Archive for August, 2017

The Three Rs of Innovation – Risk, Reward, and Resources

Is it innovation or continuous improvement or is it innovation? Is it regular innovation or disruptive innovation? Is it new enough or too new? These questions are worse than meaningless as they suck emotional energy from the organization and divert emotional energy from the business objective.

With every initiative, there are risks, rewards, and resources. Risk generally tracks with newness, reward usually tracks with incremental customer goodness and resources are governed by the work.  Risk is about the probability of tackling the newness, reward is about the size of the prize and resources are about how the work is done. There is no best amount of risk as sometimes the right amount is none and other times it’s more than everyone prefers. And there’s no best amount of reward as it depends on the company’s goals. And there’s no right amount of resources because there’s no right scope.  For all three – risk, reward and resources – the right amount depends on the context.

For bottom line projects, it’s about maintaining product functionality while eliminating waste.  And while there’s no right amount of risk, reward and resources, three filters (people, process, tools) can help get everyone on the same page.

Here are the escalating categories for people – no new people, move people from group A to group B, hire more people like the ones we have, hire new people with skills we don’t have.  And for categories for process – no new processes, eliminate steps of existing processes, add steps to existing processes, create a process that’s new to the facility, create a process that’s new to the company, create process that’s new to the industry, create a process that’s new to the world.  And for tools – no new tools, modify existing tools, buy new tools, create new tools from scratch.

There are no right answers, but if you’ve got to hire people you’ve never hired, create processes that are new-to-world, and invent new tools, it’s clear to everyone the project is pushing the envelope. And if the reward is significant and resources are plentiful, it could be a good way to go.  And if there are no new hires, no new processes, and no new tools, don’t expect extravagant rewards. It’s not an exact science, but categorizing the newness in people, process, and tools and then comparing with the reward (payoff) makes clear any mismatches.  And when mismatches are clear they can be managed. Resources can be added, the scope can be reduced and reward can be revisited.

For top line projects, it’s about providing novel usefulness to customers at a reasonable cost.  And while risk, reward, and resources must be balanced, the filters are different.  For top line, the filters are breadth of applicability, competition, is/isn’t.

Here are the escalating categories for breadth of applicability – same customer in the same application, same customers in a new application, new customers in a new market, new customers in different industry, new customers in an industry created by the project. For competition – many competitors in the same industry, fewer competitors in the same industry, fewer competitors in a different industry, no competitors (compete with no one.) And for is/isn’t – improve what is, radically improve what is, create what isn’t.

Again, no right answers. But the plan is to sell to the same customers into markets with the same powerful competitors with only a slight improvement to the existing product, don’t expect radical rewards and don’t run a project that consumes significant resources. And, if the plan is to create a whole new industry where there are no competitors and it requires an entirely new service that doesn’t yet exist, the potential reward should be spectacular, expect to allocate a boatload of resources and prepare for the project to take longer than expected or to be cancelled before completion.

Balancing risk, reward and resources is not an exact science.  And the only way to get good at it is to calibrate new projects based on previous projects.  To start the calibration process, try the process on your most recent completed projects.  Categorize the projects with the relevant filters and define the resources consumed and the realized rewards.  And when planning the next project, categorize with the filters and define the resource plan and planned rewards and see how they compare with the completed projects.  And if there are mismatches, reconcile them with the realities of the previous projects.

Image credit – Ian Sane

Innovate like a professional with the Discovery Burst Event.

Recreational athletes train because they enjoy the activity and they compete so they can tell themselves (and their friends) stories about the race. Their training routines are discretionary and their finish times are all about bragging rights. Professional athletes train because it’s their job. Their training is unpleasant, stressful and ritualistic. And it’s not optional. And their performance defines their livelihood. A slow finish time negatively impacts their career. With innovation, you have a choice – do you want to do it like a recreational athlete or like a professional? Do you want to do it like it’s discretionary or like your livelihood depends on it?

Like with the professional athlete, with innovation what worked last time is no longer good enough.  Innovation demands we perform outside our comfort zone.

Goals/Objectives are the key to performing out of our comfort zone. And to bust through intellectual inertia, one of the most common business objectives is a goal to grow revenue. “Grow the top line” is the motto of the professional innovator.

