Archive for the ‘Brand’ Category

How To Innovate Within a Successful Company

If you’re trying to innovate within a successful company, I have one word for you: Don’t.

You can’t compete with the successful business teams that pay the bills because paying the bills is too important.  No one in their right mind should get in the way of paying them.  And if you do put yourself in the way of the freight train that pays the bills you’ll get run over.  If you want to live to fight another day, don’t do it.

If an established business has been growing three percent year-on-year, expect them to grow three percent next year. Sure, you can lather them in investment, but expect three and a half percent. And if they promise six percent, don’t believe them. In fairness, they truly expect they can grow six percent, but only because they’re drinking their own Cool-Aid.

Rule 1: If they’re drinking their own Cool-Aid, don’t believe them.

Without a cataclysmic problem that threatens the very existence of a successful company, it’s almost impossible to innovate within its four walls. If there’s no impending cataclysm, you have two choices: leave the four walls or don’t innovate.

It’s great to work at successful company because it has a recipe that worked.  And it sucks to work at a successful company because everyone thinks that tired old recipe will work for the next ten years. Whether it will work for the next ten or it won’t, it’s still a miserable place to work if you want to try something new. Yes, I said miserable.

What’s the one thing a successful company needs? A group of smart people who are actively dissatisfied with the status quo. What’s the one thing a successful company does not tolerate? A group of smart people who are actively dissatisfied with the status quo.

Some experts recommend leveraging (borrowing) resources from the established businesses and using them to innovate. If the established business catches wind that their borrowed resources will be used to displace the status quo, the resources will mysteriously disappear before the innovation project can start. Don’t try to borrow resources from established businesses and don’t believe the experts.

Instead of competing with established businesses for resources, resources for innovation should be allocated separately. Decide how much to spend on innovation and allocate the resources accordingly. And if the established businesses cry foul, let them.

Instead of borrowing resources from established businesses to innovate, increase funding to the innovation units and let them buy resources from outside companies. Let them pay companies to verify the Distinctive Value Proposition (DVP); let them pay outside companies to design the new product; let them pay outside companies to manufacture the new product; and let them pay outside companies to sell it.  Sure, it will cost money, but with that money you will have resources that put their all into the design, manufacture and sale of the innovative new offering. All-in-all, it’s well worth the money.

Don’t fall into the trap of sharing resources, especially if the sharing is between established businesses and the innovative teams that are charged with displacing them. And don’t fall into the efficiency trap. Established businesses need efficiency, but innovative teams need effectiveness.

It’s not impossible to innovate within a successful company, but it is difficult. To make it easier, error on the side of doing innovation outside the four walls of success. It may be more expensive, but it will be far more effective.  And it will be faster. Resources borrowed from other teams work the way they worked last time. And if they are borrowed from a successful team, they will work like a successful team. They will work with loss aversion. Instead of working to bring something to life they will work to prevent loss of what worked last time. And when doing work that’s new, that’s the wrong way to work.

The best way I know to do innovation within a successful company is to do it outside the successful company.

Image credit – David Doe

Validate the Business Model Before Building It.

One of the best ways to learn is to make a prototype.  Prototypes come in many shapes and sizes, but their defining element is the learning objective behind them.  When you start with what you want to learn, the prototype is sure to satisfy the learning objective.  But start with the prototype, and no one is quite sure what you’ll learn.  When prototypes come before the learning objective, prototypes are inefficient and ineffective.

Before staffing a big project, prototypes can be used to determine viability of the project.  And done right, viability prototypes can make for fast and effective learning.  Usually, the team wants to build a functional prototype of the product or service, but that’s money poorly spent until the business model is validated.   There’s nothing worse than building expensive prototypes and staffing a project, only to find the business model doesn’t hold water and no one buys the new thing you’re selling.

There’s no reason a business model can’t be validated with a simple prototype. (Think one-page sales tool.)  And there’s no reason it can’t be done at the earliest stages.  More strongly, the detailed work should be held hostage until the business model is validated.  And when it’s validated, you can feel good about the pot of gold at the end of the rainbow.  And if it’s invalidated, you saved a lot of time, money and embarrassment.

