Archive for the ‘Top Line Growth’ Category

When is it innovation theater?

When you go to the cinema or the playhouse you go you see a show. The show may be funny, it may be sad, it may be thought-provoking, it may be beautiful, and it may take your mind off your problems for a couple of hours; but it’s not real.  Sure, the storyline is good, but it came from someone’s imagination.  And because it’s a story, it doesn’t have to bound by reality. Sure, the choreography is catchy, but it’s designed for effect. Yes, the cinematography paints a good picture, but it’s contrived. And, yes, the actors are good, but they’re actors. What you see isn’t real. What you see is theater.

If you are asked to focus on the innovation process, that’s theater.  Innovation doesn’t care about process; it cares about delivering novel customer value. The process isn’t most important, the output is. When there’s an extreme focus on the process that usually means an extreme focus on the output of the process would be embarrassing.

If you are tasked to calculate the net present value of the project hopper, that’s theater. With innovation, there’s no partial credit for projects you’re not working on. None. The value of the projects in the hopper is zero. The song about the value of the project hopper is nothing more than a catchy melody performed to make sure the audience doesn’t ask about the feeble collection of projects you are working on. And, assigning a value to the stagnant project hopper is a creative storyline crafted to hide the fact you have too many projects you’re not working on.

If you are asked to create high-level metrics and fancy pie charts, that’s innovation theater.  Process metrics and pie charts don’t pay the bills. Here’s innovation’s script for paying the bills: complete amazing projects, launch amazing products, and sell a boatload.  Full stop.  If your innovation script is different than that, ball it up and throw it away along with its producer.

If the lame projects aren’t stopped so better ones can start, if people aren’t moved off stale projects onto amazing ones, if the same old teams are charged with the innovation mandate, if new leaders aren’t added, if the teams are measured just like last year, that’s innovation theater. How many mundane projects have you stopped? How many amazing projects have you started? How many new leaders have you added? How many new teams have you formed? How will you measure your teams differently? How do you feel about all that?

If a return on investment (ROI) calculation is the gating criterion before starting an amazing project, that’s innovation theater.  Projects that could create a new product family with a fundamentally different value proposition for a whole new customer segment cannot be assigned an ROI because no one has experience in this new domain. Any ROI will be a guess and that’s why innovation is governed by judgment and not ROI.  Innovation is unpredictable which makes an ROI is impossible to predict. And if your innovation process squeezes judgment out of the storyline, that’s a tell-tale sign of innovation theater.

If the specifications are fixed, the resources are fixed, and the completion date is fixed, that’s innovation theater.  Since it can be innovation only when there’s novelty, and since novelty comes with uncertainty, without flexibility in specs, resources, or time, it’s innovation theater.

If the work doesn’t require trust, it’s innovation theater. If trust is not required it’s because the work has been done before, and if that’s the case, it’s not innovation.

If you know it will work, it’s innovation theater.  Innovation and certainty cannot coexist.

If a steering team is involved, it’s innovation theater.  Consensus cannot spawn innovation.

If more than one person in charge, it’s innovation theater.  With innovation, there’s no place for compromise.

And what to do when you realize you’re playing a part in your company’s innovation theater? Well, I’ll save that for another time.

“Large clay theatrical mask, Romisch-Germanisches Museum, Cologne” by Following Hadrian is licensed under CC BY-SA 2.0

Goals, goals, goals.

All goals are arbitrary, but some are more arbitrary than others.

When your company treats goals like they’re not arbitrary, welcome to the US industrial complex.

What happens if you meet your year-end goals in June? Can you take off the rest of the year?

What happens if at year-end you meet only your mid-year goals? Can you retroactively declare your goals unreasonable?

What happens if at the start of the year you declare your year-end goals are unreasonable? Can you really know they’re unreasonable?

You can’t know a project’s completion date before the project is defined.  That’s a rule.

Why does the strategic planning process demand due dates for projects that are yet to be defined?

The ideal future state may be ideal, but it will never be real.

When the work hasn’t been done before, you can’t know when you’ll be done.

When you don’t know when the work will be done, any due date will do.

A project’s completion date should be governed by the work content, not someone’s year-end bonus.

Resources and progress are joined at the hip.  You can’t have one without the other.

If you are responsible for the work, you should be responsible for setting the completion date.

Goals are real, but they’re not really real.

“Arbitrary limitations II” by Marcin Wichary is licensed under CC BY 2.0

How to Know if Your Idea is Novel

When your idea is novel, no one will steal it. No NDA required.

If your idea is truly novel, no one will value it. And that’s how you’ll know it’s novel.

