You’ve just landed your new role with your freshly-minted diploma and been given your first big assignment. As you prepare to get started, you recall that case study where a group went into the “war room,” held deep and lengthy brainstorming sessions and then had “the moment.” From there, it was merely a distribution problem.
Inspired, you pull out the notes from your course in entrepreneurship and go to work on setting a stretch goal and analyzing your firm for unique competences and expertise. You may have been given a financial and time target to go with your assignment, so you work hard on stacking up assumptions to make sure that you have a “plan that works.” You gather as much insight about hurdle rates from your colleagues as possible so you can win enough budget to go forward. Your program is going up against a slate of other big bets, and you want to be selected.
Let’s presume success, i.e., the program is funded. Now that you’ve set the bar high, you need to unpack all those assumptions, and suddenly you realize the probability of getting all those assumptions to occur at the same time is very slim. This sets the program up for early misses to forecast, which keeps you explaining and not learning.
What’s Going on at the Front Lines
There has been a substantial shift in the past few years from this “closed” paradigm to a learning-based approach.
Unfortunately, many of the organizational leaders who only do innovation infrequently are still working in the old paradigm. This old paradigm usually raises its head when a usually reliable “core business” begins to underperform and there is need for a “makeup” innovation plan. This usually leads to the above or some very short-cycle M&A work to fill the gap in the 36-month future.
To sidestep this trajectory (which typically ends badly – see posts here and here) you need a new mindset. There is an emergent set of practices that produces strong, grounded outcomes. To contrast the two approaches, let me unpack them from the standpoint of focus, forecasting, scope, leadership and motivation.
Focus
The academic approach is an inside the firm to outside view. It has the sense of standing on the “solid ground” of the current value proposition and projecting a new product or service.
Contrast this with the fresh approach of working from the customer inwards. To find those key insights that are needed for true grounded organic growth, we need to be centering on the customer’s needs – both stated and unstated.
Forecasting
In the older paradigm, great emphasis was placed on setting a target for financial returns in advance of real customer feedback. Not only is this risky, but it usually places the innovator in the variance management machine of the modern corporation, resulting in being flagged on every report – including the CFO’s if they miss their number. This creates the probability of an early demise of the project or program.
The fresher view is to create “scenarios” with confidence bands. These confidence bands are large at the outset, then get progressively smaller as work on the program to reduce risk continues.
Scope
The preferred set of programs of the older paradigm is a short list of “big bets,” with the emphasis on early down selection to avoid confusion. The unintended consequence of this is to create a sort of “liar’s poker” approach to early program forecasting that creates such high expectations that, in private conversation, pretty much the whole team is convinced it will not occur.
The newer view is to avoid large investments in big bets, and instead set tightly tranched “learning experiments” each set to remove variance and uncertainty in the business hypothesis of the project. By keeping these investments small and tightly budgeted, learning is maximized, pivots are quick and integrity is not compromised.
Leadership
The leader of the team in the old paradigm is typically a tenured leader with deep domain expertise in the current organization and P&L structure. Unfortunately, this type of leadership has a high need to “be right” and overuse intuition based on the current avatar of the firm – while at the same time deemphasizing the need for external learning.
The emergent school of thought is to use “T” shaped leaders with enough subject matter expertise to be credible, but who put a heavy emphasis on dialogue and outside their specialty collaboration.
Motivation
Lastly, let’s examine the prime motivation for this work from both viewpoints. The older view is one of pure financials: set an appropriate dollar target and “create” the new business. In short, build a program to meet internal stakeholder expectations.
The modern growth leader starts with the premise that they need to make the life of their client better. By carefully getting to know them, they see unarticulated, but very important solvable pain points. This valuable “insight” leads to projects that find acceptance and “pull” rather than the traditional “push” through the channel.
Last Thoughts
I’ve exaggerated the above for effect, but you would be surprised how often I see several of these factors built into innovation programs in firms. To be fair, innovation and operations require two different mindsets, and when we blend them we come up with what I have described above. The secret lies in taking the best of the old school tools and using them in concert with new school approaches. I have done this work for a number of firms and the results are dramatic.
If you’d like to chat, please give me a call at 847-651-1014 or use this link to set up a 20-minute, (no-strings-attached) consult.
