How to Innovate – Part 3.

Bigger Better and Faster Product as a Concept

In the first part of this How to Innovate series, Nick Hixson shared with us why innovation is important, and some insight on how innovation is possible in every part of your business. In the second part, he looked at the process itself, and how we can all learn to be innovators.  In this final article, he covers arguably the most important part, taking action and implementing the ideas.

The article was first published here at Hixsons Business AdvisorsHixsons is an award-winning company that specialises in strategy development for small to medium-sized businesses in the UK. Please do go and visit Nick’s website, there is a wealth of information on there about how Hixsons solve their customer’s problems and help them grow.

How to innovate – the process.

Assessing and testing.

1 Let patterns guide and actions decide

– to separate good ideas from bad use patterns to get directional sense then experiment to confirm. Is there a high potential job to be done? Is this a plausible economically scalable model? Can you correct its course when it goes wrong? Is early profitability possible? Is this the disruptive way to solve a problem which is simpler, more convenient or cheaper? And don’t get seduced by the plan because for every failure the numbers looked awesome!

2 What is the idea’s 4 P’s?

Which are population, price, penetration, and purchase frequency. You need to quickly estimate the financial potential this way. Make the population as small as possible – just your dream customers, you know what price you are pitching it at, and you know how often customers should buy it, and leave penetration last – solve for it after estimating the other three. Penetration is % of population who you think will buy. Then see if that stacks up, play with the numbers (a what if scenario) to see if it works.- solve for it after estimating the other three.

3 Reverse engineer success

– how to find the most critical assumptions – what does success look like; then, what are the two most critical things necessary to make it happen?

4 Test critical assumptions

– how to learn more about the idea – launch it in miniature; put it into an integrated experimental spread sheet model or simulation

5 Bring ideas to life

– how to get people to buy in – use the Hollywood pitch (Entourage) which is an anchor analogy to what it’s similar to, but with a twist to what is unique about it. Maybe a 90 second video (Jing), mock magazine ads, prototypes (complete with duct tape) storyboards, semi-functional website (wix.com) story of what it will look like 12 months hence. Not necessarily all professional, just ensure you’ve considered it all and brought it to life – get other people involved in the video, advertisement etc., particularly customers.

6 Everyday experimentation

– how to get good at experimentation – constantly look at new ways of doing things, use thought experiments (write them down), change the way you do simple things like your commute to work, eat at different times – anything to get you thinking differently about your life. What did you notice that was different?

7 Enjoy surprises

– how to learn the right thing from experiments – focus on the unexpected findings and look at the raw data. Avoid confirmation bias – seeing what you want to see, and don’t separate researchers and decision-makers because you want to keep the details and the anomalies. Frame the experiment to prove the reverse of what you want and involve people with no involvement in the idea because you get a different perspective.

Moving forward

1 Embrace selective scarcity

how much should you invest in this – use tight timelines single decision-makers and few strategic choices so you don’t waste resource. Focus – be clear about success and what is acceptable or not but make that enabling not shackling. No committees – whoever is best qualified makes the decision no matter how junior. (Watch Tora! Tora! Tora!). Constrain time; remember, the first strategy is probably wrong, so force a stop, no overthinking, don’t overcomplicate, short timeframes.

2 Amplify resources

– where can you get innovation resources, what can you leverage externally, or redirect internally? Don’t do it all yourself – use strategic partners, manage risk rather than seek it. Bin zombie projects – be honest with yourself and use small teams and move faster.

3 Manage the interfaces

– how to manage between new and core activities – keep a list so you don’t remember what you’re trying to forget (don’t get sucked into existing ways), spin it off so the core activities don’t take over, have a mechanism for points of tension between the two – sometimes the new business acquires the old so it can ask for what it needs rather than the other way round. Ensure everyone is clear who has decision rights

4 Reward behaviour not outcomes

– how to reward innovation – reward the behaviour even if the outcome is unsuccessful. Perhaps ensure your quality assurance is at the beginning and not the end to help with that.

5 Get quick wins

– use 30 day milestones to show it’s worth more investment.

6 Practice makes perfect

– to systematically get better, put yourself in places where you have to practice. Talk to entrepreneurs and the self-employed about what they do and how they do it – they are generally very happy to share. Teach someone else; learn as you go.

