One of the most powerful lessons I’ve learned about getting new to-market growth projects done over my 30+ year career, is one that started out sounding good but ended up being dead wrong.
When I was a young P&L manager tasked with leading new-to-market product and service teams, I was pulled aside by a sage who told me that the “right way” was to “stay off the radar” and then find a beta customer who would do the same. Then, when you had a product and customer story, that’s when you go “public” and “bring it to the operations team for scale.”
When I became more experienced in building cross-functional teams, I realized that, counter to the above advice and the vast majority of innovation process literature, it’s a big error not to engage critical voices early in the development of “new to the firm” products and services.
Great new breakthrough products and services are built in tight boxes
Let me give you a front row seat to the rise of a global business that grew from scratch to several hundred million in less than a decade. I am talking about paging, which is a useful example that grew organically, based on the two-way FM radio, primarily at Motorola. While many people have written about the technical arc, what many authors miss is that the business was built layer by layer within very tight business case guidelines. There was a hard-edged boundary to each new investment, carefully watched over by the CFO and VP of Operations, assuring that each step was accretive to earnings. The boundaries were crystal clear: miss product cost, manufacturing cost or systems cost and you went back to the drawing board – no questions asked.
I was at the table on the engineering teams for both the device (the pager itself) and infrastructure (think early cell towers) side. This approach led to a very disciplined approach that included rigorous technology roadmaps and corresponding business cases – all which had to make as much sense to the CFO as it did to the CTO.
The takeaway here, is that by taking a conservative pathway, setting clear unambiguous benchmarks, and including people on the team who are traditionally labeled naysayers, very strong businesses can be built that do not risk the massive investment and market fails of items like Apple Newton or Nokia Lumia.
I strongly encourage my clients to flip the conventional wisdom about staying off the radar and instead strive to have the clarity and truth-telling voice of the operations team in the first 10% of the program. This strategy enables you to make wide a narrow path of success.
So if this is true, why don’t typical innovation models make use of their harder-edged business and operations team members more often? There are two ditches on either side of the road to organic growth:
- The first is the common one, ie to keep research “off the radar” as long as possible, then to “make it visible” in internal demonstrations. When the true business case finally becomes clear, including resources, capital investment and incremental product margin, the CFO or their delegate simply cannot support it. It is sent back “to be refined,” and many times does not see the light of day again. This is where the CFO’s and the hard edged CMO’s get their reputations as innovation killers.
- The second ditch is getting the CFO and COO into the product details. The business case needs to be non negotiable, but how to fulfill it needs to be open to as much creative license as possible. When the ops team tries to constrain creativity, it quickly becomes a disaster, subjecting the group to “death by a 1000 cuts,” and closing off viable pathways that the creatives may have found if they knew the envelope they were shooting for.
The road to success is to use your operationally-oriented team members in a robust organic process that starts with hammering out (i.e. forging great decisions with constructive conflict) the “make sense” business model that the technology or service must meet to serve the customer use case. It is here that hard decisions are made for features, investment, scope and geography that guide the technical teams on the window of feasibility.
This “pre-approved” envelope of business parameters allows the technical team to then hammer out products and services that will bring earnings to the P&L and allow incremental development of further products out of earnings.
The specifics:
- First make sure you have a valuable problem. Turn the creatives loose on solving that problem with high value (involve the customer facing Go-To Market team if at all possible). In the case of paging, it was connecting high-value people to events that needed their imminent attention. Document the problem thoroughly using the customer’s verbatim words, on-site video, and photos.
- Prototype the “base case” or the simplest product that meets the basic needs.
- Build the real business case including experts from the full value chain (all the way from Silicon Valley to the user’s hands).
- Fight like family – Invite the most curmudgeonly people you can find to critique the business case, product and service. Get it all on the table; the good bad and ugly.
- Rinse and repeat until you have built the biggest envelope of feasibility possible.
- Turn your best creatives on the task of making a refined product work, closing product and market fit gaps.
- Ruthlessly invest in steps with clear “go/no go” criteria. Stop investing if the product market fit does not work or look for a m&a or other cash positive pathway to build the bridge.
If you’d like to talk about how to develop the leaders in your firm (I call them growth leaders) to build products and services using the best critical thinkers in your firm. I’d be excited to share my program that can assist your team in developing them. Please send me a note, or give me a call at 847-651-1014.
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