Don’t Ask If Your Industry is Ripe for Disruption

“Is your industry ripe for disruption?”  This is a common headline in the innovation space.  What usually follows is a list of industries and some bullet points about what makes them prime targets for competitive interference. 

If you’re letting these analyses drive your innovation activities, you’re missing the point.  Here’s why:

             1.      The Future is Created, not Predicted

What industry is not ripe for disruption?  Companies often think they have a lock on market share based on data, trends, research, etc.  No wonder they’re surprised when confronted with upstarts that overturn traditional ways of thinking about their market. 

The disruptions that occur often defy expectations.  And prediction.   Expert entrepreneurs disrupt industries by following the principles of Effectuation as outlined by Dr. Saras Sarasvathy of UVa’s Darden School of Business. 

The “unifying principle” of Effectuation is that of Pilot in the Plane.  This asserts that innovations are not “found”.  They are created through deliberate actions and responses on behalf of the innovator.  They do not arise based on “vision”, but on action. 

2.      Unanticipated Happenings are Not to be Feared, but Embraced

The tone of these articles on disruption is usually fear based.  “Companies need to do x”; or “beware of y”.  It paints the picture of unanticipated acts as threatening.  This is a very plan oriented, causal or “managerial” mindset.  If it hasn’t been identified ahead of time, it must be mitigated against or eliminated.  There is no room for the unexpected in corporate strategic planning. 

Dr. Sarasvathy learned from her research on expert entrepreneurs that their mindset is the inverse.  They not only leave room for the unexpected, they encourage it.  And when they do encounter it, they don’t attempt to quash it.  Instead they ask themselves “how can I use this to my advantage”.  Consistent with the entrepreneurial mindset of viewing everything you have as a potential asset, even the unexpected that entrepreneurs encounter are put in that same category. 

3.      Innovating is Not Equal to Adapting

Industry focused articles often promote the herd mentality.  Once they identify that the industry should innovate, they usually recommend a direction.  Using these analyses to drive your innovation efforts can lead to a “follow the pack” bias that shortchanges the internal innovation process.  Innovation built on this mindset is grounded in benchmarking and best practices.  At best, it will induce the organization to make a slight change in future plans, or prepare better for the known future.  What it won’t do is stimulate truly breakthrough “unknowable” innovations. 

What to Do Instead

1.         Don’t wait for someone to tell you your industry needs to innovate.  Start now. 

2.         Empower your people to shift their mindset from predicting and adapting to Effectuating and creating.   

3.         Leave room in your innovation planning for the unplanned.  And when it does occur, capitalize on it. 

Next time you see a headline asking “Is your Industry Ripe for Disruption?” move on to the next article.  The answer is always “Yes”.  

--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC

Effectuation: When You Can’t Rely on Miracles

Roche Parmaceuticals is a big corporation in many ways.  It appears on the Fortune Global 500, the list of Best Companies to Work For, and Forbes’ list of the Fifty Most Innovative Companies. 

But when it comes to innovation Roche acts less like a corporation and more like an entrepreneur.  Roche’s CEO Severin Schwan was interviewed for the January 2016 edition of the McKinsey Quarterly, “Organizing for Breakthrough Innovation”.  

There are several examples of Effectual thinking, the mindset developed by Dr. Saras Sarasvathy of the University of Virginia’s Darden School of Business, in this interview.  The specific principles and terms of Effectuation aren’t there.  But underneath some very corporate vocabulary lurk the behaviors of expert entrepreneurs.

What Roche is Doing and How it is Rooted in Effectuation

1.      Bottoms Up Innovation with Top Down Allocation

Roche pushes innovation control down to lower levels of the organization.  Resource allocation remains at the top levels to ensure some coordination and consistency worldwide.  But the freedom to create and pursue new ideas rests at the local level. 

Because of local level autonomy, Roche sees some overlap in ideas from time to time.  Recognizing that this signals an inefficiency, there is a conscious cultural decision to absorb this inefficiency for the benefits gained from letting the lower levels innovate with less top-down interference. 

Moreover, Roche goes beyond dismissing the inefficiencies to embrace the notion that duplicate ideas could even serve the benefit of providing backups or collaborations for innovations.  This mindset that similar ideas do not have to be competing with each other, or a waste, is something we see in the Effectual mindset of expert entrepreneurs that allows them to view competitors as potential partners and collaborators.  This often leads to an “increase the pie” mentality that spawns new innovations rather than an “all or nothing” fear based mentality. 

