“You have to get out of your space. There is not insight in your building.”
Rounding out Wednesday afternoon sessions at the Aurora WDC intelligence leadership symposium, RECONVERGE:G2, was a presentation by Clay Phillips, Founder and Principal, Crow’s Nest Consulting LLC, who discussed the concept of innovation intelligence.
“Merging intelligence and innovation best practices for faster and better insights and decisions in highly uncertain situations with an emphasis on opportunities rather than threats,” was the tagline for Phillips’ talk.
Objective of the talk:
- Increase understanding of lean startup innovation methodology
- Increased understand of how corporate intelligence supports and influences advanced innovation programs
- Shared learning about best practices and application by participants
What is lean startup innovation?
Most innovations fail due to poor planning, technology failure, inadequate funding, competition got there first, too few customers, and lack of focus.
The number one reason, per Phillips, is because the market isn’t there. It is a customer problem and lack of focus for startups, he noted.
Core problem for startups:
- Disruptive and transformative change
- Many ideas and opinions
- Resistance to change
- Lack of transparency
- High failure
- Need to run the core business
- Lots of noise and “innovation theater”
Startups base plans on hope and wishful thinking, but the core element of a lean approach is evidence based, stress tested business models.
Lean innovation provides:
- Integrated systems view
- Externally focused/forward thinking
- Transparent assumptions and hypotheses
- Evidenced-based insights and decisions
- Fast, repeatable, scalable, actionable
Better decisions equal better returns on innovation investment, says Phillips. Using this approach will increase probability of a “hit”—innovation is no longer a guess.
The more this is done, the more valuable the innovation portfolio will be. Premise: moving a large volume of ideas quickly though a rigorous evidence-based vetting process will lead to higher overall returns for the innovation investment portfolio.
The framework involves knowing foundations ecosystem mapping and dynamics/hypotheses formation, testing the problem, testing the solution, and testing the business.
This is a circular function, not a funnel.
If things occur in this order, better and faster outcomes result.
Decide “where you want to play,” an innovation portfolio strategy is an essential foundation. Lean innovation is well-suited for “Horizon 3” cases with new products, customers and business models.
This approach does not work well in H-1. This is about “getting around the outer limits.”
The business model canvas serves as a framework that captures and integrates the fundamentals in a visible working format. (Feasibility, desirability, and viability).
Turn guesses into evidence and insights with rapid iteration; lean innovation is highly iterative and interactive.
Large companies have advantages, but also face obstacles: Success, existing business model, established culture, hierarchies, functional silos, risk aversion, bias for incremental improvement, internal resource trade-offs, H-1 metrics among them.
Understand the innovation intelligence overlay: Know foundations, test the problem, test the business, and test the solution.
The bottom line: Identify what you bring to the table pertinent to ecosystem mapping, hypotheses formation, customer and stakeholder discover, key partnerships, biases and stress testing, story-telling.
What does your company’s innovation portfolio look like in context of your current business model? How does your company’s innovation vetting and decision making system work?
Ecosystems and Stakeholder Discovery
(In lean startup, the term is more often “customer discovery.”)
Many ways to map ecosystems include asking:
- Who does what and to whom?
- Who provides/pays for what?
- What is the value proposition?
- What are the inputs and outputs?
- How do purchase decision get made, what are the criteria?
- What are the barriers to change?
- What are the constraints?
- Who holds the power?
- Who wants change/ who does not?
- Where does the product/service fit in the ecosystem?
Ecosystem maps drive hypotheses for stakeholder discovery, says Phillips. It creates a framework for purposeful evidence collection; allows for clear validation and invalidation of assumptions; enables pattern acquisition and recognitions; and generates actionable insights.
In stakeholder and customer discovery, focus by conducting a conversation with open-ended questions. Look for situations where the person can/cannot describe the problem–they search for definition of problem, but they do not know the solution; a need exists.
“You have to get out of your space, there is not insight in your building,” says Phillips.
A second discussion point: How do you use ecosystem dynamics mapping? What approaches have had the most impact? How are you involved with stakeholder or customer discovery for innovation projects?
Stress Testing and Storytelling
Start here: Don’t believe everything you think. Our role is in challenging base assumptions. Startup people can be headstrong—they have firm beliefs; CI pros are well positioned to challenge them.
- Perception is everything: Startup owners think their idea is beautiful, but others may not.
- Cognitive biases are influential, and we need to have awareness of them. Confirmation bias is one that is prevalent. Create an antidote to the biases, says Phillips.
- Blindspots test you and your innovation teams about what’s believed to be known and unknown. Your role is to be clear and transparent on the unknowns; talk about your assumptions.
Stress-testing to identify and overcome biases:
- What must be true?
- Weakest link in the chain
- Uncertainty vs impact matrix
- Flip critical assumptions: “What if we’re wrong?”
- Red team exercise
- Who wants this to fail?”
- How could a competitor kill your business?
- “What will we do if…”
An external intel stress test must be conducted along with an internal intelligence stress test.
Storytelling vs Giving Presentations
Your work is a journey taken and a story to be told, not just a presentation to be given. When working on fundamental change, the narrative and the story must connect with people to influence them.
Emotional content, not just evidence and facts, make sense of things and provide new narratives.
You are trying to help them realize insights and reach better conclusions and decisions. Rationalization, inspiration and bridge building are essential components.
Frame your story, says Phillips: What did you think, what did you do, what did you learn, what should be done next?
Also, know your audience. Different stories can be told, within the company, “they’re going to love your story,” when you discuss your business model, it is more about investors and decision makers.
Is your intelligence team involved with innovation and business develop stress testing? How do you shape and influence the narrative?
Innovation is hard. Those who work on it are often frustrated and overwhelmed. “Insights can be exhilarating, but being airborne doesn’t mean you’re flying,” notes Phillips.
Innovation intelligence is successful when you work with innovators, and validate or invalidate a concept that can be explained to a whole group of people to generate a resource allocation decision.