The best way to validate the business model is with a set of one-page documents that define for the customer what you will sell them, how you’ll sell it, how you’ll service it, how you’ll train them and how you’ll support them over the life of your offering.  And, don’t forget to tell them how much it will cost.

The worst way to validate the business model is buy building it.  All the learning happens after all the money has been spent.

For the business model prototypes there’s only one learning objective: We want to learn if the customer will buy what we’re selling.  For the business model to be viable, the offering has to hang together within the context of installation, service, support, training and price.  And the one-page prototype must call out specifics of each element.  If you use generalities like “we provide good service” or “our training plans are the best”, you’re faking it.

Don’t let yourself off the hook.  Use prototypes to determine the viability of the business model before spending the money to build it.

Image credit – Heather Katsoulis

Even entrepreneurial work must fit with the brand.

To meet ever-increasing growth objectives, established companies want to be more entrepreneurial.  And the thinking goes like this – launch new products and services to create new markets, do it quickly and do it on a shoestring.  Do that Lean Startup thing.  Build minimum viable prototypes (MVPs), show them to customers, incorporate their feedback, make new MVPs, show them again, and then thoselaunch.

For software products, that may work well, largely because it takes little time to create MVPs, customers can try the products without meeting face-to-face and updating the code doesn’t take all that long.  But for products and services that require new hardware, actual hardware, it’s a different story.  New hardware takes a long time to invent, a long time to convert into an MVP, a long time to show customers and a long time to incorporate feedback.  Creating new hardware and launching quickly in an entrepreneurial way don’t belong in the same sentence, unless there’s no new hardware.

For hardware, don’t think smartphones, think autonomous cars.  And how’s that going for Google and the other software companies? As it turns out, it seems that designing hardware and software are different.  Yes, there’s a whole lot of software in there, but there’s also a whole lot of new sensor systems (hardware).  And, what complicates things further is that it’s all packed into an integrated system of subsystems where the hardware and software must cooperate to make the good things happen.  And, when the consequences of a failure are severe, it’s more important to work out the bugs.

And that’s the rub with entrepreneurship and an established brand.  For quick adoption, there’s strong desire to leverage the established brand – GM, Ford, BMW – but the output of the entrepreneurial work (new product or service) has to fit with the brand.  GM can’t launch something that’s half-baked with the promise to fix it later. Ford can come out with a new app that is clunky and communicates intermittently with their hardware (cars) because it will reflect poorly on all their products.  In short, they’ll sell fewer cars.  And BMW can’t come out with an entrepreneurial all-electric car that handles poorly and is slow off the start.  If they do, they’ll sell fewer cars.  If you’re an established company with an established brand, the output of your entrepreneurial work must fit with the established brand.

If you’re a software startup, launch it when it’s half-baked and fix it later, as long as no one will die when it flakes out.  And because it’s software, iterate early and often. And, there’s no need to worry about what it will do to the brand, because you haven’t created it yet.  But if you’re a hardware startup, be careful not to launch before it’s ready because you won’t be able to move quickly and you’ll be stuck with your entrepreneurial work for longer than you want.  Maybe, even long enough to sink the brand before it ever learned to swim.  Developing hardware is slow.  And developing robust hardware-software systems is far slower.

If you’re an established company with an established brand, tread lightly with that Lean Startup thing, even when it’s just software.  An entrepreneurial software product that works poorly can take down the brand, if, of course, your brand stands for robust, predictable, value and safety.  And if the entrepreneurial product relies on new hardware, be doubly careful.  If it goes belly-up, it will be slow to go away and will put a lot of pressure on that wonderful brand you took so long to build.

If you’re an established brand, it may be best to buy your entrepreneurial products and services from the startups that took the risk and made it happen.  That way you can buy their successful track record and stand it on the shoulders of your hard-won brand.

Image credit – simpleinsomnia

Mike Shipulski Mike Shipulski
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