Archive for the ‘Constraints’ Category

Before you can make a million, you’ve got to make the first one.

With process improvement, the existing process is refined over time.  With innovation, the work is new. You can’t improve a process that does not yet exist.  Process creation, yes.  Process improvement, no.

Standard work, where the sequence of process steps has proven successful, is a pillar of the manufacturing mindset.  In manufacturing, if you’re not following standard work, you’re not doing it right.  But with innovation, when the work is done for the first time, there can be no standard work. In that way, if you’re following the standard work paradigm, you are not doing innovation.

In a well-established manufacturing process, problems are tightly scoped and constrained. There can be several ways to solve it and one of the ways is usually better than the others. Teams are asked to solve the problem three or four ways and explain the rationale for choosing one solution over the other. With innovation it’s different.  There may not be a solution, never mind three.  With innovation, it’s one-in-a-row solution.  And the real problem is to decide which problem to solve.  If you’re asked to use Fishbone diagrams to solve the problem three or four ways, you’re not doing innovation. Solve it one way, show a potential customer and decide what to do next.

With manufacturing and product development, it’s all about Gantt charts and hitting dates.  The tasks have a natural precedence and all of them have been done before.  There are branches in the plan, but behind them is clear if-then logic.  With innovation, the first task is well-defined.  And the second task – it depends on the outcome of the first.  And completion dates?  No way. If you can predict the completion date, you’re not doing innovation.  And if you’re asked for a fully built-out Gantt chart, you’re in trouble because that’s a misguided request.

Systems in manufacturing can be complicated, with lots of moving parts.  And the problems can be complicated. But given enough time, the experts can methodically figure it out. But with innovation, the systems can be complex, meaning they are not predictable.  Sometimes parts of the system interact strongly with other parts and sometimes they don’t interact at all. And it’s not that they do one or the other, it’s that they do both.  It’s like they have a will of their own, and, sometimes, they have a bad attitude. And if it’s a new system, even the basic rules of engagement are unknown, never mind the changing strength of the interactions.  And if the system is incomplete and you don’t know it, linear thinking of the experts can’t solve it.  If you’re using linear problem solving techniques, you’re not doing innovation.

Manufacturing is about making one thing a million times. Innovation is about choosing among the million possibilities and making one-in-a-row, and then, after the bugs are worked out, making the new thing a million times.  But one-in-a-row must come first.  If you can’t do it once, you can’t do it a million times, even with process improvement, standard work, Gantt charts and Fishbone diagrams.

Image credit jacinta lluch valero

Improving What Is and Creating What Isn’t

There are two domains – what is and what isn’t. We’re most comfortable in what is and we don’t know much about what isn’t. Neither domain is best and you can’t have one without the other. Sometimes it’s best to swim in what is and other times it’s better to splash around in what isn’t.  Though we want them, there are no hard and fast rules when to swim and when to splash.

Improvement lives in the domain of what is. If you’re running a Six Sigma project, a lean project or a continuous improvement program you’re knee deep in what is. Measure, analyze, improve, and control what is. Walk out to the production floor, count the machines, people and defects, measure the cycle time and eliminate the wasteful activities. Define the current state and continually (and incrementally) improve what is. Clear, unambiguous, measurable, analytical, rational.

The close cousins creativity and innovation live in the domain of what isn’t. They don’t see what is, they only see gaps, gulfs and gullies. They are drawn to the black hole of what’s missing. They define things in terms of difference.  They care about the negative, not the image. They live in the Bizarro world where strength is weakness and far less is better than less. Unclear, ambiguous, intuitive, irrational.

What is – productivity, utilization, standard work. What isn’t – imagination, unstructured time, daydreaming. Predictable – what is. Unknowable – what isn’t.

In the world of what is, it’s best to hire for experience.  What worked last time will work this time. The knowledge of the past is all powerful.  In the world of what isn’t, it’s best to hire young people that know more than you do. They know the latest technology you’ve never heard of and they know its limitations.

Improving what is pays the bills while creating what isn’t fumbles to find the future. But when what is runs out of gas, what isn’t rides to the rescue and refuels. Neither domain is better, and neither can survive without the other.