2.      Scale is not an Early Stage Concern

Roche is a huge company in search of big ideas to solve big problems, so of course large-scale breakthroughs are desired.  However, the Effectual mindset prevails in that they are able to successfully hold off on evaluating the scale potential of an idea until it is given its chance to succeed. 

This is often a struggle for large companies that want to see instant results.  If not, they kill the new program or product.  Roche is in it for the long haul and gives new research the chance to take effect, and the scientists the chance to learn, grow, and adapt their treatments before they evaluate the scale potential of the idea. 

3.      Individual Accountability and Skin in the Game

Ideas require champions.  Individuals must commit to the ideas they back and they must get others on board as advocates.  If people aren’t willing to back their innovation and put skin in the game towards advancing them, the idea is not pursued. 

Once an idea is adopted as a corporate priority, one individual is given accountability for the success of that initiative.  And that accountability is pushed to the lowest level possible to give them the greatest amount of hands on control. 

4.      Cultivation of Specific Behaviors

 Three behaviors are observed as essential to their innovation success.

o   Self-initiative

o   Action in the face of ambiguity

o   Openness to outside ideas

These are all fundamental components of Effectual action.  Comfort with taking action in the midst of uncertainty stems from the knowledge that the individual has the opportunity to control the outcomes they are pursuing.  They’re not taking a chance on fate, but entering an arrangement they can influence in their favor.  Coupled with self-initiative, this aligns closely with the Pilot in the Plane Principle of Effectuation. 

Openness to outside ideas is expressed as both openness to diversity as well as openness to the value of partnering with other people, groups, or companies.  This is what opens the door to successful co-creating (i.e. the Crazy Quilt Principle)

5.      Management and Board Alignment

Mr. Schwan talks of going to the Board with long shot ideas.  But he presents those ideas in “digestible” pieces and “doesn’t bet the farm” (i.e. the Affordable Loss Principle).  Married with a strategic focus on the long-term, this enables the Board to back Mr. Schwan’s vision and leadership and creates a supportive management environment for innovation.   

Creating the Cures Instead of Hoping for Them

Roche isn’t the only corporation seeking to solve big problems with innovative solutions.  Effectuation has been proven to be an effective decision making framework in the face of uncertainty.  It’s the mindset that enables successful startups to navigate the early stages and create unforeseen outcomes. 

Mr. Schwan never mentions the word “Effectuation”.  He might not even know that there’s a word to describe this mindset.  But it’s clear by his actions that he values the Effectual process.  And this puts Roche one step closer to creating miracles, not just hoping for them. 

--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC

Obstacles to Asking and How to Overcome Them

Heads you lose.  Tails you lose.  If that’s the bet, do you take it?  No.

For many people, that’s how they look at Asking.  Making an Ask can be a scary prospect.  If you don’t ask, you don’t get.  That’s a losing proposition.  Yet if you do ask, the result could also go poorly.  Another loss. 

How do you manage this?  The answer for many is – avoid asking.  But if you’re trying to bring an innovation into the world, that’s not an option. 

Instead, try these three steps:

1.      Recognize what’s keeping you from asking.

2.      Learn the tactics to overcome that issue.

3.      Ask, ask, and ask some more.

Over the past five years, Sara Whiffen of Insights Ignited has worked with Dr. Saras Sarasvathy of the University of Virginia’s Darden School of Business to uncover what it is that prevents people from asking.  They have interviewed and surveyed successful askers, unsuccessful askers, and those who avoid asking altogether.  While there is still a lot of analysis to be done, a few key obstacles to asking are already emerging.  

1.      Cultural Bias of the Self Made Myth

American culture is deeply rooted in the idea of being self made – lifting yourself up by your own bootstraps.  The idea that one person can do it all and grow a successful venture without assistance is completely unrealistic.  All innovative ideas require someone to take a chance on them, to opt in to participate.  Asks are necessary to grow ideas.

Tactics for Overcoming

Stories of legends are often written to inspire.  But they can gloss over many of the gritty details.  Take another glance at entrepreneurs you admire.  Look deeper into their stories for how Asks have fueled their success.  As a tool, Asking is amazingly versatile and can be applied in myriad ways.  

