As a result of increasing and often disruptive competition in many industries, the role of innovation as a crucial part of any forward-thinking business is now being fully recognised. Even monolithic industries such as financial services are realising they need to innovate if they are to retain their market leading position in years to come.
By their very nature, established organisations are slowed down by complex processes and management structures, so we are told that they have to start thinking and behaving more like startups.
But given that most real startups would kill to have the resources, customers and reputation of established companies we prefer to think of the opportunity that established organisations face as that of the 'super startup' – this is the opportunity to create revolutionary innovation through engendering a startup-like culture of innovation and achieve a more realistic and successful product and service development approach through making use of their best assets, not ignoring them.
These are our five principles for helping your organisation to become a 'super startup':
Get the right idea before getting the idea right
It’s tempting to have an idea, visualise how you think it would work as an end product, and get on with designing and building it, assuming that you have all the answers you need. However, by doing this, you may well not be capitalising on the opportunity or insight that led you to the idea in the first place. Or worse, your original insight might be completely invalid. Let’s face it, you know the least about your idea when you are starting out with it.
This homework is so important to the success of new products – ensuring you understand the essence of the idea, that the problem you are trying to solve, or the opportunity you are trying to exploit actually exists – and then getting it into shape as a proposition that delivers on the promise of that idea. This means a proposition that meets the needs of customers, that is feasible to make, and viable to operate. Only then can you really think about the best possible execution.
Stop making predictions and start experimenting
Without a doubt, the number one cause of missed targets is the setting of targets. The rule here is that if you’ve been asked to predict how successful your innovation will be, you are no longer in the innovation game, you are in a huge guessing game.
Avoid being pulled into predictive behaviour too early. Companies that require this sort of forecasting in the early stages of product development are doing nothing more sophisticated than asking to be lied to, albeit with complex-looking spreadsheets and graphs to support those lies.
Having said that, a litmus test of viability can be useful– a rough calculation where you work out what constitutes a significant product in the world of your normal business, and working back to see if it’s even vaguely feasible to build it at the right cost, or reach enough of a consumer base.
We call this the 'Numbers Game' – someone sets an arbitrary profit target and we work out how many sales or customers we would need to achieve this arbitrary, but compelling number. What this process does is not make any predictions, but rather, it highlights what we don’t know, and shows us what things would have to be true to make it successful – it also allows us to sanity check customer or sales requirements against other known businesses.
This exercise is not a business case or a predictive exercise, it is simply an activity that highlights the potential weak links in the chain we know we’ll have to look at in more detail later.
What experimenting does is bring increasing levels of certainty to some of the numbers that underpin the calculations in the Numbers Game. A series of small experiments will steadily evolve your understanding of what something will actually take to deliver, how customers will react to it, and therefore the likelihood of achieving the numbers you need to make the business stack up.
Learn from what people do, not what they say they will do
Generally, people are bad at predicting how other people will behave. Why then would customers be any better than us at predicting how they themselves will behave?
There is a fiction persisted by researchers that we can find out what people will do in the future, or indeed discover why they did something in the past, by simply asking them. What these methods don’t account for is simply that people lie.
They don’t do it maliciously, but they craft responses to market research based on a complex set of very human considerations: How will my answer affect someone’s perception of me? Will my answer prejudice some benefit to me or to my fellow humans at some point in the future? How would other people want me to answer? How can I look clever to the rest of the group? How does the researcher who paid me money and put a glass of wine in my hand want me to respond?
So we need to find new ways to find out what customers care about, and how they will actually react to the new products.
Build a team to learn, not to ‘succeed’
Probably best phrased by Jeremy Clark in Pretotyping@work when he says, 'Wake up, Pollyanna: MOST NEW IDEAS FAIL'. Clark and his colleague Alberto Savoia also coin the brilliantly reversed catchphrase 'Failure is an option'.
When you are in the incubation phase, the results of any experiments or study should not impact the wellbeing of individuals or the team itself. The reality is that this can be very difficult to do.
Left to their own devices, teams are very likely to become emotionally attached to the ideas they are working on, and they are likely to make a connection between this idea and advancement in their careers. But the outcomes must impact on the idea itself and not on the team that learned of the outcomes – in other words, we must thank the messenger, not shoot them.
The measure of success and therefore the basis of rewards and advancement for the team must be their ability to learn, and to generate learning. We must reward our team’s own behaviours, and not the behaviour of the markets.
> See also: Four tips for kickstarting your innovation story
If we incentivise people to produce results, then they will bias themselves to find positive outcomes – regardless of what they have learned in the process about the suitability of the idea for the business. Rewarding responsible, honest behaviour, is the only way we will know when it’s right to start, or shut down a project.
As you will discover very early on in any innovation programme, the lists of reasons not to do something will always be longer than the list of reasons to do it. But not even attempting something is to admit defeat from the outset.
The number one characteristic of successful innovators is an on-going enthusiasm and tenacity. Without any success or failure, there is nothing to learn from, just a void – a total lack of knowledge or information. Doing something will start to fill that void with evidence rather than opinions and increase your confidence about what to do next. Leaving the void empty will paralyse your organisation.
Sourced from Paul Dawson, Partner at Fluxx and Tom Hopkins, Innovation Consultant