Innovate Like Edison

(FSB Magazine) BOOK EXCERPT -- If you're reading this with the help of an electric light, it's worth pausing to remember that it was Edison's remarkable innovation that made it possible. Edison's landmark success with the incandescent light bulb and his development of an entirely new system for distributing and monitoring electric power changed the world forever. It is fitting that the light bulb is now a universal metaphor for a bright idea.

Edison didn't just invent the incandescent light, he envisioned and created a system for lighting the entire world. His systems included the means to fund, produce, distribute, monitor, market, and continuously improve his inventions. He did the same with the phonograph and moving pictures, launching the modern entertainment industry.

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Edison began all his innovation efforts by asking himself these questions: "What needs do people have that I can fulfill? What trend or trends are present here? What opportunities do they present? What are the current gaps in the marketplace? What is the insight that can lead me to create greater value in this segment? How can I leverage what I know about this category or industry that makes sense for my laboratory and my brand name? How can I test the efficacy of my idea?"

Edison looked for trends through his reading and networking. He would note places where he thought something was missing or areas where he felt the quality, efficiency, or technology might be improved. Using hypotheses he developed about each trend, he would work on ways of fleshing them out further himself or assign a team to the task. Whatever the project, Edison focused on how he could deliver the greatest possible value to the marketplace. Of course, Edison did more than just develop innovations by following trends; he ultimately created trends through his innovations.

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Throughout his career Edison used a five-step process to launch his inventions. To give you a taste of his approach, we use the example of Edison's first product, the stock ticker. His system is culled from historical documents and written as Edison might have noted them.

1. Identify trends in the marketplace, observing where and how needs are shifting. In 1868, I read in the newspapers that the rebuilding of the American South after the Civil War has sent commodities prices rising, since demand for lumber, brick, stone, and other building materials has increased and supplies are strained. The reporting of these prices - as well as the price of gold and precious metals - is eagerly sought by American businesses at an increasing rate.

2. Determine if there are any gaps created by these changing needs. I've noted that few efficient machines and few services exist to rapidly - and reliably - report commodities prices, precious-metals prices, and stock prices to businesses around the country.

3. Identify the core insight (the "aha!") or need at the heart of each gap. I think I can apply the principles of -telegraphy to make a machine that reports prices.

4. Link your insights to your capabilities as a company and your strengths and weaknesses in relation to your competitors. I can combine my talents for telegraph equipment assembly and design to develop price--reporting machines that operate rapidly and efficiently.

5. The hypothesis is an "if-then" proposal for a practical experiment about the goal you'd like to fulfill based on the linkage you've created. If I can build an efficient, reliable telegraph-like machine that can help businesses report commodities and metals prices all over the country, then I will make a significant profit.

The result? Edison's stock-reporting machine launched his career as a successful inventor and innovator.