The magic question – what’s the best way to allocate resources between the domains? The unsatisfying answer – it depends. And the sextant to navigate the dependencies – good judgement.

Image credit – JD Hancock

Dismantle the business model.

When companies want to innovate, there are three things they can change – products, services and business models. Products are usually the first, second and third priorities, services, though they have a tighter connection with customer and are more lasting and powerful, sadly, are fourth priority.  And business models are the superset and the most powerful of all, yet, as a source of innovation, are largely off limits.

It’s easy to improve products. Measure goodness using a standard test protocol, figure out what drives performance and improve it. Create the hard data, quantify the incremental performance and sell the difference.  A straightforward method to sell more – if you liked the last one, you’re going to like this one. But this is fleeting. Just as you are reverse engineering the competitors’ products, they’re doing it to you. Any incremental difference will be swallowed up by their next product. The half-life of your advantage is measured in months.

It’s easy for companies to run innovation projects to improve product performance because it’s easy to quantify the improvement and because we think customers are transactional. Truth is, customers are emotional, not rational. People don’t buy performance, they buy the story they create for themselves.

Innovating on services is more difficult because, unlike a product, it’s not a physical thing. You can’t touch it, smell it or taste it.  Some say you can measure a service, but you can’t. You can measure its footprints in the sand, but you can’t measure it directly. All the click data in the world won’t get you there because clicks, as measured, don’t capture intent – an unintentional click on the wrong image counts the same a premeditated click on the right one. Sure, you can count clicks, but if you can’t count the why’s, you don’t have causation. And, sure, you can measure customer satisfaction with an online survey, but the closest you can get is correlation and that’s not good enough.  It’s causation or bust.  You’ve got to figure out WHY they like your services. (Hint – it’s the people who interface directly with your customers and the latitude you give them to advocate on the customers’ behalf.)

Where services are difficult to innovate, the business model is almost impossible. No one is quite sure what the business model actually is an in-the-trenches-way, but they know it’s been responsible for the success of the company, and they don’t want to change it. Ultimately, if you want to innovate on the business model, you’ve got to know what it is, but before you spend the time and energy to define it, it’s best to figure out if it needs changing.  The question – what does it look like when the business model is out of gas?

If you do what you did last time and you get less in return, the business model is out of gas.

Successful models are limiting. Just like with the Prime Directive, where Captain Kirk could do anything he wanted as long as he didn’t interfere with the internal development of alien civilizations, do anything you want with the business model as long as you don’t change it. And that’s why you need external help to formally define the business model and experiment with it. The resource should understand your business first hand, yet be outside the chain of command so they can say the sacrilegious things that violate the Prime Directive without being fired.  For good candidates, look to trusted customers and suppliers.

To define the business model, use a simple block diagram (one page) where blocks are labelled with simple nouns and arrows are labelled with simple verbs. Start with a single block on the right of the page labelled “Customer” and draw a single arrow pointing to the block and label it.  Continue until you’ve defined the business model.  (Note – maximum number of blocks is 12.)  You’ll be surprised with the difficulty of the process.

After there’s consensus on the business model, the next step is to figure out how the environment changed around it and to identify and test the preferred evolutionary paths. But that’s for another time.

Image credit – Steven Depolo

What if it works?

jumping-dogWhen money is tight, it’s still important to do new work, but it’s doubly important not to waste it.

There are a number of models to increase the probability of success of new work.  One well known approach is the VC model where multiple projects are run in parallel.  The trick is to start projects with the potential to deliver ultra-high returns.  The idea isn’t to minimize the investment but to place multiple bets.  When money’s tight, the VC model is not your friend.

Another method to increase the probability of success is to increase the learning rate.  The best known method is the Lean Startup method.  Come up with an idea, build a rough prototype, show it to potential customers and refine or pivot.  The process is repeated until a winning concept finds a previously unknown market segment and the money falls from the sky.   In a way, it’s like the VC Model, but it’s not a collection of projects run in parallel, it’s a sequential series of high return adventures punctuated by pivots. The Lean Startup is also quite good when money’s tight.  A shoe string budget fosters radical learning strategies and creates focus which are both good ideas when coffers are low.