2.      Excess Empathy

No one likes to be put on the spot.  To be cold called, feel unprepared, or blindsided.  Everyone has had that experience at some point; feeling time stand still while you search for an appropriate answer to a tough questions. Some people hesitate to make Asks because they identify strongly with that uncomfortable feeling and don’t want to put others in that situation. 

Tactics for Overcoming

If you tend to exhibit a high degree of empathy, go ahead and put yourself in the shoes of the person you’ll be asking, but do so from a positive perspective. Imagine them wanting to help, wanting to build a relationship with you, wanting to connect with your idea and move it forward.  Phrase your Ask in a way that invites them to collaborate with you.  Don’t make demands or leave them feeling as if it is easier to disengage than to form a partnership with you.  

3.      Fear of Rejection

This is the most common explicit fear.  “What if the person I ask says No to my request?”  In that case, you won’t get what you want.  Which would happen anyway if you didn’t ask.  Either way, the outcome is identical.  But by putting your Ask out there, you risk a loss of pride.  Fear of personal rejection can be even stronger than the fear of not getting your request.

Tactics for Overcoming

Separate yourself from the Ask.  A rejection of the request is not a rejection of you personally.  It might not even be a rejection of your idea. 

Why, then, is the person saying No?  For whatever reason they don’t feel that they can commit resources towards your request. 

Studies have shown that most people want to respond to requests in a positive way.  Take comfort in knowing that as awkward as you felt hearing a No, it’s likely the other party felt just as awkward saying No. Successful salespeople and entrepreneurs alike know you will often hear many No’s before you hear a Yes. 

 4.      Fear of Acceptance

You’ve asked.  They’ve said, “Yes”.  Now what?  You have to deliver.  This is when things become real.  Now you’re on the hook to make things happen.  This can also keep people from Asking.

Tactics for Overcoming

Start with asking yourself “Do I really want to do this?”  and “Why?”. Understanding your motivations for entering into this new venture can help you overcome the Fear of Yes.  Keep it front of mind when the panic of delivery creeps in or you feel a crisis of confidence and go back to why this new venture matters to you. 

Also, now is a good time to lean on your co-founder.  Leverage this relationship to ease doubts and improve your ability to follow through on new commitments. 

5.      Fear of Maybe

Sometimes, hearing a “maybe” can be even worse than a “yes” or “no”.  It leaves things in an ambiguous state.  It elicits more questions than when you began and throws the Asker back into wondering what the resolution will be.  Avoiding this uncertainty is enough to keep some from making an Ask in the first place.

Tactics for Overcoming

Try asking in a more open way.  Instead of using “closed” Asks, drive towards a commitment by asking “What would it take to...” or “How could we…”.  These lead to more conversational opportunities and give the person being asked more room to discuss options and possibilities.  As the asker, you get more insights into how they make decisions, their priorities, and considerations.  Even if the discussion results in a “maybe”, you will have more information at your disposal for future interactions. 

Moving Forward with Asking

You can’t be a successful entrepreneur without the Ask.  It’s a necessary component of bringing innovations out of your head and into the world.  If you identify with any of these obstacles to asking, try the tips suggested.  And then Ask away.  Whatever the answer – you can’t lose. 

--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC

Asking is the Answer

“I have so many great business ideas, but I don’t know how to get started.”  This is a common refrain.  Where to begin?  The most effective way to move your ideas forward is by Asking.

Effectuation offers a process for innovating during times of uncertainty.  As you look at each principle, its foundation is an Ask.  Dr. Sarasvathy at the University of Virginia’s Darden School of Business, originator of Effectuation, has identified the “Ask” as the single most important granular unit required for entrepreneurial success.  Mastering the concepts around Asking increases the likelihood of favorable entrepreneurial outcomes. 

Four Categories of Asks   

There are four phases in delivering innovative ideas.  The first is identifying what you want to move forward with.  The second is getting stakeholders to buy into helping you bring forth the idea.  The third phase is getting participation from those outside your stakeholder network.  And the fourth phase is scaling the idea.

Each of these phases requires a particular type of Ask proficiency.  

1.      Ask Yourself

At the beginning you’ll want to become adept at Asking yourself some key questions.  These include: 

• Who am I?
• What do I know?
• Who do I know?