When your idea is novel, no one will adopt it. This isn’t much of a stretch as, due to not-invented-here (NIH), no one will adopt anyone else’s idea – novel or not.

When your idea is novel, it will be misunderstood, even by you.

When your idea is novel, it will evolve into something else and then something else. And then it might be ready for Prime Time.

Novel ideas are like orchids – they need love beyond the worth of their blossom.

If your idea hasn’t failed three times, it’s not worth a damn.

The gestation period for novel ideas is long; if it comes together quickly, it’s not novel.

The best way to understand your novel idea is to make a prototype. And then another one.

Your first novel idea won’t work, but it will inform the next iteration. And that one won’t work either, and the cycle continues. But that’s how it goes with novel ideas.

If everyone likes your novel idea, it isn’t novel.

If no one likes your novel idea, you may be on to something.

If you’re not misunderstood, you’re doing it wrong.

If your dog likes your idea, you can’t say much because he loves you unconditionally and will always tell you what you want to hear.

If you think your novel idea will create a whole new product line in two years, your timeline is off by a factor of three, or five.

If your most successful business unit tries to squash your novel idea it’s because it threatens them. Stomp on the accelerator.

When you are known to give air cover to novel ideas, the best people want to work for you.

 

“it seemed like a good idea at the time” by woodleywonderworks is licensed under CC BY 2.0

Technical Risk, Market Risk, and Emotional Risk

Technical risk – Will it work?

Market risk – Will they buy it?

Emotional risk – Will people laugh at your crazy idea?

 

Technical risk – Test it in the lab.

Market risk – Test it with the customer.

Emotional risk – Try it with a friend.

 

Technical risk – Define the right test.

Market risk – Define the right customer.

Emotional risk – Define the right friend.

 

Technical risk – Define the minimum acceptable performance criteria.

Market risk – Define the minimum acceptable response from the customer.

Emotional risk – Define the minimum acceptable criticism from your friend.

 

Technical risk – Can you manufacture it?

Market risk – Can you sell it?

Emotional risk – Can you act on your crazy idea?

 

Technical risk – How sure are you that you can manufacture it?

Market risk – How sure are you that you can sell it?

Emotional risk – How sure are you that you can act on your crazy idea?

 

Technical risk – When the VP says it can’t be manufactured, what do you do?

Market risk – When the VP says it can’t be sold, what do you do?

Emotional risk – When the VP says your idea is too crazy, what do you do?

 

Technical risk – When you knew the technical risk was too high, what did you do?

Market risk – When you knew the market risk was too high, what did you do?

Emotional risk – When you knew someone’s emotional risk was going to be too high, what did you do?

 

Technical risk – Can you teach others to reduce technical risk? How about increasing it?

Market risk – Can you teach others to reduce technical risk? How about increasing it?

Emotional risk – Can you teach others to reduce emotional risk? How about increasing it?

 

Technical risk – What does it look like when technical risk is too low? And the consequences?

Market risk – What does it look like when technical risk is too low? And the consequences?

Emotional risk – What does it look like when emotional risk is too low? And the consequences?

 

We are most aware of technical risk and spend most of our time trying to reduce it.  We have the mindset and toolset to reduce it.  We know how to do it.  But we were not taught to recognize when technical risk is too low.  And if we do recognize it’s too low, we don’t know how to articulate the negative consequences. With all this said, market risk is far more dangerous.

We’re unfamiliar with the toolset and mindset to reduce market risk. Where we can change the design, run the test, and reduce technical risk, market risk is not like that.  It’s difficult to understand what drives the customers’ buying decision and it’s difficult to directly (and quickly) change their buying decision. In short, it’s difficult to know what to change so they make a different buying decision.  And if they don’t buy, you don’t sell. And that’s a big problem.  With that said, emotional risk is far more debilitating.

When a culture creates high emotional risk, people keep their best ideas to themselves. They don’t want to be laughed at or ridiculed, so their best ideas don’t see the light of day. The result is a collection of wonderful ideas known only to the underground Trust Network. A culture that creates high emotional risk has insufficient technical and market risk because everyone is afraid of the consequences of doing something new and different.  The result – the company with high emotional risk follows the same old script and does what it did last time.  And this works well, right up until it doesn’t.

Here’s a three-pronged approach that may help.

  1. Continue to reduce technical risk.
  2. Learn to reduce market risk early in a project.
  3. And behave in a way that reduces emotional risk so you’ll have the opportunity to reduce technical and market risk.

Image credit — Shan Sheehan

Sometimes too much is just that – too much.

