The “what” and “how” for innovation management in 2023.
Web3. We can’t change the world if nobody understands what we’re talking about.
If you're a corporate innovator, this is your bible to help you achieve more with less, faster, in the month's ahead.
Our role as corporate innovators is more important than ever. Yet at the same time, the calls to do more, with less, faster and get it right the first time are more urgent than ever.
Recently we participated in The Innov8rs Connect Unconference, with participants working their challenges supported by peers and guided by experts.
The Innovator's Handbook 2022 summarizes what was discussed in the 100+ sessions throughout the program, offering you a comprehensive overview of the best and latest in corporate innovation.
Inside, you'll find contributions from dozens of global thought leaders including Alexander Osterwalder, Rita McGrath, Tendayi Viki, Esther Goes, Jonathan Bertfield and S&P's Scott McDonald.
This handbook will help you reflect and refocus, so that you can benchmark your approach and find new and different ways to reach your goals.
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Our presentation at the 2021 Innov8rs Connect Unconference.
Thanks to rapid advances in tools and techniques, the barriers to exploring new ideas and making them happen have never been lower for organizations. At the same time, this swiftness of change means that modern discovery practices are developing well ahead of where most teams operate today.
In this session from the 2021 Innov8rs Connect Unconference, S&P's Scott McDonald and Anuraag Verma of Feedback Loop share stories of how large, legacy organizations are operating at the forefront of modern research and experimentation; maneuvering like startups to identify their most promising growth opportunities and test more ideas faster. We look at the increasing frequency of customer contact, the variety of methods they’re using and the results they’re achieving.
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The old excuses for not engaging with customers more often simply don’t apply anymore. In fact they’ve been turned on their heads.
“For every good idea there are a thousand bad ideas it is indistinguishable from. The only real way to tell the difference is to go out and try them, see what works, discard the failures and build on the successes. You have to, in other words, dare to be crap.”
— Marc Randolph, Co-founder, Netflix
Perhaps Randolph was a bit dramatic, but he makes an important point. We have to wade through a lot of crap ideas to identify those relative few that will grow our businesses and secure our futures.
Yet it’s still surprisingly common today for companies to bet big on launching a few cherished ideas into the marketplace each year, with little in the way of pre-market testing.
We don’t have to do that anymore, and we can’t afford to either. Here’s why…
The innovation deck is stacked heavily against us
A growing number of studies show that only about 10% of new business ideas will find some success in the marketplace, and just one in 250 will hit it big ($1+ billion). So despite the mythology and romance of the “big idea” in business, innovation today is as much a process of elimination as it is of inspiration. And all that elimination needs to happen quickly. So fortunately…
The opportunity cost of testing new ideas is plummeting
It has become ridiculously cheap and easy to test our ideas in the marketplace. Frameworks are maturing. Research platforms are more powerful than ever and a growing array of no-code tools are giving non-developers the ability to quickly prototype all sorts of applications on their own. Today you can drag and drop an e-commerce website into existence using an app on your phone.
Where we once rushed to launch, we can now rush to learn.Experimentation as a core business practice and leadership philosophy is exploding.
- We have a new generation of powerful research platforms like Feedback Loop, Suzy and Remesh that allow teams to run a variety of surveys and experiments with greater speed and scale than ever before.
- There’s a new breed of consulting firm like Exponentially, LeanApps and Precoil that test new ideas for organizations, or teach them how to run experiments themselves.
- There’s even a movement afoot to make experimentation skills part of the core curriculum of MBA programs. See Why Business Schools Need to Teach Experimentation.
Look before you leap
No matter what your challenge, customer, product or market, there are almost always ways to for test product-market fit early.
- A new line of cosmetics? Test the packaging first.
- A new service offering? Create a mock brochure or sales deck and start selling now.
- New consumer product? Create a landing page and run some inexpensive ads.
Jeff Hawkins famously tested his Palm Pilot idea by carrying around a piece of wood with drawn-on buttons. Just get your idea out there fast, listen carefully and above all don’t get too attached to it.
“If you double the number of experiments you do per year you’re going to double your inventiveness.”
— Jeff Bezos
What can go wrong when we don’t test early and often? Consider the case of streaming startup Quibi.