The answer to these questions will clarify your interests, values, and priorities.  Truly ask yourself these questions.  Be honest with your responses.  The results will surprise you.  You will see that you already have a significant amount of resources at hand with which to begin your innovation process. 

For example, when asking yourself “Who am I?”, consider your likes, dislikes, experiences, passions, etc.  Dive deeper into this by asking yourself:

• What is my reason for doing this?
• What outcomes would I like to see happen?
• What am I most afraid of?

This also becomes the building block for your story.  The more you understand yourself and your motivations for pursuing this innovation path, the more authentic you can be when making Asks of others.   

2.      Ask Others

It’s not always easy to ask someone for something.  But for entrepreneurs, it’s essential.  After asking yourself, one of the first Asks required to advance an innovative idea is asking someone to partner with you to make it happen.  Getting a co-founder on board, a champion, or an advocate of some sort who complements your skill set and can bring additional resources to the table is a fundamental requirement for entrepreneurial success. 

Many venture capital groups won’t even talk to an entrepreneur unless they have a co-founder vested in their concept.  Why?  Having two founders significantly increases your odds of succeeding.  In order to get this person to commit, you’ll have to Ask.  Once you’ve achieved this, and begin to see the value that this one Ask can bring to your venture, you’ll be more likely to continue increasing the number and complexity of your Asks to others.  

3.      Get Others to Ask You

As word gets out about your innovation, you’ll find yourself in situations you hadn’t anticipated – meeting with new people and organizations.  In this phase, you again broaden your experience with Asking by getting others to ask you.   As you have co-creative conversations, you’ll want to present your ideas in a way that invites others to join. 

Forget focusing on pitching where you throw out a series of facts, features, and fantasy about what your innovation could grow to be and ask someone if they’re in or out – take it or leave it.  Instead, paint a picture of opportunity where you give others the chance to identify ways in which they see a role for themselves in advancing your venture.  Give them the time and space to create a role for themselves and Ask you for the opportunity to participate. 

4.      Get Others to Ask for You

In the final phase, your idea is out there and growing.  At this point, the focus is scale.  How can you broaden your impact?  Get others to Ask for you.  Create a culture of Asking in your organization.  Don’t just promote it, but put it into practice.

This increases the amount of influence an entrepreneur is able to have and expands their reach.  In order for someone to Ask on your behalf, they must feel vested in the outcomes.  Continue to be open to stakeholder participation.  This further magnifies the effect. 

Figuring out the first step in an innovation process can appear daunting at first.  It’s not.  Start with Asking.

--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC

Three Innovation Missteps that Sunk Yahoo

Two guys in a trailer cluttered with pizza boxes on Stanford’s campus, crawling the Internet looking for new websites.  This is how Yahoo came to be.  It was a card catalog for the expansive information library that the World Wide Web was fast becoming.  And users quickly saw the value.  It was a fast, free way to find what one was looking for online.

Fifteen years later, Yahoo was languishing.  They had lost users, focus, and lots and lots of money.  They blamed their competition for this.  They envied Google’s sophisticated search technology.  Seeking to capture some of this magic, they hired from Google’s ranks. 

Marissa Mayer was brought in from Google to be Yahoo’s CEO in 2011.  She is a computer scientist with expertise in complex algorithms and artificial intelligence.  Her mission in this role was to reignite revenue for Yahoo. 

Unfortunately, Mayer brought a predictive mindset to the task at hand.  She attempted to pick winners and guess where the market was moving rather than create markets.  Looking at her tenure there were three primary missteps.  Had she been an effectual thinker, she might have approached these areas differently:

1. A focus on what Yahoo wasn’t instead of what they were.  

Mayer was to bring what was working in Google to Yahoo.  By adhering to this idea, she ignored a lot of what made Yahoo unique and its valuable internal assets.  Yahoo’s founding was rooted in both science and people.  They applied scientific logic to create search catalogs, but Yahoo was driven by human decision-making.  The employees felt strong ownership and saw a role for themselves in developing a catalog that made sense. 

Mayer attempted to replicate and squeeze into Yahoo a Google “best of” compilation.  This left committed Yahoo employees feeling frustrated and undervalued, diminishing their contributions over time.  It also led to the discarding of what made Yahoo unique in a quest for making them “just like”.  

2. A strategy of picking winners rather than creating markets.

Mayer went on a buying binge at Yahoo.  Polyvore, Tumblr, Summly, even a stake in the Chinese marketplace Alibaba were all purchased.  Most failed to be adequately integrated.  None were fully optimized.  

