5 Minutes To New Ideas With Phil McKinney

I’ve never shopped at the online craft marketplace Etsy.com or even any of its competitors.

Not an area of interest for me as I’m not often in the market for hand-knitted iPod cozies, customized guitar cables, or the like.

As for my wife and daughters – they are big fans and very loyal and passionate users. And they are not alone. Since 2005 Etsy.com has signed up 2 million merchants and 35 million users.

Their annual sales figures in 2017 were $3.2 BILLION. Even more interesting to me is not just the passion – but the level of passion that Etsy inspires. Etsy provides a way for talented people who produce quirky goods to go global. A young woman who customizes invitations out of vintage postcards would have struggled to find enough business before Etsy existed. By partnering with the website she can benefit from its all-encompassing reach and make contact with enough serious customers to sustain and grow her business. On one level Etsy provides a very simple service—allowing vendors to reach people who might not otherwise be aware of their products and make sales. On a deeper level though, it allows entrepreneurs and customers who are passionate about something—often very niche—to find one another.

At the same time, Etsy provides the hope of freedom from the nine-to-five, and the opportunity for thousands of ambitious entrepreneurs to share their innovations with the world. Etsy doesn’t promise its users success; it simply offers them a fair shot. The gamble and risk is all theirs. There is no physical exchange of goods between Etsy and its users, and the website makes its money by charging a commission on sales. The irony is that many users who break down the actual time they spend making a product versus what they can sell it for find they are lucky to make minimum wage. Other users find that their quirky one-offs are copied by factories or larger operations who can then undercut their prices on other, more commercial, retail sites. The relationship between Etsy and the store holder can be turbulent; users love the site, but some are growing increasingly frustrated that the core premise—you can only sell what you yourself make, crafting supplies, or vintage items—limits their potential profits.

There is no way to scale your offerings which keeps merchants artificially constrained. This ceiling means that the vast majority of users are doing this for one reason: passion. They love what they do, and they love/hate the website that allows them to do it.

Passion makes the relationship between organization and customer volatile. Some companies can survive it (think of the outrage that briefly but noisily roils around every iteration of Facebook’s operating agreement)

Others misjudge the depths of their customers’ feelings and can come perilously close to crumbling because of it. The Dutch bank ING enraged their customers by paying bonuses to bosses after it had been bailed out by the government. The banks’ customers were so angered that they rallied on Twitter and threatened to withdraw their deposits en masse. Eventually the bank reversed its position, the bonuses were rescinded, and order was restored.

It will be interesting to see what Etsy evolves into, and whether it can keep users passionate in a positive way as it continues to grow at an accelerated rate. It’s possible Etsy will see them grow resentful, much like the original eBay sellers who railed against changes in the site’s fee policy. For now this very simple exchange is enough to cement their customer’s passion and loyalty. Can you say the same about your business?

So ask yourself ..

Who is passionate about my product or something it relates to?

Challenge yourself to think deeper about how your customer thinks about your product ..

[Sparking Points]

Do you or your product inspire an emotional reaction from your customers?

Do they feel like they couldn’t get by without what you do? Why or why not?

Can you tell the difference between a customer who feels frustrated that he has to use your product, and one who is grateful that your product is there and available to him?

What are you doing to understand this emotional connection?

This emotional connection has its pros and cons.

On the pro side – its key to market success as you look to differentiate yourself from your competitors

On the con side -- if you upset that passion, you may find it turn into anger and aimed at you..

What is surprisingly inconvenient about my product?

The designers and engineers who work at HP face many challenges in getting their ideas signed off on. It’s a long process from an idea to a finished prototype. Before any product can hit the market, it faces one final test. I take the prototype home, give it to my wife, and say, “Tell me what you think.”

Now, my wife is an extremely smart and focused individual, but she is emphatically not a techie. She doesn’t care how a gadget works; she just wants it to work.

Her lack of specialized knowledge has been hugely valuable to me over the years. If I test a new product, I can troubleshoot it almost without thinking. I might not even notice a glitch that could cause major hassles for an end consumer because the fix is second-nature to me. On the other hand, if my wife can’t get a product to work, the first thing she does is call me up and yell at me, which is a great incentive to get our products as flawless as possible.

