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Want to Improve Your Innovation Results? Then Approach Innovation as a System

A colleague of mine pointed out to me: “Every business is perfectly designed to produce the results it is producing.” What a profound statement!. As I started to think about it, it made perfect sense.

Our actions and “implied” or “emergent strategy” dictates the results we are getting. If we say we want more innovation, yet continue to do the same old things over and over, is there any wonder why we don’t get better results?

The long and the short: Improving your innovation capacity requires us to rethink and redesign our organization as a system of integrated parts.

Successful Innovation Requires a Systems Approach.

No one part in the organization can get the job done by itself. It requires team effort, a rethinking of strategy and decision making, and a retooling of the core processes and methods that are required to play in the new realities of your markets.

Innovation as a System

It starts with leadershipleaders need to set the tone and the direction. And provide the means and resources for the organization’s transformation into an innovative culture.

This reminds me of an observation that was made of Steve Jobs. Sure he was a visionary and innovator. No doubt about it, but what he sometimes doesn’t receive enough credit for is that he was a change agent.

Steve Jobs was described as a bulldozer who could break down cultural barriers, bureaucracies, and accepted processes, that tend to want to keep innovation in check. It’s not because organizations inherently don’t want to innovate, rather they don’t want variations.

Variation is bad for operational excellence. On the other hand, innovation requires change and involves uncertainties and chaos, which is antithetical to achieving operational excellence.

You also need the right people on your team. The sad and difficult reality is not everyone in your organization is ready or able to make the change necessary to compete successfully in the new reality.

It goes beyond skill sets, which to a large degree can be improved and learned. It’s really more about attitude and disposition. Specifically, it requires curious and inquisitive mind set. A natural desire to want to learn, experiment, and discover. To want to make a difference in making the world a better place by helping people.

This reminds me of the old brick layer story, it goes something like this:

Once there were 3 bricklayers. Each one of them was asked what they were doing.
The first man answered gruffly,
‘I’m laying bricks.’
The second man replied,
‘I’m putting up a wall.’
But the third man said enthusiastically and with pride,
‘I’m building a cathedral.’”
– Author Unknown

The first two brick layers might be fine in a predictable and stable environment. They do as they are told, and probably follow a well thought out process and do their task pretty well. But in a fast changing and dynamic environment, we need to constantly upgrade our skills and processes to compete successfully. Sticking to the old way of doing things simply won’t work.

Members of a high performing innovation team need to have active curious minds to quickly bring questions to the company and industry orthodoxies – and discover new possibilities that spark innovation. 

But that’s still not enoughInnovation won’t happen if the processes and methods to innovate are absent. Without these in place even the greatest talent will flounder.

I am reminded of the Beatles and the Magical Mystery Tour. With all the collective talent that made up the Beatles, they thought they could create and produce a successful movie by winging it. Without storytelling and film making processes, the outcome was predictable: A total film-making flop.  

Here’s the rub

Leadership, people and process are required to build a system “more perfectly designed” for innovation. Without a system approach, innovation will likely produce unpredictable and poor results.

And innovation success will not happen unless leadership takes an active role in making it happen. Leaders need to create the environment and provide the freedom for people to innovate.

The good news is that there are many leadership and people skills, systems, methods, and practices a company can both adopt and adapt in building a culture of innovation. I’ll dive deeper into the how to create a “more perfectly designed system” to innovate and grow in future articles.

Free your people, and create a system to innovate!

Kevin

Posted in Discovery Driven Design, New Product Development, Teams and Culture | Comments Off on Want to Improve Your Innovation Results? Then Approach Innovation as a System

Creating the Next Big Thing for Middle Market Companies

I recently joined Mike Smart Founder and Principal Consultant at Egress Solutions on a webinar  to discuss the need and challenges middle market companies face in launching innovative and breakthrough new products.

Middle market companies, which I define as $10 million to $100 million in sales, face the same competitive forces as their larger brethren. An environment characterized by complexity, volatility, and blinding speed, where the introduction of new technologies have made new business models possible while dramatically lowering costs.

Simply put: the rules of the game in almost every industry has changed dramatically and will keep changing. What’s working today may very well not work tomorrow. Competitors, both existing and new, will continue to evolve and adapt to meet the new realities.  

The Changing Realities of the Competitive Landscape

Middle market CEO’s are well aware of the competitive forces and new dynamics.. They know they have to innovate to stay in the game.

But the harsh reality is that innovation is hard. It’s expensive, involves a high degree of uncertainty and risk. The success rate of new innovation is dismally low. Numerous studies have shown that failure rates for new innovations range from 60% to upwards of 80%. 

Risk aversion is one of the many reasons companies choose not to innovate. Time and resources, lack of processes and methodologies, and lack of talent and skills top the list of why companies fail to innovate.

And middle market companies, unlike larger companies and well-funded startups, face additional challenges. Larger companies have the staying power to invest in innovation experiments, and VC funded startups have resources to carry them until their strategic investments payoff.

But  middle market companies have a lot more skin in the game. Betting the farm and losing is not an option.  

So what’s a mid-market CEO to do?

To begin with, we need to think about innovation differently. First we need to recognize that innovation (or innovating as a verb) is a strategy to achieve the goal of creating DEFINITE COMPETITIVE ADVANTAGE by delivering a steady stream of new customer value.

Strategy and innovation are different sides of the same coin. One side of the coin, strategy, defines where we will compete: who the customers are and what important jobs they need and want to get done better.

The flipside of the coin, innovation, defines how we will win customers and beat the competition. The solutions and underling technical and organizational capabilities that will allow us to be competitive in a fast changing market landscape.

