do_matic

Growth and innovation: what are you commiting to do?

(It's like the pedestrian's creed. From grebo_guru on Flickr.)

Recently, I've been working with companies to design their innovation strategy and to develop a culture of innovation. In related meetings with executive leadership teams, I've been asked to share my opinion on the common pitfalls these companies will face. There are plenty of them, but one stands out recently as a subtle but important challenge.

In a prior post, I described some innovation leadership imperatives:
Share Direction
Give Permission
Provide Support
Commit

The last imperative, handled poorly, can lead to trouble. Leaders and project teams often fail to align themselves and their colleagues around what they are committing to do. Failing to communicate that intention can lead to mismatched investment, timelines and expectations.

For example, "leadership" might be committing to develop new commercial platforms that represent $100s of millions in potential. A pilot team, for the exact same project, might just be trying to learn about a market that's new to them. The team might receive a budget commensurate with a full-bore market blitz, while what they need is a program designed to help them cheaply investigate a new area. They didn't decide whether they should go small to learn, or big to win.*

Ask yourself and your colleagues, what are we committing to do:
to start?
to learn?
to win?
to change?

It might feel like a scary conversation to have, but it's far scarier not to have it.

* I've been digging the WSJ / MIT SMR Business Insight collaboration lately. Here's an article that describes the idea of experimentation at scale.

Innovation Measure: Time to First Feedback (TFF)

(Fractal reverb. Not unlike Infinite Cat. Courtesy of theLaika and Creative Commons.)

All too often, employees, managers and businesses sit on ideas too long. Mulling them over... Perfecting them... Polishing them... Yeah, polishing them. But most businesses don't make money from sitting on ideas. They make money from getting them designed and launched.

Innovation loves velocity, especially thoughtful velocity.

In this context, thoughtful velocity translates into considered experimentation with an earnest desire to discover new facts and to evolve based on what you learn.

With that in mind, I put forth* another innovation measure: Time to First Feedback (TFF)

Time to First Feedback is the time (measured in days) for an idea in the form of a prototype to be presented to a real-live user (RLU) for honest reaction.

There would be levels for TFF, like in the Capability Maturity Model, based on orders of magnitude, like the Richter scale:

Level 0 < 730 days
         1 < 365 days
         2 <  90 days
         3 <    5 days
         4 <   .5 days

What's your organization's TFF Level? What would it take to raise it a level?

Let's scrutinize this for a minute...

Why not time to first prototype? Because I've walked around many a corporation and seen passable prototypes that "just weren't quite ready for sharing yet." You have to prototype something to get feedback anyway. It's like Prego, it's in there.

Isn't time to market what matters? Yes and no. In some organizations, TFF can equal the time to market. If you're living in beta, this is good. If you aren't living in beta, this is bad. That likely means you've missed numerous opportunities to evolve your offering for the better and significantly mitigate your risk.

What about Apple? They don't show anybody anything. You're not Apple.

Does it still make sense to track Time to Market? Absolutely. After all, you're in it to ship. Which made me think...

There's definitely evidence to suggest that you can be too early to market. But, I wonder whether companies that possess ungodly thoughtful velocity can prototype evolve and refine right through until the timing is right?

* Well, elevate actually. Some organizations do indeed track things that are close to this, but as far as I can tell, it is not widely prevalent.

Constraints are inspiring: Buick, Cadillac, Chevrolet, GMC

The quicker than expected reorganization / sorting out / emergence of General Motors has been all over the news last night and this morning. I was struck by how clarifying, for me at least, the commitment to a few brands could be.

Once I saw the list, I stopped the internal argument about whether Buick was old, whether Hummers were evil and whether Saturn was really different.

I just told myself, "OK, if I was working there I know what we're working with. Time to start designing, growing and competing."

I don't know if even more constraint would help, but I do like some constraint paired with the idea of working differently as espoused by Fritz Henderson and coupled with clear goals (be best in class).

Hey Colin: Which is better immediate or reliable?

Colin asked:

In terms of innovation, which is a better input, immediate or reliable? Longer-term inputs are a safer bet, but the longer I wait the more likely it is that someone may eat my lunch.

First, I can totally relate to the onslaught of information you described. Before it was news tickers at the bottom of my screen, but now it’s all manner of content coming at me live through every device. Can’t we relax a bit? Give ourselves a bit more time to ponder and decide?

