Shipulski On Design

Archive for the ‘Innovation’ Category

When 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

If the work is new, there is no best practice.

When you read the best books you’ll understand what worked in situations that are different than yours.  When you read the case studies you’ll understand how one company succeeded in a way that won’t work in yours.  The best practices in the literature worked in a different situation, in a different time and a under different cultural framework.  They won’t work best for you.

Just because a practice worked last time doesn’t mean it’s a best practice this time.  More strongly, just because it worked last time doesn’t mean it was best last time. There may have been a better way.

When a problem has high urgency it should be solved in a fast way, but if urgency is low, the problem should be solved in an efficient way. Which way is best? If the consequences of getting it wrong are severe, analyses and parallel solutions are skillful, but if it’s not terribly important to get it right, a lower cost way is better.  But is either the best way?

The best practices found in books are usually described a high level of abstraction using action words, block diagrams and arrows.  And when described at such a high level, they’re not actionable.  You may know all the major steps, but you won’t know how each step should be done.  And if the detail is provided, the context of your situation is different and the prescriptive steps don’t apply.

Instead of best practices, think effective practices.  Effective because the people doing the work can do it effectively.  Effective because it fits with the capability and capacity of the people doing the work.  Effective because it meshes with existing processes and projects.  Effective because it fits with your budget, timeline and risk profile.  Effective because it fits with your company values.

Because all our systems are people systems, there are no best practices.

image credit — johnwayne2006

If you believe the work is meaningful, best effort flows from every pore.

If you believe in yourself, positivity carries the day.

If you believe the work will take twelve weeks, you won’t get it done in a day-and-a-half.

If you believe in yourself, when big problems find you, you run them to ground.

If you believe people have good intensions, there are no arguments, there is only progress.

If you believe in yourself, you are immune to criticism and negative self-talk.

If you believe people care about you, you’re never lonesome.

If you believe in your team, there’s always a way.

If you believe in yourself, people believe in you.  And like compound interest, the cycle builds on itself.

Image credit – Joe Shlabotnik

For established companies, when times are good, it’s not the right time to try something new – the resources are there but the motivation is not; and when times are tough it’s also the wrong time to try something new – the motivation is there but the breathing room is not.  There are an infinite number of scenarios, but for the established company it’s never a good time to try something new.

For startup companies, when times are good, it’s the right time to try something new – the resources are there and so is the motivation; and when times are tough it’s also the right time to try something new – the motivation is there and breathing room is a sign of weakness.  Again, the scenarios are infinite, but for the startup is always a good time to try something new.

But this is not a binary world. To create new markets and new customers, established companies must be a little bit startup, and to scale, startups must ultimately be a little bit established. This ambidextrous company is good on paper, but in the trenches it gets challenging. (Read Ralph Ohr for an expert treatment.)  The establishment regime never wants to do anything new and the startup regime always wants to.  There’s no middle ground – both factions judge each other through jaded lenses of ROI and learning rate and mutual misunderstanding carries the day.  Trouble is, all companies need both – established companies need new markets and startups need to scale. But it’s more complicated than that.

As a company matures the balance of power should move from startup to established.  But this tricky because the one thing power doesn’t like to do is move from one camp to another. This is the reason for the “perpetual startup” and this is why it’s difficult to scale.  As the established company gets long in the tooth the balance of power should move from the establishment to the startup.  But, again, power doesn’t like to change teams, and established companies squelch their fledgling startup work. But it’s more complicated, still.

The competition is ever-improving, the economy is ever-changing and the planet is ever-warming.  New technologies come on-line, and new business models test the waters. Some work, some don’t.  Huge companies buy startups just to snuff them out and established companies go away.  The environment is ever-changing on all fronts.  And the impermanence pushes and pulls on the pendulum of power dynamics.

All companies want predictability, but they’ll never have it.  All growth models are built on rearward-looking fundamentals and forward-looking conjecture.  Companies will always have the comfort of their invalid models, but will never the predictability they so desperately want.  Instead of predictability, companies would be better served by a strong sense of how it wants to go about its business and overpowering genetics of adaptability.

For a strong definition of how to go about business, a simple declaration does nicely. “We want to spend 80% of our resources on established-company work and 20% on startup-company work.” (Or 90-10, or 95-5.)  And each quarter, the company measures itself against its charter, and small changes are made to keep things on track.  Unless, of course, if the environment changes or the business model runs out of gas.  And then the company adapts.  It changes its approach and it’s projects to achieve its declared 80-20 charter, or, changes the charter altogether.

A strong charter and adaptability don’t seem like good partners, but they are.  The charter brings focus and adaptability brings the change necessary to survive in an every-changing environment.  It’s not easy, but it’s effective.  As long as you have the right leaders.