And then there’s the VC/Lean Startup combo. A set of high potential projects run in parallel, each using Lean’s build, show, refine method to learn at light speed.  This is not the approach for empty pockets, but it’s a nice way to test game changing ideas quickly and efficiently.

Things are different when you try to do an innovation project within a successful company. Because the company is successful, all resources are highly utilized, if not triple-booked.  On the balance sheet there’s plenty of money, but practically the well is dry.  The organization is full up with ROI-based projects that will deliver marginal (but predictable) top line growth, and resources are tightly shackled to their projects.  Though there’s money in the bank, it feels like the account is over drawn.  And with this situation there’s a unique and expensive failure mode lurking in the shallows.

The front end of innovation work is resource light. New prototypes are created quickly and inexpensively and learning is fast and cheap.  Though the people doing the work are usually highly skilled and highly valuable, it doesn’t take a lot of people to create a functional prototype and test it with new customers.  And then, when the customers love it and it’s time to commercialize, there’s no one home. No one to do the work. And, unlike the relatively resource light front end work, commercialization work is resource heavy and expensive. The failure mode – the successful front end work is nothing but pure waste.  All the expense of creativity with none of innovation’s return.  And more painful, if the front end was successful the potential failure mode was destined to happen. There was no one to pick it up from the start.

The least expensive projects are the ones that never start. Before starting a project, ask “What if it works?”

image credit – jumping lab

Rule 1: Don’t start a project until you finish one.

done!One of the biggest mistakes I know is to get too little done by trying to do too much.

In high school we got too comfortable with partial credit. Start the problem the right way, make a few little mistakes and don’t actually finish the problem – 50% credit.  With product development, and other real life projects, there’s no partial credit.  A project that’s 90% done is worth nothing.  All the expense with none of the benefit.  Don’t launch, don’t sell. No finish, no credit.

But our ill-informed focus on productivity has hobbled us.  Because we think running projects in parallel is highly efficient, we start too many projects.  This glut does nothing more than slow down all the other projects in the pipeline.  It’s like we think queuing theory isn’t real because we don’t understand it.  But to be fair to queuing and our stockholders, queuing theory is real.

Queues are nothing more than a collection of wayward travelers waiting in line for a shared resource.  Wait in line for fast food, you’re part of a queue.  Wait in line for a bank teller (a resource,) you’re queued up.  Wait in line to board a plane, you’re waiting in a queue.  But the name isn’t important.  Line or queue, what matters is how long you wait.

Lines are queues and queues are lines, but the math behind them is funky.  From firsthand experience we know longer queues mean longer wait times. And if the cashier isn’t all that busy (in queuing language – the utilization of the resource is low) the wait time isn’t all that bad and it increases linearly with the number of people (or jobs) in the queue.  When the shared resource (cashier) isn’t highly utilized (not all that busy), add a few more shoppers per hour and wait times increase proportionately. But, and this is a big but, if the resource busy more than 80% of the time, increasing the number of shoppers increases the wait time astronomically (or exponentially.)  When shoppers arrive in front of the cashier just a bit more often, wait times can double or triple or more.

For wait times, the math of queueing theory says one plus one equals two and one plus one plus one equals seven.  Wait times increase linearly right up until they explode.  And when wait times explode, projects screech to a halt.  And because there’s no partial credit, it’s a parking lot of projects without any of the profit.  And what’s the worst thing to do when projects aren’t finishing quickly enough?  Start more projects.  And what do we do when projects aren’t launching quickly enough?  Start more projects.

When there’s no partial credit, instead of efficiency it’s better to focus on effectiveness.  Instead of counting the number of projects running in parallel (efficiency,) count the number of projects that have finished (effectiveness.)  To keep wait times reasonable, fiercely limit the amount of projects in the system.  And there’s a simple way to do that.  Figure out the sweet spot for your system, say, three projects in parallel, and create three project “tickets.” Give one ticket to the three active projects and when the project finishes, the project ticket gets assigned to the next project so it can start.  No project can start without a ticket.  No ticket, no project.

This simple ticket system caps the projects, or work in process (WIP,) so shared resources are utilized below 80% and wait times are low. Projects will sprint through their milestones and finish faster than ever.

