Innovation Playbook

 

Create an Innovation Pipeline at Your Company

Creating a simple, repeatable innovation process is essential to keep your company healthy and growing. Especially as we find ourselves in an era of rapid disruption from competitors and technology. This process will effectively engage, motivate, and train your staff to be experimental thinkers, as well as establish a lasting innovative culture.

If you have a track record of hiring talented people, then understand that great product and service innovation ideas can come from anyone in an organization, not just from the executive level. Include staff who are regularly in close contact with customer workflows, tools, and feedback; and those with vision and the ability to design and build new things.

The following suggested innovation pipeline process is ideal for encouraging creative thinking and avoiding losing great ideas in corporate bureaucracy. I invite you to try this process with your company. And hey, let me know how it goes.

 

! NEW – Now you can Get the Innovation Playbook in an easy-to-read eBook format – Free! 

 

Before You Begin

Event Types:

The best way to introduce new concepts that will improve your business is to hold periodic innovation events. The most significant benefit of doing this is that it provides an opportunity to bring together your innovative thinkers, strategists, and builders to collaborate. Keep in mind, kicking off a collision of ideas may not pay off the first time you try it. But as the right people in your company continue to socialize and collaborate on innovative strategic thinking, it sets in motion the potential for future eureka moments!

Here are two options of event types your company could try organizing:

 

• “Pitch Day” events welcome anyone in the company to present an innovative idea (a new solution to a customer problem). Participants will do this pitch in conjunction with a brief, presentation criteria, and a strict time limit.
• “Hack Days / Hackathons” are typically more of a hands-on event often seen in software development. Usually, a brief is shared defining a customer, and a critical problem they have encountered. Teams form to document a solution and build a pretotype (slides, drawing, HTML) or prototype (simple working demo).

Getting started:

Finding, or being willing to find the time to run an Innovation Pitch Day or Hack Day—as well as necessary follow-up actions—is the biggest hurdle most companies find to even get started.

While it’s never straightforward or easy, a company’s executive team must embrace and provide ongoing support for building an innovation pipeline. Leadership must have a vision, and practise tolerance for the time, resources and distractions that can go along with innovating. However, like anything else in business or life, you will get better at it the more you do it.

 

• Allocate one half or a full day to either a Pitch or Hackathon once to twice a year (for participants and organizers). It works best for Hack Days if you allocate one workday (i.e., Friday) in exchange for a Saturday volunteered by the participants.
• Set an expectation that there may need to be preparation done outside work hours in advance, and after the event for the winner(s). Make genuine effort, including sacrificing time, as part of the experience. This will help weed out potential participants who aren’t fully committed to the concept. Also, set a high bar to avoid ending up with unsubstantiated ideas on sticky notes that will never see the light of day.
• Be willing to make an ongoing allocation of time for staff during regular working hours toward identifying, testing and building innovation projects.
• Teams will self-organize for innovation events. Strongly encourage diversity in groups: Demographics, roles, seniority, a mix of idea and tactical people, etc.

 

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Key Steps to Implement your Innovation Pipeline Process

 

1. Determine the type of ideas you are looking to address at your innovation event:

 

1. a) Solution ideas for EXISTING customers and their problems:

 

• Frequently, these ideas are actual priority problems that are already on your development or planning backlog list but requires dedicated collaborative thinking to resolve

• This option can also work well when your business has matured. In this case, you are seeking new growth opportunities within the same customer space – by identifying new (to you) customer problems and unique solutions.

 

1. b) Outside-the-box ideas for NEW customers, problems, markets:

 

• Ideas based outside of your primary business and customer are the most challenging and represent the riskiest approach to innovation. You may be trying to achieve new growth success by going into markets you don’t understand well.
• Doing due diligence and experimentation on outside-the-box ideas will also take the most time. However, depending on your company’s situation, it may be worth looking outside your core business for new opportunities that you have the expertise and technical ability to address.
• When considering entering a new space, you must have existing technical skills, people, and knowledge that can be successfully leveraged. There will be a learning curve, but it’s highly recommended that you do not attempt learning everything on the job.

 

2. Organize your Innovation Event and Share the Brief

 

For EXISTING customer idea types (see Key Steps 1. a):

Hack Days are useful when you are dealing with a well-understood user, set of problems and competitors. With a Hack Day, you can get right into figuring out solutions without requiring in-depth research and analysis on the customer and market.

