BONUS Why 98% of Innovation Fails Before It Reaches a Single Customer With Lorraine Marchand

BONUS: Why 98% of Innovation Fails Before It Reaches a Single Customer

Lorraine Marchand has spent three decades helping organizations innovate in environments where failure carries real consequences. In this episode, she shares the frameworks, stories, and hard-won lessons from her time at IBM Watson Health and beyond — starting with the summer her father handed her a stopwatch and a problem to solve at a diner.

The Sugar Cube That Started It All

"At the age of 12, I learned that problem solving was fun. It was really safe to experiment, and it turned out to be lucrative, because we earned some revenue and royalties from our sugar cube."

Lorraine's innovation journey began with her father — a serial inventor who challenged his kids to identify and solve real problems. One summer, he took Lorraine and her brother to the Hot Shops Cafeteria in the Baltimore-Washington area with stopwatches, graph paper, and 3-color pens. Their assignment: figure out what was slowing down table turnover. After three days of observation and interviews with waitresses, busboys, and the manager, they discovered that sugar packets were the culprit — granules spilling over the table and floor during cleanup. Their solution, the Sugar Cube, was prototyped, sold to the manager, and eventually adopted across the chain — which later became the Marriott Corporation. The lesson stuck: innovation starts with observing problems close to the core, not chasing abstract ideas in a vacuum.

Inside IBM Watson Health: Customer Co-Creation Over Engineering Brilliance

"We have fallen in love with our solution. And we have not done our true problem-solving dissection and customer research to make sure that we're solving a problem that a customer wants to pay us to solve."

At IBM Watson Health, Lorraine worked with 250 world-class engineers building solutions for the biggest names in life sciences — Johnson & Johnson, Pfizer, Sanofi, Medtronic. The process started with "garage sessions" where the team would tackle problems directly with a reference customer. But a recurring tension emerged: engineering would want to take what they learned from one customer, disappear into a room, build the perfect solution, and then hand it to marketing to sell. Lorraine had to repeatedly pull them back. A reference customer is an N of 1 — solving their problem doesn't guarantee a marketplace need. The discipline was to keep the customer in lockstep at every stage and continuously open the aperture, bringing in more customers and more feedback to validate that the solution would work at scale.

The Innovation Mindset: Four Components That Matter

"Thinking outside of the box means that you step outside of your box and you step into someone else's box."

Lorraine identifies four components of the innovation mindset: problem solving, insatiable curiosity, embracing change, and welcoming diversity. The diversity piece is where most teams fall short. Homogenous groups become echo chambers — smart engineers designing from a technology perspective rather than a customer use perspective. The most innovative organizations Lorraine has worked with embrace cross-functional, multidisciplinary teams where engineering, marketing, and customer experience all have a seat at the table. No idea is a bad idea at the brainstorming stage — the down-selection comes later through structured evaluation.

The Golden Ratio: Why 10% Drives 70% of Future Growth

"Five years later, 70% of your growth will come from that 10% that you invested in innovation. So there's an inverse correlation to where you're investing and where that growth is going to come in the future."

Lorraine points to the Golden Ratio framework popularized by Sergey Brin at Google: invest 70% in core business, 20% in adjacencies and new markets, and 10% in net new, transformative ideas that might not work out. The data across companies over the last 15 years consistently shows that the 10% bet on innovation generates the majority of future growth. Companies that invest 100% in core and a little in adjacency stay stuck in single-digit growth. Making innovation a strategic imperative — with dedicated budget and dedicated talent — is what separates companies that break out from those that stagnate.

Experimentation Done Right: Problem Statement First, Prototype Fast

"You have to have a really solid problem statement. It has to be clear, measurable, significant, and actionable."

Good experimentation follows the scientific method. It starts with problem deconstruction — using first principles, the series of whys, or reframing to break down the problem until the statement is sharp enough to act on. From there, brainstorm solutions, down-select to the most promising one based on customer input, and build a minimal viable product. Lorraine emphasizes minimal — test the smallest feature possible, get it in front of customers quickly, capture the feedback, and loop it back into the next iteration. The continuous loop of learning is where real progress happens.

The Watson Health Pivot: When the Customer Changes Everything

"Even for me, it wasn't until we got this in the customer's hands and we were able to see how it was going to function in real life that we had the aha moment."

At IBM Watson Health, Lorraine's team was developing an algorithm for a large medical device company working on pain intervention. The software used a patient's mobile phone to detect mobility issues — how quickly they got up from a chair, how easily they opened a jar — and determine when to deliver pain relief through the device. The engineering was elegant, the reference customer loved it. But when they put the solution in the hands of actual physicians and patients in their homes, they discovered they were off track in how the tool would function in real life. The pivot was dramatic: instead of the medical device company, they partnered with a pharmaceutical company that used the algorithm to guide patients on when to take pain-related medication. The entire end customer changed — because they did the work of testing with real users.

Reframing Failure as Learning

"If failure's in your operating system, you're not going to try these experiments, and you're not going to be willing to get it wrong."

Lorraine's book No Fear, No Failure examines the strategic failure that holds companies back from innovating. One of the five C's in her framework is chance — the willingness to take calculated risks. The key is reframing experiments from "did we get it right or wrong?" to "what can we learn?" When teams set learning objectives for each experiment — what can I learn about this tool, about the customer, about how this works in practice — they remove the fear that prevents action and replace it with a process that compounds knowledge over time.

About Lorraine Marchand

Lorraine Marchand helps senior leaders innovate in high-cost-of-failure environments. An award-winning author, keynote speaker, and innovation advisor, she brings 30+ years of experience, including work at IBM Watson Health. Her book, No Fear, No Failure, offers practical frameworks for learning and growth without undue risk.

You can link with Lorraine Marchand on LinkedIn and find more of her work at LorraineMarchand.com.