The $1 billion learning experience
Quibi (short for “quick bites”) seemingly had it all. A-list co-founders in Jeffrey Katzenberg and Meg Whitman. $1.7 billion in funding from investors like Disney, 21st Century Fox, NBCUniversal, Sony Pictures, Viacom and Alibaba and a level of buzz most startups can only dream about.
Yet six months after launching in April of 2020 and having spent over $1 billion, the founders announced they were shutting the service down after failing to gain traction with subscribers.
“We had a new product and we asked people to pay for it before they actually understood what it was. I think we thought there would be easier adoption,” Katzenberg said. “In the end, we didn’t get the support of consumers and customers in the way we had to to make this a successful business.”
The company did run experiments. Only too late in the game. “Over the summer we started to see a slowdown in our momentum, and we tried many different things, different packaging models, we changed our marketing, we changed the app around many different times but it was clear that for whatever reason this wasn’t going to be as successful as Jeffrey and I had hoped,” Whitman told CNBC at the time.
“Failure is part of the Innovation game, but expensive failure is not a necessary part of the process.”
— Tendayi Viki
Contrast Quibi with Farmers Insurance and its new platform aimed at millennials, Toggle.
Farmers, a Fortune 500 company in a highly regulated industry, worked with the rapid consumer insights platform Feedback Loop (formerly Alpha) to launch a new online business 13 months ahead of plan. In that time the team covered more research ground than most leaders might think possible:
- 175 surveys and experiments conducted in nine months.
- 54,000 research participants.
- 40 audience segments explored.
- Reduced the time from ideation to product launch from a projected 18 months to five months.
The old excuses for not engaging with our customers more often (no time, no budget) simply don’t apply anymore. In fact they’ve been turned on their heads.
Vision or hallucination?
There’s only one way to find out.
Recommended Reading
- Testing Business Ideas: A Field Guide for Rapid Experimentation
by David J. Bland and Alexander Osterwalder - The Right It: Why So Many Ideas Fail and How to Make Your Succeed
by Alberto Savoia - Continuous Discovery Habits: Discover Products that Create Customer Value and Business Value
by Teresa Torres - Sense & Respond: How Successful Organizations Listen to Customers and Create New Products Continuously
by Jeff Gothelf and Josh Seiden
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Your business – everyone's business – is product-market fit. And we rarely need valuable programming talent to find it anymore.
When creating new technology products and businesses, it was once standard practice to build first and ask questions of the marketplace later. It was a risky and expensive way to launch untested ideas, but it was how things were done.
This habit persists in many organizations today, and it’s increasingly problematic for two reasons:
- The cost of learning is too high. Today’s design and testing tools make it easier than ever to create realistic prototypes of ideas and validate them in the marketplace without building them first.
- The cost of failure is even higher. The accelerated pace of change today and the high number of bets required to discover winning ideas have made it too wasteful, slow and impractical for organizations to code software ideas before they absolutely have to.
What’s the harm if we build it and they don’t come? Consider the story of Trov, a startup provider of on-demand insurance for consumer items like bicycles, personal electronics and sporting goods. Industry website Coverager reported last June that Trov had just pivoted from its direct to consumer business model after seven years and $99 million in investment. According to Coverager, even where Trov did find a fit, the market was too small and the product too complicated to scale.
“In today’s world, it should never take years and $99 million to learn that we don’t have product-market fit.”
While Trov might be an extreme example, there are dozens of mini-Trovs unfolding today in most large organizations.
Too much, too soon?
The movement away from building early took off in 2011 when Eric Ries published The Lean Startup and introduced the idea of the Minimum Viable Product, or MVP, which allowed teams to collect “the maximum amount of validated learning about customers with the least amount of effort and investment.”
Although a huge step forward, those MVPs still required teams of engineers and a few months or longer to get working software into the hands of customers.
In a blog post last Autumn (“Avoiding the Wrong MVP Approach”), software usability expert Jared Spool described a team that was exploring whether auto insurance customers could upload accident photos from their phones that were comparable in quality to the photos provided by expensive professional photographers (the answer was yes).
