Shipulski On Design

Posts Tagged ‘Competitiveness’

The race for productivity is on. And to take productivity to the next level, set limits.

To reduce the time wasted by email, limit the number of emails a person can send to ten emails per day. Also, eliminate the cc function. If you send a single email to ten people, you’re done for the day.  This will radically reduce the time spent writing emails and reduce distraction as fewer emails will arrive. But most importantly, it will help people figure out which information is most important to communicate and create a natural distillation of information. Lastly, limit the number of word in an email to 100. This will shorten the amount of time to read emails and further increase the density of communications.

If that doesn’t eliminate enough waste, limit the number of emails a person can read to ten emails per day.  Provide the subject of the email and the sender, but no preview.  Use the subject and sender to decide which emails to read.  And, yes, responding to an email counts against your daily sending quota of ten.  The result is further distillation of communication. People will take more time to decide which emails to read, but they’ll become more productive through use of their good judgement.

Limit the number of meetings people can attend to two per day and cap the maximum meeting length to 30 minutes. The attendees can use the meeting agenda, meeting deliverables and decisions made at the meeting to decide which meetings to attend. This will cause the meeting organizers to write tight, compelling agendas and make decisions at meetings. Wasteful meetings will go away and productivity will increase.

To reduce waiting, limit the number of projects a person can work on to a single project.  Set the limit to one. That will force people to chase the information they need instead of waiting. And if they can’t get what they need, they must wait. But they must wait conspicuously so it’s clear to leaders that their people don’t have what they need to get the project done. The conspicuous waiting will help the leaders recognize the problem and take action.  There’s a huge productivity gain by preventing people from working on things just to look busy.

Though harsh, these limits won’t break the system. But they will have a magical influence on productivity. I’m not sure ten is the right number of emails or two is the right number of meetings, but you get the idea – set limits.  And it’s certainly possible to code these limits into your email system and meeting planning system.

Not only will productivity improve, happiness will improve because people will waste less time and get to use their judgement.

Everyone knows the systems are broken. Why not give people the limits they need and make the productivity improvements they crave?

Image credit –  XoMEoX

Additive Manufacturing (AM) is technology/product space with ever-increasing performance and an ever-increasing collection of products. There are many different physical principles used to add material and there are a range of part sizes that can be made ranging from micrometers to tens of meters.  And there is an ever-increasing collection of materials that can be deposited from water soluble plastics to exotic metals to specialty ceramics.

But AM tools and technologies don’t deliver value on their own.  In order to deliver value, companies must deploy AM to solve problems and implement solutions.  But where to start? What to do next? And how do you know when you’ve arrived?

To help with your AM journey, below a maturity model for AM.  There are eight categories, each with descriptions of increasing levels of maturity.  To start, baseline your company in the eight categories and then, once positioned, look to the higher levels of maturity for suggestions on how to move forward.

For a more refined calibration, a formal on-site assessment is available as well as a facilitated process to create and deploy an AM build-out plan.  For information on on-site assessment and AM deployment, send me a note at mike@shipulski.com.

Execution

1. Specify AM machine – There a many types of AM machines. Learn to choose the right machine.
2. Justify AM machine – Define the problem to be solved and the benefit of solving it.
3. Budget for AM machine – Find a budget and create a line item.
4. Pay for machine –  Choose the supplier and payment method – buy it, rent to own, credit card.
5. Install machine – Choose location, provide necessary inputs and connectivity
6. Create shapes/add material – Choose the right CAD system for the job, make the parts.
7. Create support/service systems – Administer the job queue, change the consumables, maintenance.
8. Security – Create a system for CAD files and part files to move securely throughout the organization.
9. Standardize – Once the first machines are installed, converge on a small set of standard machines.
10. Teach/Train – Create training material for running AM machine and creating shapes.

Solution

1. Copy/Replace – Download a shape from the web and make a copy or replace a broken part.
2. Adapt/Improve – Add a new feature or function, change color, improve performance.
3. Create/Learn – Create something new, show your team, show your customers.
4. Sell Products/Services – Sell high volume AM-produced products for a profit. (Stretch goal.)