Back in 2007, she was relocating her stained-glass studio to California from our former home on the East Coast. She was a little nervous about the drive. Luckily, I had just been given the first working model for the latest GPS device that HP was about to go into production on . I gave her a quick lesson, and off she went. Three days later she calls me from the road, almost speechless with rage. The GPS looked great and had the lasted hardware features anyone could want. What it didn’t have was accurate maps. Every time my wife searched for rest stops, it came up empty.

When she finally made it out west, she met me for lunch at the HP cafeteria. The head of our division that developed the product came up and asked her what she thought. Her response?

“Well, it was clearly designed by a guy; I stopped at every crummy gas-station bathroom between here and Kentucky!”

The GPS was super-fast, looked great, but had completely missed the mark on why people buy GPS devices, which is based almost purely the quality of the maps and the points of interests along the way. Great hardware can’t compensate for faulty software.

The GPS device failed the wife test, and it had failed my test too. It was sent back to the drawing board.

There are two ways to uncover these kinds of potential annoyances in your new or existing products. One is to observe your customers and see what they are doing with your product and what their experience with it is. The other is, use the product yourself. Either way, you need to be fanatical about constantly improving the product and getting rid of the problems you uncover. Keep in mind that I’ve observed major differences between how men and women handle these issues. Guys have ego wrapped up in their new devices; they won’t let the gadget win. A woman will give it three chances; if she tries to use a new product three times and it doesn’t work, she’ll take it back to the store because she doesn’t have any interest in fighting with the product and winning. Men are much more likely to keep tinkering with the device and, if all else fails, stick it in the garage and forget about it. If it doesn’t work for a woman, she’ll let you know, and you’ll have a returned product on your store shelves. This is one of the reasons I rely so heavily on the wife test; my wife is a zero-tolerance consumer. If you don’t have a zero-tolerance consumer, you need to find one and embrace them. Have them test your products and give you the unvarnished truth about your products’ real usefulness and value.

That way – you can answer the question ---

What is surprisingly inconvenient about my product?

But don’t stop there .. ask yourself ..

[Sparking Points]

How do you uncover what customers perceive to be inconvenient about your product?

Are you aware of the inconveniences?

Do you use your own product or service?

What’s your version of the wife test?

Go beyond the obvious by ignoring your own likes and dislikes about any given product. You are NOT the best gauge of your customer. Get up – and go talk to them.

Where do we perform product research and development? Where else could this be done?

What is your organization’s philosophy about design and development?

Do you keep everything in-house, or do you outsource as needed?

There are two schools of thoughts on this. By keeping the design process in-house, a company can build a sense of continuity and cohesion that links the entire family of products together in a satisfying way. Or you can outsource as needed, hiring talent for specific products and moving on once that product is complete. Neither is right or wrong; the more important point is to have a rationale for whichever strategy you choose, and to extract the most value from it.

Look at a company like Herman Miller. Their Aeron chair is an iconic design for the technological age, but it wasn’t designed internally. Instead, Herman Miller outsourced the design to leading designers that have their own firms. The famous husband-and-wife team Charles and Ray Eames designed the classic 1950s Eames chair the same way. The point is that Herman Miller knows what their strengths are: manufacturing and distributing the final product. They also have a huge amount of practical expertise. For instance, they have experts in ergonomics, the less obvious details that are critical to the overall comfort and practicality of a product (e.g., the way a chair distributes the body heat generated by the user). They share this very specialized knowledge with designers, and then throw the company’s expertise into selling the final piece of furniture. Herman Miller has a very different idea of where design, research, and development should take place. Herman Miller has adopted the philosophy that it’s more important to ensure that the best and brightest are working on your product, and that this is a higher priority than making sure the work is done in-house.

Also, think back to the DreamScreen project I mentioned in chapter 6. When we began that project, we were very clear that we were going to make it specifically for India. So why would you design it in the United States?

If you’re going to design a product for a specific market, then you need to throw out the rules of how it’s been done in the past and do the R&D closer to the customer. So, we sent a team to India, interviewed 2,600 customers, and drove the R&D from there. Sometimes you have to put your resources in the right place to get the right results.