Strategy development is a critical issue for business success, please do share what works for you in the comments section.

About: Nick Hixson is a founding partner at Hixsons Business Advisors.  Hixsons, based in Bournemouth, UK, is an award- winning company specialising in helping to grow small to medium-sized companies.  You can contact Hixsons here.

Implementation Matters is edited by Rob Ward the founding partner of Cosmapec Supply Chain Management.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains. If you want to learn more about the Cosmapec approach to strategy development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

How to Innovate – Part 2

Futuristic image with word Innovation using human eye as the letter o.

In the first part of this How to Innovate series, Nick Hixson shared with us why innovation is important, and some insight on how innovation is possible in every part of your business. In this second part, he looks at the process itself, and how we can all learn to be innovators.  Finding opportunities for innovation, and developing the ideas that can exploit them, are the next steps to addinng more value for your customers.

The article was first published here at Hixsons Business AdvisorsHixsons is an award-winning company that specialises in strategy development for small to medium-sized businesses in the UK. Please do go and visit Nick’s website, there is a wealth of information on there about how Hixsons solve their customer’s problems and help them grow.

How to innovate – the process

Discovering opportunities

Do you have a real problem? Think of it now for a minute or two, considering your target customer, what problem you’re trying to solve, any signals that you have that your customer is dissatisfied with the status quo, and what you think you can do about it. With that in mind let’s just go through the discovery process.

1 Start before you need to.

How do you know it’s time? Are there any early warning signs – what do underlying trends (how you feel) suggest? Is there a small but growing trend that you’re aware of but can’t really measure? Are there any analogies and metaphors in other businesses or other parts of life that you can make sense and learn from? When it’s clear you have to change, then it’s more difficult because it’s possibly a little bit late.

2 Customer is boss

– how to spot opportunities without a customer is boss perspective? Do you make sure you have enough meetings and phone calls and e-mails with customers and prospective customers just to find out what they want? Remember, especially in larger organisations, that the more colleague facing time you have, the less time you have facing customers. Putting it more crudely – if you are giving your colleagues face time, what part of you are your customers seeing? What are the moments of truth in your organisation – surely when the customer chooses a product, and importantly when the customer uses the product. What happens when they use it – do you really know? Any others? Try and find their hopes, dreams, and –importantly – frustrations.

3 Get the job done

– what indicates an innovation opportunity – an important unsatisfied job. Don’t ask the customer what he wants – he won’t know. Ask what satisfies him because that’s what he buys. Ask why a lot – Why do you want to buy a drill (I need to drill a hole) Why do you need to drill a hole (I need to hang a picture) Why do you need to hang a picture (I want the living room to look nicer) Why do you want to make your living room look nicer (I had some visitors comment adversely on the living room and I don’t want that to happen again). Note opportunities for selling other products!

4 Compete against non-consumption

– which customers should I target – look for non-customers facing a barrier to getting the job done

5 Find compensating behaviours – to find non-obvious opportunities – what is the compensating behaviour that covers the current inadequacy? In other words what are they doing that they don’t need to do just to fix it. You need to find and fix the workarounds.

6 Get as close to context as possible

– how to investigate opportunities – deep observation (no focus groups) get out of the building – go and do it with them, don’t just watch, so then you will really understand what the frustrations are and how you can fix them.

7 Don’t innovate blind

– to find if the opportunity is real (why hasn’t this been done before) investigate the market, ask an expert, keep a list of what you don’t know and are unsure of.

 

Blue printing ideas

1 Go to the intersections

– to get inspiration, go to intersections where things collide and borrow from other contexts (“Bad artists copy, good artists steal” Picasso) deeply understand the problem, and look to see who has solved it in another field. Adapt adopt and implement. Seek external stimuli – experience new places you visit as fully as possible, learn about interesting people (www.TED.com), read diversely, meet interesting people and ask them about how and why they do things

2 Ideas from everywhere

– where is inspiration – rapidly explore all avenues possible and discard quickly. Look for analogies in related industries – places like http://www.15.INNO.com. Think what if I – borrowed this idea – was CEO of this company that I like, how would I solve this – if I combine two unconnected ideas, what would it look like? Have something you carry around with you all the time for notes.

3 Quality is relative

– is my idea high-quality, does it matter to the target customer? Don’t over engineer stuff that customers don’t care about. Do a strategy canvas.