Volume

1. Make one part – Make one part and be done with it.
2. Make five parts – Make a small number of parts and learn support material is a challenge.
3. Make fifty parts – Make more than a handful of parts. Filament runs out, machines clog and jam.
4. Make parts with a complete manufacturing system – This topic deserves a post all its own.

Complexity

1. Make a single piece – Make one part.
2. Make a multi-part assembly – Make multiple parts and fasten them together.
3. Make a building block assembly – Make blocks that join to form an assembly larger than the build area.
4. Consolidate – Redesign an assembly to consolidate multiple parts into fewer.
5. Simplify – Redesign the consolidated assembly to eliminate features and simplify it.

Material

1. Plastic – Low temperature plastic, multicolor plastics, high performance plastics.
2. Metal – Low melting temperature with low conductivity, higher melting temps, higher conductivity
3. Ceramics – common materials with standard binders, crazy materials with crazy binders.
4. Hybrid – multiple types of plastics in a single part, multiple metals in one part, custom metal alloy.
5. Incompatible materials – Think oil and water.

Scale

1. 50 mm – Not too large and not too small. Fits the build area of medium-sized machine.
2. 500 mm – Larger than the build area of medium-sized machine.
3. 5 m – Requires a large machine or joining multiple parts in a building block way.
4. 0.5 mm – Tiny parts, tiny machines, superior motion control and material control.

Organizational Breadth

1. Individuals – Early adopters operate in isolation.
2. Teams – Teams of early adopters gang together and spread the word.
3. Functions – Functional groups band together to advance their trade.
4. Supply Chain – Suppliers and customers work together to solve joint problems.
5. Business Units – Whole business units spread AM throughout the body of their work.
6. Company – Whole company adopts AM and deploys it broadly.

Strategic Importance

1. Novelty – Early adopters think it’s cool and learn what AM can do.
2. Point Solution – AM solves an important problem.
3. Speed – AM speeds up the work.
4. Profitability – AM improves profitability.
5. Initiative – AM becomes an initiative and benefits are broadly multiplied.
6. Competitive Advantage – AM generates growth and delivers on Vital Business Objectives (VBOs).

Image credit – Cheryl

100% of the people won’t like your new idea, even if it’s a really good one like the airplane, mayonnaise or air conditioning.

I don’t know the right amount of conflict, but I know it’s not 0% or 100%.

If 100% is good, 110% isn’t better. Percentages don’t work that way.

100% alignment is not the best thing. Great things aren’t built on the back of consensus.

100% of the problems shouldn’t be solved.  Sometimes it’s best to let the problem blossom into something that cannot be dismissed, denied or avoided.

Fitting in can be good, but not 100% of the time. Sometimes the people in power need to hear the truth, even if you know they’ll choke on it.

If the system is in the way, work the rule. Follow it 100%, follow it to the letter, follow it until it’s absurd. But, keep in mind the system isn’t in the way 100% of the time.

Following the process 100% eliminates intellectual diversity. And, as Darwin said, that leads to extinction.  I think he was onto something.

Trying to fix 100% of the problems leads to dilution. Solve one at a time until you’re done.

The best tool isn’t best 100% of the time. Here’s a rule: If the work’s new, try a new tool. You can’t cut a board with a hammer.

I don’t know how frequently to make mistakes, but I know it’s not 0% or 100% of the time.

As a sport, leadership isn’t binary. That’s why we’re paid to use our good judgement.

Image credit – Joe Dyer

Is it innovation or continuous improvement or is it innovation? Is it regular innovation or disruptive innovation? Is it new enough or too new? These questions are worse than meaningless as they suck emotional energy from the organization and divert emotional energy from the business objective.

With every initiative, there are risks, rewards, and resources. Risk generally tracks with newness, reward usually tracks with incremental customer goodness and resources are governed by the work.  Risk is about the probability of tackling the newness, reward is about the size of the prize and resources are about how the work is done. There is no best amount of risk as sometimes the right amount is none and other times it’s more than everyone prefers. And there’s no best amount of reward as it depends on the company’s goals. And there’s no right amount of resources because there’s no right scope.  For all three – risk, reward and resources – the right amount depends on the context.

For bottom line projects, it’s about maintaining product functionality while eliminating waste.  And while there’s no right amount of risk, reward and resources, three filters (people, process, tools) can help get everyone on the same page.