When your best isn’t good enough, how do you feel? When your best isn’t good enough, what do you do? But more importantly, when your best isn’t good enough, what does that say about you?

If your best used to be good enough and now it isn’t, there are four possible explanations. 1.) Expectations increased and your performance is unchanged. 2.) Expectations increased and your performance increased less.  3.) Expectations increased and your performance decreased.

If expectations of your performance haven’t increased over last year, I want to work where you work because your company is an oasis (and an aberration).  Since nearly all industries and occupations are governed by the unnatural mindset of growth-year-on-year-no-matter-what, it’s highly likely your performance expectations have increased. There’s no need to review this scenario.

In scenario one, your performance is unchanged. Why? Well, you may have tried to increase your performance but issues unrelated to work have consumed huge amounts of your emotional energy, and this new drain on your emotional energy consumed the energy you needed to increase your performance.  A list of such issues includes global warming, deforestation, plastic in our water supply, COVID, political unrest, and the regular issues such as medical care for aging parents, death of your parents, inevitable health issues related to your aging. What does that say about you?

In scenario two, your performance increased, but the increase was insufficient. Maybe your performance would have increased quite a bit, but the special cause issues (COVID, etc.) along with the common cause issues (you and your parents get older every year) impacted your performance in a way that lessened the increase in your performance.  Without the special causes, you would have met the increased expectations, but because of them, you did not. What does that say about you?

In scenario three, even though expectations increased, your performance decreased. In this case, it could be that political unrest and the other special causes teamed up with the common causes (stress of everyday life) to reduce your performance. What does that say about you?

In thermodynamics, there’s a law whose implications make it certain that there’s a limit to the amount of matter (stuff) you can put in a control volume (a defined volume that has a limit).  That means that if every year you add air to a balloon, eventually it pops. Even the strongest ones. And when you extend this notion to people, it says that no matter how much pressure you apply to people, there’s a limit to what they can achieve.  And if you apply pressure that overcomes their physical limit, they pop.  Even the strongest ones. Or, maybe, especially the strongest ones because they try to take on more than their share.

People have a physical limit, and people cannot indefinitely support a mindset of growth-every-year-no-matter-what.  No matter what, people will pop. It’s not if, it’s when. And add in the special causes of COVID, political unrest, and environmental problems and people pop sooner and cannot do what they did last year, no matter what.

And what does all this say about you? It says you are trying harder than ever. It says you are strong. It says you are amazing.

And what does it say about growth-every-year-no-matter-what? It says we should stop with all that, at least for a while.

Image credit — Judy Schmidt

If you’re not creating derision, why bother?

When you see good work, say so.

When you see exceptional work, say so in public.

When you’ve had good teachers, be thankful.

When you’ve had exceptional teachers, send them a text because texts are personal.

When you do great work and no one acknowledges it, take some time to feel the pain and get back to work.

When you do great work and no one acknowledges it, take more time to feel the pain and get back to work.

When you’ve done great work, tell your family.

When you’ve done exceptional work, tell them twice.

When you do the work no one is asking for, remember your time horizon is longer than theirs.

When you do the work that threatens the successful business model, despite the anguish it creates, keep going.

When they’re not telling you to stop, try harder.

When they’re telling you to stop it’s because your work threatens.  Stomp on the accelerator.

When you can’t do a project because the ROI is insufficient, that’s fine.

When no one can calculate an ROI because no one can imagine a return, that’s better.

When you give a little ground on what worked, you can improve other dimensions of goodness.

When you outlaw what worked, you can create new market segments.

When everyone understands why you’re doing it, your work may lead to something good.

When no one understands why you’re doing it, your work may reinvent the industry.

When you do new work, don’t listen to the critics. Do it despite them.

When you do work that threatens, you will be misunderstood.  That’s a sign you’re on to something.

When you want credit for the work, you can’t do amazing work.

When you don’t need credit for the work, it opens up design space where the amazing work lives.

When your work makes waves, that’s nice.

When your work creates a tsunami, that’s better.

When you’re willing to forget what got you here, you can create what could be.

When you’re willing to disrespect what got you here, you can create what couldn’t be.

When your work is ignored, at least you’re doing something different.

When you and your work are derided, you’re doing it right.

Image credit — Herry Lawford

Say no to say yes.

If the project could obsolete your best work, do it.  Otherwise, do something else.

But first, makes sure there’s solid execution on the turn-the-crank projects that pay the bills.

If you always say yes to projects, you never have the bandwidth to do the magical work no one is asking for.

