One of the pieces of advice I give new clients always surprises them. "Look at your failures and non-starters," I say in the beginning of any meeting, "and let's find some great ideas."
This scares some of them since most people want to move on from failures or what they perceive to be false starts. But the big surprise is that the best innovations aren't based on the unknown or yet to be discovered. They are grounded in an understanding of the past, of ingrained cultural habits and behavior patterns, and making informed decisions based on that knowledge.
The fastest, most profitable innovation opportunities are likely right in front of you. Yet unfortunately they often go unnoticed. Chris Zook's research at New York City-based management consulting firm Bain & Company demonstrates how pivotal looking under your own hood can be. He found that nine out of 10 companies that successfully renewed themselves built that renewal on hidden and existing assets.
See the potential in what already exists and that you might be taking for granted. That's what the IMAX company did. It understood that people liked the IMAX experience they had in big science museums and centers, and its leaders figured people would likely enjoy the Imax experience even more while watching their favorite Hollywood movies.
In the quest to make IMAX more commercial and less institutional -- limiting it to making films for educational purposes and science centers -- Chief Executive Richard Gelfond figured out how to suck the costs out of the Imax process and retro fit it into regular theaters. They did it by using proprietary algorithms they had worked on over a long period of time, and by using existing technology to lower to costs of turning existing Hollywood films into IMAX films. It used to cost $30,000 to screen one IMAX film and now it costs about $150.
Gelfond also changed the IMAX business model -- not by reinventing it but simply by using a different existing model: instead of selling theaters IMAX equipment, the company gave it to them in exchange for showing more IMAX movies, which consumers are willing to pay a higher price for because it gives them a more exciting and richer film going experience.
Look at all your resources with fresh eyes. Review false starts, old tools, undeveloped prototypes, notes, gadgets, formulas, recipes, and past research and reports. Who else might that information interest? There may be a different audience than originally intended. How can the material be combined or tweaked in a new way to appeal to a new audience?
Dove did that when it reinvented its line of soap for men. In 2010, it launched Dove Men+Care, a new line of male personal-care products. Dove understood that its existing brand, already specifically targeted at women, would not be of interest to male customers. But the company also knew that the men's personal care market had expanded and was different than it was even in 2000. It used existing products but tweaked them for a male market, with "manly" packaging, color schemes and graphics.
Don't abandon good technology because it didn't work the way you thought it would. Excel Dryer in East Longmeadow, Mass., makes one of the most high-quality, popular models of air hand dryers for public restrooms. Denis Gagnon bought the company in the 1990s, and discovered a problem -- people hated using the product.
Anyone who has been in a public bathroom with an air dryer knows that the 35 to 40 seconds it takes the machines to dry your hands can sometimes feel like an eternity. That's why a lot of us give up and leave with our hands still damp. Looking for a way to improve the air-drying experience, Gagnon found Invent Resources, run by four scientists who had retired from their day jobs as physicists to offer their expertise to companies who wanted to build better products.
One technology Invent Resources had come up with was for a super fast hairdryer, which failed to impress industry leader Conair. Instead of abandoning the technology, Invent Resource scientists applied it to the hand air dryer, cutting the drying time to 12 seconds. Gagnon loved it. Excel's sales have gone up more than 10 percent every year.
Go back to basics and expand on that. Often a business will see its market change and think there's nothing it can do to salvage its product. That almost happened to Denmark based international toy powerhouse Lego. In 2003 and 2004, sales were so bad that the company almost liquidated. But a new chief executive, Jørgen Vig Knudstorp, recognized that it wasn't Lego itself that had become obsolete in the world of toys, it was that Lego's main assets -- creativity and personalized building -- wasn't in sync with its shifting audience. Vig Knudstorp saw that children were growing up and becoming more sophisticated at a younger age as were the retail channels that sold the toys (like Toys 'R Us and Walmart).
Vig Knudstorp cut the number of sets it made in half. Designers rediscovered what Lego was all about -- personal creativity and invention using a limited but more versatile set of pieces. Profits went up.
Lego also used existing assets and expanded them into things like movie tie-ins and theme parks, which appeal to a more sophisticated youngster.
If big companies like IMAX, Dove and Lego can innovate based on existing assets, so can smaller companies. All you have to do is take another look at what you already have going for you.
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.