What Goldfish Can Teach Us About Killing Innovation Projects

What Goldfish Can Teach Us About Killing Innovation Projects

 “We are not good at killing innovation projects.”

In the past two days, three people in two different companies across two different industries said these exact words to me.

If Step #1 in solving a problem is admitting that you have one, then my clients should feel pretty good about making progress.

But what’s Step #2?

“Killing the project” is an obvious and fundamentally unhelpful answer.  But before we get to the less obvious and helpfully actionable answer, we need to acknowledge a fact about humans

 

We decide with our hearts, justify with our heads, and require guts to act.

As much as we would like to believe that we, as humans, are logical and fact-driven, we’re not.  If we were, we would not be swayed by brands and we would all agree on the best restaurant, music, and political candidate.

Beliefs, values, emotions, and connections (our heart) drive our behavior.  We choose things that help us feel a certain way, create a certain perception, or signal our belonging to a certain group.  As Clay Christensen would say, we choose things that solve emotional and social Jobs to be Done.

We then find or seek out facts and evidence that justify the decisions our hearts have made.  We want to be logical and rational, to make “the best choice,” and to be able to sway people with our arguments.  We use our heads to justify our hearts.

But that alone isn’t enough.  We don’t do things that we know we should (flossing, eating vegetables, maintaining long-term investments in innovation).  We do what we want even though we know we shouldn’t (eat a lot of sugar, drink too much, binge watch anything that starts with “Real Housewives of”).

We need motivation and courage (guts) to translate our wants and our thoughts into action.  Perhaps, even more importantly, when our heads and our hearts disagree, we need guts to make the decision and act.

Because without guts, when the head and the heart disagree, the heart always wins.

 

That’s why you’re not good at killing projects.

Here’s a common scenario: after working for several years on a new product you get data that shows that it won’t “work.” 

Perhaps it’s clinical data indicating that the product doesn’t provide the efficacy required.  Or market data showing that customers aren’t willing to buy the product at the current price or buy as much of it as expected to justify the investment.  Or benchmarking data that estimates that your product will be in the bottom 5% of products ever launched by your company.

Whatever it is, it’s not good and the data and logic all dictate that the project should be killed.

Instead, you deem it to be “strategic” and keep working on it.

This is because, in your heart, you believe in the project.  You were part of creating it.  You nurtured it from concept to concrete, guiding it through near-death experiences, and celebrating its successes.  You love this project.

Your heart says “keep going,” while your head says “make it stop.”

You need guts to make the decision.

It’s hard to decide, but Step #2 makes it easier.

If the first step is knowing in your head that the project is not viable and will not meet expectations no matter what you do, the second step is finding the guts to resist your every instinct and decide in favor of your head.

To find the guts to make the call, you need to acknowledge your heart and the feelings, emotions, and beliefs that are motivating you to try just one more thing.

(If you’re a Very Serious Business Professional and are super freaked out by the last sentence, imagine that I wrote, “you need to acknowledge your cognitive biases like the sunk cost fallacy, not invented here bias, or the IKEA effect” and keep reading) 

To acknowledge your heart and empower your guts, you need to say goodbye and create closure. 

How to do this effectively is determined by the culture of the team and company, but here are some examples I’ve seen and been part of:

  • Write the project’s eulogy
  • Hold a funeral (traditional, New Orleans, Irish, or Viking all qualify)
  • Have a “Reading of the Will” in which the project bequests mementos and silly awards to team members
  • Create a memorial like planting a tree or, taking a cue from Ben & Jerry’s, a graveyard
  • Establish an award in its name and give it out every year to a person who has shown the courage to preserve and the wisdom to know when to quit

Yes, I know this sounds silly but so does having funerals for goldfish and we do that.  We do it for the same reasons we struggled to kill the project – because we love it, and we will miss it.

Just as we feel very sad but know we did the right things when we flushed the goldfish, you will feel sad but know you did the right thing when you kill the project.

And while it will never be easy, it will get easier and you will get better at killing projects (just like I did after going through 23 goldfish my senior year of college).

How to Get Corporate Executives to Walk Their Innovation Talk

How to Get Corporate Executives to Walk Their Innovation Talk

Things we know we should do because they’re good for us:

  1. Eat 5 servings of fruits and vegetables each day
  2. Floss twice a day
  3. Get 10,000 steps a day
  4. Buy insurance
  5. Consistently invest in innovation

Let’s be honest, the above list could also be titled, “Things we know we should do but don’t.”