Losing sight of the duality between innovation and strategy leads to wasted energy. Middle market companies do not have the luxury of innovating for the sake of innovating. They have limited resources to pursue activities that don’t directly create customer value and definite competitive advantage. Innovating with a strategic purpose is essential.

Secondly, we tend to think of innovation as launching disruptive, game changing new products into the market. This is “a” strategy,” one that can create huge dividends, but also extremely difficult and risky. Like an investment portfolio, risky bets have their place. But if the portfolio is too weighted in risk, losing a bet can be devastating.   

The good news is that there are other innovation options for mid-market companies to choose from that are far less riskier than disruptive innovation. As outlined in Geoff Moore’s book “Dealing With Darwin – How Great Companies Innovate at Every Phase of  Their Evolution,” opportunities to innovate happen across all phases of the technology and category (the extended period of a technology adoption) life cycle.

Innovation Happens Through the Category Life Cycle

In our webinar  we go deeper into the innovation options and their relative risk/reward profiles, and how to create an innovation development portfolio to balance risk with “sure-bets.”

Becoming Customer and Market Focused

We also discuss the best lever a mid-market company can pursue is to change its business orientation from being product, technology and sales oriented, to a customer and market orientation.

As I have discussed in many of my past blogs, focusing on important jobs people want to get done better, will provide a strategic direction over the long haul.  The jobs-to-be-done innovation framework provides a methodology and common language to define a company’s winning aspiration (what victory looks like) and a robust and flexible strategy that provides adaptability and resiliency to the ever changing market landscape.

But innovation processes and methods like jobs-to-be-done, won’t be successful without creating a culture of innovation. Where the culture shifts its orientation from product centric to market and customer centric. And willingness to experiment and learn to be better prepared to both anticipate and react to opportunities as they unfold.

Finally, leadership is ultimately responsible for making strategy and innovation happen. Without the full support and commitment from leadership, innovation becomes just hollow words. This will lead to cynicism and destructive behaviors from the team.  

Make no mistake about it, transforming a culture into a culture of innovation is hard. It’s easy to stick to your knitting and try to do it better. But that simply isn’t a viable play in the new area of “digital everything.”  Leadership and its commitment to creating value for customers through innovation is paramount.

Check out our webinar “Creating the Next Big Thing” to learn more about how mid-market companies can play the game of innovation to win. And stay tuned for future articles that will dive deeper into “innovation for mid-market companies.”

Play the game of innovation to win!

Kevin

Posted in New Product Development, Strategy, Teams and Culture | Comments Off on Creating the Next Big Thing for Middle Market Companies

Strategy Needs to Evolve to Meet the Challenges of a Changing Environment

Imagine you are the quarterback in the big game, and you find your team down 17 to 0, with 8 minutes remaining in the game. Your game plan (strategy) up till now has been to run the ball and control the clock. But it hasn’t produced any points. Times running out. Are you going to continue to stick to the plan or try something different?

Strategy Needs to Evolve With the Game

Down 17 points, 8 minutes to go – time to change the plan

Chances are you are going to switch to a hurry-up offense  because the ground game strategy is a bust. And time is running out. There will be no tomorrow.

Same goes for the business leader when facing competitive forces in the marketplace. At some point in time, your business landscape will change. What worked in the past (your strategy) no longer works. Competition is becoming fierce. Sales and margins are declining. Times running out.

Like in football, your strategy has to evolve as the game unfolds. Perhaps even change depending on how radically the playing field has changed.

After all, what’s the point in continuing to offer a product or service that customers no longer want? If you aren’t competing for the right things, (i.e. helping people get important jobs done perfectly), with a solution that provides clear value, then no level of planning and execution will matter

For example, up to about the mid-eighties, typewriters (you remember what those were right?) were an essential office product. They helped companies get the important job of communicating and presenting information in a professional, clear and aesthetically pleasing documents.

But along came PC’s and laser printers. Not only could office workers create documents more efficiently, they could now share documents over computer networks. Typewriter manufacturers tried to add WISYWIG displays and other PC like features. But the value proposition simply was no longer compelling. The category for all intents and purposes, was dead.

What if typewriter companies had understood the changing landscape and had the means and courage to compete with a totally new set of rules? Would they have survived? Perhaps, but we will never know because these companies stuck to their knitting and tried to compete till the ghost had literally left them.

Indeed, spotting a trend and then creating a totally new winning strategy doesn’t come easy. Most of the brand name companies like Smith Corona are long gone. IBM on the other hand, faced the realities of the market and dropped their typewriter business altogether to pursue more promising businesses.

How about your company? Is your strategy still working?

There are many indicators that can tell us how well our strategy is working. Of course looking at our sales and profit margins is the obvious place. But because these numbers are lagging performance indicators, it may be too late to react in time if major shifts and disruptions have occurred.

A more forward leading sign is to examine the number of products and services you are offering. As well as the product and program development projects you have in the pipeline. A proliferation of SKU’s and projects may be a sign that your strategy is no longer effective.

Steve Jobs once famously said:

“I’m as proud of many of the things we haven’t done as the things we have done. Innovation is saying no to a thousand things.”

Strategy is about making choices. To compete effectively, a company must make choices about what it will and won’t do, who it will and won’t serve, where it will and won’t devote resources. An explosion of products and projects is a sign your strategy needs rethinking.

Rethinking and shaping strategy – where to begin

Start with your current strategy. How well is your strategy achieving your objectives? Have you made and are you sticking to hard choices of what  you will do and won’t do? Who you will compete for (customers) and who you won’t compete for?

