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More than ever, innovation is a real, tangible competency at many Fortune 500 companies, which are investing substantially in their innovation capabilities to build new businesses, explore new technologies, and find new avenues to creating value. However, for every company that has produced substantial impact through innovation, there are many others that have struggled to produce real results. Tempted by the hope of disruptive products and beyond-the-core growth, less successful business leaders discover that making innovation happen at a large company is harder than they imagined. After a few years--usually three--they find that their budgets are dramatically cut and their priorities realigned. In some cases, their entire innovation structures are eliminated. What separates the great innovation organizations from the good ones? Simply put, it’s the ability to account for what I call the “pipeline paradox.” The Innovation Pipeline The traditional graphical depiction of an innovation pipeline is a funnel. The wide end is filled with lots of different ideas, which through a series of stages and gates, get distilled down to just a few worthy ones--the ones that emerge at the end of the funnel. Because of this mental model, innovation leaders tend to place disproportionate emphasis on finding the big idea. They hire staff with fuzzy front-end skillsets. They do cross-company brainstorms and buy market research. They may even buy a dedicated idea-management system to collect ideas. After substantial time and effort, these idea-focused innovation leaders eventually alight on a few concepts with great potential. But then what happens? These same innovation leaders discover they must overcome the pipeline paradox. What Really Happens Once a company decides on the ideas it wishes to pursue, it must invest more time, people, and strategic thinking to get them to market; this inverse relationship between number of ideas and the amount of resources is the pipeline paradox. Too often, companies make substantial investments in finding new ideas but fail to allocate enough resources and staffing on graduating projects beyond the funnel and ensuring they can be easily integrated into a business unit. As a result, a lot of ideas get suspended in the middle of the pipeline. By the time an idea leaves the innovation pipeline, it should be market-ready. The marketing plan needs to be established; details around manufacturing and operations must be aligned; partner and channel implications need to be addressed. Failure to account for this transition increases the likelihood that an innovation group identifies great ideas but produces few tangible results. A Path Forward To better account for the pipeline paradox, corporate innovators should follow these steps: 1.) Begin with the end in mind. Over 20 years ago, Steven Covey stated in his first Seven Habits book that starting with the end goal is crucial for highly effective people. This is equally true for successful innovation pipelines. From the very beginning, think about what it will take for the idea to become a business. Which functions need to be involved in scaling the business? Where will the staffing and resources come from? 2.) Be clear about the goals of your pilot. Although all innovators know the value of piloting, truly savvy innovators are explicit about the goals of their pilots. They know what assumptions they are testing for and they are thoughtful about building the pilot around those assumptions. The next time you set up a pilot, be sure to ask yourself, “What is the smallest, lowest cost way to obtain the greatest validation about my key assumption?” By answering this question, you will build a great pilot; or even better, you may discover that a smaller-scale (and lower-cost) study is more appropriate. 3.) Figure out a way to turn a profit in the short term. As a corporate innovator, it can be very tempting to say to yourself, “In five years, this idea could be a $100 million business.” Avoid this type of thinking. All companies, especially public corporations, are judged by quarterly results. Your boss won’t have five years to show results, and neither will you. As you build out your innovation and get closer to the end of pipeline, be proactive about identifying near-term ways to monetize the innovation. Making money in the near term is a sure way to earn your group the right to think about the long term.

