Archive for the ‘Top Line Growth’ Category

The Additive Manufacturing Maturity Model

Additive Manufacturing (AM) is technology/product space with ever-increasing performance and an ever-increasing collection of products. There are many different physical principles used to add material and there are a range of part sizes that can be made ranging from micrometers to tens of meters.  And there is an ever-increasing collection of materials that can be deposited from water soluble plastics to exotic metals to specialty ceramics.

But AM tools and technologies don’t deliver value on their own.  In order to deliver value, companies must deploy AM to solve problems and implement solutions.  But where to start? What to do next? And how do you know when you’ve arrived?

To help with your AM journey, below a maturity model for AM.  There are eight categories, each with descriptions of increasing levels of maturity.  To start, baseline your company in the eight categories and then, once positioned, look to the higher levels of maturity for suggestions on how to move forward.

For a more refined calibration, a formal on-site assessment is available as well as a facilitated process to create and deploy an AM build-out plan.  For information on on-site assessment and AM deployment, send me a note at mike@shipulski.com.

Execution

  1. Specify AM machine – There a many types of AM machines. Learn to choose the right machine.
  2. Justify AM machine – Define the problem to be solved and the benefit of solving it.
  3. Budget for AM machine – Find a budget and create a line item.
  4. Pay for machine –  Choose the supplier and payment method – buy it, rent to own, credit card.
  5. Install machine – Choose location, provide necessary inputs and connectivity
  6. Create shapes/add material – Choose the right CAD system for the job, make the parts.
  7. Create support/service systems – Administer the job queue, change the consumables, maintenance.
  8. Security – Create a system for CAD files and part files to move securely throughout the organization.
  9. Standardize – Once the first machines are installed, converge on a small set of standard machines.
  10. Teach/Train – Create training material for running AM machine and creating shapes.

 

Solution

  1. Copy/Replace – Download a shape from the web and make a copy or replace a broken part.
  2. Adapt/Improve – Add a new feature or function, change color, improve performance.
  3. Create/Learn – Create something new, show your team, show your customers.
  4. Sell Products/Services – Sell high volume AM-produced products for a profit. (Stretch goal.)

 

Volume

  1. Make one part – Make one part and be done with it.
  2. Make five parts – Make a small number of parts and learn support material is a challenge.
  3. Make fifty parts – Make more than a handful of parts. Filament runs out, machines clog and jam.
  4. Make parts with a complete manufacturing system – This topic deserves a post all its own.

 

Complexity

  1. Make a single piece – Make one part.
  2. Make a multi-part assembly – Make multiple parts and fasten them together.
  3. Make a building block assembly – Make blocks that join to form an assembly larger than the build area.
  4. Consolidate – Redesign an assembly to consolidate multiple parts into fewer.
  5. Simplify – Redesign the consolidated assembly to eliminate features and simplify it.

 

Material

  1. Plastic – Low temperature plastic, multicolor plastics, high performance plastics.
  2. Metal – Low melting temperature with low conductivity, higher melting temps, higher conductivity
  3. Ceramics – common materials with standard binders, crazy materials with crazy binders.
  4. Hybrid – multiple types of plastics in a single part, multiple metals in one part, custom metal alloy.
  5. Incompatible materials – Think oil and water.

 

Scale

  1. 50 mm – Not too large and not too small. Fits the build area of medium-sized machine.
  2. 500 mm – Larger than the build area of medium-sized machine.
  3. 5 m – Requires a large machine or joining multiple parts in a building block way.
  4. 0.5 mm – Tiny parts, tiny machines, superior motion control and material control.

 

Organizational Breadth

  1. Individuals – Early adopters operate in isolation.
  2. Teams – Teams of early adopters gang together and spread the word.
  3. Functions – Functional groups band together to advance their trade.
  4. Supply Chain – Suppliers and customers work together to solve joint problems.
  5. Business Units – Whole business units spread AM throughout the body of their work.
  6. Company – Whole company adopts AM and deploys it broadly.