Here are the escalating categories for people – no new people, move people from group A to group B, hire more people like the ones we have, hire new people with skills we don’t have.  And for categories for process – no new processes, eliminate steps of existing processes, add steps to existing processes, create a process that’s new to the facility, create a process that’s new to the company, create process that’s new to the industry, create a process that’s new to the world.  And for tools – no new tools, modify existing tools, buy new tools, create new tools from scratch.

There are no right answers, but if you’ve got to hire people you’ve never hired, create processes that are new-to-world, and invent new tools, it’s clear to everyone the project is pushing the envelope. And if the reward is significant and resources are plentiful, it could be a good way to go.  And if there are no new hires, no new processes, and no new tools, don’t expect extravagant rewards. It’s not an exact science, but categorizing the newness in people, process, and tools and then comparing with the reward (payoff) makes clear any mismatches.  And when mismatches are clear they can be managed. Resources can be added, the scope can be reduced and reward can be revisited.

For top line projects, it’s about providing novel usefulness to customers at a reasonable cost.  And while risk, reward, and resources must be balanced, the filters are different.  For top line, the filters are breadth of applicability, competition, is/isn’t.

Here are the escalating categories for breadth of applicability – same customer in the same application, same customers in a new application, new customers in a new market, new customers in different industry, new customers in an industry created by the project. For competition – many competitors in the same industry, fewer competitors in the same industry, fewer competitors in a different industry, no competitors (compete with no one.) And for is/isn’t – improve what is, radically improve what is, create what isn’t.

Again, no right answers. But the plan is to sell to the same customers into markets with the same powerful competitors with only a slight improvement to the existing product, don’t expect radical rewards and don’t run a project that consumes significant resources. And, if the plan is to create a whole new industry where there are no competitors and it requires an entirely new service that doesn’t yet exist, the potential reward should be spectacular, expect to allocate a boatload of resources and prepare for the project to take longer than expected or to be cancelled before completion.

Balancing risk, reward and resources is not an exact science.  And the only way to get good at it is to calibrate new projects based on previous projects.  To start the calibration process, try the process on your most recent completed projects.  Categorize the projects with the relevant filters and define the resources consumed and the realized rewards.  And when planning the next project, categorize with the filters and define the resource plan and planned rewards and see how they compare with the completed projects.  And if there are mismatches, reconcile them with the realities of the previous projects.

Image credit – Ian Sane

At some point, what worked last time won’t work this time. It’s not if the business model will go belly-up, it’s when. There are two choices. We can bury our heads in the sands of the status quo, or we can proactively observe the world in a forward-looking way and continually reorient ourselves as we analyze and synthesize what we see.

The world is dynamic, but we behave like it’s static. We have massive intellectual inertia around what works today.  In a rearward-looking way, we want to hold onto today’s mental models and we reject the natural dynamism swirling around us.  But the signals are clear. There’s cultural change, political change, climate change and population change. And a lower level, there’s customer change, competition change, technology change, coworker change, family change and personal change. And still, we cling to static mental models and static business models. But how to move from static to dynamic?

Continual observation and scanning is a good place to start. And since things become real when resources are allocated, allocating resources to continually observe and scan sends a strong message. We created this new position because things are changing quickly and we need to be more aware and more open minded to the dynamic nature of our world.  Sure, observation should be focused and there should be a good process to decide on focus areas, but that’s not the point. The point is things are changing and we will continually scan for storms brewing just over the horizon.  And, yes, there should be tools and templates to record and organize the observations, but the important point is we are actively looking for change in our environment.

Observation has no value unless the observed information is used for orientation in the new normal.  For orientation, analysis and synthesis is required across many information sources to develop ways to deal with the unfamiliar and unforeseen. [1] It’s important to have mechanisms to analyze and synthesize, but the value comes when beliefs are revised and mental models are updated. Because the information cuts against history, tradition and culture, to make shift in thinking requires diversity of perspective, empathy and a give-and-take dialog. [1] It’s a nonlinear process that is ironed out as you go.  It’s messy and necessary.

It’s risky to embrace a new perspective, but it’s far riskier to hold onto what worked last time.