Digital Design

For most of the history of design, the designer has enjoyed the role of creator. A designer makes a thing, and that thing is produced in large quantities, distributing the designer’s vision, ideals, and values—cultural influence—into the world. In fact these days, a design and its creator’s values can be introduced into the digital world in a day or an hour. Given the power of designer as author, critique is usually aimed at a designed thing’s characteristics: how it looks, how it provides value, how easy it is to use. Outside of small circles of design historians, few people critique the values projected by the designer. But these are worthwhile questions: Does the community that will consume the thing share the values it's designer projects? Are they good values? What’s a framework for assessing a design solution’s values, anyway? Participatory Design A movement of participatory design, or "design with versus design for," attempts to address these questions of value and ethic. Participatory design involves giving simple objects and artifacts to non-designers, and working with them to visualize a new design. Participatory design has historic precedence in conversations of unions, worker’s rights, and collective control over the technological workspace. According to Pelle Ehn, one of the first proponents of what has become known as Scandinavian participatory design, participation in the entire design process by users of the end design is fundamental to ensuring a humane design solution. He says that by eliminating the workers from the process of designing for the workers, a nonparticipatory designer has robbed those individuals of their humanity. Ehn’s argument recognizes that products of design are powerful. “The role of the designer shifts to facilitator and translator.” Liz Sanders has extended participatory design research by focusing on the actual mechanisms by which participatory design can occur. She describes how design toolkits can be used to extract creativity from non-designers. These toolkits—pieces and parts that participants can arrange to create their own rudimentary design solutions with little or no craft-based experience—are known as Generative Tools, and contain two-dimensional parts such as paper shapes and photos or three-dimensional parts such as forms with Velcroed knobs and buttons. Design moves from being this… These toolkits are given to participants who are asked to express their feelings visually about a given experience. The role of the designer shifts to facilitator—extracting creative information from "regular people"—and translator—helping to identify meaning, insight, and design inspiration in that information. "Cultural probes" are a mechanism for directing participants’ influence into the design process. The probes offer an intimate view of the emotional qualities of regular people; they do not tell the designer what to make. The designer is left to interpret these qualities and make sense of them. These probes often take the form of artifacts that a participant completes; a common probe is a disposable camera or a journal. Designers work with the completed artifacts to reflect on or tell stories around them. Some designers will ask participants to explain the inspiration for a given photograph, journal entry, or other creative effort. Others—such as Gaver—avoid asking for explanations because "we value the mysterious and elusive qualities of the uncommented returns themselves… Rather than producing lists of facts about our volunteers, the Probes encourage us to tell stories about them." …to being this. Cultural probes literally probe a given culture, poking at society and trying to extract inspiration through narrative. Because the input comes from non-designers, this becomes a form of "designing with," as the designer’s role becomes one of interpretation and facilitation rather than visionary. This is still a fully creative endeavor on the designer’s part. But consumers temper and inspire the results. The design views presented by Ehn, Sanders and Gaver offer a comprehensive story of designing with rather than for people. Ehn promotes including end users in the entire design process, particularly when they are politically, economically or socially disenfranchised. Sanders promotes giving toolkits to end users, so they can express their aspirations and dreams without formal craft skills. And Gaver promotes probes as a way of extracting emotional and experiential insight from end users. Each technique is a theoretical framework of participatory design, as it changes the way designers think about design. But it’s also a pragmatic framework in that it changes designers’ activities and methods. “When designers attempt social change, they are often viewed as part of the problem.” These frameworks challenge both designers and the status quo of design activities in corporations and consultancies. Designing-with also introduces difficult questions relating to a designer’s potential sphere of influence and impact. Presume that you are designing in the context of homelessness, and you have embraced a philosophy of "designing with." You seek out some homeless people to learn as much as possible about how they feel, so you can empathize with their situation. How do you start? If you simply approach a person—homeless or otherwise—on the street and ask them how they feel, you won’t get very far. Social norms dictate a different approach for engaging in conversation, and topics like feelings and emotions are usually off limits in