In my “4 Rules to Follow to Avoid Becoming a Victim of Digital Disruption” post, I argued that business disruption is real and it’s accelerating. CEOs are responding to that threat/opportunity by launching formal business transformation programs; a significant percentage fail. I followed that with “Why Is Digital Disruption So Difficult?” where I deconstructed the business transformation process into four phases – Engage, Innovate, Invent, Launch and Evolve — and explained the challenges that make each so difficult. Today, I’m diving deeper into questions around innovation. Why is it so difficult to uncover real breakthrough ideas? Is there a better approach? In my next blog, I’ll discuss what happens next.
Once you identify an innovative idea with promising potential, how do you know if “that dog will hunt” — and how do you protect high-potential, innovative ideas from premature burial?
Maybe the following scene sounds familiar:
A CEO calls a consultant and says,“I need help. Our current business models are responsible for our success and are firmly entrenched. But are they the right models for the future? I have a world-class leadership team…all very talented operators. But they see the business from inside out. I don’t think any of them have introduced an impactful, innovative idea in the last 20 years.”
The consultant smiles, leans forward and describes his firm’s business transformation engagement.
Two weeks later, the consultant calls a meeting and invites the aforementioned leadership team, the senior managers who haven’t delivered any impactful innovative ideas in the last 20 years. As he sets up a blank flip chart, he says to the group, “Give me your most creative ideas. Whatever comes to mind. There is no such thing as a bad idea.”
The consultant begins to capture those ideas on the flip chart. When he gets to approximately six-and-a-half pages, he stops and says,“that’s a good list.” There’s a brief period for clarifying questions, then the consultant counts the number of ideas on the flip chart, divides by four, and passes each attendee that number of yellow stickies. The attendees are instructed to place their stickies on the ideas they feel are best. The idea with the most votes wins, and is brought to the CEO to fund – and bet the future of the business on.
Can you think of a worse way to create the big ideas that drive innovation? It’s the inmates running the asylum. I was that consultant at three major consulting firms. I’m guilty of leading many of those engagements. And, as a client, I’ve participated in many more. Mea culpa. I know this scene well — it’s based on the brainstorming model popularized by Alex Osborn in his 1953 book Applied Imagination. It’s also intended to be a group creativity technique for solving very specific problems – not disrupting entire business models. It hasn’t changed much since then.
If brainstorming doesn’t work, why do consultancies still use it?
The easy answer is, it generates a lot of revenue for them. But it doesn’t, at least not directly. A large professional services firm delivered 20 of these workshops last year — at a list price of $250,000. None were sold for that price. One was sold for $25,000, two for $15,000 and 17 delivered for free.
The real motivation driving consultancies to brainstorm? Although the dated approach may not generate breakthrough ideas, it’s a very effective way to gain senior management consensus on mediocre initiatives that lead to large systems integration projects. Once the consultant reports to the CEO that his (or her) leadership has invested time and reached a consensus, it’s very difficult to overturn that. Even if the CEO doesn’t think their recommendation is very good. And even if it requires significant funding.
There is a better way, but it requires much more preparation than packing flip charts, magic markers, and yellow stickies. What if the consultant walked into that first meeting equipped with insights capable of empowering participants to view their business through five distinct lenses? Would it be a better use of the senior executive’s time and talents if, instead of starting with a blank sheet of paper, they assembled relevant insights into a story about the potential future?
That scene has a different ending.
The consultant begins with the Voice of the Customer, developed in preparation for the workshop through ethnographic research, social listening and modeling and heuristic investigations designed to uncover latent and unknown value. Through this lens, the leadership team gains a deep understanding of user (customer and non-customer) wants and needs.
The Voice of the Product follows. It identifies the main parameters of value through functional analysis, then it asks: “What are the latent technologies within the product that, if exploited, can attract new customers and/or grow market share?” And next: “What are the product gaps? Are there adjacent technologies that can be leveraged to fill those gaps?” Combined with the Voice of the Customer, these lenses help leaders better predict the parameters and requirements of potential new products.
And then there’s the Voice of the Market. Listening to this one yields insights into how macroeconomic trends are shaping a particular industry. It explores, “What is going on? Who is doing what? What are the impacts of regulations, policy, and social trends? What opportunities and what obstacles do they create?” The Voice of the Market uncovers disruptions that may create new opportunities a company can embrace, exploit and advantage from.
Fourth comes the Voice of Innovation, which identifies new business models from leading innovators in the marketplace, and maps each to a company’s existing products and services. Sources include well-funded startups, competitors, and potential competitors. It then analyzes which innovations can be borrowed, adapted, or combined with other ideas. The Voice of Innovation helps executive teams better understand and anticipate the moves of emerging and potential disruptors.
Finally, the Voice of Technology identifies enabling technologies that can deliver on new concepts. This lens looks across the entire technology stack, including both digital and product/manufacturing technology, and highlights what is possible. It requires blending the perspectives of information technologists, data scientists, and physical scientists. The Voice of Technology, when focused on each of the other voices, generates a portfolio of potentially high-impact, innovative opportunities.
In summary, I believe it is predictably difficult for an executive team to generate high potential, innovative ideas capable of transforming deeply entrenched business models simply by capturing, and voting on, six-and-a-half pages of reactions to: “there is no such thing as a bad idea.” I cannot think of one game-changing innovation in the history of business that was created this way. And I’m embarrassed to admit that, for years, I was part of the con.
But that was then.
I now believe there is a far more likely path to success. To follow it, consultants need to invest due time for identifying and shaping each piece of the business disruption puzzle in advance. Armed with these insights, the executive team is well informed and equipped to assemble and reassemble the pieces until they build a portfolio of potentially high-impact, innovative, breakthrough ideas.