Moving forward, what trends, threats, challenges, and opportunity lay ahead that could potentially require a change in the strategy? Are there pending shifts in social, technical economic, environmental and political (STEEP) trends that will impact the playing field?

There are a number of  strategy tools, models and  methods available to help analyze your current situation and scope future opportunities and threats.  In fact there is an overwhelming number of tools to the point where paralysis by analysis can kick in if you lack a clear strategy making process.

I suggest you define and create your strategy using any number of simple frameworks including the business model canvas and a strategy  making system I find particularly useful: the “Strategic Choice Cascade” Martin and Lafley define in their excellent book Playing to Win: How Strategy Really Works”

Martin and Lafley on Strategy  

Strategy is a Set off Choices About Winning. It’s an integrated set of choices that uniquely  positions the firm in its industry as to create sustainable advantage and superior value relative to the competition.”

Strategy Answers these five interrelated questions:

  1. What is your winning aspiration? The purpose of your enterprise, its motivating aspiration.
  2. Where will you play? A playing field [target market] where you can achieve that aspiration.
  3. How will you win? The way you will win on the chosen playing field.
  4. What capabilities must be in place? The set and configuration of capabilities required to win in the chosen way.
  5. What management systems are required? The systems and measurements that enable capabilities and support the choices.

In future articles I will dive deeper into how to use Martin and Lafley’s strategy cascades, business model canvas, jobs-to-be-done innovation theory, and design thinking to assess and improve your current strategy and/or evolve and create a new winning strategy.

In Super Bowl LI the Patriots faced a daunting task before the end of the first half. The team made halftime adjustments, as well as on-the-field adjustments during the second half to achieve the “comeback win of all times” in Super Bowel history. They faced reality, made their adjustments and worked as a team to get the job done.

Your team can do it as well by thinking strategically by facing reality and making the best set of choices to win to increase your odds of winning.

Hut hut!

Kevin

Posted in Strategy | Comments Off on Strategy Needs to Evolve to Meet the Challenges of a Changing Environment

The Balancing Act Between Deliberate and Emergent Strategy

In my previous article, The Reports of Strategic Planning’s Death Is Greatly Exaggerated, we discussed why top-down (deliberate/intended) strategy or bottom-up (emergent) strategy taken at extremes, doesn’t work.

Deliberate strategy assumes we can precisely predict and plan for the future. It’s a matter of collecting sufficient data upfront, doing proper analysis and creating a plan, that if executed will yield the desired results.

balancing act between deliberate and emergent strategy

balancing act between deliberate and emergent strategy

Unfortunately, we can’t predict the future with any accuracy when dealing with complex adaptive systems such as a competitive market place. Competitors aren’t going to sit back idly letting us have our way. And technology and other outside forces won’t sit idle either. The playing field is changing too fast, sometimes in ways we could not have imagined.

And likewise, if  we don’t have sense of direction, and a well-designed strategic process to manage uncertainly, our future will likely be controlled by external actors and events, resulting in a future we neither planned nor wanted.  It’s the old Alice and Wonderland (see video) conundrum: 

“Alice asked the Cheshire Cat, who was sitting in a tree, “What road do I take?”
The cat asked, “Where do you want to go?”
“I don’t know,” Alice answered.
“Then,” said the cat, “it really doesn’t matter, does it?”
Lewis Carroll,   

Not knowing where you want to go may be fine for  Alice and the Cheshire cat, but hardly a winning strategy for sustainable success.

Choosing the “best option” direction given imperfect information

Strategy is all about  making the best choices and setting a direction based on some combination of facts & experience, It’s about agreeing where to focus resources, energy and emotion to achieve long term sustainable success. It’s about deciding where to play and how to win in the market.

Chances are at the outset of strategy making process,  you will not know precisely what victory looks like. But as long as you have an initial sense, or idea, that’s sufficient to move forward.

Strategy, like innovation, is an iterative process. Direction will emerge and become clear as you test, validate and reshape your assumptions. This is the balance act that must be managed between deliberate and emergent strategy. 

Setting a bold direction

Direction is an overall goal of where a company or organization wants to be sometime in the future. It’s the end game of what your organization or future will look like. Without direction and buy in, an organization can’t focus its energy in achieving sustainable growth.

Thus, defining “victory” is critical. And it needs to be something far reaching but doable. The core value of forcing yourself into a specific definition of “victory” is that it narrows the field of play considerably. It allows us to focus resources and create a winning strategy working backwards from what victory looks like.

Kennedy’s space is a good example of specifying what victory looks like:

“I believe that this nation should commit itself to achieving the goal, before this decade is out, of landing a man on the moon and returning him safely to earth.”

~ JFK – May 25, 1961

This is the epitome of a powerful victory (vision) statement.  The end game is clear, and its bold. There is no confusion of what victory looks like. And while the objective is specific, it doesn’t specify how.  That’s where and how the emergent strategy evolves and innovation happens.

Did Kennedy imagine and create his victory statement out of thin air? Of course not. He worked with his senior advisors in exploring what would be possible given the current and near term state of technology. And  based on what was a feasible, a bold and doable objective was defined enabling the US to win the space race.

Being bold, and living with the uncertainty of what unfolds in the future takes some guts.  I believe not being bold is the reason why so many strategic plans are nothing more than extensions of the budgeting process and guarantees status quo thinking.

Roger Martin points out if a strategic choice doesn’t keep you up at night, chances are your choice is not bold. And most likely incremental and non-inspiring resulting in maintaining the status quo.

In their book, Playing to Win, Martin and Lafley stress that if you want to compete successfully, you need to explicitly commit to winning. Just playing the game for the sake of playing, will lead to disappointing results.

