Defining relevant innovation – the elusive ‘credible challenge’

Credible challenge – what is it, and why is it important? 

In order for something to be credible, it requires belief.  Belief not only that each associate will be affected by the challenge, but that they can influence the outcome.  Belief that the challenge is possible, but also difficult.  Above all, belief that the challenge has relevance to the group.  It’s this last piece that I want to focus on, how to establish the belief in your stakeholder group that the defined challenge is relevant.

Relevance in this context can really be defined through evaluating ease of execution, of both your own and competing business.  This is not to say that any products or services in your market are irrelevant.  The opposite is true – all products and services in your market are relevant.  Depending on the evaluation, the challenge should be approached differently.  The intent is to drive relevance and ultimately support the credibility of the defined challenge.

The key is understanding that it is not the challenge itself, but the response required, that drives relevance for the stakeholder. 

Product mapping quadrant

 

The model above demonstrates an appropriate response for each product or service in a market, based on evaluating the ease of delivery.  Note that this evaluation is intended to cover any and all aspects of business support.  It should not be limited to the purely technical capability of production.  For example, a critical aspect of this holistic view is the profit margin and the level that is deemed acceptable.

The response in each case should be to drive the consumers accessing those products or services into the core business quadrant, by altering or switching the product. 

It is important to note here that ‘innovation’ does not include dabbling in the core business quadrant.  Although these changes to products identified as core business might be important to execute, they do not represent a challenge and will not have any significant impact on the market.  Therefore they cannot meet the definition of credible challenge.

The glaring hole in everything I have described so far (just in case you didn’t spot it) is that I haven’t included the introduction of *new* products – only the evaluation of existing ones.  As a consequence, we have also ignored the possibility of significantly growing the market. 

To be fair, this is partly deliberate, as my intent was to cover the larger business point of view, where significant market disruption is to be avoided.  If this is not possible, at least the pace of disruption should be controlled.  Ideally each product falling into the convert to alternative quadrant would spawn a successive but largely equivalent product into the reduce cost quadrant.  In reality however, genuinely new to market products could be introduced into the reduce cost quadrant, simply as a response to grow the market.  If you expand these lines of thinking, an individual product will have a lifecycle through the model.

Product mapping quadrant showing typical lifecycle

 

The interactions are in reality much more complex, with consumers shifting in and out of complex repertoires.  However, the intent of this model is to identify product innovation responses which are self-evidently relevant to the stakeholders involved in the process. 

Defining a preferred shape of products in a particular quadrant (which ultimately sets the boundaries between the quadrants), and how much of the portfolio should sit in each quadrant, will enable effective prioritization.  This prioritization can then drive a sustainable and relevant product portfolio, with new products feeding in at one end and obsolete products exiting then pipeline at the other. 

Why is my business not innovative?

Back to innovation for this article – and I’ll do at least one more follow up in the next week or so.

I wanted to explore why large businesses don’t seem to be able to successfully innovate.  As with anything, there are plenty of well-reported exceptions, but considering the level of investment in innovation those businesses make, I think my generalization is justified.

I have a theory around what a business needs to be able to innovate – there are three key elements; a credible challenge, means to deploy and conviction to deliver. 

Credible challenge is a threat or opportunity that the business associates feel direct ownership for.  The challenge needs to be self-evident, and the associates need to not only be affected by the challenge, but also have the ability to influence the outcome.  They have to be direct stakeholders.

Means to deploy are suitable and accessible resources that can be used to address the credible challenge. 

Conviction to deliver is the ability to define the credible challenge, effectively manage the means to deploy and stay the course in light of inevitable failures (and hopefully some successes too).  A pretty good definition of leadership even if I do say so myself J.

So just add those elements and you should be delivering world-class innovation in no time, right?  Probably not.  What makes this difficult is that the larger the business, the harder it is to define a credible challenge.  Conversely, the smaller the business, the more limited the means to deploy. 