 

Strategic Importance

  1. Novelty – Early adopters think it’s cool and learn what AM can do.
  2. Point Solution – AM solves an important problem.
  3. Speed – AM speeds up the work.
  4. Profitability – AM improves profitability.
  5. Initiative – AM becomes an initiative and benefits are broadly multiplied.
  6. Competitive Advantage – AM generates growth and delivers on Vital Business Objectives (VBOs).

Image credit – Cheryl

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

The WHY and HOW of Innovation

Innovation is difficult because it demands new work. But, at a more basic level, it’s difficult because it requires an admission that the way you’ve done things is no longer viable. And, without public admission the old way won’t carry the day, innovation cannot move forward. After the admission there’s no innovation, but it’s one step closer.

After a public admission things must change, a cultural shift must happen for innovation to take hold. And for that, new governance processes are put in place, new processes are created to set new directions and new mechanisms are established to make sure the new work gets done.  Those high-level processes are good, but at a more basic level, the objectives of those process areto choose new projects, manage new projects and allocate resources differently. That’s all that’s needed to start innovation work.

But how to choose projects to move the company toward innovation? What are the decision criteria? What is the system to collect the data needed for the decisions? All these questions must be answered and the answers are unique to each company. But for every company, everything starts with a top line growth objective, which narrows to an approach based on an industry, geography or product line, which then further necks down to a new set of projects. Still no innovation, but there are new projects to work on.

The objective of the new projects is to deliver new usefulness to the customer, which requires new technologies, new products and, possibly, new business models. And with all this newness comes increased uncertainty, and that’s the rub. The new uncertainty requires a different approach to project management, where the main focus moves from execution of standard tasks to fast learning loops. Still no innovation, but there’s recognition the projects must be run differently.

Resources must be allocated to new projects. To free up resources for the innovation work, traditional projects must be stopped so their resources can flow to the innovation work. (Innovation work cannot wait to hire a new set of innovation resources.)  Stopping existing projects, especially pet projects, is a major organizational stumbling block, but can be overcome with a good process. And once resources are allocated to new projects, to make sure the resources remain allocated, a separate budget is created for the innovation work. (There’s no other way.) Still no innovation, but there are people to do the innovation work.

The only thing left to do is the hardest part – to start the innovation work itself. And to start, I recommend the IBE (Innovation Burst Event). The IBE starts with a customer need that is translated into a set of design challenges which are solved by a cross-functional team.  In a two-day IBE, several novel concepts are created, each with a one page plan that defines next steps.  At the report-out at the end of the second day, the leaders responsible for allocating the commercialization resources review the concepts and plans and decide on next steps. After the first IBE, innovation has started.

There’s a lot of work to help the organization understand why innovation must be done. And there’s a lot of work to get the organization ready to do innovation. Old habits must be changed and old recipes must be abandoned. And once the battle for hearts and minds is won, there’s an equal amount of work to teach the organization how to do the new innovation work.

It’s important for the organization to understand why innovation is needed, but no customer value is delivered and no increased sales are booked until the organization delivers a commercialized solution.

Some companies start innovation work without doing the work to help the organization understand why innovation work is needed. And some companies do a great job of communicating the need for innovation and putting in place the governance processes, but fail to train the organization on how to do the innovation work.

Truth is, you’ve got to do both. If you spend time to convince the organization why innovation is important, why not get some return from your investment and teach them how to do the work? And if you train the organization how to do innovation work, why not develop the up-front why so everyone rallies behind the work?

Why isn’t enough and how isn’t enough. Don’t do one without the other.

Image credit — Sam Ryan

Innovation is about good judgement.

It’s not the tools. Innovation is not hampered by a lack of tools (See The Innovator’s Toolkit for 50 great ones.), it’s hampered because people don’t know how to start.  And it’s hampered because people don’t know how to choose the right tool for the job. How to start? It depends. If you have a technology and no market there are a set of tools to learn if there’s a market. Which tool is best? It depends on the context and learning objective. If you have a market and no technology there’s a different set of tools.  Which tool is best?  You guessed it.  It depends on the work. And the antidote for ‘it depends’ is good judgement.

