Throughout the last 35 years, I've worked with hundreds of entrepreneurs. Some of them struggle all their lives against larger, often more savvy competitors, pulling out all the stops to convince banks to offer them credit to pay for advertising, marketing, and sales to convince customers that their products are worth buying.

But there's a smaller group that has found a better way to make a living. They start with a team of partners with complementary skills and a shared passion and purpose. Then they do research and survey their customers until they've discovered a need that is not met by anyone in their marketplace, and determine why no one in the marketplace has already filled that need.

They then apply an innovation process that is one part creative thinking, and one part analysis and critical thinking, until they have a product, service, or some combination, that meets unmet needs in a unique and compelling way.

By then, customers need no convincing. They were part of the needs identification process and have been part of the innovation process as well. They are often so excited by the new offering's prospects that they're willing to invest their own money in it. They become ambassadors for the offering - telling everyone they know that it's precisely what they need, and that they were part of the development process. No need for financing, advertising, or marketing. It's an entrepreneur's dream come true.

There is no rocket science to this process. But I've seen it work repeatedly, so I decided to write a book about it, an entire chapter of which is devoted to the innovation process. Let's take a step back and look at how it works.

Getting a clue

This process assumes you've done your research and discovered one or more needs that are not being met by anyone else in the marketplace. So the first step is imagining possibilities.

The imaginer's role is to conceive of something radically new, unbounded by knowledge of what exists now, to imagine something no one has ever thought of before.

It can also be useful to study how nature has solved similar needs. This approach, called biomimicry, has resulted in the invention of revolutionary glues and coatings, communications tools, and even equipment like carburetors.

The objective is to come up with a whole portfolio of ideas, not just one, for each of the identified unmet needs. There is no black hatting at this stage - every idea goes into the portfolio, no matter how crazy or unpolished it might seem.

The second step is to form your innovation team, who can listen to and understand those unmet needs and the ideas you have come up with that address them. This team should consist of the partners of your enterprise, some leading-edge customers or potential customers, and any outsiders who share your passion for finding a solution to these needs. Diversity of the innovation team (skills, backgrounds, and points of view) is critical.

The listening and understanding component is not a selling process; it's a conversational one. The purpose is to explore the thoughts that the imaginers have come up with, and simultaneously learn more about the need as you learn more about the ideas.

Getting organized

The third step is to organize for innovation. The biggest mistake most organizations make with innovation is squelching ideas before they have been thought through and given a fair chance. The "organizing for innovation" step entails providing enough time and space for each idea to be fairly and thoroughly considered, and ensuring that the resources (additional information, money for prototypes, expert consultations, among others) needed to do so are provided and in place.

This can be time-consuming, detailed work that some creative people have no patience for, but it is essential to effective innovation. Without this, the organization is likely to abandon the more radical (and potentially break-through) ideas in favor of the familiar and incremental.

The fourth step is brainstorming. It requires a particular chemistry among your innovation team and invited guests - they have to like and trust each other and have the ability to "work off" of each other. It requires a balance and tension between creative thinkers (who will constantly push each idea to its limits, asking "what if" and "why not") and critical thinkers (who will ground the idea in reality and push the creative types to make sure their ideas are based on science and are "realizable").

This step is often best done with an outside facilitator to keep the balance and ensure that people listen before they judge, think before they speak, and remain polite and respectful. When it's done well, the results can be astonishing, even to the participants. At this stage you will have a group of alternative offerings to go forward with - if you have only one innovation at this stage, you will be wedded to it, and you may proceed with it when to do so would be unwise.

Trying it out

The fifth step is to conduct multiple parallel experiments both in the lab and in the marketplace with the alternative offerings. Using prototypes is helpful if it's a product, while storyboarded scenarios can be used if it's a service offering.

At this stage, you should be talking with suppliers of components of the offering, assessing resource needs and "fit" with your other products or services, and checking competitors' offerings to ensure your offering is sufficiently different from anything else in the market - a critical component of innovative success. And of course you should now go back and ask whether this final offering still meets the unmet need that prompted the innovation in the first place.

The sixth and final step is commercialization of your offering, and the continuous improvement, refinement, and adaptation to changing market conditions necessary to keep your innovation fresh, responsive, and ideally suited to the needs that it was designed to meet.

Let's consider a simple example of how this works in practice. A couple I know did some research that identified an unmet need in their city for high-quality, locally grown, organic foods. Despite the clamor for such products, the grocery stores just didn't carry them, and the suppliers were just too small and disorganized to suit the stores' large-scale, high-volume purchasing systems.

This couple, working with an innovation team of six potential customers and suppliers, came up with two dozen ideas, including setting up their own mobile farmers' markets (moving around communities like traveling circuses), and even organizing organic farmers into a large cooperative.

Several day-long meetings discussed each of the ideas, and then each of the team members was assigned to do additional research (mostly conversations with officials, marketers, intermediaries, regulators, farmers, environmental groups, and others).

The brainstorming looked at all the ideas in several "buckets," and finally, three offerings were selected to prototype. Two of them ran into unexpected problems - one would delay them by at least a year, and the other would cost more than they thought was prudent for such a venture. But the third idea - collecting daily menus of local, organic products available from a group of 15 farmers and farm groups, and using them to sell to and deliver to a dozen prestige restaurants around the city - was a smash success. Their only problem now is keeping up with the demand!

This process works. It's not expensive or patentable and doesn't require a lot of expensive consultants. What it does require (and perhaps this explains why it's so rarely used) is the right mix of skills on your innovation team, great collaboration abilities, and the patience to invent, explore, and consider ideas fully and fairly. And of course, it requires you to have done your homework first, and find needs that aren't already addressed in the marketplace.