Why?  Why do we choose not to do things that years of research prove are good for us and for which solutions are readily available?

Because they’re inconvenient, uncomfortable, expensive, and, most of all, because we have not yet been burned by not doing them.

Experience is a better motivator of change and driver of behavior than knowledge. We don’t floss until we’ve had one (or more) painful and bloody dentist appointments.  We don’t buy insurance until we have to deal with a break-in.  We don’t invest in innovation until we’re desperate for revenue, profit, or growth.

The good news is that, at least when it comes to innovation, we don’t have to wait to be desperate or to get burned before we do what we know we should.  We can create experiences that motivate change.

Borrow relevant experiences

Experiencing success, even if it’s vicariously, is key to getting people to do what they know they should.  One way to do this is to find proof that the change is possible and do-able.  To do this you need to find relevant and recent examples (i.e. not a field trip to Silicon Valley and not stories about Steve Jobs). 

Find a company in your industry (or a similar one) that has successfully achieved the goal you’ve set.  Tell their story to people within your organization.  Set-up a conversation between a current or former member of their team and a key stakeholder in your organization.  Buy their product and display it as evidence that success is possible.

Create experiences of success

Innovation takes time, especially if you’re working on something breakthrough.  But people lose interest and faith quickly, especially in organizations that are judged by quarterly numbers.  As a result, the worst thing you can do is to go into “stealth mode” and try to “fly under the radar” until you have a huge, earth-shattering success to announce.

Instead, spend time learning about your decision-makers’ and stakeholders’ doubts at the same time you’re learning about your customers’ problems.  Then, when you prove those doubts wrong, celebrate the win…politely, and publicly.

Does your boss think Legal will never approve your idea?  Work with Legal, ask them what it would take to get an approval, and when you do that and get the Yes, tell your boss.  Does Finance think no one will ever pay the price for your solution?  Open a “lemonade stand” to sell the product and then take Finance out for drinks, using your first dollars of revenue to pay for the first round.

Small and steady wins give people experience with success and buy you the time, resources, and support you need to achieve the earth-shattering ones.

Immerse everyone in the experience

While borrowing and creating experiences can be powerful, nothing is as convincing or compelling as actively engaging people in achieving success.

Involve innovation leaders, decision-makers, and key stakeholders in the hard work of customer discovery, solution design, and business testing.  Make them listen in live to customer interviews, hand them the sharpie (or the mouse) during ideation sessions, and “hire” them to staff your “lemonade stand.”

By making people lean in, roll up their sleeves and do the work, they’ll experience how hard innovation is and why it takes longer than they think.  They’ll be invested in your work and your results.  They’ll feel the rush of the small successes.

Innovation is a Head, Heart, Guts endeavor

People decide what to do with their hearts, justify their decisions with their heads, but it takes guts to take action.  Knowledge feeds the head, but it takes experience to have guts. 

The 5 Gifts of Uncertainty

The 5 Gifts of Uncertainty

“How are you doing?  How are you handling all this?”

It seems like 90% of conversations these days start with those two sentences.  We ask out of genuine concern and also out of a need to commiserate, to share our experiences, and to find someone that understands.

The connection these questions create is just one of the Gifts of Uncertainty that have been given to us by the pandemic.

Yes, I know that the idea of uncertainty, especially in big things like our lives and businesses, being a gift is bizarre.  When one of my friends first suggested the idea, I rolled my eyes pretty hard and then checked to make sure I was talk to my smart sarcastic fellow business owner and not the Dali Lama.

But as I thought about it more, started looking for “gifts” in the news and listening for them in conversations with friends and clients, I realized how wise my friend truly was.