By starting fewer projects you’ll finish more.  Stop starting and start finishing.

Image credit – Fred Moore

How To Allocate Resources

shareHow a company allocates its resources defines its strategy.  But it’s tricky business to allocate resources in a way that makes the most of the existing products, services and business models yet accomplishes what’s needed to create the future.

To strike the right balance, and before any decisions on specific projects, allocate the desired spending into three buckets – short, medium and long.  Or, if you prefer, Horizon 1, 2 and 3.  Use the business objectives to set the weighting. Then, sit next to the CFO for a couple days and allocate last year’s actual spending to the three buckets and compare the actuals with how resources will be allocated going forward.  Define the number of people who will work on short, medium and long and how many will move from one bucket to another.

To get the balance right, short term projects are judged relative to short term projects, medium term projects are judged relative to medium term projects and the long term ones are judged against their long term peers.  Long term projects cannot be staffed at the expense of short term projects and medium term projects cannot take resources from long term projects.  To get the balance right, those are the rules.

To choose the best projects within each bucket, clarity and constraints are more important than ROI.   Here are some questions to improve clarity and define the constraints.

How will the customer benefit? It’s best to show the customer using the product or service or experiencing the new business model.  Use a hand sketch and few, if any, words.  Use one page.

How is it different?  In the hand sketch above, draw the novel (different) elements in red.

Who is the new customer? Define where they live, the language they speak and how they get the job done today.

Are there regional constraints?  Infrastructure gaps, such as electricity, water, transportation are deal breakers.  Language gaps can be big problems, so can regulatory, legal and cultural constraints. If a regional constraint cannot be overcome, do something else.

How will your company make money?  Use this formula: (price – cost) x volume.  But, be clear about the size of the market today and the size it could be in five years.

How will you make, sell and service it?  Include in the cost of the project the cost to overcome organizational capacity/capability constraints.  If cost (or time) to close the gaps is prohibitive, do something else.

How will the business model change?  If it won’t, strongly consider a different project.

If the investigations show the project is worthwhile, how would you staff the project and when?  This is an important one.  If the project would be a winner, but there is no one to work on it, do something else.  Or, consider stopping a bad project to start the good one.

There’s usually a general tendency to move medium term resources to short term projects and skimp on long term projects.  Be respectful of the newly-minted resource balance defined at the start and don’t choose a project from one bucket over a project from another.  And don’t get carried away with ROI measured to three significant figures, rather, hold onto the fact that an insurmountable constraint reduces ROI to zero.

And staff projects fully.  Partially-staffed projects set expectations that good things are happening, but they never come to be.

Image credit – john curley

You probably don’t have an organizational capability gap.

mind the gapThe organizational capability of a company defines its ability to get things done.  If you can’t pull it off, you have an organizational capability problem, or so the traditional thinking goes.

If you don’t have enough people to do the work, and the work is not new, that’s not a capability gap, that’s an organizational capacity gap. Capacity gaps are filled in straightforward ways. 1.) You can hire more people like the ones who do the work today and train them with the people you already have. Or for machines – buy more of the old machines you know and love.  2.) Map the work processes and design out the waste.  Find the piles of paper or long queues and the bottleneck will be right in front.  Figure out how to get more work through bottleneck.  Professional tip – ignore everything but the bottleneck because fixing a non-bottleneck will only make you tired and sweaty and won’t increase throughput.  3.) Move people and machines from the work to create a larger shortfall.  If no one complains, it wasn’t a problem and don’t fix it.  If the complaints skyrocket, use the noise to justify the first or second option.  And don’t let your ego get in the way – bigger teams aren’t better, they’re just bigger.

If your company systematically piles too work on everyone’s plate, you don’t have an organizational capability problem, you have a leadership problem.

If you’re asked to put together a future state organization and define its new capabilities, you don’t have an organizational capability gap.  A capability gap exists only when there’s a business objective that must be satisfied, and a paper exercise to create a future state organization is not a business objective.  Before starting the work, ask for the company’s growth objectives and an explanation of the new work your team will have to do to achieve those objectives.  And ask how much money has been budgeted (and approved) for the future state organization and when you can make the first hire.  This will reduce the urgency of the exercise, and may stop it altogether. And everyone will know there’s no  “organizational capability gap.”