To deliver on performance goals, coaches give Strategic Guidance to the professional athlete, and it’s the same for company leaders – it’s their responsibility to guide the innovation approach. The innovation teams must know if their work should focus on a new business model, a new service or a new product. And to increase the bang for the buck, an Industry-First approach is recommended, where creation of new customer value is focused within a single industry. This narrows the scope and tightens up the work. The idea is to solve a problem for an industry and sell to the whole of it.  And to tighten things more, a Flagship Customer is defined with whom a direct partnership can be developed.  Two attributes of a Flagship Customer – big enough to create significant sales growth and powerful enough to pull the industry in its wake.

It’s the responsibility of the sales team to identify the Flagship Customer and broker the first meeting.  At the meeting, a Customer-Forward approach is proposed, where a diverse team visits the customer and dives into the details of their Goals/Objectives, their work and their problems. The objective is to discover new customer outcomes and create a plan to satisfy them.  The Discovery Burst Event (DBE) is the mechanism to do the work  It’s a week-long event where marketing, sales, engineering, manufacturing and technical services perform structured interviews to get to the root of the customer’s problems AND, in a Go-To-The-Work way, walk their processes and use their eyeballs to discover solutions to problems the customer didn’t know they had.  The DBE culminates with a report out to leaders of the Flagship Company where new customer outcome statements are defined along with a plan to assess the opportunities (impact/effort) and come back with proposals to satisfy the most important outcome statements.

After the DBE, the team returns home and evaluates and prioritizes the opportunities.  As soon as possible, the prioritization decisions are presented to the Flagship Customer along with project plans to create novel solutions.  In a tactical sense, there are new opportunities to sell existing products and services.  And in a strategic sense, there are opportunities to create new business models, new services and new products to reinvent the industry.

In the short term, sales of existing products increase radically.  And in the longer term, where new solutions must be created, the Innovation Burst Event (IBE) process is used to quickly create new concepts and review them with the customer in a timely way. And because the new concepts solve validated customer problems, by definition the new concepts will be valued by the customer. In a Customer-Forward way, the new concepts created by the IBE are driven by the customer’s business objectives and their problems.

This Full Circle approach to innovation pushes everyone out of their comfort zones to help them become professional innovators. Company leadership must stick out their necks and give strategic guidance, sales teams must move to a trusted advisor role, engineering and marketing teams must learn to listen to (and value) the customer’s perspective, and new ways of working – the Discovery Burst Event (DBE) and Innovation Burst Event (IBE) – must be embraced.  But that’s what it takes to become professional innovators.

Innovation isn’t a recreational sport, and it’s time to behave that way.

Image credit – Lwp Kommunikáció

Complaining isn’t a strategy.

It’s easy to complain about how things are going, especially when they’re not going well. But even with the best intentions, complaining doesn’t move the organization in a new direction.  Sometimes people complain to attract attention to an important issue. Sometimes it’s out of frustration, sometimes out of sadness and sometimes out of fear, but it’s never the best mechanism.

If the intention is to convey importance, why not convey the importance by explaining why it’s important? Why not strip the issue of its charge and use an approach and language that help people understand why it’s important? It’s a simple shift from complaining to explaining, but it can make all the difference. Where complaining distracts, explaining brings people together. And if it’s truly important, why not take the time to have a give-and-take conversation and listen to what others have to say? Instead of listening to respond, why not listen to understand?

If you’re not willing to understand someone else’s position it’s not a conversation.

And if you’re on the receiving end of a complaint, how can you learn to see it as a sign of importance and not as an attack? As the receiver, why not strip it of its charge and ask questions of clarification? Why not deescalate and move things from complaint to conversation? Understanding is not agreeing, but it still a step forward for everyone.

When two sides are divided, complaining doesn’t help, even if it’s well-intentioned. When two sides are divided and there’s strong emotion, the first step is to take responsibility to deescalate. And once emotions are calmed, the next step is to take responsibility to understand the other side.  At this stage, there is no requirement to agree, but there can be no hint of disagreement as it will elevate emotions and set progress back to zero.  It’s a slow process, but when the issues are highly charged, it’s the fastest way to come together.

If you’re dissatisfied with the negativity, demonstrate positivity. If you want to come together, take the first step toward the middle. If you want to generate the trust needed to move things forward, take action that builds trust.