 

• Organize a “Hack Day/weekend,” ideally on a Friday and Saturday.
• Share a specific brief about the customer you are already selling products and services to. Provide details on their persona and the particular problems you have identified that they’re facing. Usually, in this case, you are looking for solutions to well-defined customer problems. However, your brief can also invite new solution ideas for customer problems your company has yet to identify. Translation: New revenue opportunities.
• Hack Day teams are typically made up of your business staff, developers/engineers and creatives. These teams will evaluate, strategize, consider existing competitive solutions to document and figure out their innovative solution.
• Hack Day teams create, and typically pitch a product spec document and a “pretotype” solution (slides, drawing, HTML). In some cases, with the right team and a simple solution, they may even be able to create and present an early working demo “prototype.” Now that’s exciting!

 

For NEW customer/markets innovation idea types (see Key Steps 1. b):

Pitch Day event works well if you’re trying to pivot or diversify your business model through innovation into new customer segments and industries. In this situation, you deal with many unknowns that will require more research, experimentation, time, and cost.

 

• Provide a brief that describes an existing maturity or stagnation issue with your current solutions for existing customers. This brief communicates that the company seeks innovative ideas to expand outside of your current market.
• Participants are required to demonstrate that they’ve done sufficient research on the new customers they intend to serve and any new industry and competitor market they intend to enter.
• While participants are: 1) presenting a desirable, innovative solution – they must also demonstrate that there is 2) an actual customer type with 3) a real problem that they would pay you to solve. The due diligence and experimentation phase will attempt to validate all three of these things.

 

3. Pitch

 

Each team gets a maximum of five (5) minutes to present their idea (less time if there are multiple pitches. Be ruthless on time management).

Provide participants, in advance, with the key things you want them to address in their presentation. Here is a sample list:

 

• Customer and their Key Problem(s)
• Proposed new Solution
• Unique Value Proposition of the new solution
• Key Competitors and why they matter
• White Space Position vs competition
• Market Size and Revenue Opportunity
• Proposed Channels to create and grow revenue
• Solution Demo if available

 

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Some tips for developing innovative thinking in organizations:

 

• Product-Market Fit is critical. There must be a well-defined customer with a significant problem who’d be willing to pay for your new solution. Hopefully, you’ll validate this in due diligence and experimentation, but it has to be at the front of your thinking from the start of ideation.
• Continually capture customer needs (opportunities). Write these as user stories:
  • “As a <user type>, I want <feature/functionality> so that <reason/benefit>”
• In the book Innovation to the Core, the authors Skarzynski and Gibson suggest several keys for instituting systemic innovative thinking in your company, including:
  • Leverage your assets: your people and core skills, unique knowledge, technologies. Think of your company as different competencies and strategic assets that can be connected like building blocks to create new value.
  • Look for intersections of trends and patterns. Predict what these mean for your customer.
  • Rock the boat—challenge conventional thinking in your industry.
  • Go to the extreme edges in your thinking where others don’t go. Don’t follow the leader.
  • Search for the “AND.” Where are customers being offered a trade-off (either this or that)? The “OR” is an opportunity to innovate.

 

4. Voting on the Top Presentations

 

1. Run a confidential ballot vote:
   • Voters can be a set of pre-appointed judges and should include some or all members of your executive team. Voting rights may also go to all of the participants, most of whom will have an in-depth understanding of your customer, and will welcome the best idea on the day, regardless of which team presents it.
   • Executive votes will carry the most weight. Voters can identify their top three (3) selects on a ballot, and the organizers can tabulate these votes.
   • Pro tip: Invite experienced individuals from outside your organization to participate in your Pitch Day vote. These individuals should have a track record of innovation in their professional lives.
2. To enable consistent quality of voting, provide the eligible voters with a scorecard:
   • This scorecard is a sheet listing the name of each presentation and a set of necessary items to rank each one.
   • Voters can rank the pitched ideas using a scoring system ranging from 1 to 5 (low to excellent). Voters can sum scores for each participant at the bottom of the sheet.
3. Scorecard ratings will vary for each company, but categories may include:
   • Revenue impact
   • Is it in your wheelhouse?
     • Leverages existing skills, knowledge, assets
     • You have existing customer and industry understanding;
   • Ease and speed of doing this
   • Can be done within a reasonable budget
   • The project has strong leadership
   • Aligns to industry trends
   • The project is a strong strategic fit for your company
   • Uniqueness or Innovativeness of idea
   • The purpose and vision are powerful
4. After the voting is complete, tabulate the ballots and share the results with the executive judges.
   • Take a 30-minute break, during which the executive will review the scores and discuss the pitches to align on the winners.
   • Following the break, the executive will announce the winner(s) and communicate the next steps.