If you’re asked to put together a project plan (with timeline and budget) to create a new technology and present the plan to the CEO next week, you have an organizational capability gap.  If there’s a shortfall in the company’s growth numbers and the VP of business development calls you at home and tells you to put together a plan to create a new market in a new country and present it to her tomorrow, you have an organizational capability gap.  If the VP of sales takes you to a fancy restaurant and asks you to make a napkin sketch of your plan to sell the new product through a new channel, you have an organizational capability gap.

Real organizational capability gaps are rare.  Unless there’s a change, there can be no organizational capability gap.  There can be no gap without a new business deliverable, new technology, new partnership, new product, new market, or new channel.  And without a timeline and an approved budget, I don’t know what you have, but you don’t have organizational capability gap.

Image credit – Jehane

A most powerful practice – Try It.

Trying HardThe first question is usually – What’s the best practice? And the second question is – Why aren’t you using it?  In the done-it-before domain this makes sense.  Best practices are best when inputs are tightly controlled, process steps are narrowly defined, and the desired output is known and can be formally defined.

Industry loves best practice because they are so productive.  Like the printing press, best practices are highly effective when it’s time to print the same pages over and over.  It worked here, so do it there. And there. And there. Use the same typeface and crank it out – page by page.  It’s like printing money.

Best practices are best utilized in the manufacturing domain, until they’re not.  Which best practice should be used? Can it be used as-is, or must it change? And, if a best practice is changed, which version is best? Even in the tightly controlled domain of manufacturing, it’s tricky to effectively use best practices. (Maybe what’s needed is a best practice for using best practices.)

Best practices can be good when there’s strong commonality with previous work, but when the work is purposefully different (think creativity and innovation), all bets are off.  But that doesn’t stop the powerful pull of productivity from jamming round best practices into square holes. In the domain of different, everything’s different – the line of customer goodness, the underpinning technology and the processes to make it, sell it, and service it.  By definition, the shape of a best practice does not fit work that has yet to be done for the first time.

What’s needed is a flexible practice that can handle the variability, volatility, and uncertainty of creativity/innovation. My favorite is called – Try It.  It’s a simple process (just one step), but it’s a good one. The hard part is deciding what to try.  Here are some ways to decide.

No-to-yes. Define the range of inputs for the existing products and try something outside those limits.

Less-with-far-less. Reduce the performance (yes, less performance) of the very thing that makes your product successful and try adolescent technologies with a radically lower cost structures.  When successful, sell to new customers.

Lines of customer goodness.  Define the primary line of customer goodness of your most successful product and try things that advance different lines. When you succeed, change all your marketing documents and sales tools, reeducate your sales force, and sell the new value to new customers.

Compete with no one. Define a fundamental constraint that blocks all products in your industry, try new ideas that compromise everything sacred to free up novel design space and break the constraint. Then, sell new products into the new market you just created.

IBE (Innovation Burst Event). Everything starts with a business objective.

There is no best way to implement the Try It process, other than, of course, to try it.

Image credit — Alland Dharmawan.

Constructive Conflict

Dragoon Jumping and Double SpearsInnovation starts with different, and when you propose something that’s different from the recipe responsible for success, innovation becomes the enemy of success. And because innovation and different are always joined at the hip, the conflict between success and innovation is always part of the equation. Nothing good can come from pretending the conflict does not exist, and it’s impossible to circumvent. The only way to deal with the conflict is to push through it.

Emotional energy is the forcing function that pushes through conflict, and the only people that can generate it are the people doing the work. As a leader, your job is to create and harness this invisible power, and for that, you need mechanisms.

To start, you must map innovation to “different”.  The first trick is to ask for ideas that are different. Where brainstorming asks for quantity, firmly and formally discredit it and ask for ideas that are different. And the more different, the better. Jeffrey Baumgartner has it right with his Anticonventional Thinking (ACT) methodology where he pushes even further and asks for ideas that are anti-conventional.