Image credit – Rick Abraham1

When doing something from the first time you’re going to get it wrong.  There’s no shame in that because that’s how it goes with new work. But more strongly, if you don’t get it wrong you’re not trying hard enough.  And more strongly, embrace the inherent wrongness as a guiding principle.

Take Small Bites. With new work, a small scope is better than a large one.  But it’s exciting to do new work and there’s a desire to deliver as much novel usefulness as possible.  And, without realizing it, the excitement can lead to a project bloated with novelty.  With the best intentions, the project team is underwater with too much work and too little time.  With new work, it’s better to take one bite and swallow than three and choke.

Ratchet Thinking. With new work comes passion and energy.  And though the twins can be helpful and fun to have around, they’re not always well-behaved.  Passion can push a project forward but can also push it off a cliff. Energy creates pace and can quickly accelerate a project though the milestones, but energy can be careless and can just as easily accelerate a project in the wrong direction.  And that’s where ratchet thinking can help.

As an approach, the objective of ratchet thinking is to create small movements in the right direction without the possibility of back-sliding.  Solve a problem and click forward one notch; solve a second problem and click forward another notch.  But, with ratchet thinking, if the third problem isn’t solved, the project holds its ground at the second notch.  It takes a bit more time to choose the right problem and to solve it in a way that cannot unwind progress, but ultimately it’s faster.  Ratchet thinking takes the right small bite, chews, swallows.

Zero Cost of Change. New work is all about adding new functions, enhancing features and fixing what’s broken.  In other words, new work is all about change. And the faster change can happen, the faster the product/service/business model is ready for sale.  But as the cost of change increases the rate of changes slows.  So why not design the project to eliminate the cost of change?

To do that, design the hardware with a bit more capability and headroom so there’s some wiggle room to handle the changes that will come.  Use a modular approach for the software to minimize the interactions of software changes and make sure the software can be updated remotely without customer involvement.  And put in place a good revision control (and tracking) mechanism.

Doing new work is full of contradictions: move quickly, but take the time to think things through; take on as much as you can, but no more; be wrong, but in the right way; and sometimes slower is faster.

But doing new work you must.

image credit – leasqueaky

Doing new work isn’t difficult, thinking about is difficult.  Stop thinking and start starting; there’s no other way.

If you’re a scientist, everything has a half-life.  If you’re Buddhist, everything is impermanent.  If you’re a CEO, your business model is out of gas.  It’s scary to admit everything goes away, but it’s far scarier to deny it.

Just because an idea is threatening doesn’t mean it’s threatening.  It probably means it’s one hell of a good idea.

If it’s not different, it can’t be innovation.

Projects take too long because they’re poorly defined.  On a single page, define the novel usefulness the project will deliver, make a crude prototype and show it to potential customers. Refine, learn and repeat. Then launch it.  (This is the essence of Lean Startup without all the waste.)

If I could choose my competition, I’d choose to compete with no one.

Failure is never the right word.  Don’t use it.  Ever.  (Even failing forward or forward failing should not be used.)  No one wants to fail.  No one will ever want to fail.  Replace of the word “failure” with “learning” and learn quickly.

If you’re not scared, you’re not doing innovation.

Companies offer more-with-less for as long as they can; and when there’s nothing left they offer more-with-more. It would be better to offer less-with-far-less.

For Franklin D. Roosevelt, the only thing to fear was fear itself.  For business, the only thing to fear is the cow path of success.

Image credit – JasonParis

When the work is new, it all comes down to learning.  And with learning it all comes down to three questions:

• What do you want to learn?
• What actions will take to learn what you want to learn?
• How will you decide if you learned what you wanted to learn?

There are many definitions of learning.  To me, when your beliefs change, that’s learning.  If your hunch moves to a validated idea, that’s learning.  If your understanding of a system moves from “I don’t know” to “I know a little bit.”, that’s learning.  If you believed your customers buy your product for Feature A and now you know they really buy it because of Feature B, that’s learning.

What do you want to learn? The best place to start is to clearly define what you want to learn.  Sounds easy, but it’s not. Some of the leading thinking recommends you define a formal hypothesis.  I don’t like that word.  It’s scary, intimidating and distracting.  It’s just not helpful.  Instead, I suggest you define a Learning Objective.  To do that, complete this sentence:

I want to learn if the customer ____________________.

It may take several iterations/meetings to agree on a Learning Objective, but that’s time well spent.  It’s faster to take the time to define what you want to learn than to quickly learn something that doesn’t matter.  And define the Learning Objective as narrowly as possible.  The tighter the Learning Objective, the faster you can learn it.