The team considered coding a streamlined version of the idea as an MVP. But as Spool put it, even a limited functionality software version for customer-supplied photos would still require a lot of work and disruption.
They’d need a way to upload the photos to the company mainframe system used for claims processing. They’d have to build something that attached the photos to customer claim records. They’d have to change the adjusters’ workflow. That’s a lot of difficult system-wide changes for one unproven idea.
“Organizations are so used to solving every problem with software that we forget that we can learn what we need by faster, more effective means.”
— Jared Spool, UIE
He went on to describe a series of clever offline experiments that were used to validate the idea instead.
Now, thanks to new developments, it appears we can finally have it both ways.
Enter the no-code movement
Imagine conceiving a new generation of digital products and business models without writing a single line of code. Increasingly we can thanks to the no-code and low-code movements: A drag-and-drop, visual approach to software development that allows even non-technologists to quickly create functioning, scalable software experiences for very little cost.
Challenges and opportunities that were previously addressable only by those with technical know-how or deep enough pockets can now be taken on by any team or entrepreneur.
The movement has been quietly gaining momentum for years, but in the past 12 months it has exploded in profile and capability. High-volume e-commerce marketplaces with payments built in, subscription publishing platforms, web and native mobile apps, voice bots and more can now be built entirely with no-code tools like Webflow, Bubble, Airtable and Glide.
Martin Slaney, a London-based entrepreneur and product leader, made some bold and exciting predictions about the potential of no-code platforms on Medium last October (“The Future of Product Management is No-Code Development”).
Slaney spent six months immersing himself in the world of no-code and he is convinced that pretty much anything that can be done with code will be done without it. There is a learning curve, he points out. But it’s much more manageable than learning to build software from scratch.
Are we putting coders out of a job?
Far from it. According to TechRepublic, an estimated one million computer programming-related jobs in the US were expected to go unfilled in 2020. As innovation leaders, we can do our part to solve the global talent shortage by utilizing programmers only when – and where – they’re really needed.
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The classics endure. Recently Jared Spool tweeted a link to an article he wrote in 2011 (Fast Track to a Great UX — Increased Exposure Hours) that remains as vital for innovators today as ever. For those who missed it the first time, here’s a recap.
In the article Spool described what he called the closest thing he’s ever found to a silver bullet when it comes to reliably improving the products and experiences that organizations produce.
It’s called Exposure Hours: The number of hours your team members are exposed directly to real users interacting with your or your competitors’ products. There is a direct correlation, he found, between this exposure and the improvements we see in the products a team produces.
“For more than 20 years, we’ve known that teams spending time watching users can see improvements. Yet we still see many teams with regular user research programs produce complicated, unusable products. We couldn’t understand why. Until now.”
Spool isn’t the first person to champion spending time with customers. However, he might be the first to spend several years observing teams doing it and documenting his findings in a scientific way.
Here is his deceptively simple formula for success:
- Once-a-year research isn’t enough.
- Ongoing, direct exposure to customers is key.
- Exposure not just by design teams, but at all levels of the organization.
- More exposure = better products.
“We saw many teams that conducted a study one a year or even less. These teams struggled virtually the same as teams who didn’t do any research at all.”
Direct contact
This part is crucial for teams that rely on their research department or commercial providers for customer insights. Each team member has to be exposed directly to the users themselves. Teams with dedicated user research professionals who conduct research and then disseminate the results through documents or videos don’t see the same results.
The teams with the best result were those that kept up their research on an ongoing basis, using a variety of research methods. Six weeks was the bare minimum for a two-hour exposure dose. The teams with members who spent the minimum of two hours every six weeks saw far greater improvement to their user experiences than teams who didn’t meet the minimum. And teams with more frequent exposure, say two hours every three weeks, saw even better results.
By everyone
Not just designer and developers. Teams that excluded non-designers, like executives and business stakeholders, from user contact didn’t see the same advantages as teams that included them. The tipping point came when all were included. This part will resonate with designers who regularly urge their colleagues and clients to sit in on research sessions.
“While core design team members became very familiar with what users need and want, they were constantly battling with their other colleagues who didn’t have the same experiences.”
Whoever knows their customer best wins
As Spool pointed out, exposure is wonderfully easy to measure. Just count the hours. He even saw organizations including it in their quarterly performance reviews.