Imagine what the outcome of the space program would have been if Kennedy’s victory statement was to build bigger and faster rockets than the Soviets. Sure, our American scientist and engineers could have done that, but for what purpose? What would the end game have been?

Probably something far short in both impact and achievement than landing a man on the moon. And probably at a far greater expense, since there was no clear goal to inspire the nation to win the space race.

If your goal is to be a vibrant ongoing concern in the future, your aspirations need to be bold and ambitious to escape status-quo thinking and inspire your team to create bold results.

 

Kevin

Posted in New Product Development | Comments Off on The Balancing Act Between Deliberate and Emergent Strategy

The Reports of Strategic Planning’s Death Is Greatly Exaggerated

When I read management articles about the death of strategic planning, I am reminded by the quote Mark Twain quipped after hearing a major American newspaper printed his obituary:

“The reports of my death are greatly exaggerated.”

Yet there is some truth to the idea that strategic planning is dead. At least the traditional method of strategic planning many companies subscribe to.

Comander's -Intent

Traditional strategic planning is based on a top-down, command and control process. Where the senior management team define “the plan” based on detailed analysis of competitive playing field (industry and market situation), and define a step by step game plan, when executed, achieves their business objectives.

The problem with top-down, command and control planning

Henry Mintzberg, an internationally renowned thought leader in strategy identifies three fallacies of command and control planning:

First is the fallacy of predetermination.

When we believe we can know the future,  we are led to create a “rock-solid” plan based on our “predict and prepare” line of thought.  

Simply put, we can’t predict the future with any accuracy. There are too many variables (customer attitudes, demographic & socioeconomic shifts, technology innovations, regulations, environmental issues, etc.) and actors (customers, competitors, political agendas, regulators, etc.) who have a say on how the future unfolds.

Second is the fallacy of detachment.

This refers to the tendency of planners to remove themselves from the scene of action. It’s the “Ivory Tower” syndrome. Strategy is delegated to planners and formulated without direct contact with the realities of the playing field.

Third is the fallacy of formalization.

This is when we cast our plans in stone – or what some call the “binder” mentality. We create these detailed and eloquent plans that end up in a binder on the shelf, collecting dust. No on looks at it, thus over time it becomes detached from reality. It represents less and less what a company actually does.

We can’t completely predict the future, so why bother planning for it?

Since the future is difficult to predict, perhaps this is why many companies believe strategy planning is dead. The environment is too dynamic to predict, the strategy will probably be wrong. So instead, don’t waste time creating plans that will most likely be irrelevant as the future unfolds. Instead, be fast and nimble and execute on the fly.

Being fast and nimble, with the capability to execute on the fly is a strategy!  

But being fast and nimble without a clear definition of  where to play, and how to win, the strategy becomes what Miles and Snow call a reactor strategy.  A reactor has no consistent strategic approach; and drifts with environmental events, reacting to but failing to anticipate or influence those events.

Hardly a winning strategy for long-term success.

Integrating top-down and bottom-up strategy to achieve success

Top-down strategy and bottom-up strategy taken in isolation leads to poor strategy. Instead, what is needed is a combination of the two planning methods.

Top-down sets the direction of where a company will play, and how to win. It is expressed as strategic intent, or commander’s intent. It describes “what victory looks like” at some point in the future.  

Strategic intent often is articulated in vision and mission statements

From strategic intent, a “deliberate” strategy is formulated. Deliberate strategy outlines exact business intention. It specifies clear goals and objectives, and a series of metrics the organization will use to measure its progress and success.

The business then coaches employees to work together in all aspects of accomplishment of these goals. Employees must think through and discuss all actions in the interest of matching company goals.

Deliberate strategy shouldn’t be confused with the top-down command and control dogma. Deliberate strategy is not about creating a fool proof strategy cast in stone, but rather a clear definition of where to play, how to compete and what victory looks like. 

From the bottom-up, strategy emerges

As the organization engages in the market place, it discovers what works and doesn’t work. This when bottom-up strategy connects top-down strategy. And the overall strategy evolves, or emerges, to fit the realities of the playing field.

When strategic intent is properly communicated and understood, employees have the framework to make good decisions, and take necessary actions to win customers and beat the competition.

The actions that an organization takes forms what is called emergent strategy. Also called realized strategy.  

According to Mintzberg:

“Strategies can be planned and intended, they can also be pursued and realized (or not realized). And pattern in action, or what we call realized strategy, explain the pursuit.” He goes on to say:

“In practice, of course, all strategy making walks on two feet, one deliberate, the other emergent. For just as purely deliberate strategy  making precludes learning, so purely emergent strategy making precludes control. Pushed to the limit, neither approach makes sense. Learning must be coupled with control.” 

Strategy making like innovation, is a learning process

I have argued in the past that strategy and innovation are different sides of the same coin. They both focus on where to play, and how to win customers. And both are grounded in the reality that we don’t know what we don’t know.

Like the innovation process, strategy making (versus planning) is an adaptive and learning process that starts with a direction (vision, mission, objectives), defines a set of hypothesis (or assumptions), and proceeds with a set of experiments to discover what’s real, what’s not, what works, and what doesn’t work, to adapt and shape the overall  business strategy.

In future articles we will examine strategy making frameworks that integrate deliberate strategy with emergent strategy.

Play to win by knowing where you want to go, and adapting to the realities of playing field.

Kevin

Posted in Front End of Innovation, Strategy | Comments Off on The Reports of Strategic Planning’s Death Is Greatly Exaggerated

Why Breakthrough Ideas Often Never See the Light of Day

A common ailment of new product development is the inability of companies to kill off projects that no longer demonstrate economic viability. The reason it’s so hard to kill off marginal projects is because too much time and ego has been invested.