It’s not the process.  There are at least several hundred documented innovation processes. Which one is best? There isn’t a best one – there can be no best practice (or process) for work that hasn’t been done before. So how to choose among the good practices? It depends on the culture, depends on the resources, depends on company strengths. Really, it depends on good judgment exercised by the project leader and the people that do the work.  Seasoned project leaders know the process is different every time because the context and work are different every time. And they do the work differently every time, even as standard work is thrust on them. With new work, good judgement eats standardization for lunch.

It’s not the organizational structure. Innovation is not limited by a lack of novel organizational structures. (For some of the best thinking, see Ralph Ohr’s writing.) For any and all organizational structures, innovation effectiveness is limited by people’s ability to ride the waves and swim against the organizational cross currents. In that way, innovation effectiveness is governed by their organizational good judgement.

Truth is, things have changed. Gone are the rigid, static processes. Gone are the fixed set of tools. Gone are the black-and-white, do-this-then-do-that prescriptive recipes. Going forward, static must become dynamic and rigid must become fluid. One-size-fits-all must evolve into adaptable. But, fortunately, gone are the illusions that the dominant player is too big to fail. And gone are the blinders that blocked us from taking the upstarts seriously.

This blog post was inspired by a recent blog post by Paul Hobcraft, a friend and grounded innovation professional. For a deeper perspective on the ever-increasing complexity and dynamic nature of innovation, his post is worth the read.

After I read Paul’s post, we talked about the import role judgement plays in innovation.  Though good judgement is not usually called out as an important factor that governs innovation effectiveness, we think it’s vitally important. And, as the pressure increases to deliver tangible innovation results, its importance will increase.

Some open questions on judgement: How to help people use their judgement more effectively? How to help them use it sooner? How to judge if someone has the right level of good judgement?

Image credit – Michael Coghlan

If you don’t know what to do, you may be on the right track.

What would you do if:

You had to push through your fear of being judged?

You had to break some rules to get an idea off the ground?

You had a concept that would displace your most successful product?

Your colleague tried to scuttle your best idea?

You knew it was time to stop judging yourself negatively?

Your colleague asked you to help with a hair-brained idea?

You were asked to facilitate a session to create new concepts, but no one could explain what would happen after the concepts were created?

You weren’t afraid your prototype would be a success?

You thought you knew what the customer wanted, but didn’t have the data to prove it?

You were asked to create patentable concepts you knew would never be commercialized?

Your prototype threatened the status quo?

You were asked to facilitate a session to create new concepts and told how to do it?

You were told “No.”

You saw a young employee struggling with a new concept?

You were blocking yourself from starting the right work?

You thought your idea had merit, but you needed help testing it in the market?

You were asked to follow a standard process but you knew there wasn’t one?

You were asked to come up with new concepts though there were five excellent concepts gathering dust?

You were told there was no market for your new-to-world prototype?

You had to bolster your self-confidence to believe wholeheartedly in your idea?

There is a name for what you would do. It’s called innovation.

 

image credit – UnknownNet Photography

The Cycle of Success

coccoon-now-transparentThere’s a huge amount of energy required to help an organization do new work.

At every turn the antibodies of the organization reject new ideas.  And it’s no surprise.  The organization was created to do more of what it did last time.  Once there’s success the organization forms structures to make sure it happens again.  Resources migrate to the successful work and walls form around them to prevent doing yet-to-be-successful work. This all makes sense while the top line is growing faster than the artificially set growth goal.  More resources applied to the successful leads to a steeper growth rate.  Plenty of work and plenty of profit.  No need for new ideas.  Everyone’s happy.

When growth rate of the successful company slows below arbitrary goal, the organization is slow to recognize it and slower to acknowledge it and even slower to assign true root cause.  Instead, the organization doubles down on what it knows.  More resources are applied, efficiency improvements are put in place, and clearer metrics are put in place to improve accountability.  Everyone works harder and works more hours and the growth rate increases a bit.  Success.  Except the success was too costly.  Though total success increased (growth), success per dollar actually decreased.  Still no need for new ideas.  Everyone’s happy, but more tired.