The intent is to create emotional energy, and to do that there’s nothing better than telling the innovation team their ideas are far too conventional. When you dismiss their best ideas because they’re not different enough, you provide clear contrast between the ideas they created and the ones you want. And this contrast creates internal conflict between their best thinking and the thinking you want.  This internal conflict generates the magical emotional energy needed to push through the conflict between innovation and success.  In that way, you create intrinsic conflict to overpower the extrinsic conflict.

Because innovation is powered by emotional energy, conflict is the right word.  Yes, it feels too strong and connotes quarrel and combat, but it’s the right word because it captures the much needed energy and intensity around the work. Just as when “opportunity” is used in place of “problem” and the urgency, importance, and emotion of the situation wanes, emotional energy is squandered when other words are used in place of “conflict”.

And it’s also the right word when it comes to solutions. Anti-conventional ideas demand anti-conventional solutions, both of which are powered by emotional energy. In the case of solutions, though, the emotional energy around “conflict” is used to overcome intellectual inertia.

Solving problems won’t get you mind-bending solutions, but breaking conflicts will. The idea is to use mechanisms and language to move from solving problems to breaking conflicts. Solving problems is regular work done as a matter of course and regular work creates regular solutions.  But with innovation, regular solutions won’t cut it.  We need irregular solutions that break from the worn tracks of predictable thinking. And do to this, all convention must be stripped away and all attachments broken to see and think differently.  And, to jolt people out of their comfort zone, contrast must be clearly defined and purposefully amplified.

The best method I know to break intellectual inertia is ARIZ and algorithmic method for innovative solutions built on the foundation of TRIZ.  With ARIZ, a functional model of the system is created using verb-noun pairs with the constraint that no industry jargon can be used. (Jargon links the mind to traditional thinking.) Then, for clarity, the functional model is then reduced to a conflict between two system elements and defined in time and place (the conflict domain.)  The conflict is then made generic to create further distance from the familiar.  From there the conflict is purposefully amplified to create a situation where one of the conflicting elements must be in two states at the same time (conflicting states) – hot and cold; large and small; stiff and flexible.  The conflicting states make it impossible to rely on preexisting solutions (familiar thinking.)  Though this short description of ARIZ doesn’t do it justice, it does make clear ARIZ’s intention – to use conflicts to break intellectual inertia.

Innovation butts heads and creates conflict with almost everything, but it’s not destructive conflict.  Innovation has the best intentions and wants only to create constructive conflict that leads to continued success. Innovation knows your tired business model is almost out of gas and desperately wants to create its replacement, but it knows your successful business model and its tried-and-true thinking are deeply rooted in the organization.  And innovation knows the roots are grounded in emotion and  it’s not about pruning it’s about  emotional uprooting.

Conflict is a powerful word, but the right word.  Use the ACT mechanism to ask for ideas that constructively conflict with your success and use the ARIZ mechanism to ask for solutions that constructively conflict with your best thinking.

With innovation there is always conflict.  You might as well make it constructive conflict and pull your organization into the future kicking and screaming.

Image credit – Kevin Thai

Innovation Through Preparation

Pack what you needInnovation is about new; innovation is about different; innovation is about “never been done before”; and innovation is about preparation.

Though preparation seems to contradict the free-thinking nature of innovation, it doesn’t.  In fact, where brainstorming diverts attention, the right innovation preparation focuses it; where brainstorming seeks more ideas, preparation seeks fewer and more creative ones; where brainstorming does not constrain, effective innovation preparation does exactly that.

Ideas are the sexy part of innovation; commercialization is the profitable part; and preparation is the most important part.  Before developing creative, novel ideas, there must be a customer of those ideas, someone that, once created, will run with them.  The tell-tale sign of the true customer is they have a problem if the innovation (commercialization) doesn’t happen. Usually, their problem is they won’t make their growth goals or won’t get their bonus without the innovation work.  From a preparation standpoint, the first step is to define the customer of the yet-to-be created disruptive concepts.

The most effective way I know to create novel concepts is the IBE (Innovation Burst Event), where a small team gets together for a day to solve some focused design challenges and create novel design concepts.  But before that can happen, the innovation preparation work must happen.  This work is done in the Focus phase. The questions and discussion below defines the preparation work for a successful IBE.

