How to Breed an Innovative Business Idea — #5 of 31 Proven Skills [Research]

Skill #5: Visualize an Unequal Input-Output Equation to Guide Your Efforts

Having an appreciation of the physical input-output equation outside of its setting in nature reveals that if unequal outcomes are possible, then it should be possible to generate a beneficially unequal result through innovative human intervention

Folklore has it that we tend to get out of life what we put into it. The notion has appeal because it seems natural. Indeed, in the world of nature, Isaac Newton’s Third Law of Motion states that for every action, there is an equal and opposite reaction. This is undoubtedly true, but when it comes to human involvement in any process, it does not necessarily hold. Often the inputs and outputs are not equal in personal affairs.

With every action we initiate, we seek to bring about a certain result and the efficacy of this result will vary relative to our goal. We may well achieve what we are aiming for or, at least, something commensurate with what we put in but, unfortunately, sometimes disaster strikes — perhaps a failed business venture — and what we get back is negligible or even negative, compared with what we put in. Finally, sometimes we get lucky, and what we get back is much greater than what we initially contributed.

Broadly speaking, the possible effort and result outcomes fall into four quadrants:

Quadrants 1 and 2 accord with Newton’s Third Law of Motion and Quadrant 3 is the failed business venture.

We are interested in Quadrant 4, the last scenario.

To think innovatively, we utilize the structure of an input-output equation with the sole, critical expectation that the output produced significantly and beneficially exceeds the sum of the inputs. Quadrant 4. This small effort> big result consequence is the essence of a successful innovative idea.

I refer to such ideas by the loose acronym Sebir: an idea where a relatively small amount of effort has generated a disproportionately big result. In research I have done on thousands of innovative business ideas, I have identified 31 personal skills that we can use to generate Sebirs as required.

The skill we are addressing arises from our earlier understanding that if human intervention can bring about unequal input-output results that are both good and bad, gaining insight into how to achieve a beneficial input-output result by design is theoretically possible.

Examples of how and when this can occur are therefore illuminating.

Examples of Innovative Ideas from Input-Output Equations*

Most agree that organ donation is a very worthwhile human activity and support its promotion. It is therefore initially puzzling that Germany has an organ donation consent rate of less than 15% while Austria has a consent rate of over 95%.

What accounts for this apparent aberration when the inputs and outputs in both countries are subject to very similar cultures and economic circumstances?

Understanding the nature of the input-output relationship and how to influence it innovatively can help answer this question.

Governments everywhere mount campaigns to encourage citizens to ‘opt-in’ voluntarily to donate their organs after death. The construction and delivery of the appeal (the inputs) are employed with greatly varying success (the output) as the Germany-Austria comparison shows. A commendable outcome for Austria but apparently a big effort-small result scenario for Germany.

How can Germany improve its organ donation input-output equation?

Innovatively. A simple tweaking of the process inputs so that ‘opting-out’ rather than ‘opting in’ is required to produce a small effort-big result outcome. Consent to donate organs is the default position in Austria unless a potential donor formally declines. For now, Germany still holds to the view that willingness to donate organs should not be presumed and is sticking with ‘opt in’.

Austria has leveraged the organ donor input-output equation to its advantage. Germany has chosen not to.

Let’s move from a human setting to a manufacturing setting. The input-output equation for a manufacturer of metal products works well most of the time until the build-up of metal waste on the equipment necessitates a stoppage while it is cleared away. An intervention that turns the machinery upside down so that gravity causes the metal waste to fall continuously to the floor removes the need for any stoppages.

A once-off adjustment to the established metal products’ input-output equation permanently removes a regular disruption to manufacturing yield.

And finally to an equation in the world of online services.

For many years, computer software suppliers operated an input-output equation that accommodated the need to upgrade and re-sell software to customers every few years once its original functionality was superseded. The transformation to a pricing model whereby customers bought software via annual subscription rather than outright purchase has since ensured a much more sustainable relationship with customers, one that is far less reliant on regular re-negotiation and logistical considerations.

The input-output equation for software supply was revolutionized through the transition from conventional to subscription pricing.

Takeaway

*Thousands of categorized, innovative business ideas can be found at Sebir.com