And then growth turns to contraction. With no more resources move to the successful work, accountability measures increase to unreasonable levels and people work beyond their level of effectiveness. But this time growth doesn’t come.  And because people are too focused on doing more of what used to work, new ideas are rejected.  When a new idea is proposed, it goes something like this “We don’t need new ideas, we need growth.  Now, get out of my way.  I’m too busy for your heretical ideas.”  There’s no growth and no tolerance for new ideas.  No one is happy.

And then a new idea that had been flying under the radar generates a little growth.  Not a lot, but enough to get noticed.  And when the old antibodies recognize the new ideas and try to reject it, they cannot.  It’s too late.  The new idea has developed a protective layer of growth and has become a resistant strain.  One new idea has been tolerated. Most are unhappy because there’s only one small pocket of growth and a few are happy because there’s one small pocket of growth.

It’s difficult to get the first new idea to become successful, but it’s worth the effort.  Successful new ideas help each other and multiply.  The first one breaks trail for the second one and the second one bolsters the third.  And as these new ideas become more successful something special happens.  Where they were resistant to the antibodies they become stronger than the antibodies and eat them.

Growth starts to grow and success builds on success.  And the cycle begins again.

Image credit – johnmccombs

Be done with the past.

graspThe past has past, never to come again.  But if you tell yourself old stories the past is still with you.  If you hold onto your past it colors what you see, shapes what you think and silently governs what you do.  Not skillful, not helpful.  Old stories are old because things have changed.  The old plays won’t work. The rules are different, the players are different, the situation is different.  And you are different, unless you hold onto the past.

As a tactic we hold onto the past because of aversion to what’s going on around us. Like an ostrich we bury our head in the sands of the past to protect ourselves from unpleasant weather buffeting us in the now.  But there’s no protection. Grasping tightly to the past does nothing more than stop us in our tracks.

If you grasp too tightly to tired technology it’s game over.  And it’s the same with your tired business model – grasp too tightly and get run through by an upstart.  But for someone who wants to make a meaningful difference, what are the two things that are sacred? The successful technology and successful business model.

It’s difficult for an organization to decide if the successful technology should be reused or replaced.  The easy decision is to reuse it.  New products come faster, fewer resources are needed because the hard engineering work has been done and the technical and execution risks are lower.  The difficult decision is to scrap the old and develop the new.  The smart decision is to do both.  Launch products with the old technology while working feverishly to obsolete it.  These days the half-life of technology is short.  It’s always the right time to develop new technology.

The business model is even more difficult to scrap. It cuts across every team and every function.  It’s how the company did its work.  It’s how the company made its name. It’s how the company made its money.  It’s how families paid their mortgages.  It’s grasping to the past success of the business model that makes it almost impossible to obsolete.

People grasp onto the past for protection and companies are nothing more than a loosely connected network of people systems.  And these people systems have a shared past and a good memory.  It’s no wonder why old technologies and business models stick around longer than they should.

To let go of the past people must see things as they are.  That’s a slow process that starts with a clear-eyed assessment today’s landscapes. Make maps of the worldwide competitive landscape, intellectual property, worldwide regulatory legislation, emergent technologies (search YouTube) and the sea of crazy business models enabled by the cloud.

The best time to start the landscape analyses was two years ago, but the next best time to start is right now.  Don’t wait.

Image credit – John Fife

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 Create Eye-Watering Ideas

Rocket manWith creativity, the leading thinking says the most important thing is to create many of ideas.  When asked to generate many of ideas, the thinking goes, the team lets go of their inhibitions and good ideas slip through their mental filters.  I’ve found that thinking misleading.  I’ve found that creating many ideas results in many ideas, but that’s it. Before the session to create new ideas, you already had a pile of ideas you weren’t working on, and after the session is bigger, but not better.

What’s needed is several outlandish ideas that make your hair stand on end. The ideas should be so different that they cause you to chuckle to mask your discomfort.  These ideas should be borderline unbelievable and just south of impossible. The ideas should have the possibility to change the game and tip your industry on its head.

The “many ideas” thinking has the right intent – to loosen the team’s thinking so they generate good ideas, but the approach is insufficient.   To force the team to generated outlandish ideas they must be turned inside-out and put on the rack.  Heretical ideas don’t come easily and drastic measures are needed.  The team must be systematically stripped of the emotional constraints of their success using the Innovation Burst Event (IBE) method.

