1: There are two traps CEOs and leadership teams fall into regarding innovation.
Trap #1: “The minute we think we truly understand the customer and can take our attention off discovering what matters, we’re dead,” Panera founder Ron Shaich writes in Know What Matters: Lessons from a Lifetime of Transformations.
“Sooner or later,” Ron notes, “even the most brilliant and innovative concept will fall behind the times and become a competitive disadvantage.”
Which is why the CEO must make innovation job #1. “Discovery is the CEO’s number one job and should never be delegated.” As a CEO, “our job is not to accept what is. Our job is to change the trajectory of the business.”
Trap #2: Thinking innovation is fun. Or easy. It’s not.
“It’s quite frankly a grind, an often-uphill struggle to bring something new into being,” Ron writes. “Innovation isn’t a flash of inspiration or a momentary creative breakthrough.”
Yesterday, we explored Ron’s idea that a CEO’s most important job is to be “The Innovator-in-Chief.”
His take: “Being innovator in chief doesn’t mean you just sit in the corner office dreaming up visions of the future.
“It means being the driver of a detailed, disciplined process from vision to rollout.”
Building on this mindset, Ron has developed an innovation process that works.
‘When we developed the original vision for Panera,” he recalls, “I was led primarily by instinct, but looking back, I could see that in fact I’d been following a process.
“Ultimately,” Ron writes, “I codified the process, breaking down the steps I use to discover what matters, bring what matters to life, and get what matters done.”
Now, he uses this innovation system for projects, big and small, across the companies he works with.
“Note that although the process’s steps are quite distinct, they are not discrete,” Ron notes, “In practice, each step is fluid and often spills into the next step.”
3: Here is Ron’s Three-Step Process for Innovation:
Step 1: Discover what matters: Determine what job we need to complete for whom
- Observe. We use all our senses. We look for behaviors that signal people’s frustrations, unfulfilled needs, and desires. This is the trigger for innovation. We can work with focus groups, study our competitors and other industries, and apply business models and broader cultural trends.
- Look for patterns and generalize. As we gather data, how can we apply best practices from other industries and trends?
- Brainstorm. “Explore the meaning of the patterns we’re noticing,” Ron recommends. “Compare notes and wrestle with what we have seen. Generate hypotheses on what will matter to people in the future.”
- Research. According to Ron, research is the last piece of the innovation puzzle, not the first. “It serves only to confirm what we’ve seen directly,” he writes.
“Research can only tell you what people did yesterday,” Ron explains. “And if you just take whatever happened yesterday, extrapolate it, and expect that world to be there tomorrow, don’t be surprised when you find yourself irrelevant.”
We are looking to confirm our theories and hunches, not discover them.
“The world doesn’t pay you to read yesterday’s research,” he says. “It pays you to figure out what will matter tomorrow and how to be the first to get there.”
Step 2. Bring what matters to life: Capture our vision in one, two, and three dimensions
- Identify success factors. “I think of this as a one-dimensional sketch,” Ron writes, “a single page in which you clarify and ultimately commit to the deliverables that will be required to take advantage of the opportunity you observed.”
- Rendering. Think two-dimensional. A watercolor sketch of the vision of the solution. We can see it, describe it, and discuss it. But we haven’t built anything yet.
We test in our minds. We discuss it with others. How might it serve guests? Operators? Investors?
We “continue to play with it, challenge it, and stay open,” he suggests. “Are there secondary unforeseen consequences to certain choices?
We continue talking about it until we build some confidence. Think 80 percent solid. “It might take the form of a written document like our Concept Essence, Ron writes. “It might include visuals.”
- Lab test. “Once our rendering is so vivid that we can see it, taste it, touch it, hear it, smell it,” he observes, “it’s time to move into three dimensions and lab test the various parts or subsystems of the solution, internally, before it faces customers.”
- Prototype. The final phase of step 2 is to “truly test the full, three-dimensional operational reality of our vision, to learn and experience how it works with guests and operators,” Ron writes. This is a critical step in the process where our vision starts to become reality.
Step 3. Get what matters done: roll out our innovation
- Planning. “Determine what to roll out first, second, third, and so on (what the world can absorb when) for the minimally viable product (MVP),” Ron writes.
- Versioning. Next up: “Build confidence, confirm impact, and define rollout needs,” he notes, “through larger and larger market tests.”
- Execution. Decide who will coordinate the full-system rollout. Perform.
More tomorrow!
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Reflection: Have I been treating innovation like an occasional brainstorm instead of a disciplined, ongoing process to discover what will matter most to the people I serve?
Action: Choose one area of my work and run it through Ron’s three steps this month—observe and look for patterns, create a simple one‑page “sketch” of what could matter more, and design a small prototype test to learn from real people before scaling.