When was the last time you used your discretion to work on a project of your choosing? How do you feel about that?

If you’re told to stop the project by the most successful business unit, stomp on the accelerator.

The best projects aren’t the ones with the best ROI. The best projects are the ones that threaten success.

If you’re certain of a project’s ROI, there is no novelty.

If the project has novelty, you can’t predict the ROI. All you can do is decide if it’s worth doing.

There’s a big difference between calculating an ROI and predicting the commercial success of a project.

If your company demands certainty, you can be certain the new projects will be just like the old ones.

If the success of a project hinges on work hasn’t been done before, you may have a winner.

Say yes to predictability and you say no to novelty.

Say no to novelty and you say no to innovation.

Say no to innovation and you say no to growth.

Say no to growth and the game is over.

Say no to good projects so you can say yes to the magical ones.

Say no to ROI so you work on projects that could reinvent the industry.

If the project doesn’t excite, just say no.

Image credit – Lucie Provincher

It’s time to start starting.

What do we do next? I don’t know

What has been done before?

What does it do now?

What does it want to do next?

If it does that, who cares?

 

Why should we do it? I don’t know.

Will it increase the top line?  If not, do something else.

Will it increase the bottom line?  If so, let someone else do it.

What’s the business objective?

 

Who will buy it? I don’t know.

How will you find out?

What does it look like when you know they’ll buy it?

Why do you think it’s okay to do the work before you know they’ll buy it?

 

What problem must be solved? I don’t know.

How will you define the problem?

Why do you think it’s okay to solve the problem before defining it?

Why do you insist on solving the wrong problem? Don’t you know that ready, fire, aim is bad for your career?

Where’s the functional coupling? When will you learn about Axiomatic Design?

Where is the problem? Between which two system elements?

When does the problem happen? Before what? During what? After what?

Will you separate in time or space?

When will you learn about TRIZ?

 

Who wants you to do it? I don’t know.

How will you find out?

When will you read all the operating plans?

Why do you think it’s okay to start the work before knowing this?

 

Who doesn’t want you to do it? I don’t know.

How will you find out?

Who looks bad if this works?

Who is threatened by the work?

Why do you think it’s okay to start the work before knowing this?

 

What does it look like when it’s done? I don’t know.

Why do you think it’s okay to start the work before knowing this?

 

What do you need to be successful? I don’t know.

Why do you think it’s okay to start the work before knowing this?

 

Starting is essential, but getting ready to start is even more so.

 

Image credit — Jon Marshall

Without a problem there can be no progress.

Without a problem, there can be no progress.

And only after there’s too much no progress is a problem is created.

And once the problem is created, there can be progress.

 

When you know there’s a problem just over the horizon, you have a problem.

Your problem is that no one else sees the future problem, so they don’t have a problem.

And because they have no problem, there can be no progress.

Progress starts only after the calendar catches up to the problem.

 

When someone doesn’t think they have a problem, they have two problems.

Their first problem is the one they don’t see, and their second is that they don’t see it.

But before they can solve the first problem, they must solve the second.

And that’s usually a problem.

 

When someone hands you their problem, that’s a problem.

But if you don’t accept it, it’s still their problem.

And that’s a problem, for them.

 

When you try to solve every problem, that’s a problem.

Some problems aren’t worth solving.

And some don’t need to be solved yet.

And some solve themselves.

And some were never really problems at all.

 

When you don’t understand your problem, you have two problems.

Your first is the problem you have and your second is that you don’t know what your problem by name.

And you’ve got to solve the second before the first, which can be a problem.

 

With a big problem comes big attention. And that’s a problem.

With big attention comes a strong desire to demonstrate rapid progress. And that’s a problem.

And because progress comes slowly, fervent activity starts immediately. And that’s a problem.

And because there’s no time to waste, there’s no time to define the right problems to solve.

 

And there’s no bigger problem than solving the wrong problems.

What You Don’t Have

If you have more features, I will beat you with fewer.

If you have a broad product line, I will beat you with my singular product.

If your solution is big, mine will beat you with small.

If you sell across the globe, I will sell only in the most important market and beat you.

If you sell to many customers, I will provide a better service to your best customer and beat you.

If your new projects must generate $10 million per year, I will beat you with $1 million projects.

If you are slow, I will beat you with fast.

If you use short term thinking, I will beat you with long term thinking.

If you think in the long term, I will think in the short term and beat you.

If you sell a standardized product, I will beat you with customization.

If you are successful, I will beat you with my hunger.

If you try to do less, I will beat you with far less.