The tension between 'credible challenge' and 'means to deploy' with respect to business size

Logically therefore, a ‘sweet spot’ exists – a size where a business can find optimal balance between the two.  I suspect that this ideal size is not fixed, but is actually a function of the organization and culture in place.  In fact, the optimal balance could even be different depending on the defined challenge.  Probably some other things I haven't thought of, too.

One of the well-documented exceptions I mentioned earlier, W.L. Gore and Associates, is renowned for both innovative success and revolutionary culture, and it’s pretty obvious that the second enables the first.  However, I think a key component of this is that Gore’s culture and organisation actually enables the concept of credible challenge to exist amongst a larger group size, which therefore supports a greater means to deploy than would typically be expected with such a large group.  Even so, Gore actively prevents a business unit from growing beyond a couple of hundred associates.

OK, so we’ve covered off the three elements we need to put in place, and why that’s not as easy it sounds – but how do we diagnose what is missing and adjust accordingly?  Don’t forget that this is not a case of implementing a list of stuff, but instead an attempt to deliver a best compromise across competing elements.  So being able to identify the status and adjust the balance is critical.

The effect of missing elements with the pursuit of innovation 

 

If your business can’t seem to pursue an objective long enough to deliver a result, then you’re probably directionless and need to focus on your conviction to deliver.

Continuously executing every idea you have, until you run out of resource?  A clear need to define a credible challenge and avoid being clueless.

If the problem is associates being frustrated by a lack of resources needed to make things happen, the means to deploy needs to be adjusted so that your associates don’t feel so powerless.

Of course, it’s possible to have two or even all three of these issues, but by far the most difficult to address is the credible challenge.  So in the next article we’ll discuss some thoughts around how to narrow the field at least a little.

Time, Cost, Scope, Risk, Quality and Benefit - and how they relate

So…  I felt like revisiting an old favourite this time, something I am sure that many, if not most, have seen before.  But this time I want to push it, stretch the idea as far as it will go.

The diagram below describes one of the central ideas behind Project Management – that it is necessary to balance Time, Scope and Cost (or Resource) to deliver a project.  For example, when a project is planned, the amount of Time, Scope and Cost is defined.  If something occurs which is not to plan, a compromise must be found.  Possible responses might be to reduce Scope to ensure that Time and Cost are still delivered as planned.  Or increase the amount of Time and Cost so that the full Scope is delivered.  In reality it is rarely that simple, but you get the idea.

These three parameters could be classified as inputs, and changes to any of them alters the shape of the project.  This in turn will often affect the planned outcome of the project – the Objective.  If we develop our diagram a little further, at this point we can plot our Objective on a fourth scale, the Benefit scale.

As the project progresses, we can draw lines from the planned departure points of each input towards our objective.  The length of line could denote how much of each input parameter has been consumed.  Errors in planning alter the departure point of each of these lines, as the assumption of how much of that input was required was in error.  Using this method it is clear to see that the closer the project is to completion, the harder it is to adjust for incorrect assumptions and still hit the objective. 

Further, it is apparent that should the Objective change partway through a project, although it may be possible to adjust it will also mean that consumption lines will not be straight (and therefore less efficient).

Those more familiar with Project Management will at this point be wondering about Risk and Quality – where do they fit in this model?  Let’s start with Risk.  Risk is by definition an ambiguity, and can easily be considered as a cone around each of our input parameters.  The earlier a Risk is to eventuate in a project, the greater the potential impact on the eventual objective.

Finally, Quality - assuming that our definition is consuming our three input parameters as planned to deliver our Objective.  This is by far the simplest concept, so much so I am not even going to draw it on the diagram.  Delivery of a Quality outcome is simply bringing the three input parameters together at the point of Objective, despite changes in project requirements, erroneous assumptions or eventuating Risk.  The greater the variance, the greater impact on Quality.  The key to delivering Quality is therefore alignment.  If all those involved in a project fully understand the input parameters, the Objective, the Risks, and most importantly – how these relate to each other, the result will inevitably be a Quality outcome.