To prepare for the IBE, a reward-looking analysis is done to identify traditional lines of customer goodness (for example, miles per gallon for automobiles) and define how that goodness has changed over time (position it on the S-curve.)  If the improvement has been flat, it’s time for a new line of customer goodness, and if the goodness is still steadily increasing, it’s time to create a new technology that will provide the next level of improvement.  With this analysis the disposition of the system is defined and potentially fertile design space is identified.  And within this design space, design challenges are created that force the team to exercise the highly fertile design space during the IBE.

Everything about the IBE is designed to strip the team of its old thinking.  The IBE is held at an offsite location to change the scenery and eliminate reminders of traditional thinking and good food is served to help the team feel the day is special.  But the big medicine is the design challenges.  They are crafted to outlaw traditional thinking and push the team toward new thinking.  The context is personal (not corporate) and the scale of the challenge is purposefully small to help the team let go of adjacent concerns.  And, lastly, the team is given an unreasonably short time (five to ten minutes) to solve the problem and build a thinking prototype (a prototype that stands for an idea, not at functional prototype.)

Everything about the IBE helps the team let go of their emotional constraints and emit eye-watering solutions.  The design challenges force them to solve problems in a new design space in a way and does not give them a chance to limit their thinking in any way.  The unrealistic time limit is all-powerful.

Four design challenges is about all team can handle in the one-day IBE.  With the IBE they come up with magical ideas clustered around four new areas, new areas that have the potential to flip your industry on its head.  In one day, a team can define market-changing ideas that obsolete your best products and even your business model.  Not bad for one day.

It may be popular wisdom that it’s best to create many new ideas, but it’s not the best way.  And it contradicts popular belief that a team can create three or four game-changing ideas in a single day.  But the IBEs work as advertised.

Don’t waste time creating a pile of ideas.  Spend the time to identify fertile design space and hold a one-day IBE to come up with ideas that will create your future.

Image credit – moonjazz

Selling New Products to New Customers in New Markets

yellow telephoneThere’s a special type of confusion that has blocked many good ideas from seeing the light of day.  The confusion happens early in the life of a new technology when it is up and running in the lab but not yet incorporated in a product.  Since the new technology provides a new flavor of customer goodness, it has the chance to create incremental sales for the company.  But, since there are no products in the market that provide the novel goodness, by definition there can be no sales from these products because they don’t yet exist.  And here’s the confusion.  Organizations equate “no sales” with “no market”.

There’s a lot of risk with launching new products with new value propositions to new customers.  You invest resources to create the new technologies and products, create the sales tools, train the sales teams, and roll it out well. And with all this hard work and investment, there’s a chance no one will buy it.  Launching a product that improves on an existing product with an existing market is far less risky – customers know what to expect and the company knows they’ll buy it.  The status quo when stable if all the players launch similar products, right up until it isn’t.  When an upstart enters the market with a product that offers new customer goodness (value proposition) the same-old-same-old market-customer dynamic is changed forever.

A market-busting product is usually launched by an outsider – either a big player moves into a new space or a startup launches its first product.  Both the new-to-market big boy and the startup have a far different risk profile than the market leader, not because their costs to develop and launch a new product are different, but because they have not market share.  For them, they have no market share to protect any new sales are incremental.  But for the established players, most of their resources are allocated to protecting their existing business and any resources diverted toward a new-to-market product is viewed as a loss of protective power and a risk to their market share and profitability.   And on top of that, the incumbent sees sales of the new product as a threat to sales of the existing products.  There’s a good chance that their some of their existing customers will prefer the new goodness and buy the new-to-market product instead of the tried-and-true product.  In that way, sales growth of their own new product is seen as an attack no their own market share.

Business leaders are smart.  Theoretically, they know when a new product is proposed, because it hasn’t launched yet, there can be no sales.  Yet, practically, because their prime directive to protect market share is so all-encompassing and important, their vision is colored by it and they confound “no sales” with “no market”.  To move forward, it’s helpful to talk about their growth objectives and time horizon.

