I saw Naomi Simson, the founder and CEO of RedBalloon, give a talk at the Future Summit sponsored by the Australian Davos Connection. It was a fantastic talk, and she had a number of interesting insights on the innovation process. This talk gets at a lot of the same issues that she touched on last night – it’s well worth a listen:
She made several key points about innovation:
- “It’s one thing to have a great idea, but it’s worthless without great execution.” This is dead right – she also talked about people asking her how she came up with ideas, and she said she has too many ideas. There are two related points here. One is that the value of a great idea isn’t in the idea itself – it’s in the execution. The second is that not every idea works. You have to execute them to figure out which ones are the ones that will be successful.
- She also said that now when she talks about innovation, she can fit a theory to what she did, but that when she was in the middle of starting up her business, all she had time for was doing things. This rings true to me. One of the points that is striking when we do our intensive executive education teaching is that the main thing that people seem to value in these is just having some time to think. We get so caught up in keeping our heads above water that this can be difficult.
- I had a quick chat with Naomi after the talk, and she said one other striking thing – she designed RedBalloon specifically as a business that could only work on the internet. She founded the company in late 2001 (right in the middle of the dot.com crash), and she put a lot of thought into coming up with something that was not simply an online version of something that already existed. I’ve talked before about how taking advantage of the web really requires completely new business models, and RedBalloon is a great example of doing this.
On that last point, RedBalloon is another great example of an aggregate, filter and connect value creation strategy. The site is a place for you to buy experiences as gifts for people. The site aggregates many different experiential gifts from a whole range of providers – you can buy chocolates, great meals, adventure sports, a whole range of things. Having access to all of these things in one place provides a tremendous resource.
There is filtering too, as the firm screens the experience providers. This is to ensure that they will deliver the experiences that are promised. You can also filter through the various offerings on the website.
Finally, there is connecting. Obviously the site connects people with experience providers. More importantly, once people do something through RedBalloon, they tell their friends and associates about other – connecting the site with people that they know. The firm has grown almost exclusively through word of mouth (Naomi even talks about this as connecting). Remarkably, they have been able to grow to over $12 million in annual sales with no outside investment. This is a sign of remarkably successful connection strategy.
The RedBalloon story is a great one. It was fascinating to hear Naomi talk about her experiences and to see how closely they aligned with general principles that I have observed across many organisations. There is a lot to be said for having such a strong focus on executing ideas – it’s something from which we can all learn.