Likely not. Not when Netflix just showed up, but could be over sooner than its replacement is profitable. Not when you can choose a new, slightly misleading but wildly successful book title in like 12 minutes. Not only do we notice the slipstream more, we need to learn to harness it better.

Back to the question at hand. (I’m just stalling.)

As an innovation decision-maker, I started from the place of basically wanting both. That is, I want to make the immediate more reliable and to make the reliable more immediate.

To do that, you need a powerful way to process information and inputs. For innovation, the question you pose is often just as important as the answer you find. For the time being at least, I believe we still want and need people posing the questions and making the decisions. Sophisticated number crunching can help, but I don’t think such systems pose or answer innovation questions that well. There are experiments out there (see Hunch), but they help when the question is known and ideally univariate.

So, if innovation is in part about bringing new things into the world, this is where I come out:

I want reliable people posing provocative questions and processing more immediate inputs.

"Reliable people" are those that have learned to spot patterns through experience and many cycles of learning. Such people exhibit a relentless curiosity that drives them to learn and challenge their patterns frequently. Ultimately, I want such people working close to the questions and looking to be surprised and contradicted by what they find as quickly as possible.

With such prevalent access to more immediate data, will people become more reliable sooner? Does immediacy make us better calibrated decision-makers (or allow less qualified decision-makers to make better decisions)? This sounds a bit like trying to bring the Gladwell/Surowiecki discussion from several years ago forward.

Maybe when we have tools or other people to help us process it, but as individuals I think it still takes a lot of experience. But that experience, combined with a healthy dose of humility and history, can come more rapidly than ever before.

Price, value, experience and digital media (or "the atoms or the bits")

I was going to pick up this book. Because VSL told me to. I often do what they tell me to do and they haven't let me down yet.



I was looking forward to the prospect of holding it whilst relaxing in a lawn chair in the backyard this summer (ok, somebody else’s backyard, I live here).

Then I was like... well I wonder if it’s available on the Kindle? Lo and behold, I see down there in the lower left that it sure is. Bonus.

That’s cool, I could get it faster. Immediately even. (Even though my Kindle is at home and turned off, when I next turned it on this book would be there "waiting for me" in all its line item glory sooner than I would ever be ready to read it).

Then I was like... I’d probably want to share this one with my wife Steph or my friend Rene. It would make me look smart and I could nerd out about it with somebody. That couldn’t happen with the Kindle though (and Steph would be like 'get out of here with that nonsense, you nerd'). And this book might have pictures that I want to look at (I don’t think so actually, it seems like a collection of essays.)

Then I was like... what’s the price difference (notice the tardiness of this question)?

$0.21

So the inherent difference in the value of this book is $0.21? Says so right up there. (Apparently a pleasant voice is worth another $8.39, but the robot voice on the Kindle is free.)

Well maybe. Price is what you pay and value is what you get. Amazon sets a price, but we say how valuable it is.

As a Prime customer, I’ve already covered the shipping differences quite nicely for them and order more books than I otherwise would if I was to consider the incremental cost of shipping each time I bought a book (brilliant!). I’ve already bought the Kindle. But... let’s ignore sunk costs for a second (MBA kicks in).

Then I was like... Screw that. I’m offended. I want to buy the paper now because I can share it, hold it and it will get here soon enough for my purposes. That is, sooner than I can read it. If I'm paying to destroy trees, then I want the trees. On the margin, the value of the paper is greater for me (or at least I tell myself). Or at least until and if paper goes away. And paper hasn't yet been wrested from my cold dead hands.

But then again, I can’t stick the book on that “library” of mine for when I travel. Who cares? I’ve got enough book inventory to allow me to shelter in place while revolution and reality shows rage around me. They could give me both. They might someday. They're giving me lots of free books right now with some channel price discrimination. That's both a problem and an opportunity they have: two simultaneous models.

Then it occurred to me... Amazon’s got me. I’m a sucker. I love them, but I’m a sucker. Bezos is an innovation hero, but seemingly my arch nemesis as well. (Okay, okay. I'm my worst enemy.) He's found a price and designed an experience that has me considering paying the same price! I'm trapped, but do I want an alternative?