Yahoo never fully took on the role of making these acquisitions successes.  All told, these fifty-three or so acquisitions cost Yahoo about $2.5 billion – and that was more than they could afford to lose.  Mayer left Yahoo with no runway for innovation trial and error and exposed their vulnerabilities for a takeover.  

3. A “Build it and they will come” focus instead of a user, or better yet, customer, focus.

This is an area Yahoo has struggled with since its inception.  They had users – lots of them - but were late to the game with monetizing them.  Only after expense and VC pressure was applied were the initial founders focused on extracting revenue from their model.  Prior to that, Yahoo’s search cataloging was a hobby and then a free user based community.  

Yahoo never had a revenue model that captured the uniqueness of what they had to offer.  They jumped into the advertisement model since that was the main monetization path at the time.  But there was never a direct correlation between those who got the most value from the site and those who paid. 

Mayer took a predictive approach and attempted to guess what Yahoo users wanted and would pay for.  She placed some big bets.  In the end, she was wrong.  Only after they built things did they seek to monetize them, rather than constructing commitment based relationships that would guarantee revenue.  

We all know how this story ends – Verizon purchased Yahoo for $4.8 billion three days ago, on July 25, 2016.  For Mayer, the ending wasn’t all that bad.  She’s walking away with around $50 million reportedly. 

For the rest of Yahoo’s employees, their future is more uncertain.  But they have talent.  And they have networks.  If they combine this with effectual thinking, we might see some innovations from this group after all.   

--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC

Finding Innovation in Unexpected Places…like Sears!

Have you ever lost your keys?  You turn your house upside down looking for them?  You exhaust all possibilities?  And then find them right under your nose? 

Corporate innovation can be similar to this scenario.  Often, companies spend a lot of time and resources searching for innovation possibilities.  They scour remote recesses of their organizations.  What they miss, however, is that an innovative option might be right in front of them. 

Sears was in this situation.  Their lost item was revenue.  For years they’ve struggled, bleeding money.  Once bustling stores now frequently stand full of merchandise but absent of customers.  They changed leadership, restructured, closed stores, experimented with sales and promotions.  But there was little improvement.  Customers continued to shop elsewhere.  

It took them a long time to see that while there were many things going wrong with the company, there were some things that were going well.  And a path to profitability could be built on this existing strength.  That strength was their delivery process.  Born from their sales of large appliances, Sears had developed an infrastructure for delivering large items, installing them, and removing the originals. 

So Sears decided to extract their delivery process as a standalone service and focused on ways to leverage that capability.  The result is Innovel Solutions.  Innovel Solutions is a logistics service set up to deliver large items from big box stores to consumers.

Rebranding their delivery process enabled Sears to approach other big box stores as potential customers.  For example, a primary customer of Innovel is Costco.  Costco is a competitor to Sears in terms of large appliance sales.  But today, if a customer buys a TV from Costco, it will likely be delivered and installed in their home by Innovel (unbeknownst to customers -- a Sears logistics company!). 

Innovation Insights From Sears / Innovel

We’re used to seeing innovation examples from Apple or Google.  But what innovation insights might Sears have to offer? 

• Innovations don’t have to be new.  They can be something that’s existed for a while or that has slowly grown over time.  In some cases, the innovative element is the creative application of a process, technology, or product - how things are taken apart, put back together, or rearranged.  Sears has been delivering large items for decades.  The innovation is in how this service is now being applied to competitors’ product delivery.

• Innovations don’t have to be big.  They can start small.  Sears started with finding a big partner who was willing to sign on to outsource their delivery – Costco.  With the success of this relationship, other big box retailers are following.  And the more customers Innovel acquires, the more it invests in its logistics technology, improving the service over time. 

• Innovations don’t have to be novel.  UPS already does delivery.  As does FedEx.  So why would Costco go with Innovel?  They provide more than just delivery.  They’ve added installation and removal to the process.  Each of these processes exists today as a stand-alone.  It’s the combination that’s driving this innovation success. 

For companies that are seeking innovative ideas to grow revenue – keep searching.  Novel ideas, new concepts, and creative programs are within your grasp.  But while you’re brainstorming what could be – don’t forget about what already is.  That innovation you’re looking for to drive more revenue your way…it might already be right in front of you.   