What actions will you take to learn what you want to learn? In other words, for every Learning Objective create a Learning Plan.  Use the Who, What, When format.  Define Who will do What and When they’ll be done.  To increase the learning rate, define the minimum work to fulfill the narrowly-defined Learning Objective.  Just as you defined the Learning Objective narrowly, define the Learning Plan narrowly.  And to further speed the learning, set constraints like – no one can travel to see customers; no more than five customers can be contacted; and the Learning Plan must be completed in two days.  You’re not looking for large sample sizes and statistical significance; you’re looking to use your best judgement supported by the minimum learning to create reasonable certainty.

How will you decide if you learned what you wanted to learn? Learning requires decisions, decisions require judgement and judgement requires supporting information.  As part of the Learning Plan, define the Learning Information you’ll collect/capture/record to support your decisions.  Audio recordings are good and video is better.  For fast learning, you can record a phone call with a customer or ask them to share their webcam (and record the feed) as you talk with them.  Or you can ask them to shoot some video with their smart phone to provide the information needed to achieve you Learning Objective.

To analyze the data, it’s best to review the audio/video as a group and talk about what you see.  You should watch for body language as well as listen to the words.  Don’t expect complete agreement among your team and expect to create follow-on Learning Objectives and Learning Plans to answer the open questions.  Repeat the process until there’s enough agreement to move forward, but don’t wait for 100% consensus.

When you present your learning to company leadership, show the raw video data that supports your learning.  Practically, you’ll connect company leaders to customers and let the customers dispel long-held biases and challenge old thinking.

There’s nothing more powerful than a customer telling your company leaders how things really are.

Image credit – Thomas Hawk

With 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.

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Is it disruptive? Is it innovative? Two meaningless questions. Two questions to stop asking. More strongly, stop using the words “disruptive” and “innovative” altogether. Strike them from your vocabulary and replace them with novel, useful, and successful.

Argument is unskillful but analysis is skillful. And what’s needed for analysis is a framework and some good old-fashioned quantification. To create the supporting conditions for an analysis around novelty, usefulness, and successfulness, I’ve created quantifiable indices and a process to measure them. The process starts with a prototype of a new product, service or business model which is shown to potential customers (real people who do work in the space of interest.)

The Novelty Index. The Novelty Index measures the difference of a product, service or business model from the state-of-the-art. Travel to the potential customer and hand them the prototype. With mouth closed and eyes open, watch them use the product or interact with the service. Measure the time it takes them to recognize the novelty of the prototype and assign a value from 0 to 5. (Higher is better.)
5 – Novelty is recognized immediately after a single use (within 5 seconds.)
4 – Novelty is recognized after several uses (30 seconds.)
3 – Novelty is recognized once a pattern emerges (10-30 minutes.)
2 – Novelty is recognized the next day, once the custom has time to sleep on it (24 hours.)
1 – A formalized A-B test with statistical analysis is needed (1 week.)
0 – The customer says there’s no difference. Stop the project and try something else.

The Usefulness Index. The Usefulness Index measures the level of importance of the novelty. Once the customer recognizes the novelty, take the prototype away from them and evaluate their level of anger.
5 – The customer is irate and seething. They rip it from your arms and demand to place an order for 50 units.
4 – The customer is deeply angry and screams at you to give it back. Then they tell you they want to buy the prototype.
3 – With a smile of happiness, the customer asks to try the prototype again.
2 – The customer asks a polite question about the prototype to make you feel a bit better about their lack of interest.
1 – The customer is indifferent and says it’s time to get some lunch.
0 – Before you ask, the customer hands it back to you before you and is happy not to have it. Stop the project and try something else.

The Successfulness Index. The Successfulness Index measures the incremental profitability the novel product, service or business model will deliver to your company’s bottom line. After taking the prototype from the customer and measuring the Usefulness Index, with your prototype in hand, ask the customer how much they’d pay for the prototype in its current state.
5 – They’d pay 10 times your estimated cost.
4 – They’d pay two times your estimated cost.
3 – They’d pay 30% more than your estimated cost.
2 – They’d pay 10% more than your estimated cost.
1 – They’d pay you 5% more than your estimated cost.
0 – They don’t answer because they would never buy it.

The Commercialization Index. The Commercialization Index describes the overall significance of the novel product, service or business model and it’s calculated by multiplying the three indicies. The maximum value is 125 (5 x 5 x 5) and the minimum value is 0. Again, higher is better.

The descriptions of the various levels are only examples, and you can change them any way you want. And you can change the value ranges as you see fit. (0-5 is just one way to do it.) And you can substitute actual prototypes with sketches, storyboards or other surrogates.

Modify it as you wish, and make it your own. I hope you find it helpful.

Image credit – Nisarg Lakhmani

At the most basic level, business is about allocating resources to the best projects and executing those projects well.  Said another way, business is about deciding what to work on and then working effectively.  But how to go about deciding what to work on?  Here is a cascade of questions to start you on your journey.