[1] Osinga, Frans, P.B. Science, Strategy and War, The strategic theory of John Boyd. New York: Routledge, 2007.

image credit – gabe popa

Big companies hold tightly to what they have until they feel threatened by upstarts, and not before. They mobilize only when they see their sales figures dip below the threshold of tolerability, and no sooner. And if they’re the market leaders, they delay their mobilization through rationalization.  The dip is due to general economic slowdown that is out of our control, the dip is due to temporary unrest from the power structure change in government, or the dip is due to some ethereal force we don’t yet fully understand. The strength of big companies is what they have, and they do what it takes only when what they have is threatened.  But once they’re threatened, watch out. But, the truth is, big companies don’t make change, people within big companies make change.

Start-ups want to change everything. They reject what they don’t have and threaten the status-quo at every turn.  And they’re always mobilized to grow sales.  Every new opportunity brings an opportunity to change the game. In a ready-fire-aim way, every phone call with a potential customer is an opportunity to dilute and defocus. Each new opportunity is an opportunity to create a mega business and each new customer segment is an opportunity to pivot. The strength of start-ups is what they don’t have. No loyalty to an existing business model, no shared history with other companies, and no NIH (not invented here). But, once they focus and decide to converge on an important market segment, watch out.  But, truth is, start-ups don’t make change, people within start-ups make change.

When you work in a big company, if your idea is any good the established business units will try to stomp it into oblivion because it threatens their status quo.  In that way, if your idea is dismissed out of hand or stomped on aggressively, you are likely onto something worth pursuing. If you’re told by the experts “It will never work.” that’s a sign from the gods that your idea has strong merit and deserves to be worked. And this is where it comes down to people. The person with the idea can either pack it in or push through the intellectual inertia of company success.  To be clear – it’s their choice. If they pack it in, the idea never sees the light of day. But if they decide, despite the fact they’re not given the tools, time, or training, to build a prototype and show it to company leadership, your company has a chance to reinvent itself. What causes and conditions have you put in place for your passionate innovators to choose to do the hard work of making a prototype?

When you work at a start-up the objective is to dismantle the status quo, and all ideas are good ideas. In that way, your idea will be praised and you’ll be urged to work on it. If you’re told by the experts “That could work.” it does not mean you should work on it. Since resources are precious, focus is mandatory. The person with the idea can either try to convert their idea into a prototype or respect the direction set by company leadership. To be clear – it’s their choice. If they work on their new idea they dilute the company’s best chance to grow. But if they decide, despite their excitement around their idea, to align with the direction set by the company, your startup has a chance to deliver on its aggressive promises. What causes and conditions have you put in place for your passionate innovators to choose to do the hard work of aligning with the agreed upon approach and direction?

When no one’s looking, do you want your people to try new ideas or focus on the ones you already have? When given a choice, do you want them to focus on existing priorities or blow them out of the water? And if you want to improve their ability to choose, what can you put in place to help them choose wisely?

To be clear, a formal set of decision criteria and a standardized decision-making process won’t cut it here. But that’s not to say decisions should be unregulated and unguided. The only thing that’s flexible and powerful enough to put things right is the good judgment of the middle managers who do the work.  “Middle managers” is not the best words to describe who I’m talking about. I’m talking about the people you call when the wheels fall off and you need them put back on in a hurry. You know who I’m talking about.  In start-ups or big companies, these people have a deep understanding of what the company is trying to achieve, they know how to do the work and know when to say “give it a try” and when to say “not now.” When people with ideas come to them for advice, it’s their calibrated judgement that makes the difference.

Calibrated judgement of respected leaders is not usually called out as a make-or-break element of innovation, growth and corporate longevity, but is just that.  But good judgement around new ideas are the key to all three.  And it comes down to a choice – do those ideas die in the trenches or are they kindly nurtured until they can stand on their own?

No getting around it, it’s a judgment call whether an idea is politely put on hold or accelerated aggressively. And no getting around it, those decisions make all the difference.

Image credit Mark Strozier

Innovation is difficult because it demands new work. But, at a more basic level, it’s difficult because it requires an admission that the way you’ve done things is no longer viable. And, without public admission the old way won’t carry the day, innovation cannot move forward. After the admission there’s no innovation, but it’s one step closer.