If you want things to be different, look inside.

Image credit – Ireen2005

Moving from Static to Dynamic

At some point, what worked last time won’t work this time. It’s not if the business model will go belly-up, it’s when. There are two choices. We can bury our heads in the sands of the status quo, or we can proactively observe the world in a forward-looking way and continually reorient ourselves as we analyze and synthesize what we see.

The world is dynamic, but we behave like it’s static. We have massive intellectual inertia around what works today.  In a rearward-looking way, we want to hold onto today’s mental models and we reject the natural dynamism swirling around us.  But the signals are clear. There’s cultural change, political change, climate change and population change. And a lower level, there’s customer change, competition change, technology change, coworker change, family change and personal change. And still, we cling to static mental models and static business models. But how to move from static to dynamic?

Continual observation and scanning is a good place to start. And since things become real when resources are allocated, allocating resources to continually observe and scan sends a strong message. We created this new position because things are changing quickly and we need to be more aware and more open minded to the dynamic nature of our world.  Sure, observation should be focused and there should be a good process to decide on focus areas, but that’s not the point. The point is things are changing and we will continually scan for storms brewing just over the horizon.  And, yes, there should be tools and templates to record and organize the observations, but the important point is we are actively looking for change in our environment.

Observation has no value unless the observed information is used for orientation in the new normal.  For orientation, analysis and synthesis is required across many information sources to develop ways to deal with the unfamiliar and unforeseen. [1] It’s important to have mechanisms to analyze and synthesize, but the value comes when beliefs are revised and mental models are updated. Because the information cuts against history, tradition and culture, to make shift in thinking requires diversity of perspective, empathy and a give-and-take dialog. [1] It’s a nonlinear process that is ironed out as you go.  It’s messy and necessary.

It’s risky to embrace a new perspective, but it’s far riskier to hold onto what worked last time.

 

[1] Osinga, Frans, P.B. Science, Strategy and War, The strategic theory of John Boyd. New York: Routledge, 2007.

image credit – gabe popa

Learn in small batches, rinse and repeat.

When the work is new, it can’t be defined and managed like work that has been done before.

Sometimes there’s a tendency to spend months to define the market, the detailed specification and the project timeline and release the package as a tidal wave that floods the organization with new work.  Instead, start with a high-level description of the market, a rough specification and the major project milestones, all of which will morph, grow and inform each other as the team learns.  Instead of a big batch, think bite-sized installments that build on each other. Think straw-man that gets its flesh as the various organizations define their learning objectives and learn them.

Instead of target customer segments and idealized personas, define how the customers will interact with the new product or service. Use the storyboard format to capture sequence of events (what they do), the questions they ask themselves and how they know they’ve done it right. Make a storyboard for the top three to five most important activities the customers must do.  There’s good learning just trying to decide on the top three to five activities, never mind the deep learning that comes when you try to capture real activities of real customers. [Hint – the best people to capture real customer activities are real customers.]

Instead of a detailed list of inputs and outputs, fill in the details of the storyboards.  Create close-ups of the user interfaces and label the dials, buttons and screens.  When done well, the required inputs and outputs bubble to the surface.  And define the customer’s navigation path, as it defines the sequence of things and where the various inputs come to be and the various outputs need to be.  What’s nice is learning by iteration can be done quickly since its done in the domain of whiteboards and markers.

Instead of defining everything, just define what’s new and declare everything else is the same as last time.

The specification for the first prototypes is to bring the storyboards to life and to show the prototypes to real customers.  Refine and revise based on the learning, and rinse and repeat, as needed.

As the design migrates toward customer value and confidence builds, it’s then time to layer on the details and do a deep dive into the details – specs, test protocols, manufacturing, sales and distribution.

At early stages of innovation work, progress isn’t defined by activity, it’s defined by learning.  And it can look like nothing meaningful is happening as there is a lot of thinking and quiet time mixed in with infrequent bursts active activity.  But that’s what it takes to answer the big questions of the front end.

When in doubt, answer the big questions at the expense of the details.  And to stay on track, revisit and refine the learning objectives. And to improve confidence, show it to real customers.

And rinse and repeat, as needed.

Image credit – Jason Samfield

Mike Shipulski Mike Shipulski
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