But at this price, is Amazon really going to change the industry and simultaneously maintain control? Perhaps, but I don't think they are destroying enough value yet!

They need to price this book at 50% the cost of the physical book. But then again, those publishers aren’t that interested in doing that right now either... There’s some breakeven for the production side of the value chain that keeps the creators whole (or even better off), while passing on a savings to me the consumer and winning Amazon share of all these little profit bombs.

If you didn’t have to cover the costs of other aspects of your business (publishing print for example, or shipping toasters), what would you charge? What’s the right price to put food on the table of the authors, editors and the rest of that value chain? What could I cut out? How should I deliver the experience for both consumers and creators?

The pricing out there in this world is really, really dynamic. I'm really in need of knowing more of the details of the margin models though. Anybody know?

So, what did I do? Nothing. Can't decide. Frozen.

What's your purpose (inspiration) for innovation?

On his Design Thinking blog, Tim asked one of the central questions that should be answered when designing an innovation strategy. I've been challenging leaders and innovators with it this way:

What's our inspiration for innovation?

For some, it's people-related. For others, it's technology-related. For others, it's money-related. My sister, an accomplished physician and medical researcher, is motivated by the thrill of scientific discovery. I can work with that. My buddy Joe loves to structure a deal and measures it based on the financial outcome. That one is a bit tougher (and has led to some fallout), but ok. My travel agent Janine truly loves serving people and giving them great travel experiences. Bingo. I'm not judging right now, they're just different.

This isn't just some higher-order, transcendental kind of question though. The way Tim posed it is key: what advantage does a purpose give you and what does a lack of purpose say about your ability to do anything new and interesting over the long-haul?

The answer to the purpose / inspiration question has implications for what an organization should be good at and how it should align its processes and strategy as a result. It says something about how an organization should differentiate itself both in the market and back at the ranch. You can be in the exact same industry, yet have a very different purpose and be quite successful. It frees you up to answer the classic Levitt / Marketing Myopia question more fluidly and perhaps span industries.

But the people aspect is what's primal.

Purpose is inspirational and engaging. Inspiration feeds purpose. Inspiration and engagement drives innovation. To sustain innovation, you need to sustain inspiration and engagement. You might get an extra dose of self-motivated passion from some individuals for a period of time, but they often burn out or leave (we call them "innovators", "mavericks" or "insane"). To have it scale, perhaps you have to select for engagement through hiring and engage broadly through purpose?

The answer to the question gets people up in the morning and excited to come to work most days, staying late to accomplish something amazing or taking a risk nobody's taken before. If you could hire your strategy and innovation team based on their fundamental engagement with a purpose, you likely would.

I suspect that one of the reasons mission, values and purpose statements are so distasteful is that they don't align with what really happens in a company. Consistent disappointment isn't going to consistently get people giving their all. So when companies manage out the connections its a long-term killer and when they half-heartedly try to get them back, it's sometimes just as bad.

I led with some examples of personal motivation. I think that an organization's purpose serves as one basis for forming community collective. Some purposes are more suited to community; especially when there are strong cultural norms. Perhaps that's why some innovative organizations are smaller or why some innovation is pursued most passionately and effectively by individuals?

Whew! What a great question. More on the central questions for designing an innovation strategy soon.

Please comment over at Tim's blog.

Feel that? That's your competition passing you

(Thanks to brontedigital. And the dog? Who knows?)

I woke up this morning thinking about risk, innovation, growth, long-term growth gaps and near-term success. I thought about the adage "pigs get slaughtered" and it occurred to me that deer in headlights get run over.

(Thanks T Hall, sorry deer.)

Companies and leaders, the ones that are interested in doing something better, are out there making investments, learning, experimenting and setting themselves up for the next round of growth. I know because I get to work with them.

If you believe there will be a future, then betting on the future makes sense. Now is not only as good a time as ever, it's an even better time. The opportunity costs are lower. The cost of acquiring capabilities are lower. The constraints are inspiring and force you to build and do rather than ponder and strategize.

So as I'm apt to do when I want to feed my insatiable desire for confirming evidence and like-minded perspectives, I went looking for some and saw this. Nice rundown.