Two hours of customer exposure. Every six weeks. For everyone. The classics endure.
Here’s a link to the full article: https://articles.uie.com/user_exposure_hours/
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Conventional models weren’t built for today’s faster-moving realities. It’s time for a new approach.
The convergence of two important trends is creating new possibilities for innovation and product teams worldwide, and changing the way brands will compete forever:
- The acceleration of everything
- The rise of on-demand customer insight
For those organizations still operating with one foot in the industrial age, your time is running out.
The acceleration of everything
This trend requires little explanation. The speed of technological change and disruption, along with ever-rising consumer expectations, is requiring organizations to compete with greater speed and agility than ever before.
The product and design worlds have responded with accelerations of their own: the rise of Agile, Lean, and test-and-learn innovation approaches. Thanks to the work of Eric Ries, Jeff Gothelf, Josh Seiden, David Kidder, Christina Wodtke, Jared Spool and others, we have powerful and proven new frameworks for navigating our chaotic world. And now, thanks to the wonders of technology, we have the tools to match.
The rise of on-demand customer insight
Only a few years ago, business decisions were made by the highest paid person in the room, or by the loudest, most convincing or most persistent. Or worse, they were made by consensus. More progressive organizations brought consumers into the design process (“Let’s ask users”). But this required more time, more money, new skill sets and sometimes the involvement of outside providers. Anywhere from weeks to months would go by to gather insights and get moving again. It’s no wonder leaders usually skipped the research and went with their gut instead.
Now they don’t have to. Recent breakthroughs in technology have made it so fast, easy and affordable to confirm our hunches and find the answers we need to be successful that there’s no need to guess anymore.
The end of intuitive leadership?
First came the rise of rapid prototyping tools like Invision, Proto.io, Justinmind and others, which allowed companies to more quickly mock up ideas for stakeholders and users to evaluate. Then came on-demand user research platforms like UserTesting, Userlytics and UserZoom, which sped up the feedback loop even more. And now, there’s a new generation of all-in-one platforms like Feedback Loop, which allow teams to prototype ideas, recruit research participants and run a variety of experiments in a matter of days -- all from a single platform and with no technical skills required.
What this means is a new world of innovation with faster learning, faster time to market,fewer moving parts, fewer players, substantially lower costs and greaterdecision-making certainty than ever before. And as the tools continue to evolve, it’s only going to get better.
Five traits of the next-generation design team
- Customers included. Modern design teams don’t ask for permission to test ideas with customers and other users. They go out and find the answers they need to be successful. Customer contact is built in, and it’s as integral to the design process as firing up design software or creating a set of wireframes.
- Small, dedicated teams. The links between focus and productivity are well-established. Dedicated teams learn faster, think deeper and cover more ground.
- Streamlined in every way. Modern teams favor small over big; agility over head count; prototypes over PowerPoint. They prioritize speed, insights and outcomes over rigid process and over-sized deliverables.
- Ideas, plus evidence. Modern teams bring not just ideas to the table, but the evidence required to back them up and decide with confidence.
- Working outside of your day-to-day operations. This emerging best practice is what David S. Kidder, CEO of the consulting firm Bionic calls a “dual operating system” and Denise Garth, SVP of Strategic Marketing and Innovation at Majesco describes as a “two-speed strategy”:
- Speed of Operations for traditional business operations with mature systems and processes needing incremental improvements through modernization and optimization.
- Speed of Innovation for agile, lean and test-and-learn models to explore new business opportunities.
Recommended Reading
- Sense and Respond: How Successful Organizations Listen to Customers and Create New Products Continuously, by Jeff Gothelf and Josh Seiden
- Outcomes Over Output: Why customer behavior is the key metric for business success, by Josh Seiden
- New to Big: How Companies Can Create Like Entrepreneurs, Invest Like VCs, and Install a Permanent Operating System for Growth, by David S. Kidder and Christina Wallace
- The Startup Way: How Modern Companies Use Entrepreneurial Management to Transform Culture and Drive Long-Term Growth, by Eric Ries
- Customers Included: How to Transform Products, Companies and the World in a Single Step, by Mark Hurst
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