The Innovator’s Hypothesis

Ideas Versus Reality

Common wisdom holds that innovation requires ideas and that you need good ideas to compete in business. The reality is that “good ideas are typically bad investments.” Innovation is crucial, but just seeking new ideas is not the best way to innovate. Insisting on mustering good ideas wastes time and money. Instead of brainstorming new ideas, focus on developing one or more “business hypotheses” and testing them through “business experiments.”

A business hypothesis is a belief about how to create value – a belief that you can test. Business experiments don’t determine truth or falsity. They don’t claim something is universally true for business. The team generating the hypothesis believes that a particular action or ability will lead to specific, desired and “measurable outcomes.” You and your team should agree on “an explicit and understood measure” to use to evaluate the experiment’s results, such as an observable change in performance. Your experiments should be “easily replicable”; that is, other people should be able to repeat the experiment to verify your results.

The “5x5 Approach”

The 5x5 tactic is a “rapid innovation ...