1. Why is it so important to do this innovation work?

What defines the need for the innovation work?  The answer tells the IBE team why they’re in the room and why their work is important. Usually, the “why” is a growth goal at the business unit level or projects in the strategic plan that are missing the necessary sizzle. If you can’t come up with a slide or two with growth goals or new projects, the need for innovation is only emotional.  If you have the slides, these will be used to kick off the IBE.

 

2. Who is the customer of the novel concepts?

Who will choose which concepts will be converted into working prototypes? Who will convert the prototypes into new products? Who will launch the new products? Who has the authority to allocate the necessary resources? These questions define the customers of the new concepts.  Once defined, the customers become part of the IBE team.  The customers kick off the IBE and explain why the innovation work is important and what they’ll do with the concepts once created.  The customers must attend the IBE report-out and decide which concepts they’ll convert to working prototypes and patents.

Now, so the IBE will generate the right concepts, the more detailed preparation work can begin.  This work is led by marketing.  Here are the questions to scope and guide the IBE.

 

3. How will the innovative new product be used?

How will the innovative product be used in new way? This question is best answered with a hand sketch of the customer using the new product in a new way, but a short written description (30 words, or so) will do in a pinch. The answer gives the IBE team a good understanding, from a customer perspective, what new things the product must do.

What are the new elements of the design that enable the new functionality or performance? The answer focuses the IBE on the new design elements needed to make real the new product function in the new way.

What are the valuable customer outcomes (VCOs) enabled by the innovative new product? The answer grounds the IBE team in the fundamental reason why the customer will buy the new product.  Again, this is answered from the customer perspective.

 

4. How will the new innovative new product be marketed and sold?

What is the tag line for the new product? The answer defines, at the highest level, what the new product is all about. This shapes the mindset of the IBE team and points them in the right direction.

What is the major benefit of the new product? The answer to this question defines what your marketing says in their marketing/sales literature.  When the IBE team knows this, you can be sure the new concepts support the marketing language.

 

5. By whom will the innovative new product be used?

In which geography does the end user live? There’s a big difference between developed markets and developing markets.  The answer to the question sets the context for the new concepts, specifically around infrastructure constraints.

What is their ability to pay? Pocketbooks are different across the globe, and the customer’s ability to pay guides the IBE team toward concepts that fit the right pocket book.

What is the literacy level of the end customer?  If the customer can read, the IBE team creates concepts that take advantage of that ability.  If the customer cannot read, the IBE team creates concepts that are far different.

 

6. How will the innovative new product change the competitive landscape?

Who will be angry when the new product hits the market? The answer defines the competition.  It gives broad context for the IBE team and builds emotional energy around displacing adversaries.

Why will they be angry? With the answer to this one, the IBE team has good perspective on the flavor of pain and displeasure created by the concepts.  Again, it shapes the perspective of the IBE team.  And, it educates the marketing/sales work needed to address competitors’ countermeasures.

Who will benefit when the new product hits the market? This defines new partners and supporters that can be part of the new solutions or participants in a new business model or sales process.

What will customer throw away, reuse, or recycle? This question defines the level of disruption.  If the new products cause your existing customers to throw away the products of your existing customers, it’s a pure market share play.  The level of disruption is low and the level of disruption of the concepts should also be low.  On the other end of the spectrum, if the new products are  sold to new customers who won’t throw anything away, you creating a whole new market, which is the ultimate disruption, and the concepts must be highly disruptive.  Either way, the IBE team’s perspective is aligned with the level appropriate level of disruption, and so are the new concepts.

 

Answering all these questions before the creative works seems like a lot of front-loaded preparation work, and it is. But, it’s also the most important thing you can do to make sure the concept work, technology work, patent work, and commercialization work gives your customers what they need and delivers on your company’s growth objectives.

Image credit — ccdoh1.

How It Goes With Innovation

A view of the whole thingInnovation starts with recognition of a big, meaningful problem. It can come from the strategic planning process; from an ongoing technology project that isn’t going well; an ongoing product development project that’s stuck in the trenches; or a competitor’s unforeseen action. But where it comes from isn’t the point. What matters is it’s recognized by someone important enough to allocate resources to make the problem go away. (If it’s recognized by someone who can’t muster the resources, it creates frustration, not progress.)