4 Avoid overshooting

– can it be too good? Will the customer take the feature but not value it enough to pay for it? Because sometime in product life cycles improvements are no longer valued. Can you make it simpler and cheaper – removing features that customers don’t value or pay for.

5 Do it differently

– what is disruptive innovation? Something that creates new markets, changes existing, by simplicity, convenience, affordability, or accessibility. In other words something like personal computers, (now tablets) discount retailers

6 Business model innovation

– what is it, how do I innovate it? Model describes how you create capture and deliver value and shows a wide range of options which help innovation. E.g. longtail model, unbundled, multisided, free, open. How do you create value, how do you capture value, how do you deliver value, (www.seizingthewhitespace.com, http://www.businessmodelgeneration.com)

7 Bring together

– how to get it into a concrete blueprint (step back and summarise) Don’t just do something: stand there! Does it make sense in a 60 second elevator pitch? Can you put it into an executive summary of 5 to 10 PowerPoint slides?

Come back next week to see Part 3, where Nick will outline the final elements of the process: Assessment, test and implementation.

Strategy development is a critical issue for business success, please do share what works for you in the comments section.

About: Nick Hixson is a founding partner at Hixsons Business Advisors.  Hixsons, based in Bournemouth, UK, is an award- winning company specialising in helping to grow small to medium-sized companies.  You can contact Hixsons here.

Implementation Matters is edited by Rob Ward the founding partner of Cosmapec Supply Chain Management.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains. If you want to learn more about the Cosmapec approach to strategy development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us

How to Innovate – A Guest Post by Nick Hixson

Innovation concept with financial elements

Nick Hixson left a comment about his company’s approach to strategy development on the recent post Strategy Revisited: Part 2. He highlighted that ‘going off-road’ was an example of innovation, and he has kindly agreed to guest post an article about this process at Implementation Matters. The article was first published here at Hixsons Business AdvisorsHixsons is an award-winning company that specialises in strategy development for small to medium-sized businesses in the UK. Please do go and visit Nick’s website, there is a wealth of information on there about how Hixsons solve their customer’s problems and help them grow.

Part 1.

Innovation is the lifeblood of any business, yet it’s hard to ensure it happens. This session will give you practical advice that you can implement immediately, helping you to build innovation into your business planning. There is a process for innovation, it isn’t difficult and doesn’t rely on you having to invent the next big thing. It is about finding ways that you can improve all aspects of your business, so that you can lead and let your competitors follow.

Why innovation matters

Innovation is the lifeblood of any business. But is it truly adapt or die? Of the last generation life expectancy has increased by about 33%. But in the same time the life expectancy of any large company has halved to about 20 years. So putting this in personal terms, how many jobs will you have, as the days of working for one business doing one thing are probably over for the majority of us. So we have to be more adaptable, more thoughtful in what we do, and for businesses – they have to be more thoughtful as well. Businesses need to respond quickly and appropriately to challenges and opportunities. They have to respond quicker and better than their competitors or they will wither and die. Fortunately, as most of your competitors will be slow, this isn’t difficult.

Who are innovators?

We can all think of great innovators – Steve Jobs, Richard Branson, Mark Zuckerberg..etc. but have you looked in the mirror recently, because you are one too if you did but know it. It’s not that difficult, but it’s a lot easier if you know that there is a process behind it.

What is innovation?

Let’s start with what it’s not. It’s not all about technology. It’s not all about being creative. It’s not something that has never been done before. It’s not the next big thing.

Two definitions – the first from Peter Drucker –“change that creates a new dimension of performance”. That sounds easier. Let’s make it even easier.

“Something different that has a measurable impact”. That’s a much easier definition. Note it doesn’t mention technology and creativity. Different? Different according to whom? That depends on what you’re proposing to innovate – it could be a friend, your boss, your customers.

I like “something different that has a measurable impact” so let’s keep that in mind.

Masters of innovation

What can we learn from those who have gone before?

Back to Peter Drucker –“customers rarely buy what businesses think they are selling”. And by that he means that businesses seldom clearly understand customer’s motives for buying.

Drucker also thought that plans need to go into hard work immediately, which neatly brings us to Thomas Edison, one of the greatest innovators of all time, who said genius is 1% inspiration and 99% perspiration. Or to put it another way, if you’re not sweating it’s not working.

