Reach Breakthrough Innovation by Understanding Consumer Behavior

Below, is what we refer to as the 70/20/10 matrix from a HBR article titled Managing Your Innovation Portfolio by Bansi Nagji and Geoff Tuff. They posit (building on a concept offered by Larry Page at Google) that innovation resources should be proportionally allocated across the above categories — Core, Adjacent and Transformation, each with distinct levels of risk — to the tune of a 70–20–10 “golden ratio.”

In this post, I want to focus on the “Transformational 10”, which Nagji and Tuff define as:

“These sorts of innovations, also called breakthrough, disruptive, or game changing, generally require that the company call on unfamiliar assets — for example, building capabilities to gain a deeper understanding of customers, to communicate about products that have no direct antecedents, and to develop markets that aren’t yet mature.”

When dealing with no direct antecedents and a host of unknowns about customers, in a dynamic environment (i.e. “immature,” per the quote above), we are necessarily talking about behavior change — required of both consumers and providers of the new offering.


Behavior Change Required for Transformational Growth

Behavior change is big business. Much more than the FitBits of the world, everything from FinTech and digital health, to internet-of-things and AI (especially the IA — intelligent augmentation — version of the term) is driving change, in every direction. By asking customers and/or providers to adopt new behaviors we’re opening up new categories worth trillions in potential value, especially when you factor in both value creation through efficiency and optimization as well as new businesses/revenue streams.

That fad-ish buzzword “stickiness” that swept around Silicon Valley as a key to investable businesses was early evidence to the value of behavior change. In other words, VCs were saying that if you can get your customers to not just do something new once, but get them to keep doing it (i.e. make it stick) then you’ve done something exceptional and are on to something really valuable.

To return to the example of FitBit, in early days they found that many individual consumers were wearing their devices for a month or two and then tossing it. But adding connectivity to other platforms like Facebook, and, even more impactfully, reaching individuals through their employers (who could trigger year-long challenges) gave new behaviors a chance to set in.

To summarize, to capture value in pursuit of a viable behavior change business, balance must be struck. Those that are hyper-sensitive to the current behaviors of their customers and then cautiously and observantly suggest new ones to “try on” will be the ones who make a lasting impact. The first-in won’t necessarily be the winners here —they are more likely to create noise (see Pebble, Nike’s FuelBand, Google Glass) — rather the measured will be the most likely to both create and capture maximum value over time.

Raymond Loewy’s MAYA principle — Most Advanced Yet Acceptable —counsels innovators to give users the most advanced design, but not more advanced than what they are able to accept and embrace. He believed that users are torn between two opposing forces: neophilia, a curiosity about new things, and neophobia, a fear of anything too new.

Elaborating on consumer psychology regarding new offerings, Mary Tripsas in the New York Times said:

“Humans instinctively sort and classify things. It’s how we make sense of a complex world. So when companies develop innovative products and services that don’t obviously fit into established categories, managers need to help people understand what comparison to make.”

Combining sentiments from Loewy and Tripsas above, customers crave the new, they just want it in a familiar-enough package.


Innovation As the ‘New, but Familiar’

Therefore, anchoring in some familiar precedent rather than complete newness is the only way to step out (pragmatically and affordably) into the future. To that end, the initial ask we make of consumers should focus on the least amount of new behavior driving the most value to them, the user. We can add new behavior “requests” over time to create more value (and capture more back) but if we over ask at the outset, we sink our ship at the dock.

To build on the above, here are 5 starter principles for building viable behavior change businesses:

  1. Measure how much new behavior you’re asking users to take on, temper your desire to “blow them away” (because you will, and neither of you will like it)
  2. Focus novelty on the highest value-add components only, don’t add superfluous newness
  3. Use precedents to your advantage, rather than evidence of sameness — using comparisons helps set familiar context which reduces friction in both creating awareness and activating customers
  4. Avoid both false negatives and false positives — the former by testing in context and over time (long enough to truly measure behavior change, often 6–8 weeks minimum), and the latter by explicitly seeking disconfirming evidence (test with a diverse swath of customers, ensure that you can receive signals of both types)
  5. Don’t ignore behavior change required of the provider of the service (i.e. those delivering the experience) — that carries equal weight in your total behavior change balance

Overall, our counsel for navigating behavior change is to run experiments and start small and affordable before going big (see our post on going from “say” to “do for more detail and some examples).

What principles have helped you navigate behavior change? Drop me a line at

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