--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC

From Maps to Mania: Three Innovator Contradictions in Pokémon Go’s Success

In the mid 1990s, John Hanke launched his first online video game. Twenty years later, John Hanke is the entrepreneur behind an animated gaming app that has pushed augmented reality into mainstream use – Pokémon Go.

From Maps to Mania

Two decades of entrepreneurial activity set the stage for Hanke’s success. Here are three ways he used Effectuation to position himself to create a new market.

• Hanke started with what he knew. And he stuck with his strengths. He had an interest in technology. In mapping. In coding and software development. These skills were foundational, at the heart of all of his projects.   

• Hanke experimented. Not everything he created was a success. But Hanke wasn’t fearful about putting new ideas out into the world. He placed bets with beta versions and test runs. And then he watched what happened. He paid attention to how people were using or not using his inventions and made adjustments. He took action.  

• Hanke cultivated partnerships. Starting with his team at Keyhole, he pulled others in to add their ideas, skills, and networks. Eventually, this willingness to partner contributed to Hanke's success at Google when they purchased Keyhole. It also laid the groundwork for his ability to navigate more complex corporate relationships when his Google spin off, Niantic Labs, developed relationships with other large stakeholders, including Nintendo.    

None of these things happened overnight. They were skills Hanke began practicing early and often. He learned from failures and missteps along the way. And he strengthened his ability to navigate increasing complexity.

What Innovators Can Learn

Innovation is not a linear path. It is rife with ambiguity, complexity, and nuance. The success of Pokémon Go shows us three contradictions that innovators have to balance in pursuit of creating new markets.  

1.) Have a big vision. Take small steps. 

Hanke saw geospatial data as having a wide range of uses. He broke his big vision into small steps. Twenty years ago he didn’t have the team, the funding, or the knowledge to bring all of his ideas to fruition. But he figured out what he could do with what he had. And he did just that.

Many entrepreneurs struggle with this. They have the big idea and immediately want to acquire each resource needed to make it happen. Instead, breaking the idea into smaller, more feasible actions allows the entrepreneur to get real world input. With each subsequent validation, people ask to contribute to the idea. No longer does the entrepreneur have to convince stakeholders to give something up. Now stakeholders willingly offer to participate.     

2.) Start with you. Grow with others.  

Hanke certainly had the skills needed to launch his first online video game. And if he wanted to innovate alone, he probably could have put out more and more advanced video games overtime.

By partnering with others, Hanke was able to take those small steps he started with and turn them into giant leaps. Each new stakeholder brings new connections, resources, and expertise to the team. The culmination can be an innovative force.   

3.) Persist. And pivot.  

Did Hanke look into a crystal ball twenty years ago and see people of all ages scurrying through the streets looking for brightly colored monsters? No. But he did see value in technology and mapping. And he pursued it.

Hanke shifted between online game design, a maps focus, and an interest in mobile technology. Pokémon Go incorporates components from all of these ventures. But the Nintendo partnership brought new means to the table, and a cultural icon – Pokémon. This presented a chance to pivot beyond the ardent gamer community and into the mainstream. And it worked.

Finding the right balance between these contradictions can be tricky. But so is tracking down a flying Dragonite or a Zapdo in Pokémon Go. That isn’t stopping millions from trying. So what’s stopping you?   

--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC

Technology is Killing Innovation

No one has time for interruptions these days. We do everything we can to avoid the unexpected. Caller ID prevents unplanned conversations. ATMs eliminate superfluous face to face interactions. Amazon wish lists negate unnecessary shopping and returns. Technology has made it possible for us to get exactly what we want when we want it and the way we want it.

By reducing the possibility of encountering the unplanned, has technology diminished the ability to innovate?

Entrepreneurial research indicates that innovation is often driven by the ability to harness the unplanned to create a beneficial outcome. Two things have to be in place to support this:

1. There has to be unplanned occurrences.
2. People have to have the skills to leverage them in a positive way.

Dr. Saras Sarasvathy’s research on Effectuation showed that expert entrepreneurs incorporate the element of surprise to advance their ventures. They look at unanticipated events as opportunities to be exploited. In fact, they don’t just roll with the surprise, they often build on them as competitive differentiators.