Other people have thought of looking at old data in new ways – overthrowing the orthodoxy of the business. They thought of taking ors and turning them into ands. In other words stop thinking of things as being mutually exclusive (I can do this or that) and turn them into things which you can do as well. Add in that part of the infamous Donald Rumsfeld quote” you don’t know what you don’t know”, which in innovation terms turns into apply lessons from nonobvious fields – take information and learnings from one area and apply them to another.

Client insights

My clients now know to innovate something at least every 12 months just to try and keep ahead of the competition. But like the rest of us, we are fearful we might fail, we have limited resources, and we tend to overthink and under do. A client in the West Country epitomises this. They have a number of new products which could quadruple their turnover and do even more benefit to their profits but because every tiny little detail that they think is essential to launch them has not been done the products have not been launched for the past two years. They are concerned that any new initiative will be pounced upon by a competitor if they haven’t got it exactly right. But the only people who will tell them what is exactly right are their customers. Remember Drucker? –“customers rarely buy what businesses think they are selling”.

Attainable

Is what you’re thinking of doing attainable?

Do you understand the practices and principles of what you’re trying to do? Should you try to start something completely out of your field of expertise? Can you do some associational thinking around this – questioning ideas, methods, people (the status quo – what issues does that throw up?)– networking with other people who may do things differently in different industries (we all face similar challenges – don’t get stuck on your unique industry, often it’s your problem is not that unique!)– observing what other people do and asking why they do it that way – doing a quick and dirty experiment to see whether it might work?

You should end up with some feel for what is possible and desirable.

What sort of (category) of innovation is it?

Is it a different type? New products? New distribution methods? New revenue models?

Has it strategic intent? Are you looking for better ways to market existing products? Are you making small improvements to existing products? – remember internal targets can be just as good as external ones and easier to manage. Start with those? Get some practice internally before you launch your methods on an unsuspecting public?

Are you looking for a breakthrough performance in existing categories, or creating a new category (that is, new to you).

Which of these, by the way, is most risky? Got to be new products to new markets hasn’t it? Keep the risks in mind at all times.

Seven deadly sins

Pride – don’t force your view on customers, take an external viewpoint

Sloth – don’t allow innovation to slow down, remember to sweat the 99%

Lust – don’t get seduced by too many bright shiny objects, which means do one thing at a time until it is done. Focus! Focus! Focus!

Gluttony – abundance of resources slows things down – use resources as though they were scarce. This may not be difficult!

Envy – don’t get sucked in to an us and them issue where the innovators are the blue-eyed boys, celebrate the existing and the new

Wrath – don’t punish people for taking risks, reward behaviour not outcomes

Greed – don’t be too impatient as you might end up going for low potential markets, be patient for growth but impatient for results

Key mindsets

All about ways of thinking about your business, you and the other people in it and innovation.

Know when you’re wrong – be assured that your first plan will be wrong. To quote Mike Tyson “everyone has a plan until they get punched in the face”.

Opportunities can be missed because it looks like work – remember Thomas Edison and expect to sweat. If it looks like work, it might be very good for you.

And if you’re in a larger organisation you may need to fight the sucking sound of the core. This is when “we’ve always done it that way” grinds you down and your innovation schemes get diluted. Kodak did that. They had the whole Facebook model ready to roll well before Mark Zuckerberg thought of it. They had more resource, more money, more brains but they thought of it in terms of being photo centric instead of people centric because that’s what Kodak did. Or in a smaller firm, just because you know how to do it technically, doesn’t mean you know what your customers want. You do not always know best. However your customers always do. Your results will tell you this.

Come back next week to see Part 2.

Strategy development is a critical issue for business success, please do share what works for you in the comments section.

About: Nick Hixson is a founding partner at Hixsons Business Advisors.  Hixsons, based in Bournemouth, UK, is an award- winning company specialising in helping to grow small to medium-sized companies.  You can contact Hixsons here.

Implementation Matters is edited by Rob Ward the founding partner of Cosmapec Supply Chain Management.  He co-founded Cosmapec to help companies and executive teams establish, develop and optimise their supply chains. If you want to learn more about the Cosmapec approach to strategy development, visit us at http://www.cosmapecsupplychainmanagement.com or contact us