You need to be aware of the fact that your team will have gaps in their life experience, their beliefs, and their focus. This may not matter in 99 percent of the projects you assign them, but there will be times where these gaps are a problem. Consider the possibility that you need to look outside your walls to find the right brains for specific tasks. You aren’t going to have 100 percent of the resources you need inside your organization; it’s just too costly to keep these highly specialized people on the bench until you need them. If you are an employee in one of these specialized departments, you need to be aware of how this shift is going to change your value to your organization. If you believe there’s a coming transition to the creative economy, then your future worth and career is dependent on your ability to come up with ideas for a number of companies rather than just one. As soon as you go dry, you are out of luck.

Another element of this Killer Question that you need to consider is the concept of open innovation, which has been a hot topic for the last few years. Open innovation is the approach where organizations go outside to secure a “funnel” of ideas. One example is companies who partner with state universities to leverage government-funded research, or companies who sponsor promising high school students in the hope that they will join their workforce after graduation. The US government is using programs like TopCoder to create open-source idea channels. Companies like Procter & Gamble post tough engineering problems on dedicated websites and offer prizes for the first person to come up with a solution.

How does this affect you and your business?

No matter what size your organization is, you have to recognize the importance of embracing the open-innovation concept as you source your ideas. One of the challenges with innovation today is that many people believe that high-impact innovation comes from large companies. However, the US Small Business Administration reports that while small firms are granted only 8 percent of all patents, they receive 24 percent of all patents issued in the top-100 emerging technologies. So the source for ideas in the new and emerging areas is strongly influenced by start-ups. Patents issued to small businesses are not broad, generic patents, but are focused on specific innovations and have the biggest scope and the highest return. It’s why you see so many examples of large companies ...

In the traditional R&D process, the product is developed and then handed off to the design team to “wrap” it and make it look pretty.

The drawback is that this approach is out of date; in the last ten years consumers have become much more design-savvy. Consumers want functional, usable design that highlights ease of use, or a more emotive design that adds a personal connection with the product or in some way broadcasts a statement about the user’s more subtle, hard-to-define beliefs about themselves. We can all name a handful of companies that are melding form and function in a way that resonates with users and creates a deep-seated brand loyalty. Look at JetBlue. They are essentially a low-cost carrier, but their design does a masterful job of suggesting that they provide a full-service experience. Their terminal at JFK is a flashback to the old-world style of travel—more elegant and sophisticated than its customers would expect it to be, and more pleasant to spend time in compared with the terminals of most of its competitors, the so-called legacy carriers.

It’s important to constantly ask why you develop your product elements in a particular order. This is especially true if your organization has been in business for a substantial length of time and yet you’re still developing your products in an order that was devised to suit production methods from decades ago. Ford Motor Company worked with Ideo and the New York–based design firm Smart Design on the Ford Fusion. This was a daring move for Ford, as the car industry has always believed in keeping new ideas proprietary. By bringing in outside firms they risked their design being leaked prematurely. However, they recognized both that they needed to do something bold with the design to reflect the radically new nature of the car and that they didn’t know where to start.

Ford wanted a design that reflected the fact that the hybrid car was something “new.”

Part of this process was realizing that their potential customer base was made up of people with wildly divergent needs and wants. There were the hard-core “hypermilers,” who kept spreadsheets detailing the performance they got out of every gallon of gas. There were customers who were concerned about the environment but didn’t think much about it beyond making the decision to go hybrid. And there were people who simply were looking to lower the amount they spent on gas but weren’t emotionally invested in the environmental aspect of the vehicle. All of these groups wanted different levels of information and feedback from the dashboard array. The hypermilers wanted to “keep score” of their gas mileage and monitor how the car was performing at different points during their driving experience. The less environmentally focused customers wanted a simpler, less distracting display. The only thing all the potential customers agreed on was that there needed to be an easy-to-find clock display somewhere on the dash. So, rather than developing the dashboard last to meet the specs of the car (as it is typically done), the design team reversed the process and started working on the dash long before they even had the car itself designed. They started off interviewing hundreds of potential customers but quickly realized that no one design was going to make everybody happy. After multiple rounds of testing they developed a dash that allowed the driver to pick one of four settings that determined what appeared on the display. Once this concept was finalized, it was sent to the engineers to incorporate into the overall specs of the vehicle. By reversing the order in which their process was normally done (here’s the car, now figure out how the dashboard works within it), the combined team of Ford, Ideo, and Smart Design were able to come up with a unique experience that reflected the environmental philosophy of the car and give users a customizable experience that was much more likely to please the individuals who purchased the vehicle.

