The Nimble Hippo looks at how large organizations can build innovative cultures and disruptive strategies by taking the best lessons from startup ecosystems and applying them in a big-company context.
I recently spoke to a group of CEOs and business leaders about why it’s so hard to innovate inside large organizations. I took a number of great questions from the group but one in particular stood out.
“Why did my innovation program fail? I set up a website to submit ideas, people talked about those ideas, but after a few months, we stopped getting ideas. How come?” the woman asked.
It’s a common trap that most leaders fall into: They focus on ideas and how to generate great ones, and forget that that’s the easy part. The hard part is figuring out how to create value from great ideas in an ongoing and sustainable way.
We see this regularly as we speak with companies about our corporate innovation model. They focus on brainstorming, idea generation, and generally the fun innovation activities.
Their mistake is in thinking the value of innovation lies in the idea stage. In reality, ideas by themselves have very little value until someone takes the best ones and executes on them, quickly iterating until their value becomes clear to your customers and your company.
How can we build a repeatable innovation model that creates value from ideas? Build a transparent process for turning ideas into new products.
When looking for ideas, search as broadly as possible. Invite your employees, customers, partners, leaders and anyone else to tell you how they think you can improve on what you do or sell, by adding new products or services, or cutting those that don’t add value, or whatever else they want to contribute. You want all ideas, while understanding that not all ideas are good ones.
Once your ideas are captured, group them into themes and directions. You should begin to see where the big opportunities lie, which ideas are just outliers, and where you should focus your efforts. Once those directions are identified, begin to build a hypothesis and use rapid prototyping to test it. It’s Grade 10 science all over again.
Your innovation team should be made up of builders, of testers, of people who aren’t afraid of feedback and getting things wrong. Their job is to build a set of minimum viable products (MVPs) that solve the problem(s) you are looking to solve, and do it in the simplest way. An MVP should do everything you need it to do, but not everything you want it to do. Once those MVPs are built, they are tested with real customers or stakeholders to gain feedback and learn lessons that will help the team to ultimately build something better.
This step is called customer validation. It’s vitally important but often skipped because many organizations get caught up in two issues:
- They don’t want to put ‘unfinished’ products in front of customers.
- They’re afraid of being told their products are crap.
The reality is, if you don’t do customer validation early, your product might still be crap; it will just be more expensive .
Once customer validation is done, your team needs to build a higher-fidelity prototype, or beta product, for a larger audience. This will require a more significant investment because this product will go ‘live’, for a limited audience. Depending on what you are selling, you will need to integrate some of it into live systems, build real packaging and put it on a shelf, or create enough scalability to make the product reliable to more customers. Since you already have some validation from early adopters, it makes sense that this is a lower-risk endeavour.
If the beta test works, and you have met pre-set criteria, then you’re ready to take the next step: creating a real product. This is the most expensive but least risky stage because you have had many opportunities to get rid of the crap along the way. You have validated the idea, tested the MVP and got real customers to buy it. It may still flop, but that’s far less likely because you’ve been through a tried and true process, and been transparent about the objectives, lessons from the testing, and investment required at each stage.
This might make innovation seem less like a Eureka! moment and a lot less sexy than “changing the world,” but it gives you the best odds of delivering innovative projects to market faster and at lower costs.
Companies need to believe in the process to drive real value from ideas. They need to be ready to kill projects that they love but their customers don’t. They need to be ready to be wrong, a lot, in the early stages, so they are more often right in the late stages.
Innovation doesn’t fail because of a lack of ideas; it fails because of a lack of discipline.
