The Right Way to Innovate Rather than selling products you think people ought to buy, put out things they'll actually use.

Early digital cameras cost thousands of dollars and produced images most people wouldn't give a nickel for. Today, a few hundred dollars buys a digital camera with quality rivaling conventional photography. Yet last year, the most popular digital cameras were low-resolution snap shooters built into cell phones. Why didn't reasonably priced, high-quality products beat low-quality alternatives?

The answer lies in the reality of what recreational photographers are asking their cameras to do. These users aren't really focused on image quality, says Michael E. Raynor, a director at Deloitte Research in Toronto and co-author with Clayton M. Christensen of The Innovator's Solution: Creating and Sustaining Successful Growth. They're taking snapshots to share with friends and family, and low-resolution digital photos are easy to distribute electronically. Building the camera into a phone makes it even simpler. Says Raynor, "Digital camera-phones are better [for] taking pictures and sending [them] to your friends."

The digital camera experience is significant to people like Raynor and John Palmer, president of Palm Beach, Florida, innovation strategy firm InnoMedia Inc., because it demonstrates the problem with many innovation efforts: They focus on adding features and improvements to products rather than devising new ways to help customers do what they want to do.

To come up with your own innovation as successful as the camera-phone, start by talking to customers, potential customers and unlikely customers about the jobs they are asking your products to do. Palmer says you can use traditional market research tools, such as focus groups and interviews, and it need not cost a lot of time or money. You should need to interview no more than 30 people-fewer if you are a B2B firm, he says.

It's also a good idea to observe people consuming your products or making choices about which ones to buy. "You don't need to spend six hours; you can do it in 30 minutes," says Palmer. "Watch the struggles people are having, and try to find out the nature of that struggle and identify what they're trying to get done."

Don't stop with just examining the present, either. Dana W. Clarke Sr., founder of innovation consulting firm Applied Innovation Alliance LLCin West Bloomfield, Michigan, says studying the evolution of technologies will help you to position your products to fill future needs. "There are patterns as to how things have evolved throughout history," Clarke explains. Typical evolutions add functions and reduce prices for a time, until something new-such as a camera-phone-comes along and disrupts the pattern.

This type of disruptive innovation is what leads firms to rapid growth and market domination, says Raynor. Typical approaches, which call for matching competitors' offerings and differentiating brands, rarely lead to such powerful innovations.

More aggressive efforts using similar tools offer bigger rewards, but because they often attempt to address jobs that customers may or may not want done, they carry higher risks, he says. Trying to innovate to address customers' needs and circumstances, on the other hand, often yields quick or even immediate profits, in part because competitors are likely to be few or absent.

Seeking disruptive innovation by focusing on customer circumstances and needs works in mature industries as well as fast-changing ones and is especially suitable for nimble entrepreneurs, Raynor explains. "The most important [thing] is that it's thinking not so much about the attributes of the consumer and more about the consumption," he says. "Think about what it is they're trying to get done."

Mark Henricks writes on business and technology for leading publications and is author of Not Just a Living.