What are your company’s guiding principles?  Why does it exist? How does it want to go about its life?   These questions create context from which to answer the questions that follow.  Once defined, all your actions should align with your context.

How has the business environment changed? This is a big one.  Everything is impermanent.  Change is the status quo.  What worked last time won’t work this time.  Your success is your enemy because it stunts intentions to work on new things.  Define new lines of customer goodness your competitors have developed; define how their technologies have increased performance; search YouTube to see the nascent technologies that will displace you; put yourself two years in the future where your customers will pay half what they pay today.  These answers, too, define the context for the questions that follow.

What are you working on? Define your fully-staffed projects. Distill each to a single page. Do they provide new customer value?  Are the projects aligned with your company’s guiding principles? For those that don’t, stop them.  How do your fully-staffed projects compare to the trajectory of your competitors’ offerings?  For those that compare poorly, stop them.

For projects that remain, do they meet your business objectives?  If yes, put your head down and execute.  If no, do you have better projects?  If yes, move the freed up resources (from the stopped projects) onto the new projects.  Do it now.  If you don’t have better projects, find some.  Use lines of evolution for technological systems to figure out what’s next, define new projects and move the resources.  Do it now.

The best leading indicator of innovation is your portfolio of fully-staffed projects.  Where other companies argue and complain about organizational structure, move your best resources to your best projects and execute.  Where other companies use politics to trump logic, move your best resources to your best projects and execute.  Where other successful companies hold on to tired business models and do-what-we-did-last-time projects, move your best resources to your best projects and execute.

Be ruthless with your projects.  Stop the bad ones and start some good ones. Be clear about what your projects will deliver – define the novel customer value and the technical work to get there.  Use one page for each.  If you can’t define the novel customer value with a simple cartoon, it’s because there is none.  And if you can’t define how you’ll get there with a hand sketch, it’s because you don’t know how.

Define your company’s purpose and use that to decide what to work on.  If a project is misaligned, kill it. If a project is boring, don’t bother.  If it’s been done before, don’t do it.  And if you know how it will go, do something else.

If you’re not changing, you’re dying.

Image credit – David Flam

I don’t believe the role of Chief Innovation Officer has a place in today’s organizations.  Today, it should be about doing the right new work to create value.  That work, I believe, should be done within the organization as a whole or within dedicated teams within the organization. That work, I believe, cannot be done by the Chief Innovation Officer because the organizational capability and capacity under their direct control is hollow.

Chief Innovation Officers don’t have the resources under their control to do innovation work.  That’s the fundamental problem.  Without the resources to invent, validate and commercialize, the Chief Innovation Officer is really the Chief Innovation Mascot- an advocate for the cause who wears the costume but doesn’t have direct control over the work.

Companies need to stop talking about innovation as a word and start doing the work that creates new products and services for new customers in markets.  It all starts with the company’s business objectives (profitability goals) and an evaluation of existing projects to see if they’ll meet those objectives.  If they will, then it’s about executing those projects. (The Chief Innovation Officer can’t help here because that requires operational resources.)  If they won’t, it’s about defining and executing new projects that deliver new value to new customers. (Again, this is work for deep subject matter experts across multiple organizations, none of which work for the Chief Innovation Officer.)

To create a non-biased view of the projects,  identify lines of customer goodness, measure the rate of change of that goodness, assess the underpinning technologies (momentum, trajectory, maturity and completeness) and define the trajectory of the commercial space. This requires significant resource commitments from marketing, engineering and sales, resource commitments The Chief Innovation Officer can’t commit.  Cajole and prod for resources, yes.  Allocate them, no.

With a clear-eyed view of their projects and the new-found realization that their projects won’t cut it, companies can strengthen their resolve to do new work in new ways.  The realization of an immanent shortfall in profits is the only think powerful enough to cause the company to change course.  The company then spends the time to create new projects and (here’s the kicker) moves resources to the new projects.  The most articulate and persuasive Chief Innovation Officer can’t change an organization’s direction like that, nor can they move the resources.

To me it’s not about the Chief Innovation Officer.  To me it’s about creating the causes and conditions for novel work; creating organizational capability and capacity to do the novel work; and applying resources to the novel work so it’s done effectively.  And, yes, there are tools and methods to do that work well, but all that is secondary to allocating organizational capacity to do new work in new ways.

When Chief Innovation Officer are held accountable for “innovation objectives,” they fail because they’re beholden to the leaders who control the resources. (That’s why their tenures are short.)  And even if they did meet the innovation objectives, the company would not increase it’s profits because innovation objectives don’t pay the bills.    The leaders that control the resources must be held accountable for profitability objectives and they must be supported along the way by people that know how to do new work in new ways.

Let’s stop talking about innovation and the officers that are supposed to do it, and let’s start talking about new products and new services that deliver new value to new customers in new markets.

Image credit – Neon Tommy