Webvan illustrates one innovation blunder: over-investing in a concept that turns out to be nonviable. Are there any other common mistakes companies make?

The second error, even more painful, is killing the right idea too early. Take Twitter. Get a focus group together and ask them if they would like to communicate to the world, in 140 characters, that they’ve just gone shopping or done laundry, and in turn follow other people posting the same kind of information – well, it sounds ridiculous. If you relied on just that, the idea would have been killed. And today Twitter is worth almost $10 billion.

How can innovators use pretotyping to help determine what is actually a viable idea, and not one that just sounds good in theory or, on paper, seems patently absurd?

The challenge is, until you build something, you’re dealing only in ideas, and ideas are abstract; the most you can solicit from an idea is an opinion, which is also abstract – and subjective. To get objective data, you have to get out of this ‘thoughtland’ as fast as you can, and that’s what pretotyping is all about. It is the process of figuring out what you can do, short of building the product or a prototype, to see if there is really a market for your innovation.

My favorite example is IBM and speech-to-text technology. Thirty-five years ago, it was thought that professionals and managers could not be expected to type; back then, only secretaries and programmers typed. IBM felt the only way they could succeed in the personal computer business was to invent speech-to-text, so that users could just speak to a computer and not use a keyboard. This was going to cost a fortune. IBM did preliminary research that indicated people would indeed buy a technology that allowed them to talk into their computers rather than type, but they (wisely) decided that before making a huge investment they needed to find a way to test this hypothesis.

They did it by making what I credit as one of the earliest pretotypes. They built nothing – no hardware, no software. They simply put a person in a room with a screen and a microphone and told them to start speaking. The test subject would say something and – thanks to a behind-the-scenes stenographer– their words would appear on screen, simulating speech-to-text.

Guess what IBM learned? Just like with Webvan, what people thought they wanted was very different from what they would actually use. The test subjects said they wanted to talk to their computer, but after five minutes of actually doing it, their throats were getting sore and the room, with everyone talking to their computers, was noisy and obnoxious. They were over it. So IBM learned that speech-to-text technology was, at the time, not worth developing. That is the essence of pretotyping.

You also cite the example of Jeff Hawkins and the Palm Pilot as an early pretotype. What’s that story?

Legend has it that before committing to develop the Pilot, Jeff went into his garage and cut a block of wood that would fit in his shirt pocket. He carried it around for months, pretending it was a handheld. If someone invited him to lunch, he’d pull out the block of wood and tap on it as if he were checking his schedule. If he needed a phone number, he would pretend to look it up. He even tried different design faces and button configurations by gluing different pieces of paper to the wood block.

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