Metrics that Motivate

Empowerment is generally a key factor when considering motivation, and is particularly important when defining appropriate metrics.  Creating a balance between a framework for success and freedom to operate is vital to ensure those contributing to your business are empowered to deliver.

Before we get into the challenge of empowering through metrics, we first need to understand how to evaluate whether a metric is ‘good’.  Simply, there are two key factors; clarity of ownership and clarity of expectation.  If your meeting consists of working through your metrics rather than what action you plan to take as a result, it will be because one of these factors is not clear.  The quadrant below can help diagnose when this is happening.

Diagnosing lack of clarity with respect to metrics

 

Creating clarity at first glance may seem simple, but in reality it can be quite complex to deliver the levels of clarity your organization needs.

 

As a minimum, expectations need to consider timescales, method of measurement, level of response, target and acceptable tolerance.  Ownership should include scope of inclusion, categorization and frequency of reporting.  As with many things, the devil is in the detail, and these factors become more involved as they are explored.

Now, back to empowerment.  It is important to remember that every metric is a constraint.  They shape the desired outcome.  Therefore, the more there are, the more disempowered the owner will feel.  A real danger is that so many metrics are put in place they become mutually exclusive, making success impossible.

Therefore, the fewer metrics the better, right?  Almost.

Metrics do drive behavior, and there has to be some balance.  If you put in place just a single metric for the Customer Service Manager, it would probably be to reduce the number of customer complaints.  The easiest way to do that is to reduce the number of customers served, by giving service so bad that people simply don’t stay as customers.  There is no balance, and the eventual outcome is bad for business. 

I know that is a pretty extreme example, but it serves to make the point.  I have seen many situations where this kind of behavior has been at play, and the overall business suffers as a result.

So, there is a need to create a balanced pair of metrics for each key accountability.  These can be distilled through asking two simple questions;

 

1.       What single metric should be used to establish whether the role has been done?

2.       What balancing metric should be used to establish whether the role has been done well?

 

For example, the role might be accountable to drive growth, and so annual sales growth might be the primary metric.  The balancing metric could be the percentage of profit for the total business.

 

I challenge you to give it a try, either for your own or another role - it would be great to hear how you went!



Innovative Products to Innovative Solutions

Got to thinking about innovation today.  It was peripheral to the content that was being shared, but my mind started off on the tangent anyways.  Ended up with some thoughts around where I reckon the world of manufactured goods is heading.

It seems to me that the future consumer will want to abdicate responsibility to entire areas of their life; for example their wardrobe, transportation or petcare. 



They will not want products.  They will want solutions.

To support this, businesses would need to tailor their products to the application, and ensure that those products are well embedded into the provisioning process, creating a total solution.  That's the easy bit - the real challenge will be the KNOWLEDGE required to support such a business model.

Just think for a second - how much would a business need to know about you to not only fulfil the basic requirement of such an abdication, but do it while minimising or preferably eliminating the interactive overhead (how much interaction is required to delegate the process - it's a useless proposition if you have to manually provide all the data required to support it).

The technology is there; passive collection of data, ability to translate that into knowledge, the subsequent actions required, creation of tailored products and direct provision to the end user. 

The challenge is trust, and this is why this presents a massive opportunity for strong brands.  Only a highly trusted brand could enable the consumer revolution that such a change would represent. 

However, this will require a total re-think of how a brand should be deployed, and what it represents.  The timescales become huge - a purchase decision could more closely align to a lifetime of a beloved pet, rather than the regular visit each week to the supermarket.

Given the inevitable lag from brand investment to break even, barriers to entry will rise rapidly, and those with the vision to start building specific consumer knowledge early will inevitably become those who shape the future of their industry.

Alternatively you could buy it from Facebook or Google  ;-)

Food for thought anyway.