After a public admission things must change, a cultural shift must happen for innovation to take hold. And for that, new governance processes are put in place, new processes are created to set new directions and new mechanisms are established to make sure the new work gets done.  Those high-level processes are good, but at a more basic level, the objectives of those process areto choose new projects, manage new projects and allocate resources differently. That’s all that’s needed to start innovation work.

But how to choose projects to move the company toward innovation? What are the decision criteria? What is the system to collect the data needed for the decisions? All these questions must be answered and the answers are unique to each company. But for every company, everything starts with a top line growth objective, which narrows to an approach based on an industry, geography or product line, which then further necks down to a new set of projects. Still no innovation, but there are new projects to work on.

The objective of the new projects is to deliver new usefulness to the customer, which requires new technologies, new products and, possibly, new business models. And with all this newness comes increased uncertainty, and that’s the rub. The new uncertainty requires a different approach to project management, where the main focus moves from execution of standard tasks to fast learning loops. Still no innovation, but there’s recognition the projects must be run differently.

Resources must be allocated to new projects. To free up resources for the innovation work, traditional projects must be stopped so their resources can flow to the innovation work. (Innovation work cannot wait to hire a new set of innovation resources.)  Stopping existing projects, especially pet projects, is a major organizational stumbling block, but can be overcome with a good process. And once resources are allocated to new projects, to make sure the resources remain allocated, a separate budget is created for the innovation work. (There’s no other way.) Still no innovation, but there are people to do the innovation work.

The only thing left to do is the hardest part – to start the innovation work itself. And to start, I recommend the IBE (Innovation Burst Event). The IBE starts with a customer need that is translated into a set of design challenges which are solved by a cross-functional team.  In a two-day IBE, several novel concepts are created, each with a one page plan that defines next steps.  At the report-out at the end of the second day, the leaders responsible for allocating the commercialization resources review the concepts and plans and decide on next steps. After the first IBE, innovation has started.

There’s a lot of work to help the organization understand why innovation must be done. And there’s a lot of work to get the organization ready to do innovation. Old habits must be changed and old recipes must be abandoned. And once the battle for hearts and minds is won, there’s an equal amount of work to teach the organization how to do the new innovation work.

It’s important for the organization to understand why innovation is needed, but no customer value is delivered and no increased sales are booked until the organization delivers a commercialized solution.

Some companies start innovation work without doing the work to help the organization understand why innovation work is needed. And some companies do a great job of communicating the need for innovation and putting in place the governance processes, but fail to train the organization on how to do the innovation work.

Truth is, you’ve got to do both. If you spend time to convince the organization why innovation is important, why not get some return from your investment and teach them how to do the work? And if you train the organization how to do innovation work, why not develop the up-front why so everyone rallies behind the work?

Why isn’t enough and how isn’t enough. Don’t do one without the other.

Image credit — Sam Ryan

It’s not the tools. Innovation is not hampered by a lack of tools (See The Innovator’s Toolkit for 50 great ones.), it’s hampered because people don’t know how to start.  And it’s hampered because people don’t know how to choose the right tool for the job. How to start? It depends. If you have a technology and no market there are a set of tools to learn if there’s a market. Which tool is best? It depends on the context and learning objective. If you have a market and no technology there’s a different set of tools.  Which tool is best?  You guessed it.  It depends on the work. And the antidote for ‘it depends’ is good judgement.

It’s not the process.  There are at least several hundred documented innovation processes. Which one is best? There isn’t a best one – there can be no best practice (or process) for work that hasn’t been done before. So how to choose among the good practices? It depends on the culture, depends on the resources, depends on company strengths. Really, it depends on good judgment exercised by the project leader and the people that do the work.  Seasoned project leaders know the process is different every time because the context and work are different every time. And they do the work differently every time, even as standard work is thrust on them. With new work, good judgement eats standardization for lunch.

It’s not the organizational structure. Innovation is not limited by a lack of novel organizational structures. (For some of the best thinking, see Ralph Ohr’s writing.) For any and all organizational structures, innovation effectiveness is limited by people’s ability to ride the waves and swim against the organizational cross currents. In that way, innovation effectiveness is governed by their organizational good judgement.