Innovation Measure: Innovation Working Dollars (IWD)

There is a concept from marketing measurement and ROI that compares and contrasts working and non-working dollars. The new media folks don't like it too much, but I suspect that has something do with being measured by folks that don't get it. The concept asks the simple question:

Are we spending our money on and close to our customers?

Let's steal it for innovation.

Non-working dollars are those that are spent on planning, thinking about planning, strategy, and measuring (that's ironic), etc. Working dollars are those that have the potential to influence the customer more directly.

For innovation, influence is important, but so is learning and direct experimentation.

Ensuring that most of the work that you're doing has a chance to result in learning or influence is a good idea. More effort should be spent on prototyping, sharing ideas with users, listening to them directly and designing earlier. If you're living in beta, your ratio would be pretty high. Let's say that for every hour of non-influence and non-learning, you should have two hours of influence and learning:

IWD > 2.0

It seems like a "good" measure. It scales; you can apply it to an organization or a project or a day. It promotes the right behavior; measuring IWD will likely result in more of the right things done, faster.

If you compared your working and non-working innovation dollars, what would you find?

(Note: I'm going to start sharing ideas on Innovation Measures. There are lots of things written about what makes a good measure. The writing on innovation measures so far says a lot of stuff like: there are no silver bullets, the right number is about seven, input/outcome/process, etc. I'm going to try to make, steal or adapt some bullets. I'll probably write stuff that others have already conceived. I'm ok with that, but apologize in advance if it's your stuff.)

Creative Commons image from HJEM's Flickr Stream.

What's the value of design now? An equation...

(Take 3 on AA2015 from LGA to MIA. There was someting nice about doing this "analog." It made the links tough though.)

Upon reflection, I'd probably separate O into O (overserved) and D (opportunity for differentiation).

What would you add, change or take away?

Open as (innovation) strategy: Nokia Innovation Mill

Rarely do press releases get my heart fluttering, but this one did. By now it's been talked about quite broadly (PSFK and Core77.com both have blurbs), but Nokia is opening up their IP library. It felt important enough for me to write something down about it.

Nokia seems pretty darn serious about pursuing an open strategy. Their Ovi platform demonstrates this. And you can check out the Nokia Conversations site to watch it happen and see other indications of the approach.

Much of the conversation over the last few years around open innovation is starting to come to fruition: P&G's Connect & Develop, General Mills has a program, Best Buy's IdeaX, Starbucks MyIdea, and other networks like Innocentive.

(Update: My colleague Doug points me to Ideas Project which I knew about, but kind of didn't even think of as Nokia. How about that for open, if not a bit diffused, brand impact?)

As a "generic" strategy for large companies, open is becoming more prevalent and one to consider when designing an overall innovation strategy. To do it well, you have to commit to it. P&G, Mills, Best Buy and Starbucks have all been working on this for years

I wonder what it will take for companies not experimenting in this space to catch up and what acceleration strategies exist to help. I also wonder whether "open" is something that stands alone or is more of a cultural orientation? It takes a ton of systems design work, but that cultural piece is the trick.

What if your users wrote your business plan?

Waiting in the lobby of my hotel yesterday in Cambridge, this headline caught my eye.

What if your users / fans / customers actually wrote your business plan or ran your long-term strategic planning process?

How would they change your estimates?

What would that mean from the businesses you'd be in and how you'd invest your money?

Oh yeah, Go Caps!

Small is more trustworthy

Following up on my post about Trust and Competition. Here's a related post by Peter Bregman at the Harvard Business site. Here's the line that drew me in:

Small is the new big. Sustainable is the new growth. Trust is the new competitive advantage.

It's getting ruthless out there (consolidation, creative destruction). It's simultaneously thrilling and scary to see some of these big, cyclical business concepts playing out. It reminds me to remind myself that things repeat, especially history and especially when you let them.

So is this "small is the new big, be trustworthy" idea a new idea?

Who cares. It's a good idea.

Editor's note: We're friends with the editorial team over at Harvard Business online. They've been working amazingly hard to design for their users and evolve their offering. They keep delivering interesting stuff to my inbox, sometimes on a daily basis. It's been fun for me to personally benefit from their hard work. Lately, they've stood out amongst the many, many sources I rely on for inspiration.

Who's your trust competitor?

(Image from Espinr's Flickr photostream.)

Designing and launching a new business or offering usually presents a company with new competitors. That better be the case when designing something revolutionary or disruptive (in the Christensen sense).

