Lorraine Marchand has been an innovator since childhood, starting when her father challenged her to solve a process problem involving sugar packets at a local diner. Her new book, The Innovation Mindset: Eight Essential Steps to Transform Any Industry (Columbia University Press, 2022), is an in-depth guide to the innovation process that draws on her three decades of experience in new product development. Currently general manager of life sciences at IBM Watson Health, Marchand recently spoke with MIT Sloan Management Review about her approach to innovation and what many of us often get wrong about it.
MIT Sloan Management Review: What is the most common, significant mistake that innovators make along the new-product development journey?
Lorraine Marchand: So many innovators follow the “build it and they will come” philosophy — we see this so much in tech. I’ve spent a lot of my time in life sciences and health care, which are very much dominated by technology. When I’m working with early-stage innovators or entrepreneurs, often they’ve been in their engineering lab or their chemistry lab or their computer lab, and they stumbled on something or followed a research theme, and so they’ve developed a piece of technology. It’s super cool, it’s advanced, it can do everything but wash the dishes, and they really want to get it out there. They go right to business plans, and they miss the cardinal rule of innovation, and that’s to ask, “What problem are we solving for? And is there a customer who wants to pay to have that problem solved?” That’s really the central tenet of my book.
Get updates on Innovative Strategy
The latest insights on strategy and execution in the workplace, delivered to your inbox once a month.
Please enter a valid email address
Thank you for signing up
For example, early in my innovation career, I was teamed up with a colleague who licensed a piece of technology out of an Israeli lab. It could measure oxidative stress in any sort of body specimen, and so it was super cool. He paid a lot of money for it and brought it to the U.S. We pulled together a who’s who of oxidative stress experts, but the problem, as we dug dig deeper and deeper into it, was that oxidative stress is a byproduct of just about every disease. Then the question became, “Where are we going to focus? Are we doing something with heart disease? Are we working in a neurodegenerative area?” And the choices became so expansive, and the challenge of trying to narrow down and figure out what application this technology was fit for became so overwhelming, that we ran out of money and spirit and everything else.
I still see this happen all the time, even in my role within Watson Health. IBM had this great spirit of innovation within the research organization. The computer scientists and the engineers — absolutely brilliant people — would spin up a new solution, a piece of technology or an AI. They would bring it over to the team and say, “Here, take this to pharma and get us a reference customer. We think this is going to change the world.” But at the end of the day, we need to first ask, “What problem are we solving for the customer? Who needs this?”
The other gap I often see is a failure to know when to pivot. That’s a bit of the same problem as being captivated by the new technology. This is their baby, and it’s the prettiest baby that has ever been born, so they don’t pay attention to signs from the market or external constraints that are developing. And they fail to see that they can still follow the road map to get to their vision but need to take a turn or go in a different direction. Not understanding how important it is to be able to pivot and change direction without compromising your strategy is another way that innovators can miss the mark.
What do leaders get wrong in managing innovation?
Marchand: There’s a misperception of innovation as this wild, crazy brainstorm, and that we’re all throwing spaghetti at the wall or drawing on the board with markers. It really is a very disciplined process, and it has to emanate from observation, evidence of a problem, documentation of the problem, and then designing that solution with the end customer in mind.
In large organizations, innovation can become a tactic. It’s got to be driven through the culture, but too often organizations view it as a tactic, not as a holistic system that’s supported throughout the organization. They say, “We’re going to take a portfolio approach, and we’re going to spend 25% of our budget and our time just innovating for the sake of innovating, trying to find something disruptive.” Well, that’s not necessarily purposeful. When innovation is done well within a large organization, it has to start with the culture; it has to start with the mindset. There has to be a way of instilling that in people — embracing change, tapping into their curiosity and a passion for problem-solving.
Among the organizations that I’ve seen do that well is Johnson & Johnson. Innovation is actually in [the company’s] credo and is showcased and valued in the culture. And we have to have some permission to fail embedded within the culture, in a construct that works within the organization.
There are elements of design thinking in your approach to innovation. What do you do differently in your process?
Marchand: My methodology is based, first of all, on this discipline of observing and being able to document the problem. In terms of coming up with different solutions, as I talk about in the book, I was trained by my father, who insisted that we find three solutions to every problem we encountered, so that’s kind of my mantra. But then you have to figure out solution fit, and that’s where the MVP — minimum viable product — and the customer testing come in from design thinking.
One thing I advocate that’s a little different is this idea of doing some risk testing. In particular in high-tech areas, where there is a lot of financial risk, technical risk, and marketplace risk, you have to identify the different types of risk exposure and evaluate what their impact is going to be in terms of getting to the marketplace. Risk is a really important component of the feasibility process, particularly in technology.
What are your thoughts on organizing innovation? Does it work best in a centralized unit or as a decentralized activity?
Marchand: Right now, I see a lot of companies have their central innovation offices increasingly organized around either the chief information officer or the CTO — the central strategy group — and then they’ve got what I might call ambassadors who are business-unit-facing. Their job is to interact with each of the business units, serve their internal customers, and understand what problems they’re working on. I really wonder sometimes whether they’re truly bringing forward innovation or if it’s almost a kind of centralized model for business development or vendor surveillance, because what I have seen happen is that they’re not really helping that organization do any sort of organic innovation.
Let’s take a drug discovery unit within a large pharma company, and they’re saying, “OK, I’m going to be your eyes and ears, and I’m going to go out to my network and find all the different, cool vendors that are doing something that might be interesting to you. And then I’m going to bring it back so that you are aware of what you’re missing.” It’s valuable to understand what kind of innovations might exist out there and bring them back for the business unit’s consideration, but I wouldn’t say that they’re truly innovating.
As managers consider the impact of more remote work on organizations, many seem worried about whether innovation will suffer if people aren’t spending as much time face to face or having more chance encounters with others. What are your thoughts on that issue?
Marchand: The hybrid workplace is forcing us to be creative and innovative. We’ve got Slack and online whiteboards and virtual brainstorming sessions. I believe that people will overcome challenges with whatever the new environment is, and I think that they’ll still be able to innovate. I think we might miss, for example, the sidebar conversation with the person who’s sitting beside us. It’s hard to say whether what we discussed was valuable or not, but you know, there might be something that spurred an idea. Ultimately, I believe in people’s resilience and flexibility and their ability to make things happen, whatever the environment is.