5 Mindsets for innovative new product development
Large organizations often desire to be agile and innovative— but that’s really hard. The stakes are high and big companies often don’t feel as comfortable with risk taking because ‘the bigger you are, the harder you [fail].’ On the other hand, organizations that fail to see around the corner and know that they need a strong innovation pipeline to stay relevant really struggle (blockbuster vs. netflix, music industry vs. Apple, Kodak vs. digital cameras, the list goes on and on).
Why is it hard? Decisions in big corporate must be approved up a chain of command, or by a committee, there are policies in place governing spending, process management, change management, security, legal — this discipline is good and necessary for existing services that the company depends on, but they can hinder speed, momentum, and the ability to have a bright idea and act on it which is imperative for experimentation and innovation… At Anthroware, we’re constantly trying to find the balance to enable our corporate clients with some startup agility.
Are you a CIO, CTO, product manager or IT director at a corporation where the leadership is asking for innovation? This article is for you. It ain’t all roses, but there’s some hope in it as well! Our perspective comes from working with big corporations to create products for them that un-stick gummed up processes for their employees or clients. If done right, they get happier people and massive organizational benefits (regained time and efficiency, normally).
1. New projects are all products. Let's treat them like a startup.
Often innovation fails because the idea is treated like just another project. It’s not, is a product. Maybe your market is the employees of the organization, or maybe it’s consumers out in the wild… but it’s still a product. You have to sell it. The currency is someone’s time, the space on their phone, money, reputation… even for a required app you have to use as an employee. In order to get the full organizational benefit (cost savings, more throughput… etc.) out of the app it requires full engagement from your employees using it. That’s means marketing, sales, and habit adoption. Lo and behold, we’re thinking about a ‘project’ like a product! Now, let's go a step further and put ourselves in startup mentality.
Startups react quickly to epiphany. Startups are known as ‘disruptors’ or ‘innovators’ because they are so nimble and can afford to take big risks. Another perspective, they are empowered to take bigger risks. One of the key factors that allow startups to move at the speed of light is their ability to have an epiphany and act on it immediately without tons of process. When a great idea happens in the board room of Acme Corp. it has to get approved by committees and multiple levels of leadership— if it even makes it out of the room. There is a reason big companies want to embrace innovation, great ideas that could improve their bottom line are dying daily!
The successful teams are hyper focused on one or two delightful outcomes (think of experiences instead of a list of features) and they gather, and react to, input from consumers and stakeholders. It’s more common to find teams that fit this description in small(ish) startups.
Corporations have to innovate while remaining a success. Startups are focused on becoming a success. It’s important to think about these differences, because while the similarities with new product development inside a big corporation are obvious, the differences that create new challenges are crucial, and sometimes tough to swallow.
2. Heavy process makes it hard to innovate
Disruptive innovation certainly happens in large organizations. Some do it well (Proctor and Gamble) and have amazing internal focus on the type of lean business design thinking and flexibility that can really cultivate some cool products and solutions. The usually do it with a combination of forward-thinking top-level leadership, and small, empowered teams set to solve very specific problems.
One of our clients asked me that the other day. “Do you think we can figure out how to create a culture of product development mastery within [insert name of big waterfall-based organization here]?” At first blush, the answer is of course 'yes'. But let me challenge that. We probably can create a team within that organization with product development mastery. However, as entrepreneurs we are constantly looking for a better way to do things… perhaps changing how an organization works is not the easiest path.
Small skunkworks teams can and do work, but only with the proper level of autonomy AND the right leaders that are empowered to make decisions, take risks, and even fail. Take the right leader and slap a committee over her head and you’ve effectively removed her ability to run the team effectively.
Change is hard and scary. Recognizing the need for innovation really needs to happen with executive leadership. Decisions are hard to make (and stay made). Process change requires a lot of multi-level buy in from HR, security, legal (to name a few) and this is one of the key reasons it’s imperative for executive leadership to be involved, and willing to champion big changes when the time is right.
"Change is looked at with a higher price tag. On the flip side; not changing is also associated with a higher cost. Goals to innovate clash with a culture of heavy process."
These processes, checks, counter-checks, and committees aren’t exactly fertile soil to tend a new fledgling idea to the light of day. All organizations need to innovate to remain at the top… but big companies also know that in order to remain a success you have to be disciplined to protect what you’ve built. Risk is looked at differently. Change is looked at with a higher price tag. On the flip side; not changing is also associated with an even higher cost… obsolescence. The sweet spot is a balance of speed, agility, risk and discipline.