If you do what you did last time, I will beat you with novelty.

If you want to be big, I will be a small company and beat you.

I will beat you with what you don’t have.

Then, I will obsolete my best work with what I don’t have.

Your success creates inertia. Your competitors know what you’re good at and know you’ll do everything you can to maintain your trajectory.  No changes, just more of what worked.  And they will use your inertia. They will start small and sell to the lowest end of the market. Then they’ll grow that segment and go up-scale. You will think they are silly and dismiss them. And then they will take your best customers and beat you.

If you want to know how your competitors will beat you, think of your strength as a weakness.  Here’s a thought experiment to explain.  If your success is based on fast, turn speed into weakness and constrain out the speed. Declare that your new product must be slow. Then, create a growth plan based on slow.  That growth plan is how your competitors will beat you.

Your growth won’t come from what you have, it will come from what you don’t have.

It’s time to create your anti-product.

The Next Prime Directive – Software-Based Recurring Revenue

If you know how what the system wants to be when it grows up, you can work in this line of evolution with 100% impunity.  In that way, the key to success is learning how to see what the system wants to be when it grows up; learning to see where it wants to go; learning to see what it likes to do; learning to see what it wants to achieve; learning its disposition.

What do systems want?  Well, for business systems, here’s a hint: Business systems seek top-line growth (increased sales revenue).

When you align your work with what the system seeks (top-line growth) roadblocks mysteriously remove themselves out of the way. No one will know why, but the right things will happen. Don’t believe me that roadblocks will disappear? For your next proposal, build it around top-line growth and use “top-line growth” in the title, and see what happens.  I bet I know what will happen and I bet you will get approval.

Assess the system to learn what is missing. Then, create a proposal to fill the vacuum. Or, better yet, fill the vacuum.  Do you need to ask for permission? No. Do you need formal approval? No. Is it okay to work outside your formal domain of responsibility? Yes. Is it okay if you encroach on other teams’ areas of responsibility? Yes.  Is it okay if people disagree? Yes. And why is that? Because the vacuum is blocking the path to top-line growth. And why is that a big deal? Well, because the Leadership Team is measured on top-line growth and they think it’s skillful to unblock the path to Nirvana.  And why is that?  Well, because they are judged on and compensated for top-line growth. And, because they told the Board of Directors they’d deliver top-line growth. And if there’s one thing a Leadership Team doesn’t want to do is to break a commitment to the Board of Directors.

Here’s a rule: When your work creates top-line growth, you don’t need to ask for approval.  You just need to go faster.

Here’s another rule: When you help the Leadership Team deliver on its commitment to the Board of Directors to deliver top-line growth, your career will thank you.

There are different flavors of top-line growth, but the best flavor is called “recurring revenue”. This is when customers commit to a monthly payment. Regardless of what happens, they make the monthly payment.  Think Netflix and Amazon Prime. Month in and month out, customers pay every.  And you can plan on it. And the revenue you can count on is much more valuable than the revenue that may come or may not.  And though they don’t know how, this is why companies want to do software as a service (SaaS). And for those that don’t can’t figure out how to do SaaS, the next megatrend will be hardware as a service (HaaS). It won’t be called HaaS, rather it will be called RaaS (Robotics as a Service), machines as a service (Maas), and AaaS (Automation as a Service).  But, since AaaS sounds a lot like ASS, they’ll figure out a different name.  But you get the idea.

And the new metric of choice will be Time to Recurring Revenue (TtFRR). It won’t be enough to create recurring revenue. Projects will be judged by the time to create the first dollar of recurring revenue.  And this will make software only projects more attractive than projects that require hardware and far more attractive than projects that require new hardware.  Hardware becomes a necessary evil that companies do only to create recurring software revenue.

All this comes down to Situation Analysis or Situational Analysis (SA). On a topographic map, SA is like knowing the location of the hills so you can march around them and knowing where the valleys are so you can funnel your competitors toward them to limit their ability to maneuver.  It’s a lot more nuanced than that, but you get the idea.  It’s about understanding the fitness landscape so you can speculate on dispositional or preferential paths that the system wants to follow in its quest for top-line growth.

If you don’t know how the system wants to generate top-line growth, figure it out. And, next, if you don’t know what the system needs to achieve to fulfill its desire for top-line growth, figure that out.  And once you identify the vacuum created by the missing elements, fill it and fill it fast.

Don’t ask for permission; just do the work that makes it possible for the system to achieve its Prime Directive – software-based recurring revenue to create top-line growth.

Image credit — JD Hancock

Mike Shipulski Mike Shipulski
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