The myth of failure and risk sounds good: celebrate failure, embrace failure, fail fast. But this is misleading at best.
We think we need to celebrate failure because we believe eventual shipwreck is a price we must sometimes pay for innovation and progress. Stuff happens and we can’t punish those who try or they won’t try at all.
Many experts are happy to expand on why failure drives innovation, even splitting people into “Type I” and “Type II” mind-sets (Silicon Valley versus the rest of us). Others say that we need to fail even faster.
Let’s be honest: Do you really want your innovation to fail—fast or slow? Who truly wants to celebrate that failure? Shouldn’t we rather learn and move on?
Interestingly, in amateur risk management, we find similar thinking. Many companies don’t want their project managers to “play it safe.” Risk taking may even be part of their appraisal. Yet, whose money are these project managers putting at risk? At worst, their career path takes a kink. What they gamble is their company’s money, however.Are we asking the right question at all?
Tony Ulwick, CEO of Strategyn, has been battling this idea for a couple of years already. As far as I can see, research institutions like Argonne National Labs, CERN and many others don’t work that way either. They don’t ask win-lose questions. The answer to such questions has an information content of one bit anyway: success – failure, yes – no, 1 – 0. These are not good questions to ask.
Let us have a closer look at how scientists work by looking at the recent development of a novel technique to read classical texts. It’s not about whether or not we can read those old scrolls without unfolding (which would destroy them). The researchers at ESRF were asking how to bring to best use their own core capabilities. For example, parchment and ink have different absorption and refractive indices, and those two even change with the wavelength of the probing radiation. Which is the required spatial resolution? Using X-ray tomography, can a 3D-model for the distribution of the refractive index be built? Would that allow reading the scroll without unfolding?
You can indeed launch many good research projects with such questions. And of course: All that had been done long before the ESRF researchers were actually reading the scrolls. Only the sum of many such investigations culminates in such a breakthrough—and brings with it a long tail of other learnings, which certainly were not “failures” at all.Is the mantra of “celebrate failure” coming from two worlds clashing?
Back to business…in the world of daily management, we know the relation between input and output: The number of staff ill is x, therefore production will lag behind plan by Y where Y is a function of x, Y = f(x).
In the world of innovation, it’s different. Cause and effect are often not clear. Minor changes can lead to major differences in outcomes. For example, what happens if Tempo, a German company selling facial tissues, decides to branch into toilet paper? Technically they master it all. And few innovations fail because of technical issues. Yet, they might stumble over some unsuspected cause-and-effect relations. In the case of Tempo, the company learned their brand stood for facial tissues and not their core competencies. Toilet paper sold under the same brand name severely damaged their brand perception. When companies start such a new business line “full-blown” they might indeed need to “celebrate failure”—but is that what they truly want?
When it comes to innovation, we have less knowledge about cause and effect. Therefore, we need an approach different from our take on daily management.Managing Today’s Business vs. Creating Tomorrow’s Business
Managing today’s business
Creating tomorrow’s business
Getting stuff done
Cause and effect
How to steer it
Projects and performance goals
Experiments and learning goals
Hold people accountable for
Perfection as only benchmark
All are one team
Perfection as only benchmark
All are one team
Almost by definition in the domain of innovation, the effects to causes can’t be predicted. We don’t want to fail fast with a full-scale trial run. We rather want to learn fast. Which causes are driving desired and undesired effects? How can Tempo test their hypotheses prior to launching the new product on the market? The distinction between projects and performance goals on the one hand and experimentation and learning on the other may sound subtle but it makes a tremendous difference
As a consequence, you should not hold your people accountable for the results they have achieved in their innovation endeavors. You rather need to hold them accountable for how carefully they have researched their hypotheses, set up their experiments to test them, and how much learning they generated along the way. No doubt, a professional such as Brian Joiner might say: Besides your striving for perfection and making sure all are one team and not playing against each other, also a scientific approach is key to success in both worlds, when managing today’s and when creating tomorrow’s business.Beyond winning or losing in innovation
The art and craft of experimentation help us to grasp innovation opportunities. Not least, the important chance findings are made much more likely when your teams are used to carefully formulating their hypotheses and then designing and conducting with equal care the experiments to test them before your new offering reaches the market. You want to learn a lot. You want to open as many doors as possible. You want to raise new issues and new challenges. That may not be easy. But it is so much richer than just coming to a result such as “mission accomplished – yes or no” and the need to celebrate regardless
You should indeed celebrate:
- How many most-cherished hypotheses you “killed.”
- How you have set up your experiments.
- How much you have learned with them.
But please! Don’t celebrate failure, fast or slow. Because then, most likely, you haven’t formulated carefully enough the task you want get done.Section: Culture & Teams
While product innovations get a lot of attention, that’s not actually where most of the long-lasting innovations come from. They come from within elements of business models, such as distribution channels, core processes, the customer experience and revenue models. Companies interested in creating long-lasting competitive advantage have to look across their business model for innovation opportunities. This post explores the Business Model Architecture and how it can be mined for practical innovation opportunities beyond product and service.