Truth is, things have changed. Gone are the rigid, static processes. Gone are the fixed set of tools. Gone are the black-and-white, do-this-then-do-that prescriptive recipes. Going forward, static must become dynamic and rigid must become fluid. One-size-fits-all must evolve into adaptable. But, fortunately, gone are the illusions that the dominant player is too big to fail. And gone are the blinders that blocked us from taking the upstarts seriously.

This blog post was inspired by a recent blog post by Paul Hobcraft, a friend and grounded innovation professional. For a deeper perspective on the ever-increasing complexity and dynamic nature of innovation, his post is worth the read.

After I read Paul’s post, we talked about the import role judgement plays in innovation.  Though good judgement is not usually called out as an important factor that governs innovation effectiveness, we think it’s vitally important. And, as the pressure increases to deliver tangible innovation results, its importance will increase.

Some open questions on judgement: How to help people use their judgement more effectively? How to help them use it sooner? How to judge if someone has the right level of good judgement?

Image credit – Michael Coghlan

Disruption, as a word, doesn’t tell us what to do or how to do it.  Disruption, as a word, it’s not helpful and should be struck from the innovation lexicon.  But without the word, what’s an innovator to do?

If you have a superpower, misuse it. Your brand’s special capability is well known in your industry, but not in others. Thrust your uniqueness into an unsuspecting industry and provide novel value in novel ways. Take it by storm. Contradict the established players. Build momentum quickly and quietly.  Create a step function improvement. Create new lines of customer goodness. Do things that haven’t been done. Turn no to yes.

Don’t adapt your special capability, use it as-is. Adaptation is good, but it’s better to flop the whole thing into the new space.  Don’t think graft, think transplant.  Adaptation brings only continuous improvement.  It’s better to serve up your secret sauce uncut and unfiltered because that brings discontinuous improvement.

Know the needs your product fulfills and meet those needs in another industry.  Some say it’s better to adapt your product to other industries, and to achieve a reasonable CAGR, adaptation is good.  But if you’re looking for an unreasonable CAGR, if you’re looking to stand things on their head, try to use your product as-is. When you can use your product as-is in another industry, you connect dots only you can connect and meet needs in ways only you can.  You bring non-intuitive solutions. You violate routines of accepted practice and your trajectory is not limited by the incumbents’ ruts of success. You’ll have a whole new space for yourself. No sharing required.

But how?

Simply and succinctly, define what your product does.  Then, make it generic and look to misapply the goodness in a different application. For example, manufacturers of large and expensive furniture wrap their products in huge plastic bags to keep the furniture dry and clean during shipping. Generically, the function becomes: use large plastic bags to temporarily protect large and expensive products from becoming wet.  Using that goodness in a new application, people who live in flood areas use the large furniture bags to temporarily protect their cars from water damage.  Just before the flood arrives, they drive their cars into large plastic bags and tie them off.  The bags keep their car dry when the water comes.  Same bag, same goodness, completely unrelated application.

And there’s another way.  Your product has a primary function that provides value to your customers. But, there is unrealized value in your product that your existing customers don’t value. For example, if your company has a proprietary process to paint products in a way that results in a high gloss finish, your customers buy your coating because it looks good. But, the coating may also create a hard layer and increase wear resistance that could be important in another application. Because your coating is environmentally friendly and your process is low-cost, new customers may want you to coat their parts so they can be used in a previously non-viable application.  There is unrealized value in your products that new customers will pay for.

To see the unrealized value, use the strength-as-a-weakness method.  Define two constraints: you must sell to new customers in a new industry and the primary goodness, why people buy your product, must be a weakness.  For example, if your product is fast, you’ve got to use unrealized value to sell a slow one. If it’s heavy, the new one must be light. If small, the new one must be large.  In that way, you are forced to rely on new lines of goodness and unrealized value to sell your product.

Don’t stop continuous improvement and product adaptation.  They’re valuable. But, start some discontinuous improvement, step function increases and purposeful misuse.  Keep selling to the same value to the same customers, but start selling to new customers with previously unrealized value that has been hiding quietly in your product for years.

Evolution is good, but exaptation is probably better.