Faced with levels of uncertainty we’ve never before experienced, people and businesses are doing things they’ve never imagined having to do and, as a result, are discovering skills and abilities they never knew they had.  These are the Gifts of Uncertainty

  1. Necessity of offering a vision – When we’re facing or doing something new, we don’t have all the answers. But we don’t need all the answers to take action.  The people emerging as leaders, in both the political and business realms, are the ones acknowledging this reality by sharing what they do know, offering a vision for the future, laying out a process to achieve it, and admitting the unknowns and the variables that will affect both the plan and the outcome.
  2. Freedom to experiment – As governments ordered businesses like restaurants to close and social distancing made it nearly impossible for other businesses to continue operating, business owners were suddenly faced with a tough choice – stop operations completely or find new ways to continue to serve. Restaurants began to offer carry out and delivery.  Bookstores, like Powell’s in Portland OR and Northshire Bookstore in Manchester VT, also got into curbside pick-up and delivery game.  Even dentists and orthodontists began to offer virtual visits through services like Wally Health and Orthodontic Screening Kit, respectively.
  3. Ability to change – Businesses are discovering that they can move quickly, change rapidly, and use existing capabilities to produce entirely new products. Nike and HP are producing face shields. Zara and Prada are producing face masks. Fanatics, makers of MLB uniforms, and Ford are producing gowns.  GM and Dyson are gearing up to produce ventilators. And seemingly every alcohol company is making hand sanitizer.  Months ago, all of these companies were in very different businesses and likely never imagined that they could or would pivot to producing products for the healthcare sector.  But they did pivot.
  4. Power of Relationships – Social distancing and self-isolation are bringing into sharp relief the importance of human connection and the power of relationships. The shift to virtual meetups like happy hours, coffees, and lunches is causing us to be thoughtful about who we spend time with rather than defaulting to whoever is nearby.  We are shifting to seeking connection with others rather than simply racking up as many LinkedIn Connections, Facebook friends, or Instagram followers as possible.  Even companies are realizing the powerful difference between relationships and subscribers as people unsubscribed en mass to the “How we’re dealing with COVID-19 emails” they received from every company with which they had ever provided their information.
  5. Business benefit of doing the right thing – In a perfect world, businesses that consistently operate ethically, fairly, and with the best interests of ALL their stakeholders (not just shareholders) in mind, would be rewarded. We are certainly not in a perfect world, but some businesses are doing the “right thing” and rea being rewarded.  Companies like Target are offering high-risk employees like seniors pregnant women, and those with compromised immune systems 30-days of paid leave.  CVS and Comcast are paying store employees extra in the form of one-time bonuses or percent increases on hourly wages.  Sweetgreen and AllBirds are donating food and shoes, respectively, to healthcare workers.  On the other hand, businesses that try to leverage the pandemic to boost their bottom lines are being taken to task.  Rothy’s, the popular shoe brand, announced on April 13 that they would shift one-third of their production capacity to making “disposable, non-medical masks to workers on the front line” and would donate five face masks for every item purchased.  Less than 12 hours later, they issued an apology for their “mis-step,” withdrew their purchase-to-donate program, and announced a bulk donation of 100,000 non-medical masks.

Before the pandemic, many of these things seemed impossibly hard, even theoretical.  In the midst of uncertainty, though, these each of these things became practical, even necessary.  As a result, in a few short weeks, we’ve proven to ourselves that we can do what we spent years saying we could not.

These are gifts to be cherished, remembered and used when the uncertainty, inevitably, fades.

Originally published on Mat 19, 2020 on Forbes.com

Why “Innovation” is Killing Innovation (Hint: it involves peanut butter and cats)

Why “Innovation” is Killing Innovation (Hint: it involves peanut butter and cats)

Innovation is not peanut butter.

You can’t smear it all over something and enjoy the deliciousness.

In other words, “Innovation” is not a one-sized-fits-all term.  If you apply it to everything new and different that you’re doing, you’ll be confused, frustrated, and ultimately left with very little to show for your efforts.

In a previous post, I defined Innovation as something different that creates value.  For companies to increase their odds of creating value, however, they need to develop a language and discipline around at least three different types of innovation.

Why do I need different types of innovation?

Imagine if we used the word “Cat” to describe every feline from a house-cat to a lion.  If you proudly proclaim that you just got a new cat, people might wonder whether that purchase was truly legal.  If you yell, “There’s a cat behind you!” people might not react with the level of urgency required.

Specificity enables rapid understanding which leads to better decision making.

Labeling everything new and different with the term “innovation” can result in dramatically under-resourcing some efforts and prematurely canceling others.  After all, launching an entirely new business model takes far more time, money, people, and patience than launching an improved version of an existing product.  You need a language that reflects that.  

Why do I need at least three types of innovation?

Because, after decades of research and application, academics and practitioners alike seem to agree that two is too few and, since three comes after two and three seems to work, you need at least three.  (Doblin said 10 but that feels like too many to remember).