The Business Model Architecture is a method to analyze and design how a business creates, delivers and captures value. It is a form of the business model canvas; however, the BMA’s structure was developed analyzing over five different business model frameworks. This model is comprised of 11 boxes, each integrated together. The combined knowledge developed the framework of the Business Model Architecture.
Value Creation Partners: External people, businesses or resources that are a primary piece of developing value. Without these partners, the value decreases or is eliminated completely.
Enabling Processes and Resources: These processes, resources and activities are what create the foundation for the business to establish a core process.
Core Processes and Resources: These are the key operational processes, resources and activities that the business does that drives the value. Without these, the value simply cannot be created and the business model disintegrates.
Brand Strategy: Brand Strategy is how perceptions are managed and how the business interacts and communicates with the customer. This has a strong connection to Customer Experience.
Core Offering: This is the solution that carries the majority of the value proposition. Without a strong core offering, the business cannot build a sustainable business model.
Complementary Offering: These offerings become in-addition to, or a part of, the core offering. These can be extra features or benefits that the customer may see as value added, thus increasing the value of the overall offering.
Customer Experience: Managing the customer experience is crucial to a successful model. Brand Strategy and the offering have a tremendous impact, and a business needs to manage this experience to be memorable. This can also be a business differentiator that many other businesses may overlook.
Distribution Channels: These channels are how the customer consumes the offering, which can be delivered digitally, physically or in another manner. The easier it is for the customer to find and consume the offering, the better the experience can be.
Customer Segment: This is the end customer. However, an offering can have multiple different customer segments, so it is important to separate out the segments and explicitly identify them. In addition, the business should identify each customer’s Job-To-Be-Done (JTBD). The reason there are multiple segments, or even one, is because a customer needs to accomplish something, and they are looking to use your offering to handle the need.
Cost Structure: Whatever it takes to create, deliver and capture the value can be a cost. Whether it be explicit costs, direct costs, indirect costs or the like, a business model needs to identify the components of costs, because in the end, profit is only created by having a lower cost to revenue.
Revenue Streams: This is all the ways a business is compensated, monetarily, by the end customer by delivering and consuming the offering.Example: Tesla’s Business Model
Tesla’s business model is derived from a unique strategy: develop high-end expensive electric luxury supercars for the wealthy, use those profits to drive R&D, and in the future be able to develop a $35,000 electric vehicle for the masses. You can read Elon Mosk’s original master plan here. To deliver on that strategy, Tesla flips the current traditional auto market on its head.
The end product is an electric luxury car that combines the best of electrical technology, design and performance. The Tesla Model S, the flagship car, has won multiple design awards and has been proven to be the fastest 0 to 60mph sedan in history. The vehicle’s technology is cutting edge, allowing Tesla to upgrade and remedy many issues remotely, and a battery system that provides over 250 miles per charge is not shabby either, along with free charging stations across the United States, Asia and Europe.
At the crux of Tesla’s business model are two elements: Tesla sells directly from the manufacturer to the customer, so there are no auto-dealer middlemen, and Tesla owns and operates beautifully designed retail stores, similar to Apple, in upscale locations. This setup delivers the best experience and value to the customer, and customers receive unparalleled service. Tesla’s brand strategy hinges here, as Tesla believes the traditional auto-dealer diminishes value and brand image—the exact same reasons why Apple has its own stores. Tesla and Apple can control the customer experience and brand.
Despite the deviation from the traditional dealer model, Tesla still makes money simply by selling cars. Intellectual property is typically another area of revenue, but recently, Tesla has made all of the battery technology intellectual property, among others, public; even though it is keeping some IP to itself, releasing the battery technology is revolutionary to say the least, especially since the batteries are a key element of Tesla’s competitive advantage. Tesla believes this move of making the IP public will help accelerate the adoption of electric vehicles.
Put in the context of the Business Model Architecture, here’s a look at Tesla’s 11 components:Tags: business modelteslaarchitectureinnovationSection: Business Model InnovationStructure & Methods
Fast Company just published the list of the world’s most innovative companies of 2015 and the lineup of the top 10 most innovative companies in India is refreshing and intriguing.
Be it IndiGo airlines, which slashed aircraft turnaround times to 20 minutes, or ISRO’s Mangalyaan Mars Mission, which achieved the task of launching the Mangalyaan satellite into space on a budget that was three-quarters the cost of the Hollywood blockbuster Gravity, there are interesting lessons from every company on this list.
Here are four key takeaways, especially for companies that have become huge dinosaurs and lost their nimbleness today.Takeaway 1: No Innovation Is Complete Until It Is Implemented
A large number of companies have ideas; ideas that are bright and promising. But if it’s important to be the first to come up with an innovative idea, it is equally important to implement and execute the idea properly.