Image credit – Sor Betto

What would you do if:

You had to push through your fear of being judged?

You had to break some rules to get an idea off the ground?

You had a concept that would displace your most successful product?

Your colleague tried to scuttle your best idea?

You knew it was time to stop judging yourself negatively?

Your colleague asked you to help with a hair-brained idea?

You were asked to facilitate a session to create new concepts, but no one could explain what would happen after the concepts were created?

You weren’t afraid your prototype would be a success?

You thought you knew what the customer wanted, but didn’t have the data to prove it?

You were asked to create patentable concepts you knew would never be commercialized?

Your prototype threatened the status quo?

You were asked to facilitate a session to create new concepts and told how to do it?

You were told “No.”

You saw a young employee struggling with a new concept?

You were blocking yourself from starting the right work?

You thought your idea had merit, but you needed help testing it in the market?

You were asked to follow a standard process but you knew there wasn’t one?

You were asked to come up with new concepts though there were five excellent concepts gathering dust?

You were told there was no market for your new-to-world prototype?

You had to bolster your self-confidence to believe wholeheartedly in your idea?

There is a name for what you would do. It’s called innovation.

image credit – UnknownNet Photography

When companies want to innovate, there are three things they can change – products, services and business models. Products are usually the first, second and third priorities, services, though they have a tighter connection with customer and are more lasting and powerful, sadly, are fourth priority.  And business models are the superset and the most powerful of all, yet, as a source of innovation, are largely off limits.

It’s easy to improve products. Measure goodness using a standard test protocol, figure out what drives performance and improve it. Create the hard data, quantify the incremental performance and sell the difference.  A straightforward method to sell more – if you liked the last one, you’re going to like this one. But this is fleeting. Just as you are reverse engineering the competitors’ products, they’re doing it to you. Any incremental difference will be swallowed up by their next product. The half-life of your advantage is measured in months.

It’s easy for companies to run innovation projects to improve product performance because it’s easy to quantify the improvement and because we think customers are transactional. Truth is, customers are emotional, not rational. People don’t buy performance, they buy the story they create for themselves.

Innovating on services is more difficult because, unlike a product, it’s not a physical thing. You can’t touch it, smell it or taste it.  Some say you can measure a service, but you can’t. You can measure its footprints in the sand, but you can’t measure it directly. All the click data in the world won’t get you there because clicks, as measured, don’t capture intent – an unintentional click on the wrong image counts the same a premeditated click on the right one. Sure, you can count clicks, but if you can’t count the why’s, you don’t have causation. And, sure, you can measure customer satisfaction with an online survey, but the closest you can get is correlation and that’s not good enough.  It’s causation or bust.  You’ve got to figure out WHY they like your services. (Hint – it’s the people who interface directly with your customers and the latitude you give them to advocate on the customers’ behalf.)

Where services are difficult to innovate, the business model is almost impossible. No one is quite sure what the business model actually is an in-the-trenches-way, but they know it’s been responsible for the success of the company, and they don’t want to change it. Ultimately, if you want to innovate on the business model, you’ve got to know what it is, but before you spend the time and energy to define it, it’s best to figure out if it needs changing.  The question – what does it look like when the business model is out of gas?

If you do what you did last time and you get less in return, the business model is out of gas.

Successful models are limiting. Just like with the Prime Directive, where Captain Kirk could do anything he wanted as long as he didn’t interfere with the internal development of alien civilizations, do anything you want with the business model as long as you don’t change it. And that’s why you need external help to formally define the business model and experiment with it. The resource should understand your business first hand, yet be outside the chain of command so they can say the sacrilegious things that violate the Prime Directive without being fired.  For good candidates, look to trusted customers and suppliers.

To define the business model, use a simple block diagram (one page) where blocks are labelled with simple nouns and arrows are labelled with simple verbs. Start with a single block on the right of the page labelled “Customer” and draw a single arrow pointing to the block and label it.  Continue until you’ve defined the business model.  (Note – maximum number of blocks is 12.)  You’ll be surprised with the difficulty of the process.

After there’s consensus on the business model, the next step is to figure out how the environment changed around it and to identify and test the preferred evolutionary paths. But that’s for another time.

Image credit – Steven Depolo