their perspective has a significant impact on their decision making. An excellent example of this is my wife. My son Logan was a fencer back around 2009, and we were in Las Vegas at a two-day competition.

Logan was doing well and advancing in the tourney. That was great, but it also made us tight on time to get to the airport. After the competition, we raced to the airport. The person informed us at the check-in counter that there has been a delay in our flight to Phoenix. I corrected her, saying it must be a mistake because we were going to San Jose. She said that our ticket was Las Vegas to Phoenix to Los Angeles and then to San Jose. A typical flight from Phoenix to San Jose takes about one hour, but this one took 6 hours. I called my wife, and she said that booking the 6-hour flight saved $20. I thought she was kidding—at the time, I was the CTO at HP. She didn’t value my time the way I did.

Why does my wife think that way? My wife is the most frugal person in the world. Why? Because of her upbringing. She was one of six children, and her family struggled to say afloat. Her father worked double shifts in the steel industry, seven days a week, to provide for them. During this time, her family lost their home multiple times, and she was often forced to live with other family members. When she looks at the value of money, her experiences shaped her perspective. When you’re thinking about the value innovation, you may think you’ve got it all figured out. That doesn’t matter. What matters? The perspective of the person buying your product. It doesn’t matter what you think, but what they think. Do you know the “who” and what they value?

Creating Enhanced Value

Beyond understanding how people make decisions and what they value, let’s look at how we create enhanced value. I remember, there was a social media meme that showed an iron bar: An iron bar costs about $5. If you pound out that iron bar into horseshoes, equates to $12. It’s the same amount of iron, but making the bar into horseshoes created six extra dollars.