Which three should I use?

The three that best reflect your company’s strategies, priorities, and culture.

I know that’s a bit vague, but the truth is that there is no one right answer.  The only “right answer” I’ve ever seen is the one that sticks, that advances key corporate strategies, and that enables thoughtful decision making.

Start Here

When one of my clients is at the very beginning of building their innovation capability, we start simple

  1. Core Innovation is improvements to what they currently do
  2. Adjacent refers to innovations which combine existing and new elements (e.g. selling an existing offering to a new customer, selling a new offering to an existing customer, or monetizing an existing offering in a new way)
  3. Breakthrough innovations change everything (e.g. new offerings to new customers, monetized and delivered in new ways)

We then develop a high-level innovation process that can apply to all three (this helps with communication across the company and reinforces that everyone can participate in innovation). From there, we create more detailed structures, processes, tools, trainings, and timelines for each type of innovation to ensure that we have a balanced innovation portfolio, allocate appropriate levels of resources, and set realistic expectations with regards to timelines and ROI.

But what about (fill in the framework here)?

Again, the two most important things about innovation types are that (1) you define them and (2) they are practical, actionable, memorable, and enable progress against your strategic priorities.

That said, there are other Innovation Type frameworks from which you can draw inspiration.  Here are three of the most popular

McKinsey’s 3 Horizons Making its debut in the 1998 book The Alchemy of Growth, McKinsey’s 3 Horizons frameworks remains a favorite amongst consultants and executives (but not Steve Blank, who thinks it no longer applies).

The book argued that for companies to kick-start growth or continue to grow rapidly, they need to simultaneously focus on three “horizons of growth:”

  1. Horizon 1 ideas drive continuous improvements in existing offerings, business models, and capabilities
  2. Horizon 2 ideas extend the core to new customers or markets
  3. Horizon 3 ideas create new capabilities or businesses in response to disruptive opportunities or threats

Clayton Christensen

In his 2014 Harvard Business Review article, “The Capitalist’s Dilemma,” Professor Christensen wrote that the terms he famously coined, “disruptive” and “sustaining” innovation, are not types of innovation, rather they describe “the process by which innovations become dominant in established markets and the new entrants challenge incumbents.” Innovation types, however, should describe the outcome of the innovation.  The three he identified are:

  1. Performance-improving innovations that replace old products with new better models
  2. Efficiency innovations that enable companies to sell existing products to existing customers at lower prices
  3. Market-creating innovations that combine an enabling technology that rapidly reduces costs with a new business model to reach new customers, resulting in the creation of (as the name implies) entirely new markets.

P&G

From 2000 through 2012, P&G, under the leadership of CEO AG Lafley,  improved its innovation success rate from 15% to 50% and doubled the average size of successful initiatives.

One of the first steps in achieving these dramatic results was to define 4 types of innovation.

  1. Commercial innovations that increase trial and use of existing products
  2. Sustaining innovations that make existing products better, faster, cheaper, or easier to use
  3. Transformational innovations that deliver a step-change improvement in a product’s performance, ultimately setting new performance expectations for a category
  4. Disruptive innovations (new brands or business models) that “win through simplicity or affordability”

 

OK, I’m on-board.  How do I start?

My clients and I follow these four steps:

  1. Put a stake in the ground and name 3 types of innovation. Don’t overthink it.  Just pick three types and go on to step 2
  2. Share the types (names and definitions) with people and see how they react. Do they immediately understand?  Do they look confused?  Do they recoil in horror?  Get curious about their reactions and ask for feedback.  Refine your types and their definitions until a majority of people immediately understand (note: you’re not going for 100% agreement because that never happens, you’re going for “good enough with no one violently disagreeing)
  3. Map your innovation initiatives to each type.
    • Are there types with no initiatives? Is that type critical to achieving a strategic priority or key metric?
      • If yes, you have a gap in your portfolio.
      • If no, get rid of the type.
    • Are there initiatives with no types? Is that initiative critical to achieving a strategic priority or key metric?
      • If yes, create a type to describe that (and hopefully other) initiatives.
      • If no, get rid of the initiative.
  4. Share your innovation portfolio with key decision-makers and start developing your innovation strategy.

 

Congrats, you have a working draft of your Innovation Types!  You’ve taken a crucial first step in your journey getting real results from innovation.  Reward yourself with some peanut butter!