With a short time horizon, the best use of resources is to build on what works – to launch a product that builds on the last one.  But when the discussion is moved further out in time, with a longer time horizon it’s a high risk decision to hold on tightly to what you have as the market changes around you.  Eventually, all recipes run out of gas like Henry Ford’s Model T.  And the best leading indicator of running low on fuel is when the same old recipe cannot deliver on medium-term growth objectives.  Short term growth is still there, but further out they are not.  Market forces are squeezing the juice out of your past success.

Ultimately, out of desperation, the used-to-be market leader will launch a new-to-market product.  But it’s not a good idea to do this work only when it’s the only option left.  Before they’re launched, new products that offer new value to customers will, by definition, have no sales.  Try to hold back the fear-based declaration that there is no market.  Instead, do the forward-looking marketing work to see if there is a market.  Assume there is a market and build some low cost learning prototypes and put them in front of customers.  These prototypes don’t yet have to be functional; they just have to communicate the idea behind the new value proposition.

Before there is a market, there is an idea that a market could exist.  And before that could-be market is served, there must be prototype-based verification that the market does in fact exist.  Define the new value proposition, build inexpensive prototypes and put them in front of customers.  Listen to their feedback, modify the prototypes and repeat.

Instead of arguing whether the market exists, spend all your energy proving that it does.

Image credit — lensletter

Doing New Work

first rideIf you know what to do, do it.  But if you always know what to do, do something else.  There’s no excitement in turning the crank every-day-all-day, and there’s no personal growth.  You may be getting glowing reviews now, but when your process is documented and becomes standard work, you’ll become one of the trivial many that follow your perfected recipe, and your brain will turn soggy.

If you want to do the same things more productively, do continuous improvement.  Look at the work and design out the waste.  I suggest you look for the waiting and eliminate it.  (One hint – look for people or parts queueing up and right in front of the pile you’ll find the waste maker.)  But if you always eliminate waste, do something else.  Break from the minimization mindset and create something new.  Maximize something. Blow up the best practice or have the courage to obsolete your best work.  In a sea of continuous improvement, be the lighthouse of doing new.

When you do something for the first time, you don’t know how to do it. It’s scary, but that’s just the feeling you want.  The cold feeling in your chest is a leading indicator of personal growth.  (If you don’t have a sinking feeling in your gut, see paragraph 1.) But organizations don’t make it easy to do something for the first time.  The best approach is to start small.  Try small experiments that don’t require approval from a budget standpoint and are safe to fail.  Run the experiments under the radar and learn in private.  Grow your confidence in yourself and your thinking.  After you have some success, show your results to people you trust.  Their input will help you grow.  And you’ll need every bit of that personal growth because to staff and run a project to bring your new concept to life you’ll need resources.  And for that you’ll need to dance with the most dangerous enemy of doing new things – the deadly ROI calculation.

The R is for return.  To calculate the return for the new concept you need to know: how many you’ll sell, how much you’ll sell them for, how much it will cost, and how well it will work.  All this must be known BEFORE resources can be allocated. But that’s not possible because the new thing has never been done before.  Even before talking about investment (I), the ROI calculation makes a train wreck of new ideas.  To calculate investment, you’ve got to know how many person-hours will be needed, the cost of the materials to make the prototypes and the lab resources needed for testing.  But that’s impossible to know because the work has never been done before.  The ROI is a meaningless calculation for new ideas and its misapplication has spelled death for more good ideas than anything else known to man.

Use the best practice and standardize the work. There’s immense pressure to repeat what was done last time because our companies prefer incremental growth that’s predictable over unreasonable growth that’s less certain.  And add to that the personal risk and emotional discomfort of doing new things and it’s a wonder how we do anything new at all.

But magically, new things do bubble up from the bottom. People do find the courage to try things that obsolete the business model and deliver new lines of customer goodness.  And some even manage survive the run through the ROI gauntlet.  With odds stacked against them, your best people push through their fears cut through the culture of predictability.

Imagine what they will do when you demand they do new work, give them the tools, time and training to do it, and strike the ROI calculation from our vocabulary.

Image credit – Tony Sergo

Mike Shipulski Mike Shipulski
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