casual conversation. To share their feelings, people need to feel comfortable speaking with you about such intimate topics, and that comfort relies on trust and respect. So to find out about the homeless, you’ll need to spend a lot of time with them and establish trust. Assuming you can establish trust, you’ll probably soon encounter another social barrier: You are an outsider, so no matter how pure your intentions, you’ll be viewed as part of a socio-economic (and often political) system. That is, when designers attempt to engage in social change, they are often viewed by the community they are trying to help as part of the problem rather than part of the solution. Fundamentally, you’ll need to establish an empathetic tie to the people in the community you are affecting. The Challenge of Establishing Empathy Empathy is a misunderstood word. Many view it as a moment in time—something finite that can be achieved as a step in a larger process. But like wisdom, empathy is difficult. To empathize with any degree of useful rigor requires a great deal of time, patience, and emotional energy. “Empathy is frequently illogical and circumstantial. And this is its real value.” Empathy is not the same as understanding, which is what most ethnographic tools provide. These tools help to understand context — to uncover details related to work flow or to learn vocabulary related to a particular group of people or activity. Although useful, particularly for introducing positive usability changes or adding new features and functions to a product, understanding is not enough when designing with. To compassionately feel what it is like to be another individual, one must identify with his culture, his emotions, and his style. Unlike understanding, empathy is frequently illogical and circumstantial. And this is its real value for a designer because experiences involve not only the pragmatic (activities, goals, and tasks), but also the conceptual and fleeting (such as feelings, irrationality, and culture). And methods that attempt to formalize empathy can help a designer not only design for utility and for practicality, but also for emotion and behavior—the underpinnings of interaction design and the most important aspects of design in culture. If only empathy were as easy as a Vulcan Mind Meld. To visualize the challenge of empathy, consider a spectrum with you on one side and your next-door neighbor on the other. It would be impossible to fully empathize with your neighbor. To feel everything he feels, you would need to actually be that person. But you can get close. You can talk to him to understand his views on the world. You can observe his actions. You can go to work with him to see what sort of decisions he makes. With enough resources and tenacity, you could actually become a version of him for a short period—you could even dress in the same style of clothing, attend the same events, and hang around with the same people. But your neighbor is the unique sum of genes and experiences. His perspective of the world has been shaped over the course of his life, and that perspective affects his every thought and decision. “Students who do best are not only skillful at problem solving but also at problem seeking.” Empathy is formed through immersion. A designer who would foster empathetic connections with a group will spend many hours getting to know the individuals and trying to discover, without judgment, the cultural and social norms that exist within the group. Gaining the trust and respect of a group almost always requires some form of equitable value exchange. Unlike many formal anthropological activities, this immersion is not passive. Instead, the designer will strive to become part of the group by participating in activities, conversations, and job routines. In some cases, designers may augment their appearance to become closer to the target audience. In extreme examples, designers may actually impair or alter their bodies to better experience another person’s reality. For example, Patricia Moore wanted to feel what it was like to be a seventy-year-old woman. To gain knowledge, Moore could have spoken with people in that group, but she was looking to build empathy. So for three years, she augmented her body to age it. "I learned that putting little dabs of baby oil in my eyes would fog my vision and irritate my eyes. The look was that of eyes with cataracts… we decided to tape my fingers to simulate the lack of movement which people with arthritis must tolerate… it seemed a good idea also to restrain my movement in walking.. we put small splints of balsa wood behind each knee." Moore’s technique for gaining empathy with a population was as time-consuming as it was comprehensive. And although other empathy-gaining methods are less involved than becoming another character, they all take time, patience, and immersion. Mariana Amatullo, vice president of Art Center College of Design’s Designmatters program, explains that "students who do best in designing for social impact are not only skillful at problem solving but also at problem seeking; they tend to take opportunities as moments of possibility in what Paul Light refers to as 'the Peter Pan phenomenon—that is, if you believe you can fly, you will fly.' In this sense, I find a measure of entrepreneurial intent to be essential at succeeding. With that comes the skill of perseverance, flexibility, and empathy. All translate into individuals who are confident embracing constraints and operating within a context that tolerates ambiguity."