For example, LL Bean turned a disastrous first product launch into their brand cornerstone by accepting all product returns, sending new, improved products as replacements, and announcing that they would always honor returns for product quality – no matter how long the customer had or used the item. This extreme level of customer service started in the early 1900s but was the platform that allowed the LL Bean company to grow a worldwide brand from a rural outpost in Maine.

Successful entrepreneurs are adept at using surprise because they exercise three characteristics:

1. Skill. They take smart chances and put themselves in positions to encounter the unexpected. By doing so, they get comfortable with being surprised and they learn how to use it to their advantage.  
2. Confidence. The more they practice their skill, the better they get. They can feel this. It strengthens their comfort with surprise.
3. Optimism. Once they see some positive outcomes, they build on it. They see that this works. So they keep at it – in bigger and bolder ways.

These mutually reinforce each other.

In contrast, most corporate managers fear surprise. They do everything possible to eliminate it. From detailed risk management plans and forecasts to the simple task of team building. (Is anyone still surprised by the birthday cake in the break room???) At the office, surprise is something to be avoided and something to be feared. The longer a manager stays in corporate the more this thinking calcifies. Its contagion spreads between teams until it permeates an entire culture.

So how can corporate managers embrace surprise and use it to their innovation advantage?

1. Acknowledge surprises. Set the tone for your team. They are watching your reaction to the unexpected and will take their behavior cues from you. Talk about your affordable loss at the outset of projects. And when the unexpected does occur, don’t immediately dismiss it. Discuss first if there is a way to leverage it positively before attempting to eliminate it.

2. Allow room for surprises. Refrain from over-engineering processes. Not everything needs to have a defined method of operation. Just because you can standardize doesn’t mean you should. Be strategic. Understand what your team objectives are and ask what you gain and what you lose before you define a process.    

3. Cultivate surprises. Develop growth assignments for innovators. Stretch your corporate innovators by putting them on teams outside of their technical and functional expertise where they can encounter new things. Look at lateral opportunities for high potentials. Put them in positions where they will have to react to surprises.  

Technology is removing the unplanned. But it is still possible to put yourself in situations of surprise. Classic movie fans will remember Inspector Clouseau of the Pink Panther. He paid his assistant to surprise him so that he would always be ready for the unexpected and prepared to act appropriately. Despite his bumbling ways Inspector Clouseau wisely said, “Without warning, I will attack you. In this way, I will keep you vigilant and alert.”

What are you doing to keep your surprise skills sharp? 

--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC

Is Market Research a Waste of Time?

People have been attempting to predict the future for at least 2500 years. In the beginning, they would trek to an Oracle who would guide them on how to best position themselves to capitalize on future events. Today, the Oracle has been replaced by market researchers.  

Predicting the direction of a market has become more sophisticated and more expensive. But it remains a mainstay of innovation strategy. Companies and novice entrepreneurs alike insist on gathering data through surveys, feedback sessions, and focus groups. And our clients still don’t feel prepared for the future. These are the most common complaints we hear:

1. Market research takes too long. By the time we get the data and the analysis, our priorities or market conditions have shifted so it loses its relevance.   

2. The data is often not actionable. We get a lot of interesting insights, but not a lot that we can put into practice.   

3. The data we get is often conflicting. Different things are heard from different sources. This perpetuates our management indecision internally.

How are companies addressing these complaints? Often, their solution is to hire another market research group with new tools who promise faster, better data. And nothing changes.

If you really want to develop game changing innovations, stop trying to predict a future that cannot be predicted. Truly new and market changing advances are not inevitable or predestined. They are not found or predicted. They are formed, shaped, and created.  

Predictive tools only work when outcomes can be predicted. This seems obvious. Yet managers continue to rely on traditional predictive tools while acknowledging that they are facing unprecedented market uncertainty.

Traditional management theory has taught there are two future states. The known and the unknown. Thanks to the work of Nobel Prize laureate Herb Simon, we know now that there are three future states: the known, the unknown, and the unknowable.  

How do you know if your organization is facing an “unknowable” future?

1. The path forward is ambiguous or unclear. There are multiple possibilities that seem equally advantageous.

2. There is a lack of data available.

3. The data that is available is contradictory.

If one or more of these conditions are present, you are in the realm of the “unknowable”. In the face of this radical uncertainty, Effectuation is the toolset to use. It is how market makers create valuable new products and services when facing a future that is not just unknown, but unknowable.