A lesser known aliment is killing off promising new ideas too early in the innovation process.  Especially at the initial moments of an idea. The initial idea has very little form, and lacks a credible story to stand the scrutiny of judgement.  

initial-ideas-are-fragile

Initial ideas are too easy to dismiss

In the earliest stages of idea generation, ideas are totally leveraged (i.e. no significant resources have been committed). Thus they are seldom measured or accounted for. They simply get dismissed without a lot of thought or consideration. “Who has time for all this distraction anyway?”

More often than not, these potential game changing ideas eventually emerge from outside the company. Management can only shrug its shoulders when it realizes it let another game changer slip through their fingers. They wonder “why can’t we innovate around here?”

Experienced management got to where they are by having good judgement and making good decisions. They knows how the game is played (winning customers). But what they often fail to recognize is that the current rules of today’s game will most likely will not be the same in the future

Whether engaging in strategy making or innovation, managers need to be aware that initial ideas are vulnerable and fragile. New ideas don’t fit the current business model. And on their own don’t have enough strength to withstand the rigors of conventional wisdom and business practices.

Implementing a formal strategy making and innovation program

The first step to improving your odds of identifying a game changing new idea is to implement a formal strategy making and innovation program. It needs a dedicated cross functional team properly resourced, with a specific and clear charter to shape the future of your firm.

Most successful companies create one year operational plans to budget and execute around. For the core business, that’s a good practice. But for your strategy making and innovation teams, they need to be looking ahead to formulate new strategies of where you can play and how you can win in the future.  And your the process must be designed to handle the creation and nurturing of new ideas that currently are outside of the core.

Instead of thinking of time frames in terms of years, I find it more useful to think about strategy and execution in terms of innovation time horizons (see figure 1 – adapted from Innovation Tournaments, Terwiesch & Ulrich).

Innovation HorizonsFigure 1: Innovation Time Horizon Opportunity Zones

 

Horizon 1 is where your current core business is located.  

The business model is proven and working. Operational excellence and sustaining innovation are primary strategies. A one year planning horizon, with quarterly reviews, is appropriate.

Horizon 2 is where your next big opportunity will be found for most companies.

Markets, capabilities and technologies already exist or will soon exist. Often technologies and capabilities can be acquired from the outside at an acceptable cost and time frame (i.e. the risk of the unknown is manageable).

Defining market segments using the jobs-to-be-done innovation lens, will help identify underserved job users, and their specific needs that aren’t being met today.  In other words, demand is already out there. People already have important jobs they need to get done, though they may not be totally aware of their jobs, nor imagine better ways of getting them done.

Horizon 2 is ripe for disruptive innovations. Creating innovative solutions for underserved and currently non-customers can provide huge growth and dividends. Horizon 2 is anywhere from 1 to 5 years out.

Horizon 3, where”far-out opportunities” exist, is by far the most risky.

It’s  sexy to be at the cutting edge. But more often than not, the cutting edge is in reality the bleeding edge.   It’s truly a white space. Technologies and more importantly, customers don’t exist yet. Horizon 3 is where science fiction meets reality. It can be anywhere from 5 to more than 20 years out depending on how radical the innovation is (i.e. flying cars).

Because of the risk of dealing with the uncertainty in the white space, most companies are better off adopting a “fast follower” strategy.  Let the pioneers take the risk and create the markets. Be aware of future possibilities, and build capabilities that will allow you to be a successful fast follower when the time is right.   

Creating “the next big thing”

Focusing your strategy making and innovation efforts on horizon 2 opportunities will yield the best results. That’s not to suggest horizon 1 opportunities should be ignored. On the contrary, if your core business is in a growth industry, then horizon 1 is where your development team should be focused.

But always be aware that the playing field will change overtime, and your ability to grow using your current business model will eventually decline. The next big opportunity won’t be found in horizon 1, rather in horizon 2.

As for horizon 3, for most firms it’s too far-out to be viable. However you should be aware of technology and social trends that exist in horizon 3, and start building capabilities to be a fast follower when the market is ready for exploitation. This strategy works for Apple, why not you?

The next question of course: how do we create a strategy making and innovation process that allows us to discover great ideas in horizon 2 and keep them alive to become the next big thing? A topic for upcoming articles.

Here’s to new horizons!

Kevin

Posted in Front End of Innovation, New Product Development, Strategy | Comments Off on Why Breakthrough Ideas Often Never See the Light of Day

Creating a Competitive Advantage Requires a Reformulation of Your Strategic Playbook

In a fast pace competitive environment where change is the only real constant, how does a business build and maintain a competitive edge?  How does it consistently win customers and beat the competition?

where to compete and how to win

The simple answer is to build the capacity and processes to develop and launch meaningfully differentiated products faster and better than the competition.  

Pretty obvious – of course! But how does  a CEO  know if his marketing and development team is focusing on the “right” opportunity? 

And how does he manage the uncertainty and risk associated with innovation and new product development?

And how can he justify, much let alone, allocate resources to developing speculative new products, when his current resources are already over taxed on executing the existing core business?

All good questions, requiring serious strategic thinking (where to play, how to win), clarity (what victory looks like) and commitment to realizing your vision (winning customers by getting their important jobs done perfectly).

Here are some important factors to consider when reformulating your business strategy and innovation playbooks:

Commit to innovation and new product development as a key strategic initiative  

Without formally setting innovation and new product development as strategic imperative, chances are it will become a second or third order priority. If you want to be competitive over the long haul, not committing to innovation and new product development would be a huge mistake.

The rules of the game (your market landscape) are constantly changing. Not only are your “known” competitors trying to eat your lunch, there are new competitors from outside your industry, with innovations and disruptive business models looking to gun you down.

Simply put: what worked in the past, will not suffice in the future. While you worked hard to build customer loyalty with your current products and service, better solutions to solve customer problems will always emerge. This is what makes competition a great benefit for customers. But competition is a real vulnerability for companies who don’t evolve with the times.  

The fact of the matter is that customers will always seek the best solutions to get their important jobs done. Therefore, if you want to keep and attract new customers, you need to be the most innovative player on the playing field.  

Your innovation and product development strategy must include

1 year, 3 year and 5 year objectives and definition of what victory looks like. Yes the future in hard to predict, but without a clear and committed direction, you are likely to waste resources on chasing marginal business opportunities versus creating true breakthrough new products and business models.

A strategy and innovation game plan built on learning loops. Because we live and operate in an environment of complex adaptive systems, the only certainty is our environment will keep changing. New disruptive technologies, new competitors coming out of nowhere, new rules of the game, and new customer attitudes and behaviors.

A strategic product and capability portfolio to balance growth and risk. Think of this as your investment portfolio that you must properly fund if you expect it to yield results in the future. You need short-term and long-term investments in new products, people, skills, technologies and processes.  See How Much Risk Is In Your New Product Development Portfolio?”

Fall in love with your customer’s problems, not your solutions.

Abandon your product/solutions lens and adopt the jobs-to-be-done market lens to really understand the customers’ problem set.

Use that knowledge to create true customer value and “insanely great” products that help customers get their  important jobs done perfectly, from start to finish. The whole user experience, no details are too small.

If you stick to your product oriented lens, you will eventually become obsolete because the new breed of competitors don’t play by your rules, they play by a new set of rules designed to win over your customers.

Don’t let this happen! Focus on the important jobs and related jobs your customers want to get done, and help them get it done perfectly.  

Combing the jobs-to-be-done innovation framework with a flexible and adaptive development process based on learning loops, will provide your team an innovation game plan to successfully manage the uncertainty and risk associated with launching innovate new products. Your odds of success will increase dramatically.

Final thought: No Problem – No Profit.

No matter how good your ideas and technologies are, if they don’t help people get important jobs done better than competing alternatives, then you will lose the game of winning customers and beating the competition.

The jobs-to-be-done innovation framework , the design-thinkers triad of success and the business model canvas are essential tools that all companies can use to improve their odds of success of launching breakthrough new products.

As the sergeant from the old Hill’s Street Blues TV  series used to say:

“To it to them (the competition) before they do it to you.”

Go out there and compete to win by falling in love with your customer’s problems and out innovating the competition!

 

Kevin

Posted in Jobs To Be Done, Strategy | Comments Off on Creating a Competitive Advantage Requires a Reformulation of Your Strategic Playbook

Identify “Strategic Possibilities” Using the Jobs-To-Be-Done Opportunity Matrix

In my last article, “Finding The Next Big Opportunity Using Jobs-To-Be-Done Innovation Theory, I presented the “jobs-to-be-done  (J2BD) opportunity matrix” as a conceptual model we can use to open the discussion and analysis of  identifying attractive strategic possibilities (where to play and how to win).

In this article, we will dive deeper into J2BD Opportunity Matrix and how it can be used with the  three criteria’s from the “design success triad” to frame and analyze strategic opportunities. The three criteria of the design success triad are

  • Desirability: important jobs that people want and need to get done
  • Viability: the opportunity is worth competing for defined by size, profitability, and competitive landscape.
  • Feasibility: having the necessary skills, and resources within a reasonable time frame to execute and successfully win customers and beat the competition.

jobs_to_be_done_opportunity_matrix-customerFigure 1: Jobs-to-be-done Opportunity Matrix from the customer’s perspective

The strategy map quadrants from the customer’s perspective

In my previous article, I provided a definition of the four quadrants. In creating this article, I discovered those definitions, while still valid, were more company and product centric.

A company/product perspective is useful in that it addresses the “feasibility” criteria for success. But does little to identify the “desirability” criteria for success.

To address desirability, apply the job-to-be-done marketing lens to the matrix to better reflect the market opportunities form the customer’s perspective.   

The power behind the jobs-to-be-done innovation theory is that it is “solution” (product) independent. Products represent point-in-time solutions to getting important jobs done.

Another issue with the product perspective: Marketing Myopia

When we limit our view from the product perspective, we run the risk of missing new opportunities by limiting our playing fields. Theodore Levitt coined this phenomena “Marketing Myopia.”

In his seminal article “Marketing Myopia,”  here’s what Levitt had to say about the railroad industry which at that time was declining rapidly:

“The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today (circa 1960) not because the need was filled by others (cars, trucks, airplanes, even telephones), but because it was not filled by the railroads themselves.”

The takeaway: The jobs-to-be-done marketing lens provides a much larger set of strategic choices than the product orientated view. Had the railroad industry taken that view, perhaps they would not have experienced a major growth slump.

Tweaking the J2BD opportunity quadrants from the customers view

When exploring opportunities that match the “desirability” success criteria, we need to apply the jobs-to-be-done marketing lens and redefine the four opportunity quadrants from that perspective:

  • Quadrant 1 – lower left  – the core business: Existing job executors  who currently are buying/using solutions to get their current jobs done. The opportunity in this quadrant is to help existing customers get their jobs done better along some meaningful accepted performance vector (i.e. faster, cheaper, more positive desired outcomes,  and/or fewer undesired outcomes).
  • Quadrant 2 – upper left – adjacent markets/new job executors: Addressing non-consumers of current solution, who aren’t currently able to get their important jobs done because of major barriers like cost, complexity, convenience, and skill. This quadrant is where blue oceans are found, and where disruptive innovations thrive.
  • Quadrant 4 – lower right – related jobs: Customers have more than one job to get done. Often a job requires several sub-jobs. For example building a house has several sub jobs, and related jobs. (see figure 2 – job trees and chains).

    Helping customers get the total job done by addressing more sub-jobs is one strategy in quadrant 4. And addressing other jobs that customers typically do in conjunction with getting their other jobs done. For example, buying furniture for a new house is a related job.

  • Quadrant 3 – upper right quad – the white-space. This quadrant is riskiest to execute. It most likely will require market pioneering that involves time, resources and some luck. The degree of newness to the market/world will determine the risk level.  

A job-tree for building a house

Figure 2: Job Tree for building a house

In the next series of article, we will look at some examples of how to apply the J2BD opportunity matrix to predict success in each of the four quadrants.

Until then, pick your playing field wisely to be successful!

Kevin

 

Posted in Jobs To Be Done, New Product Development, Strategy | Comments Off on Identify “Strategic Possibilities” Using the Jobs-To-Be-Done Opportunity Matrix

Finding The Next Big Opportunity Using Jobs-To-Be-Done Innovation Theory

All successful companies have a clear strategic direction of where to play (their target market) and how to win (their unique value proposition).  Often times their competitive strategy is based on providing a better product and service solution than existing competitors.

The “better product” strategy in many situations turns out to be an excellent choice. Many companies have and still will win with this strategy. But overtime, a product orientation leads to specmanship and creating functions and features that the customers don’t value and won’t pay for.

In the heat of the battle, companies lose sight of the true important jobs that people hire their products to get done. Instead they base their product strategy on their competitors’,  resulting in undifferentiated products that overshoot the market. A waste of development resources by any definition.

At some point in time, the only way to win customers and beat the competition is to start lowering the price. It becomes a race to the bottom. It’s what Kim and Mauborgne call a  red-ocean strategy

But it gets worse!

While competitors are busy competing in their red-ocean, along comes an industry outsider with a better way to get an important job done. At first the red-ocean players ignore the outsider because the upstart’s solutions just simply don’t address what the market wants.

But the upstart isn’t competing for red-ocean customers. It’s competing for non-consumers of the current solutions. This is the what Clayton Christensen defines as disruptive innovation. Using a “good enough” solution to attract non-consumers of existing products. Kim and Mauborgne refer to this as a blue-ocean strategy.

Examples of disruptive strategies include the transistor radio back in late 50’s and early 60’s versus hifi stereos. PC’s versus mini computers. And smart phones & cloud computing technology platforms vs PC’s and client software.

It’s not a question of time, but a question of when a product oriented market strategy will eventually become a red-ocean or disrupted. It’s the nature of a competitive landscape.  

So what’s next? Where to compete, how to win?

confused business man thinking wich way to goIf you want to escape the red-ocean trap, you need to change your “product” oriented focus to a “problem” oriented focus using the jobs-to-be-done innovation lens.

It begins by understanding that throughout a day, people have important jobs that they must get done. By discovering what customers  are struggling with and why they aren’t achieving 100% satisfaction in getting the job done,  there’s a good chance a market opportunity exist.

A salient concept of the jobs-to-be-done innovation theory is that core jobs are stable overtime and are solution independent. These jobs are both important and essential to conduct their daily lives and achieve goals.

Core jobs don’t fundamentally change that much. What changes is HOW to get the job done. This is often enabled by technology.

For example, lighting a room is a core job. In the early days, people had to use candles. Then along came oil lamps, then gas lamp, then electric incandescent lamps, and today LED lights. These are all point in time product solutions. They are just means to an end of getting the job of lighting a room done.

Perhaps in the not too distant future, lighting a room will be enhanced by intelligent lights that get the job of lighting a room done perfectly as defined by the desired outcomes people want to achieve.

New technologies will be invented to get the job of lighting rooms done perfectly. Of course we could go one step further and discover that the real core job is to “see in the dark” perfectly.

Maybe there will be better ways to achieve seeing in the dark without lighting? Or there are constraints and circumstances where lighting is not a good option. Like for special forces doing missions at night. Or driving your car at night where it’s impossible to light the whole landscape.

Expanding the playing field based on  the Jobs-To-Be-Done opportunity matrix

When a company finds itself competing in a red-ocean, or disrupted by an outside the industry competitor, it will need to seek a new strategic direction and game plan to create it’s next business growth opportunity.

The jobs-to-be-done opportunity matrix (figure 1), provides a visual map of strategic options where a company can define its next growth opportunity.   

 

innovation_playingfields

Figure 1: Jobs-to-be-done Opportunity Matrix

The lower left quadrant labeled “Core,” is where a company competes today. There can be substantial growth left in this quadrant depending on the growth rate of the industry and a firm’s ability to execute sustainable innovation.  As discussed earlier, the challenge of this quadrant is that it will eventually turn into a red-ocean as more competitors enter the market and compete with each other.

The upper left quadrant labeled “Adjacent”, is where a company competes for new target of customers. One way to do that is to enter a new market region. This may or may not require modification of existing solutions to fit the local market.

The other way to compete is to create a blue-ocean strategy by identifying what Christensen calls “non-consumers” of existing solutions. And creating a new offering tailored to convert non-consumers into consumers. This is often accomplished by making the offering simpler, more convenient, more accessible and cheaper than the core/mainstream solutions.

The lower right quadrant label “Related,” is to serve existing customers by getting more of their important jobs done better. For example, a related job to lighting a room is to keep the temperature  of a room at a comfortable level. And perhaps creating a more delightful experience by minimizing unwanted distractions like phone calls when a person doesn’t want to be disturbed.

The upper right quadrant labeled “Diversification,” is the most bold and potential rewarding quadrant of them all. It is also the most risky of them all because in theory  these are new to world/ new to market products. They often evolve from new technology capabilities, and are untested in the market.

Fundamentally, to succeed in  the upper right quadrant, the innovation must address an important job that customers ultimately want to get done. As the old saying goes: “no problem, no profit.”

Choosing the right quadrant to build an innovation game plan

As with all things related to complex organizations like a business, the best quadrant to choose to build a new innovation game plan around depends on the companies circumstances and its core capabilities. There is no single answer as we shall see in future articles in this series.

The key takeaway is to understand a new product will only succeed if it gets an important job done for the customer, better than any of the alternative solutions they have to choose from.

Here’s to getting important jobs done perfectly!

Kevin

Posted in Jobs To Be Done, New Product Development, Strategy | Comments Off on Finding The Next Big Opportunity Using Jobs-To-Be-Done Innovation Theory

Great Ideas Are the Fuel of Successful Innovation

Coming up with great ideas must be a priority for companies who want to launch a continuous stream of successful new products. The better the ideas, the more likely your innovation engine will crank out winning new products.

Idea generation (ideation) is an ongoing process that needs to be designed and managed to consistently create great results. The discovery, cultivation and selection of ideas should not be left to chance and random “ah-ha” moments.

To be consistent at discovering great ideas, we need to know:

• Where to look (strategic direction: where to play and how to win).
• What to look for (important jobs people want to get done).
• How to discover and cultivate promising ideas from raw inputs into winning product concepts (an idea-to-launch framework).

Idea Exploration: Drilling for great ideas

An analogy I like to use is from the petroleum industry where they need to drill for and refine crude oil into petroleum products (e.g. gas, and heating oil). The petroleum industry doesn’t randomly drill wells around the globe in search of promising oil fields. It employs a sophisticated exploration process that identifies potential areas where it is likely to find underground oil and gas reserves.

Drilling for great ideas

Once a potential target oil field is identified, several test wells are sunk to verify the targeted field contains acceptable grade oil (desirability), that can be extracted economically (feasibility) and is of sufficient size to make the drilling venture profitable (viability).

A petroleum company would never dream of setting up an oil production field without first testing the commercial viability of the oil field under exploration. Nor should you when it comes to moving an idea into commercial development.

Ideation is an important process that makes or breaks your future

Your ideation process needs the same attention to the upfront exploration and validation process as the petroleum industry It makes no sense in exploring ideas that have no potential commercial success (commercial viability).
Nor trying to develop a product around an idea (e.g. a problem) no one cares about (desirability).

Nor committing to a development project that is outside your current and near term capabilities (feasibility).

Initial ideas are never fully formed and ready for commercialization

Like the petroleum industry, the initial ideas you uncover will be in a raw or crude state. They require refinement and experimentation before they become solid product concepts (refined ideas) that have the potential economic impact (high octane if you will) to fuel you innovation and product development engine.

The long and the short: No matter how good your innovation and product development processes are, if you feed it poor ( low octane) ideas, the innovation engine will sputter and not provide the power it needs to develop a commercially successful new product.

Initial ideas are neither good nor bad – they are just ideas

In designing an ideation process, we need to recognize that what often appears initially as a great ideas, is often misguided. And on the flipside, an idea that appears to be a weak and not interesting, can often evolve into a winning new product concept by combining and refining other elements of other ideas into a defining a winning concept.

Thus your ideation process needs to treat all raw ideas without bias. A uniform method of presenting ideas to be evaluated for go/no-go decisions, and a predictable and reliable process to refine, validate and if necessary reject ideas, as they move through the knowledge funnel form crude ideas into high octane ideas.

I recommend adapting a Uniform Concept Statement form to avoid the problem of good ideas being overlooked because they are presented poorly and/or dismissed through biased eyes. And conversely, eliminate weak or marginal ideas that are presented well and selected based on management fiat – not fact.

Initial concept statement should be short, no more than one page, and easy to understand. It should contain the following:

  • The need/pain or job to be done
    • People have problems with getting this important job done
    • Outcome expectations
      • Desired outcomes customers want to achieve.
      • Undesired outcomes customers want to avoid.
    • Context, circumstances, and challenges in getting the job done with 100% satisfaction
      • Where, when, who, what, and why, etc.
      • Barriers: Cost, time, complexity, etc.

The concept statement should be thought as a living document. Starting with the initial raw idea, and transforming and morphing into desirable and viable business opportunity as the idea is vetted and honed through the ideation and discovery process. The desired output is a high-octane product concept worthy of fueling your innovation and product development engine.

In the coming series of articles, we will drill deeper into creating a robust, reliable and predictable innovation front end (ideation and refinement process) that will improve your ability and success rate of identifying real problems that real people want solved.

In the meantime, fill it up with high test please!

Kevin

Posted in Front End of Innovation, New Product Development | Comments Off on Great Ideas Are the Fuel of Successful Innovation

The Innovator’s Playbook

Discovering and Transforming Great Ideas Into Breakthrough New Products

The Innovator's Playbook

The Innovator’s Playbook provides an innovation framework based on the "jobs-to-be-done" innovation theory pioneered by Clayton Christensen and others. This proven methodology frames innovation opportunities from the customer's perspective to create products and services that match the needs of the people who use it.
 

Download a Preview Copy of the Innovator's Playbook  

Also available on Amazon in hard copy and Kindle versions

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