The Innovator has No Clothes: Innovation’s 3 Great Lies

The Innovator has No Clothes: Innovation’s 3 Great Lies

I love stories.  When I was a kid, my parents would literally give me a book and leave me places while they ran errands.  They knew that, as long as I was reading, I wouldn’t be moved.

But there was one story I hated – The Emperor’s New Clothes

I hated it because it made absolutely no sense.  It was a story of adults being stupid and a kid being smart, and, to a (reasonably) well-behaved kid, it was absolutely unbelievable.

No adult would try to sell something that doesn’t exist, like the clothiers did with the cloth.  No adult would say they could see something they couldn’t, like the Emperor and the townspeople did.  Adults, after all, don’t play at imagination.

As a kid, this story seemed completely wild and unrealistic.

As an adult, this story is so true that it hurts.

The truth of this story touches so many things and innovation is at the top of the list.

I’ve spent my career working in innovation working within large companies and as an advisor to them.  I know what executives, like the emperor, request. I’ve said what the consultants say to sell their wares.  I believed all of it.

Now I need to be the kid and point out some of the lies, as I see them.

 

Lie #1: Companies can disrupt themselves
Truth #1: Companies can but they won’t

There are lots of reasons why companies won’t and don’t disrupt themselves but, in my experience, there is one reason that trumps them all: It’s not in anyone’s interest.

In most companies, there is not one single person, including the CEO, who has a vested interest (i.e. is incentivized) in taking the time and allocating the resources required to disrupt the current busines.

In most companies, however, there are lots of people who have a vested interest (i.e. make lots of money) in delivering on quarterly or annual KPIs.

Disruption takes time.  It took more than 20 years for the hard disk drive industry, the focus of Clayton Christensen’s doctoral research and the basis of the theory of Disruptive Innovation, to be disrupted.  Even in today’s faster-paced world, it’s hard to find an industry that, in a span of 5-10 years, ceased to exist as a result of disruptive innovation.

Companies have the resources to disrupt themselves.  But executives don’t have the incentive.

 

Lie #2: If companies act like VCs, they’ll successfully innovate
Truth #2: If companies act like VCs, they’ll go bankrupt

OK, this one is more false than true.

Companies need to engage in multiple types of innovation:

  • Improving their core
  • Moving into adjacent markets by serving new customers or offering something new or making money in new ways or using new process, resources, and activities
  • Creating something breakthrough that changes the basis of competition

Companies should only “act like VCs” when dealing with breakthrough innovations.

VCs are purpose-built to be financially successful in environments where there are more unknowns than knowns.  This is why the central tenant of acting like a VC is adopting a portfolio approach and making little bets in lots of companies.  When large companies who take this approach to breakthrough innovations, they, like VCs, invest in lots of initiatives thus increasing the odds of investing in a winner.

However, companies that “act like VCs” when it comes to their entire innovation portfolio simply dilute their resources, investing too little in too many things and ultimately decreasing their already low odds of innovation success.

This is because when engaging in core and adjacent innovation, the bulk of innovation pursued by large companies, the knowns typically equal or outweigh the unknowns.  As a result, it makes more sense to NOT act like a VC and make medium to large bets in a few initiatives, enabling companies to rapidly launch and scale their core and adjacent innovation initiatives.

 

Lie #3: We can pivot our way to success
Truth #3: If you’re not solving a problem, no amount of pivoting will bring success

The fact that the emperor and all the townspeople believed the emperor was wearing clothes didn’t make it true.

And no amount of “pivoting” – it’s not silk, it’s wool!  It’s not green, it’s blue! – was going to make it true.

The same can be said for innovation.

If the innovation isn’t solving a problem, there is no market.  Shifting from a product to a service, won’t change that.  Nor will changing from a transaction-based model to a subscription model.

Pivoting is how you fit a square peg into a round hole.  It’s not how you create a hole for your square peg.

 

Of course, it’s easy to come up with one, or two, or maybe even three examples of the lie being true.  It is those one, or two, or even three examples that are trotted out in every speech, book, article, and consulting pitch to convince us to believe.  But the reality is that the exceptions, in this case, prove the rule.

After all, the emperor wasn’t completely naked.  He was wearing a crown. 

But that doesn’t make the lack of clothes any less embarrassing.