 

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After you’ve selected a winning project:

 

5. Team

 

Once you’ve selected a fantastic idea that you want to begin testing, you must first form the right team(s) to carry the project forward through the due diligence and experimentation phase:

 

1. Start by having the company executive communicate clear expectations on employee time-allocation, budget, and a recommended end date for experiment validation.
2. Form a small team (2-3 people is ideal to start). Ensure they are made up of top-performing talent and have complementary skills (i.e., Product Manager, Full-stack Developer and UI/UX designer for software projects). Weak units yield inconclusive results due to poor execution in this phase.
3. Confirm the project leader. Ideally, this person has product management experience, or it’s someone with a solid business background and domain expertise.
4. Ideally, organize an experienced team that can provide validation due diligence and experimentation on multiple projects simultaneously. Pushing a higher volume of projects efficiently through a structured innovation pipeline will increase the chances of a significant project win.
5. Often in smaller businesses, the leader is the person who brought the winning idea forward, did the research preparation and pitched it. In this case, these individuals may not have the product management background to efficiently and effectively validate the project. Please note: Senior managers will need to provide ongoing business guidance to less experienced innovation leaders.
6. Regardless of who is leading the innovation, allocate senior staff time to mentor and monitor progress. Options for doing progress monitoring include daily stand-up meetings, weekly one-on-ones, and monthly check-ins.
7. The project leader and teammates must have the passion, commitment, time and talent to execute a quality experiment – including outside of working hours.

 

6. Due Diligence

 

1. Do not fall in love with your idea, and definitely don’t think it can’t miss. Instead, take a sober, objective approach and use research, data and user feedback to determine its true potential.
2. Structure your research and experimentation around validating Product-Market Fit.
   • Do full due diligence to complete a business model template such as Lean Canvas (my preference for start-ups);
   • Or, alternatively, apply the Business Model Canvas, backed up with credible, detailed information.
3. Do a significant quantity of high-quality customer and prospect (users) interviews to gather important feedback and data. It’s key that you reach outside your company walls. Talk directly to your target customer to validate them as a user with a problem, and to support the assumption they would pay for your solution.
   • Prospect/Customer (User) research methods (among many) may include:
     • One-on-one interviews with potential users.
     • Talk to customer service and sales.
     • On your website, set up calls to action or landing pages outlining a problem and offering a new solution (that you intend to build). Get clicks and registrants to prove their interest.
     • Create well-constructed pop-up or email surveys
     • Participate in targeted forum questions.
     • Organize usability testing of mock-ups, prototypes and betas, (i.e., user testing.com).
     • and more
4. Do thorough competitor research. Genuinely understand where the white space is.
   • Use the competitors’ products.
   • Interview users of the competitor products and find out what they like, don’t like, and what is missing.
   • Take plenty of notes and summarize the trends and patterns that you see. Understand and clearly articulate what the results are telling you.
   • The information gathered in the user research and competitive analysis steps is critical for validating Product-Market Fit.

 

 

Don’t skip the critical steps of gathering user feedback and competitive analysis – or you’ll waste time building products nobody needs!

 

 

7. Product/Service Build and Experimentation

We have now come to a crucial point: Combining the building and testing of the new product or service. These should be done concurrently within your process. This joint action is known as lean product development – a technique where you’re rapidly building your product but are continually seeking user validation of the features through testing—before overcommitting on development or marketing expenditure. Benefits of lean development include shorter development cycles, reduced waste and cost, and rapid reaction to prioritized customer needs.

 

1. An essential publication that emphasizes the importance of lean process and testing of new products and features is: The Lean Startup, by Eric Ries. This book provides insight into defining your business idea, structuring experiments, and testing them in an iterative process. Ries calls this process the Build – Measure – Learn feedback loop of continual learning and refinement of your product based on structured experiments and measuring how users react. Ries’s lessons originate from the lean software development world, but many apply to any industry.

For your company’s process, you will need to provide your winning innovation team(s) with a validation experiment framework. This framework includes establishing a hypothesis and experiment goal, types of questions to ask in user interviews and providing the team with a range of simple, low-cost ways to achieve a higher level of idea validation.

 

2. An excellent resource for learning how to run useful experiments online and offline is: Experimentation Works: The Surprising Power of Business Experiments, by Stefan H. Thomke. In this book, the author details the proper structure and provides examples of testing products and services in the business world. Thomke’s outline of What Makes a Good Business Experiment includes these seven things:
   • A well-structured Hypothesis
     • Defines quantifiable metrics;
     • Identifies potential cause and effect;
     • Can be shown to be false; and
     • Has a clear impact on business outcomes.
   • Organization Buy-in
     • Commitment to running an experiment and potentially getting a negative response)
   • Feasibility
     • Is the experiment workable? Can you determine cause and effect relationships
   • Reliability
     • Use techniques like randomization, blind tests and big data to mitigate the effect of uncontrollable variables
   • Understanding of Cause and Effect
     • Can you link your interventions to the outcome? Is there substantial evidence?
     • Are external variables removed as causes?
   • Maximize Value of the Experiment
     • Dig deeper into the data to understand causes. Leverage what you learn.
   • Decisions
     • Not every decision should be decided through experimentation.
       • Some tests are too difficult, inconclusive or expensive to run.
       • Often customers can’t see the future (i.e., Ford’s first car, Apple innovations).