There are lots of ways to assess the current or potential competition. Back at the ranch, we use, try and consume many different techniques. Not all approaches are inspiring or insightful for designing new offerings. Some techniques leave out the emotion that characterizes the user's experience. Others limit the likelihood of recognizing competition from entrants and experiences outside of the industry.

A simple and inspiring alternative that's been working for us lately is to ask: what do people trust instead of our brand? What are we going to do about it?

Trust is personal and powerful and fleeting and essential. If the experience we're designing doesn't compete effectively for a person's trust then we have to deliver better, be more consistent, connect better, or simplify the offering.

For giggles, my colleague Michele challenged us to consider the USPS. What do people trust more than the post office? Probably lots of things. Tracking when they need to feel confident. Support staff to take care of of labeling. A drop box when they need flexible choices. Amazon when they need a gift to just be sent straightaway. A neighbor to pick up the mail. A super to sign for the package.

Who's your trust competitor? What brands out there compete the most effectively trust?

Small to learn and big to win

(Image from Wadem's Flickr stream.)

A few months ago, I was telling the project backstory for a service that our company helped to conceptualize and design. It's been a big commercial success. The backstory is always so much messier than the marketing story, but you learn much more from it.

Describing the efforts that our client had made once our project had ended, I said "they went big with their launch and made a splash. They went big to win."

The chatter in the room started and a voice called out from the back (it's always from the back): "See. We should be putting more money behind our launches. We have to go big to win."

Whoops. I found myself in the midst of my own messy backstory moment only having shared half the story.

You should go small to learn and big to win.

I think when the goal is to win, yes, you should seriously considering big investments and be relentless. But some initiatives and growth efforts goals aren't really destined "to win", no matter what we tell ourselves as businesspeople.

This is especially true when you're pushing on the boundaries of what users expect from you, what you know how to do and how you're set up as an organization. (That is, more revolutionary and evolutionary outcomes.) In these situations, it comes down to thinking about initiatives as options. How little can we invest to learn the next bit of critical information?

I told another story, this one about the development of ACC Select, that illustrated a different goal (not one of ours). In this case, the goal was to learn if the team could develop a small and profitable offering with the potential to scale.

This is one of the big challenges facing the people in charge of growth at companies. Separating the and identifying the outcomes and processes to pursue different types of growth and innovation goals. But corporate cultures, especially in established distribution-driven businesses, ask for confidence and scale immediately. Anything else is a distraction. But there are some distractions that are worth it. Finding them and pursuing them the right way is the trick.

I'm left wondering about whether and how "small to learn" strategies have to play out. Are they always in the open? And when should they occur discretely?

Managing out the connections

(Creative Commons licensed photo from Vasta's Flickr photostream.)

Joan Magretta wrote a wonderful book called What Management Is. In the book, Magretta defines a business model as "a story about making and selling." That is, you better have a unique and compelling story about how you'll both make and sell your mousetrap. I like that definition, especially the "story" part.

But I've been thinking for about four years now that something is missing each time I quote the definition or recommend the book.

Connecting is missing.

By connecting I mean maintaining a vibrant and open dialogue with users and customers. Connecting is just as important as making and selling.

If you're working at a small company, you should be designing ways to truly connect with your users. If you're working at a big company, you should be thinking hard about how the balance of effort and energies should shift back towards connecting (or reintroducing it altogether).

You see it in successful small and entrepreneurial firms. They are often founded on an insight and benefit from a connection that the big guys can't see. Some of the Web 2.0 companies are touching their customers hundreds of time each day right now. Is Zappos poised to continue connecting?

Alas, over time a company becomes more efficient. Listening to customers seemingly takes too much time. Leaders have heard it all before anyway. And besides, connecting to users could very well lead to complications like having to change. Organizations also become more complex. Leaders get further and further away from their users, customers and the frontline employees that may actually have the connections.

I once had a client that ran a division who had never gone through the process of buying his products in the same way his customers did. He just couldn't understand it in the same way as our team that went through the process dozens of times. (Peter Merholz from Adaptive Path just wrote a great post about this on Harvard Business Digital.)

If you spent the same time and energy perfecting how you went about connecting as you did making and selling, where would you be?

You've got to get out there.