[Sparking Points]

In what order do you develop an idea and its components?

What would happen if you changed that?

How did you make the determination about your customers’ priorities in regards to how you ordered the phases of R&D?

When do you involve design in the R&D? What would be the impact if you change it?

I really enjoy getting behind this microphone. It is my personal creative outlet that is separate from the day job. What was it that got me to start back in 2005?

Like all things, I got inspired. My inspiration was when my mentor, Bob Davis, lent me my first self-help set of cassette tapes created by Earl Nightingale. If you are not familiar with Earl Nightingale, he produced a spoken word record, The Strangest Secret, which sold more than a million copies, making it the first spoken-word recording to achieve Gold Record status.

As we say the rest was history.

Those cassettes put me on a path of continuous learning in a format that made it easy to consume during my 1-hour commute in Chicago traffic.

A few months later after listening to that first cassette, Earl launched a monthly series he called “Insight”. A monthly subscription was $70 which was a lot of money for someone starting their first job in 1982. I signed up immediately.

On those monthly cassettes, Earl challenged his subscribers, to think, to reflect, to motivate and to be willing to change. The content was what I needed to hear. I’ve kept every single cassette and still have them in my office.

Years later, I was having a discussion with Bob Davis about how could I pay him back for the time he invested in me that led to my career success. He laughed and said I couldn’t pay it back, I needed to pay it forward. Find others who I could invest in. A challenge I wasn’t quite sure how to deliver against.

Then I got inspired.

I thought back to Earl and how he impacted me and asked how I could do the same by sharing my experiences and lessons learned with others. When I looked around, there wasn’t an easy way to produce something like what Earl did with Insight without great expense. So - I put the idea on the back burner.

Then I stumbled upon a small group experimenting with audio being distributed via RSS feeds over the internet. The lightbulb went off. I figured I could produce a recording and then distribute it using this new approach. So I jumped in.

On March 5, 2005 - I produced the first episode of what we now call a podcast. I produced that first show using a crappy little microphone plugged into my laptop setting in the bathroom at a Marriott Resort in Arizona .. and I loved it.

Bob and Earl’s inspiration in my life had come full circle. I had found a way to pay-it-forward. I’m nowhere near the impact of Earl Nightingale - but I’m trying my best -- and creatively it challenges me and keeps me learning.

True inspiration goes deep. It changes us. It transforms us. What some people call inspiration isn’t. Some things we may think is an inspiration isn’t because of how brief of time we work at it.

What some call inspiration may be the “new shiny object” that we try and then figure out its not something we are that interested in. For me, that’s photography. I have this long-standing love-hate relationship. I come back to photography repeatedly but then just as quickly lose interest. Ask my family. I have storage cards full of images that no one has ever seen.

So what inspired Earl Nightingale?

When he was seventeen years old he joined the United States Marine Corps. Earl was on the USS Arizona during the attack on Pearl Harbor and was one of fifteen Marines aboard that survived.

Following his close call in the war, Earl was inspired while reading Think and Grow Rich by Napoleon Hill when he realized that the six words he read were the answer to the question he had been looking for!

What are those six words? , 'we become what we think about'.

He realized that he had been reading the same truth over and over again, from the New Testament...to the works of Emerson. 'We become what we think about.' 'As ye sow, so shall ye reap...'

Those six words became the foundation for his career success. Later he was challenged to share that insight with others and that is what led to his recording of The Strangest Secret.

He went on to record more than 7,000 radio programs, 250 audio programs as well as television programs and videos.

Earl passed away in 1989 however he is still inspiring others through his spoken word.

We all have a story about how someone or something has creatively inspired us?

What is your creative inspiration? How are you translating your creative inspiration into having an impact?

Send me a note and share your creative inspiration story. I would love to hear it.

I’m Phil McKinney -- and thanks for listening.