Shipulski On Design

When money is tight, it’s still important to do new work, but it’s doubly important not to waste it.

There are a number of models to increase the probability of success of new work.  One well known approach is the VC model where multiple projects are run in parallel.  The trick is to start projects with the potential to deliver ultra-high returns.  The idea isn’t to minimize the investment but to place multiple bets.  When money’s tight, the VC model is not your friend.

Another method to increase the probability of success is to increase the learning rate.  The best known method is the Lean Startup method.  Come up with an idea, build a rough prototype, show it to potential customers and refine or pivot.  The process is repeated until a winning concept finds a previously unknown market segment and the money falls from the sky.   In a way, it’s like the VC Model, but it’s not a collection of projects run in parallel, it’s a sequential series of high return adventures punctuated by pivots. The Lean Startup is also quite good when money’s tight.  A shoe string budget fosters radical learning strategies and creates focus which are both good ideas when coffers are low.

And then there’s the VC/Lean Startup combo. A set of high potential projects run in parallel, each using Lean’s build, show, refine method to learn at light speed.  This is not the approach for empty pockets, but it’s a nice way to test game changing ideas quickly and efficiently.

Things are different when you try to do an innovation project within a successful company. Because the company is successful, all resources are highly utilized, if not triple-booked.  On the balance sheet there’s plenty of money, but practically the well is dry.  The organization is full up with ROI-based projects that will deliver marginal (but predictable) top line growth, and resources are tightly shackled to their projects.  Though there’s money in the bank, it feels like the account is over drawn.  And with this situation there’s a unique and expensive failure mode lurking in the shallows.

The front end of innovation work is resource light. New prototypes are created quickly and inexpensively and learning is fast and cheap.  Though the people doing the work are usually highly skilled and highly valuable, it doesn’t take a lot of people to create a functional prototype and test it with new customers.  And then, when the customers love it and it’s time to commercialize, there’s no one home. No one to do the work. And, unlike the relatively resource light front end work, commercialization work is resource heavy and expensive. The failure mode – the successful front end work is nothing but pure waste.  All the expense of creativity with none of innovation’s return.  And more painful, if the front end was successful the potential failure mode was destined to happen. There was no one to pick it up from the start.

The least expensive projects are the ones that never start. Before starting a project, ask “What if it works?”

image credit – jumping lab

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