Once recognized, the importance of the problem is communicated to the organization. Usually, a problem is important because it blocks growth, e.g., a missing element of the new business model, technology that falls short of the distinctive value proposition (DVP), or products that can’t deliver on your promises. But whether something’s in the way or missing, the problem’s importance is best linked to a growth objective.

Company leaders then communicate to the organization, using one page. Here’s an example:

WHY – we have a problem. The company’s stock price cannot grow without meeting the growth goals, and currently we cannot meet them. Here’s what’s needed.
WHAT – grow sales by 30%.
WHERE – in emerging markets.
WHEN – in two years.
HOW – develop a new line of products for the developing world.

Along with recognition of importance, there must be recognition that old ways won’t cut it and new thinking is required. That way the company knows it’s okay to try new things.

Company leaders pull together a small group and charters them to spend a bit of time to develop concepts for the new product line and come back and report their go-forward reccommendations. But before any of the work is done, resources are set aside to work on the best ones, otherwise no one will work on them and everyone will know the company is not serious about innovation.

To create new concepts, the small group plans an Innovation Burst Event (IBE). On one page they define the DVP for the new product line, which describes how the new customers will use the new products in new ways. They use the one page DVP to select the right team for the IBE and to define fertile design space to investigate. To force new thinking, the planning group creates creative constraints and design challenges to guide divergence toward new design space.

The off-site location is selected; the good food is ordered; the IBE is scheduled; and the team is invited. The company leader who recognized the problem kicks off the IBE with a short description of the problem and its importance, and tells the team she can’t wait to hear their recoomendations at the report-out at the end of the day.

With too little time, the IBE team steps through the design challenges, creates new concepts, and builds thinking prototypes. The prototypes are the center of attention at the report-out.

At the report-out, company leaders allocate IP resources to file patents on the best concepts and commission a team of marketers, technologists, and IP staff to learn if viable technologies are possible, if they’re patentable, and if the DVP is viable.(Will it work, can we patent it, and will they buy it.)

The marketer-technologist-IP team builds prototypes and tests them in the market. The prototypes are barely functional, if at all, and their job is to learn if the DVP resonates. (Think minimum viable prototype.) It’s all about build-test-learn, and the learning loops are fast and furious at the expese of statistical significance. (Judgement carries the day in this phase.)

With viable technology, patentable ideas, and DVP in hand, the tri-lobed team reports out to company leaders who sanctioned their work. And, like with the IBE, the leaders allocate more IP resources to file more patents and commission the commercialization team.

The commercialization team is the tried-and-true group that launches products. Design engineering makes it reliable; manufacturing makes it repeatable; marketing makes it irresistible; sales makes it successful. At the design reviews more patents are filed and at manufacturing readiness reviews it’s all about process capability and throughput.

Because the work is driven by problems that limit growth, the result of the innovation work is exactly what’s needed to fuel growth – in this case a successful product line for the developing world. Start with the right problem and end up with the right solution. (Always a good idea.)

With innovation programs, all the talk is about tools and methods, but the two things that really make the difference are lightning fast learning loops and resources to do the innovation work. And there’s an important philosophical chasm to cross – because patents are usually left out of the innovation equation – like an afterthought chasing a quota – innovation should become the umbrella over patents and technology. But because IP reports into finance and technology into engineering, it will be a tough chasm to bridge.

It’s clear fast learning loops are important for fast learning, but they’re also important for building culture. At the end of a cycle, the teams report back to leadership, and each report-out is an opportunity to shape the innovation culture. Praise the good stuff and ignore the rest, and the innovation culture moves toward the praise.

There’s a natural progression of the work. Start – do one project; spread – use the learning to do the next ones; systematize – embed the new behaviors into existing business processes; sustain – praise the best performers and promote them.

When innovation starts with business objectives, the objectives are met; when innovation starts with company leadership, resources are allocated and the work gets done; and when the work shapes the culture, the work accelerates. Anything less isn’t innovation.

Image credit – Jaybird

Mike Shipulski Mike Shipulski
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