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Generation buyer

People buy from people. In this choice-filled, transparent world, consumers engage by recommendation and relevance. You can advertise until you’re blue in the face, but if you’re not part of your customers’ lifestyle abend culture, why would they want to spend time with you?
In the past, society was more forgiving of transgressions. You might say we suffered from cultural amnesia. We could “forget” unsavory aspects of figures, personalities, leaders, and even companies whose work we respect and admire. People still overlook Winston Churchill’s racist remarks and Charles Dickens’s philandering. Our cultural landscape is littered with figures that would disappoint us if we scrutinized them too closely. Yet they have enriched our lives in so many ways that we have become adept at separating the content (the book, the painting, the policy) from the individual. We can approve of the former without liking the latter.

Social impact is fast becoming a widespread, rigorous business metric.

In the case of companies, we tended to do the same. We were on the same page after all: They maximized profits while we maxed out our credit cards. Amnesia was comfortable. The age of transparency changed this. The tensions became uncomfortable. We developed memories like elephants rather than goldfish. We remembered the sweatshops, the guzzling of coal, and the greediness of bonuses. We remembered the excess and the hypocrisy, especially when it came at a cost to the people. And today, when hitting Facebook’s “like” button adds a brand to our own timeline and our own sense of purpose, we think carefully about what we are aligning ourselves with and why.

Mending the schism

Some companies have tried to solve this awkward mess with a superficial Corporate Social Responsibility (CSR) initiative, or rather strategic “offsetting”--a lukewarm bath of reactive, ad hoc corporate policies designed to neutralize or bury embarrassing aspects of a business. Banks stayed greedy but continued to pour money into the arts. Forests were planted and homeless shelters received handouts. Hence, the consciences of corporations--and let’s admit it, consumers, too--were eased.
But CSR is not a proven substitute for passion. The 2001 Harvard Study by Mohr, Webb, and Harris showed that although CSR activities inspire a much more positive image of a company, it is far from certain that customers will change their purchase behavior as a result. As modern discerning customers, we need more. What we want from companies, just as from our public heroes, is consistency and honesty driven by a clear and transparent sense of purpose. A purpose that we can align ourselves with. A purpose that moves us forward.
Wait a minute! Societal purpose? Bringing meaning to people’s lives? Isn’t that what NGOs, charities, and governments are for? Why does social purpose matter to business?

Purpose is motion

And there’s the rub. The belief that having a “purpose” means “being social” relegates it to supplementing welfare or offsetting bad deeds with good. This denies it the bigger--and far better--role of playing an active part in the lives and passions of customers.
Companies and organizations that put purpose at the heart of what they do unleash a renewed passion in their customers and employees. They’ve taken the power of their brand and fine-tuned it as a force for good. And in doing so, they have made themselves incredibly and indelibly relevant to their customers.
And that’s good for business. Social impact is fast becoming a widespread, rigorous business metric. More and more businesses are choosing to explicitly link their economic decisions to the value created through environmental, social, labor, and governance efforts. The UN Global Compact already has 8,700 corporate members across 140 countries.
The most effective are those whose openly stated purpose links clearly to progress in the communities in which they operate:
— Unilever, for example, delivers to the bottom of the “economic pyramid” with affordable, micro versions of essential products in developing countries.
— IBM reinvented itself around a renewed purpose of creating a “Smarter Planet,” an impressive example of a company finding a renewed purpose for its organization and reconfiguring its business to fit.
— GSK is building a health care infrastructure for its products in areas where the health distribution system is lacking. It gets its own medicines to people in need, and in the process builds systems that local governments are unable to provide.
— Nike Foundation seeks to expand the opportunities available to girls and young women around the world, with a passion for fairness that is shared by its current and future customers.
— Google’s mission to “Organize the world’s information and make it accessible and useful” is a defining principle for everything it does, informing users where to look for new value from its core advertising revenue streams.
These companies are experimenting with new business models built around a strategic purpose and in a way that is inextricably linked with their corporate strategy.
High-growth companies see ways they can create win-win economic value for the company and the society they have elected to participate in. They’ve learned the lesson that business can create value that is directly connected to the interests of society and shareholders. It is no longer passive and reactive “accountability” but an active, gritty, genuinely held passion for change that is ripe for creativity and collaboration.