The aviation industry has been unprofitable for decades due to several reasons, like a bloated cost structure, vulnerability to exogenous events and a reputation for poor service. Air Deccan, SpiceJet and IndiGo all knew what to do. Southwest and Ryanair had already done it overseas. But the idea had to be customized and implemented for India. IndiGo proved that not only can you be profitable when others aren’t, but you can also do so with style and without compromising on the quality of the service delivered, as this video shows.
Living true to its tag line—On Time, Every Time—Indigo adopted clever and frugal techniques like quick changeover times, ACARS (aircraft communication addressing and reporting systems) and 48-hour advance check-ins at no extra costs, among various other innovative ideas, to become the country’s largest airline with a market share of 33 percent and the rare profitable one.Takeaway 2: Innovation Need Not Be a Long Expensive Affair
ISRO’s Mangalyaan mission proved this to the world. Innovation-driven success doesn’t always need huge investments and a lot of time. Sometimes, not having all the resources and funds just helps you innovate faster. Iterations might not always be the best way to improve; oftentimes, you need to adapt and use building blocks from earlier experiments.
India became the first country to put a probe into Mars’ orbit in the very first attempt. At a cost of roughly $73 million for 780 million Kms, the mission cost about 10 cents per Km. This is less than what many auto rickshaws charge in India. ISRO completed the Mangalyaan in just about 15 months, a record that further proves that innovative ideas don’t always need a long time.Takeaway 3: Customers Buy a “Job-To-Be-Done” and Sometimes Technology Can Be a Key Enabler
Customers want a product that helps them do a job and seldom care about the medium used. Technology can thus prove to be a key enabler and help accomplish that job in a cost effective and convenient manner. In short, technology can substitute a lot of established methods of completing a job.
Be it Perfint healthcare, which is fighting cancer using Robotics; Tata Swach, which removes up to a billion bacteria and 10 million viruses from a single liter of water at a cost of $0.003 per liter using a $20 filter; or Novopay, which uses a smartphone, a fist-size fingerprint reader and a tiny printer to transform a street-corner convenience store to a banking outlet, the one thing that stands in common between these companies is the fact that technology has helped accomplish customer requirements in non-conventional ways.
The way these initiatives have used low-cost technology to solve big problems is remarkable. The important thing is to understand that technology was not the solution, it was a strong enabler.Takeaway 4: Understand and Deliver the Unsaid!
Ever thought about being able to afford a smartphone for less than $80, accessing social media on the Internet without a data connection or gamifying customer service? These may not be what the customer asked for out loud but was more than happy to receive. A majority of products fail in the market because they don’t understand what the customer might or might not want.
Micromax has whipped global competitors like Apple and Nokia by bringing forward various innovations such as dual SIM phones, QWERTY keypads, and, most importantly, the first budget quad-core smartphone. Today, U2opia has 28 million users in 45 countries, and customers continue to find new uses of using the technology, which lets them access social media without a connection. Freshdesk gamified the whole customer service experience with every support ticket flowing in being a chance for the customer service agents to score. Today, the five-year old Freshdesk has 30,000 customers across the globe. Yes, Micromax, U2opia and Freshdesk created a product or service that they were sure customers would want in the future.
These four simple takeaways can go a long way in ensuring success with your innovation efforts. So, even if you work for a big organization, maybe it is time to learn from these companies and use innovation to drive success—faster and cheaper!Section: Structure & Methods
When we think about innovation, we often think about exploitation and exploration using existing materials. But some of the most exciting and interesting innovations come from materials that don’t even exist yet.
Just recently I read about a new material that was discovered by researchers from the University of Portsmouth. By applying the principles of biomimicry, whereby we seek to learn from nature, scientists will now try to reproduce this amazing material. What is it? It’s the tiny little teeth on the tongue of a certain kind of aquatic snail. The snail uses its tongue to scrap algae off of rocks.
Until this discovery, it was assumed that spider silk was the strongest material biologically produced. But these limpet teeth, as they’re called, appear to be considerably stronger and, perhaps even better, they seem to retain their strength very consistently across a range of sizes whereas most materials, like spider silk, get weaker as they get bigger.
With the amazing microscopes we have today, we can peer into the atomic structure of this material to see what it looks like, and with that insight we can look to reproduce it artificially. Researchers think the fibrous structures found in limpet teeth could be mimicked and used in high-performance engineering applications like race cars or aircrafts.
That’s what biomimicry is all about. Biomimicry is becoming an increasingly valuable approach to innovation. The philosophy of biomimicry is that nature has probably already solved your problem, so why reinvent the wheel? Why not spend your time instead searching for nature’s pre-existing and often elegant solution?
In writing The Innovator’s Toolkit: 50+ Techniques for Predictable and Sustainable Organic Growth, my co-authors and I included biomimicry as one of our techniques. Although biomimicry is often applied by researchers, such as those that discovered the strength of the limpet teeth, you don’t have to do that level of expensive, time-consuming research to reap the rewards of this method. Many examples of nature’s problem-solving abilities are available to the casual observer.
To get started, simply ask yourself: What would nature do to solve this problem?Tags: biomimicrySection: Structure & Methods