This is the fifth post in a series on innovation decision making built around the WRAP process from Chip and Dan Heath’s book Decisive. The WRAP acronym allows you to remember their four decision anchors – Widen your options, Reality test your assumptions, Attain distance before deciding and Prepare to be wrong. If you need to catch up, you can find the first four posts here, here, here and here.
When leading a program inside an organization, the pressure to stand up a mini business unit is immense. The only way to avoid this pressure is to provide an opportunity and way to capture the risks and fiction in the program, and design work and data gathering to improve the odds of success. In short…
Preparing to be wrong is an essential skill for those who work in the business of catalyzing the future and bringing renewal to organizations.
When working with organizations of all sizes on innovation, I’ve found that the three basic necessities for moving a project forward are the visual, narrative and analytical components that frame and provide a container for the innovation. These three parts allow the parent organization to see, understand and have firm metrics on the innovation that we are working to incubate.
Yet as innovation leaders, it’s critical that we retain our ability to plan objectively and make efforts to remove “fiction” from our scenarios. Said succinctly, we need to paint vivid pictures, but be prepared to rework the drawings as new information arrives. By deliberately creating room in the front end of the program for knowledge seeking and iteration, we can remove significant downstream risk.
So just how do we do this?
1. Focus on “the corners” rather than on a central scenario.
One of the most common ways I see innovation get off track in an organization is when they fall in love with a specific future-oriented scenario and build a business case around it. This “consensus” business case is then tested against the financial benchmarks of the organization and the inevitable “tweaking” begins. Assumptions are pushed and fiction is inserted to allow the program to go forward, and these “commitments” get welded into place. The amended business case is almost always too optimistic, and the minute the first benchmark is missed, the program is in trouble.
When reality impinges on the core scenario, “exception reporting” demands we “account” for the variances, and this places the team on their heels to explain themselves rather than incorporating what they learned in an effort to make better and more informed decisions. It looks easy when written in black and white, but trust me on this – it’s not.
The antidote to this is what experimental designers have known for a long time, which is that it is always best to anchor your work in corners analysis. Corners analysis is the notion that taking data at the process extremes, or corners, is very useful in seeing how robust the process being studied is. The semiconductor industry has used this to do complex process evaluation to great effect for many years. Emergent innovation business cases are every bit as complex and deserve the same treatment.
If you are vetting a business case for a vehicle-based safety technology, for example, you could use a variety of anchors for the total available market. The high side would be full implementation in new vehicles (on the order of 17 million annually) and a mandated retrofit of the existing fleet (around 200 million). A more conservative approach might be to have the innovation introduced only in luxury brands as an enhancement, much like the introduction of airbags (plus or minus one million). Doing the calculation for unit volumes on both the high side and the low side sets a very realistic “ruler” along which you can choose investment levels objectively.
2. Have a premortem.
Chip and Dan highlight a very interesting tool that unlocks our brain from its usual patterns by doing what they term a “premortem” (from the work of Russo and Shoemaker). We commonly talk about “post mortem” or after the action reviews, but the idea of using a mental tool to travel forward in time, and then think critically, is very useful. It allows us to employ our 20/20 hindsight skills to a future state as if it already happened. By asking the powerful question, “When we look back on this project in 24 months which areas will be the most successful (or the most problematic?), it blows away much of our extreme optimism and pessimism and allows for a surprisingly realistic view.
By engaging teams in a premortem, you can inform your scenarios, and pick realistic points between the corners that make sense given the current data and understanding. When the data or understanding changes, you can move the scenario set point without looking like the team is flip-flopping.
3. Set trip wires.
I always encourage organizations to set up tranched funding for their innovation programs. By setting a hard financial review milestone, it allows bi-directional communication before a team takes the next step on the journey.
Trip wires can also be scope and time related. You might give a team 90 days to fully research the customer demand for a specific product or service, and use that deadline as a way to avoid creating “walking dead” programs. In technology roadmap projects, technical proof points are frequently used. For example, this new process needs to be 20% more efficient to be effective for our customers.
I have enjoyed bringing you this series on innovation decision making, and look forward to more innovation based “how-to” series. I’d love to hear your thoughts and experiences with building robust innovation decision processes. Please drop me a line, or leave a comment below.