3. Stay in your wheelhouse.
When you’ve got an inefficiency, or painful process in your organization it’s loudly apparent. Being able to see that there is a problem doesn’t mean it’s easy to:
- source the root of the frustration,
- quantify and rank the issues,
- design and test a solution,
- consider human psychological factors,
- market to your users,
- drive habitual use,
- and thereby create a ‘solution’.
We talk a lot about ‘complexity debt’ which is the byproduct of growth and success. Many of the products and tools we build are to reduce complexity debt. Corporations already understand the need to focus on their main offerings; loosing focus means higher overhead and more to manage that doesn’t actually increase sales. If your main offering is brake pads, then you probably don’t need mastery in creating software apps.
Think of any industry; healthcare, banking, agriculture, etc.. Our ‘culture of innovation’ in these companies should reward creative ideas that solve mission-critical pain points. But if the solution is out of your wheel house, outsource it!
Organizations (especially successful ones at scale) have a built in market, money to spend (if the ROI is there), a great insight into a specific critical pain point… all they need is a disruptive innovation force to come connect the dots with a delightful experience that nails the solution. Getting that last part right is tough, but the rewards are massive:
- Happier employees or customers (provide better software that doesn’t frustrate)
- More work gets done (fewer ‘workarounds’, less time in admin tasks)
- Soft savings in reclaimed man-hours (saving 2-3 minutes a day for 10,000 people is a couple hundred thousand man hours back to your organization)
- Hard savings in replaced tools, fewer processes, more automation.
- Reduced complexity debt.
When companies produce software to enhance their consumer experience it’s the same thing. We’re not talking about just another IT project here (all projects are products!), we have to build something that solves a real life-level pain point with a solution that is simple and easy to use.
How do you know this is a real pain point? How can you tell your board or you boss (with resolve) that the solution resonates with users… you need a strong customer focus.
4. Lack of consumer focus kills products.
Statistics abound on the internet, but somewhere between 70% and 92% of new products fail (just one of many articles). The most common thread? Lack of user focus. Projects/products that do not understand the pain points and value the consumer’s opinion above all else rarely see success.
"An app that saves your factory workers 5 minutes a day in admin tasks can’t do that if nobody wants to use it."
Big organizations can trip on the massive potential benefits and forget that without consistent use, and adoption of the product from a large population of their employees the impact will disappoint. An app that saves your factory workers 5 minutes a day in admin tasks can’t do that if nobody wants to use it.
This may be the biggest problem we see— projects are treated like, well projects… and the success is based on completing a list of features. While this is a specific, measurable metric, it lacks success criteria that matter in the real world. If you treat a project like a product, then your success criteria are things like number of downloads, habitual use, revenue, number of active users… in other words, sales!
"This may be the biggest problem we see— projects are treated like, well projects… and the success is based on completing a list of features.”
I don’t want to downplay the importance of completing builds on time and within budget— that’s very important for perceived value and keeping leadership engaged/willing to do the project. But I do want to be clear that building the right set of features dictates a heavy emphasis on understanding your consumer, and constantly learning from them.
Much is written on this topic, it needed to be mentioned because it’s such a common pitfall. You would never think of your startup as a list of features, you’d consider it as a business that needs sales— success in sales requires consumer focus.
5. Getting ‘startup agility’ in your organization will take some changes
Any time we want to change the status quo, it takes work. If we want to run a project like a startup would, then we have a few options:
- take an existing organization and attempt to change the entire culture to be conducive to healthy internal new product development, lean product design that disrupts the target market and learn new skills to keep up with changing tech (really hard),
- run your new project in the same way the organizational culture currently dictates (usually more waterfall than agile, and full of waste and rework) or
- Use fewer resources to team up with a existing agile team that already has lean product development mastery to execute focused solutions that consumers need and love.
It’s provocative to say that most large organizations don’t do product development in disruptive, agile way— but it’s worth digging in and asking some hard questions about your organization.
- Could you bring a product to bear within your organization as fast as a well-equipped team of 10 motivated experts?
- Could you make bold changes in thinking and have the freedom to make and validate critical assumptions about your solution without red tape?
- What aspects of your organizations process are good and require discipline that should be kept as part of the process?
I believe that it’s a great time to pair small innovative teams with corporations to solve wicked problems. It takes understanding on both sides, but the result is innovation outside the confines of the existing organization without the red tape.
“...it’s a great time to pair small innovative teams with corporations to solve wicked problems."
TL:DR
Treat your projects like products. Respect the discipline that corporations must have AND the willingness to ‘just try it’ that startups have. Focus on the experience of the product, not the features. Real success criteria means being hyper-focused on the end-user, because if people don’t use it, there are no organizational benefits. Change is hard, companies should do what they do best, and find trusted help when they need something out of their wheelhouse.
Hope this is helpful.
-Jon