 

 

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“We must learn what customers really want, not what they say they want or what we think they should want.”

 

Eric Ries, The Lean Startup

 

 

8. Experiment Decision Point – Persevere, Pivot or Stop

You are at the point where you’ve done an excellent job of creating a well-structured hypothesis and goals for your experiment, and a reasonable time frame was set to measure results. Now, you should be ready to decide your project’s status at designated decision points.

Your decision options are:

 

1. Persevere because your experiment data supports your initial positive hypothesis. At this point, you will continue with agile development.
   • You will need to define a new hypothesis and build new experiments to test further. Continue down that same looping path of Build – Measure – Learn, adding resources to the investigation as required as you go along; or
2. Pivot because the data tells you there’s an opportunity to do something different from the original idea. In this case, the project leader can set up an additional experiment, hypothesis, goal and framework; or
3. Stop if your experiments show that further investment of time and resources isn’t worth it.

 

9. Transition & Scale

If you persevere and see validation of Product-Market-Fit via consistent, repeatable sales of your product to your target customer, you will want to start to scale your team.

 

• In the scale phase, quality marketing, design, writing, sales, customer service and operational logistics are essential. You need to either increase the time allocation of existing subject matter experts from your company onto this growing project, or consider contracting or even hiring key new staff.
• Stay lean. Cash flow and the ability to move quickly are critical to every business, especially start-ups – even when they are inside a larger company.
• Your current project CEO is likely still the right person for the role in the early days of scaling. However, if you have a roaring success on your hands and are on your way to building a large business out of your innovation – you may need a different type of leader. Some individuals are good at starting and validating a business, while others are good at scaling and operating a more significant business. If you’re lucky, your leader can do both, but keep an eye on this.
• The right talent in the right roles is a crucial component of innovation success.

 

10. Additional Steps

 

There are valuable and essential details for successful product or service innovation and scaling that I have yet to mention, such as product naming, branding, marketing, sales and service. I will address all of these (and other important topics) in more detail through future articles in the news section of this site.

 

Conclusion

Creating an ongoing innovation pipeline in your company can be one of the smartest things you can do to maintain growth and future-proof your business against competitive and technical disruption. The steps you will take along this path include:

 

• Commit to innovation. Make it a priority in your company by allocating the time, resources, budget and patience. Be willing to endure the awkwardness of trying and learning new things.
• Establish a pipeline process through regular, structured activities like Pitch Days and Hack Days.
• Select “winning” projects for further evaluation based on their scores against set criteria.
• Put the right teams and mentorship in place to begin sufficient validation due diligence.
• Build your product efficiently by experimenting effectively – applying the Build – Measure – Learn continual feedback loop.
• Evaluate project status regularly by measuring set targets against performance metrics. Know if it’s right to persevere, pivot or stop based on what you are seeing.
• Scale validated projects by ensuring an adequate budget and the right talent is in place.

 

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Additional Resources

There is a lot of information available on innovation, and it’s easy to get overwhelmed. To help you, here are some of my favourite books and online audio on the topic:

Books:

 

• Getting Real, by Basecamp
• The Lean Startup, by Eric Ries
• The Startup Owner’s Manual, by Steve Blanc
• The Innovators Method, by Nathan Furr and Jeff Dyer
• Innovation to the Core, by Peter Skarzynski and Rowan Gibson
• The Innovators Solution, by Clayton. Christensen and Michael. E. Raynor
• Hacking Growth, by Sean Ellis & Morgan Brown
• Experimentation Works: The Surprising Power of Business Experiments, by Stefan H. Thomke

Audio:

 

• The Product Mastery Now Podcast, by Chad McAllister
• The “Jobs to be Done” Theory of Innovation, by Clayton Christensen for HBR

Other related Afdonex Articles:

 

• Top 5 Ingredients for Successful Innovation

 

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I hope that you find this article helpful. Innovation is a vast topic. I’m trying to make it more accessible to the many small and medium-size businesses for whom the innovation process can seem mysterious and intimidating.

Thanks for reading. If you have feedback on this article or tips on building an innovation pipeline that you’d like to share – please contact me at don@afdonex.com.

 

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About the Author:

Don Wieshlow is CEO of the business consultancy Afdonex and has been creating and managing products and building businesses that work for over two decades.