What is it about Effectuation that enables innovators to create rather than predict the future? The key to getting control in unknowable situations is to co-create. Invite others to participate in building the future with you. Whether you refer to these parties as collaborators, stakeholders, partners, etc. doesn’t matter. What does matter is how you work with them. Base your co-creative relationships on commitments.

Commitments are when both parties put skin in the game to advance an overall idea. Commitments are deeper than feedback and more relevant than data. All who commit to the idea become vested in its success. As a result they will pull their resources into the venture. This expands the accessible means for the venture. It also widens the visibility and support as each party brings their networks and social capital to the venture. Whereas a feedback session is one to one and a finite transaction, a commitment-based relationship is multi-party to multi-party and presents infinite opportunities for growth based on the interests of all parties.

If market research is failing to give you the answers you need, consider giving up. Stop trying to forecast the unknowable. Instead, shift your resources towards crafting a future where you can succeed. Spend your time Effectuating rather than searching for a sign of things to come.

If you don’t create your own future, someone else will.

--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC

Flip Your Fails Into Sales

When new product launches don’t go your way what’s to blame?  Is it the idea?  Or the process? 

               “We ran out of money before it got traction.”

               “Customers liked it in tests, but we got mediocre sales in market.” 

               “We went out too fast and couldn’t meet customer quality expectations.”

               These are three excuses I’ve heard recently from corporate managers who struggled with unsuccessful innovation efforts.  In each case, they identified the end result as a product failure.  They talked about the loss incurred and how their teams were sent scrambling for a better idea. 

               Companies generally respond to these types of failures in one of three ways.

1.     Restructure the team.  They put a new innovation manager in place.  Or they pull the innovation team out from the business and put it into an incubator.  Or they change the titles of the team members and rebrand the squad.  In the end, it often amounts to a cosmetic change and rarely gets to the root of what caused the innovation failure and how to turn things around. 

2.     Revisit the pipeline.  Most companies are not lacking for ideas.  When one doesn’t work, they dig up the list from past brainstorming sessions and consultant plans.  They put the same process in place to bring the next idea to market. 

3.     Re-research the market.  Seeking better data on customers, the economy, and competitors is often an easy fallback for companies when new products and services don’t behave as desired.  The infrastructure is already there in most organizations.  And every employee wants to be able to answer the “what went wrong” question with stats and charts. 

But maybe it wasn’t the idea that failed.  Maybe it was the process. 

Effectuation shows us that successful entrepreneurs are able to turn all of these excuses into market successes.  Nobody intentionally tries to exhaust all of their start up funds, launch something that doesn’t resonate, or bring a less than ready product to market.  But the act of creating leads to unknowable outcomes.

Expert entrepreneurs use them to their advantage.  Effectuation refers to this as the Lemonade Principle.  They turn lemons into lemonade. 

Here is how successful entrepreneurs react in similar situations.

1.  “We ran out of money before it got traction.”

Precommitments and partnerships are a way around this.  Have customers pay prior to development for investment heavy products.  It ensures a buyer for what you’re building. 

Partnerships also help to spread the risk and expand the network of possible payers for your innovation.  Resource constraints also force creativity.  In all likelihood if you are having trouble funding the venture, others are as well.  This opens opportunities for collaboration.  

2.  “Customers liked it in tests, but we got mediocre sales in market.” 

View your customers as partners in your innovation venture.  One way to do this is to employ some form of pre sales.  Another way is to actually co-create with them.  How can you take advantage of the skin in the game that early adopters are willing to commit?  Deepen your relationship with them and make them part of your sales force.  

Also, take a wide view of your innovation efforts.  Look not just for what you expect to happen, but what is actually happening.   Is it the product / service that customers are reacting to?  Or is it your distribution channel?  Your marketing?  Your packaging?  Your pricing?  Are they giving you an indication of what they do want that you’re not noticing?  Engage your customers in figuring this out. 

3.  “We went out too fast and couldn’t meet customer quality expectations.”

Things don’t go as planned.  So be it.  What can be controlled is your response to the unforeseen. 

Product flops, quality issues, and marketing gaffes attract customer attention.  Customers are in dialogue with you.  Make the interaction a pleasant one, and you’ll acquire a customer for life.

The lesson for managers and entrepreneurs alike: the failure might be your innovation process, not your products.  Flipping your fails into sales could be well within your control.

--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC