Human beings hate change. All of us.

When Zoom has to update right before an important call, I'm not thinking "yay! an update! I'm
thinking, ah. I don't have time for this. I just want to do my call."

And I'm an innovation expert.

When Midwest express stopped serving cookies or Southwest Airlines stopped serving peanuts,
I wasn't cheering for the future of airline food. I didn't like it. I was used to the way it was.

So telling people to embrace change is just telling them to fight natural human instincts. We
prefer stability and predictability.

So what do we do instead?

Instead of trying to convince everyone love change, why don't we equip them with the tools
and mindset to navigate it. So that the change isn't as upsetting or disruptive. And they
approach it with an open mind.

There are two Master Skills that innovation experts share in this regard: Learning Agility and Growth
Mindset
.

  1. Learning Agility: This is an individual's ability to rapidly acquire, unlearn, and adapt
    behaviors based on new and evolving information. It encapsulates the willingness to be
    wrong, learn from experiences, and adjust as necessary.
  2. Growth Mindset: Those with a growth mindset understand that they can always
    improve, regardless of their experience level or current expertise. This mindset fosters
    resilience, encourages challenges, and views failures not as definitive shortcomings but
    as opportunities for growth and learning.

But why are these skills so pivotal?

Because they don't just prepare individuals for one change; they prepare them for the ongoing
journey of change. They foster adaptability and instill a sense of curiosity.

Working on these skills outside of a big change initiative reduces the intimidation of that future
change when it becomes necessary.

This kind of strategic decision making is one of the top skills innovators must master.

Here's how I make the decision without letting my pride take over:

  1. Data-Driven Decisions
    I insist that every project measure what I call Pivot Indicators. These are pre-defined metrics
    that answer two important questions: "When will we know if it's not working?" and "How will
    we know?" By establishing these indicators upfront, we remove ambiguity from the evaluation
    process.

    Whether it's a certain threshold of user engagement, a predefined ROI, or customer satisfaction
    scores, these indicators act as the guardians of our resources, ensuring that we stay agil
    respond promptly to feedback, and invest in avenues that truly resonate with our overarching
    goals.

  2. The Passion Parameter
    Numbers are vital, but they're not everything. The intangible yet palpable energy of passion is
    often the difference between projects that fizzle out and those that thrive. If you had to make
    the decision today to start this idea from scratch, would you do it?

    Are you still as excited about the opportunity as you were when everything kicked off? If your
    team exudes excitement and genuine belief in the project, this collective energy can transform
    challenges into opportunities.

  3. Opportunity Costs and the Big Picture
    Every resource committed to one initiative means potential neglect for another. It's essential to
    ask: What could these resources achieve elsewhere? I actually sit down and make a list of
    where I would invest the resources if I had more time and effort. Then, I'm not deciding
    whether I failed at something or didn't, I'm just deciding between option A or B for my time and
    resources.

I'd like to add that one way I make this decision easy on myself, is I avoid it altogether by
employing a stage gate process for evaluating where I invest my time and resources.

The stage-gate process divides the development of a new initiative into stages separated by
gates. At each gate, the ongoing viability of the initiative is evaluated based on predetermined
criteria:

  1. Sleep on it: I force myself a 48 hour waiting period before doing anything about a
    new exciting idea to see if I'm just as passionate in a few days or if something exciting
    has captured my attention.
  2. Feasibility Study: I examine the idea in-depth. What's the potential? What resources
    will be required? Do I have the time and energy to invest, or will it take away from
    current projects I'm trying to finish?
  3. Testing Phase: If the idea passes the feasibility gate, I'll assign a small amount of
    resources to conduct a test. Can I sell this idea? How much work does it take to execute
    on it? Do I enjoy doing that work? I outline my riskiest assumptions and conduct
    experiments to test the most challenging ones.
  4. Viability Phase: I give myself a challenge: If I can accomplish ___ within ___, then
    it's worth the next phase of investment. Yes, this is also a test, but it's an ambitious
    challenge that involves dollars collected or something else of high value.
  5. Launch/Scale or Re-evaluate: If the initiative passes the viability phase, it's time to
    invest in a launch. If not, I'll revisit the previous stages or consider pausing or stopping
    the initiative.

Our resources—whether time, talent, or capital—are finite, and successful innovators
understand that we have to continuously reassess to make sure that we don't get stuck.

In my journey from a 2.5 to a 4.5 tennis player, I've learned a profound lesson that goes beyond
the boundaries of the tennis court: The immense value of deliberate practice.

It would be easy for me to spend hours on the court, hitting ball after ball, hoping to improve.
In fact, that's how I spent my spring and summer.

While time and effort are commendable, they alone aren't enough for substantial growth.
That's where the magic of deliberate practice comes in.

Deliberate practice is a concept that was popularized by Anders Ericsson, who studied the
habits of top performers across various fields. Ericsson's research showed that with the right
type and amount of practice, most people can achieve exceptional levels of skill and
performance in almost any organizational coaching domain.

But it only works if you follow this very specific kind of practice (I outline the steps at the end of
this post).

I had my first lesson with a coach about 3 weeks ago, and my body was so sore after that I kept
saying, "what have I been playing all this time???" My body was just not used to the
movements he was asking me to do!

That's my coach Elliott, in the picture.

Improving Alone vs. With a Coach:

When trying to improve on our own, we rely heavily on self-assessment, which can often be
clouded by our biases or limited perspective. In contrast, a coach provides an external and
experienced viewpoint. They see the nuances in our techniques, the small yet significant errors
in our form, and the habits that hold us back.

I've grown more in my abilities over the last 3 weeks than I have in my first 6 months of playing
tennis!

Here's how:

With a coach's guidance, our practice sessions become more targeted. They guide our focus,
correct our mistakes in real-time, and introduce drills tailored to our needs. This structured and deliberate approach to organizational coaching through leadership coaching services ensures that we're not just practicing but practicing right. The result? A faster and more efficient improvement trajectory.

For anyone out there striving for excellence, be it in tennis, a professional field, or a personal
hobby, remember this: While passion and persistence are crucial, the guidance of a mentor and
the discipline of deliberate practice can be the difference between slow progression and
accelerated mastery.

And if you want to know if you're taking advantage of deliberate practice, consider these
important elements:

  1. Purposeful and Structured: Unlike casual or unstructured practice, deliberate practice is
    always purpose-driven. There's a clear goal for each session, and it's not just about
    repetition but about aiming for improvement in specific areas.
  2. Feedback Loop: One of the hallmarks of deliberate practice is the constant feedback.
    This could be from a coach, video recordings, or other external tools. The feedback
    allows for immediate correction, which is pivotal for learning.
  3. Challenging and Outside Comfort Zone: Practitioners of deliberate practice consistently
    push their boundaries. If a task becomes easy, it's a sign to move onto something more
    challenging. This ensures continuous growth.
  4. Mental Engagement: It's not enough to just go through the motions. Deliberate practice
    demands complete mental focus and consciousness. One has to be aware of what
    they're doing, why they're doing it, and how it can be improved.
  5. Iterative Nature: The approach is all about small, incremental improvements. You
    identify weaknesses, work on them, get feedback, adjust, and then practice again.
  6. Limited Duration: Contrary to the notion that more hours automatically lead to
    improvement, deliberate practice emphasizes quality over quantity. It's often intense
    and requires breaks to avoid burnout and to allow for mental and physical recovery.

In contrast, here are the potential issues with solo practice:

  1. Can Lack Direction: Solo practice, unless guided by prior knowledge or resources, can
    sometimes lack a clear goal or structure. It's more about repetition and less about
    targeted improvement.
  2. Limited Feedback: Without external input, there's a risk of cementing wrong techniques
    or habits. While one can still self-assess, it's challenging to catch all mistakes or nuances
    without an external perspective.
  3. Comfort Zone: Solo practitioners might fall into the trap of practicing what they're
    already good at because it feels satisfying. However, growth often comes from
    addressing weaknesses, which we might avoid or be unaware of.
  4. Variable Engagement: Without structure or feedback, it's easier to become mentally
    disengaged, turning practice into a routine activity rather than a focused learning
    experience.
  5. Duration-Based: Solo practitioners might measure their progress by the amount of time
    spent practicing, which can sometimes lead to long hours with limited actual
    improvement.

I'd love to know if you've ever taken advantage of deliberate practice through leadership coaching services to master a skill.

And stay tuned for more insights on my journey. The road to 4.5 continues!

Many of our daily actions are habitual, meaning they are performed automatically and without conscious thought. It's a useful way for us to save mental energy and streamline tasks that are performed frequently.

These automatic actions are often based on our learning mental models, which are the assumptions, beliefs, and frameworks that we use to make sense of the world around us. They are like little formulas about how we believe things are supposed to work.  

Here's a simple example:

Except this mental model is actually incorrect. Salt doesn't make your water boil any faster (unless your pot is filled with 20% salt).  If you want your water to boil faster, it would be smarter to just start with hot water.

And we have tens of thousands of these theories, big and small, secretly governing many of our actions. Here are just some of the categories they fall into:

But we haven't spent much time articulating exactly what our philosophies are in these areas. We're just mindlessly acting based on these hidden rules, instead of using a strategic mindset. 

When I was in high school, one of my health learned mental models (thanks to some brilliant commercials) was that the key to being physically fit was drinking as much milk as possible.  Do you remember those, "Milk, It Does a Body Good" commercials?  They were very effective.

And when I didn't make the team because I was frothing at the mouth during tryouts (this is what happens when you drink nothing but milk for two days and then engage in aerobic activity!), I didn't question the mental model.  I blamed the coaches for having too much running and not enough shooting drills during tryouts. I also declared that I just wasn't a runner.  But I held onto that milk philosophy for a decade until I started proactively learning about health and fitness.

We protect these assumptions by never questioning them. Where did they come from? Are they working for us? Do they need updating?

And yet learning mental models determine how strategic we are in our actions.  If our philosophies are accurate and helpful, they can guide us toward big wins. On the other hand, if our mental models are flawed or limited, they can lead us down the wrong path and prevent us from achieving our goals.

Or, in the words of Charlie Munger, "You get further in life by avoiding repeated stupidity than you do by striving for maximum intelligence."

So how do we update our mental models? Here are three methods:

Method 1: Updating our questions

1. When you ask a question that you ask often, reflect on whether you’re getting the kind of response that you’re hoping for.  

Ex: You ask your kid after school how their day was. They say "Fine." You try again. You ask them, "What was the best part?" or "What did they learn?" They don't remember. It feels like a very unsuccessful interrogation. These questions and learning mental models that make you think they should be working aren't serving you.

2. Try some other questions instead to see if you get a better response. Ask others about what questions they use to accomplish the same goals.

One question that has worked well for me is: "How was your day on a scale of 1 to 10?"

Method 2. Mental Model reflection

1. Identify an area of your life that you would like to grow or improve. (It's not too late for New Year's resolutions!)

2. Make a list of all the mental models you currently have about that subject and see which ones might need to be updated or might not be serving you.

3. Seek out new perspectives on these philosophies. Consider asking for feedback from others.

4. Update one mental model at a time and come up with a way to test the new approach.

Method 3. Inspiration

1. Find a source of inspiration that regularly challenges your existing learned mental models. My monthly newsletter attempts to do just that. Ask This Not That is a monthly dose of question makeover – in which I take one common question and offering an alternative that could help you get much better results.

2. Join a group of people who like to talk about this topic. There are strategic mindset groups on both LinkedIn and Facebook.

Whatever method you choose, understand that the quality of your strategic thinking is determined by the life philosophies swimming around in your head. Identifying and upgrading these mental models can help you make better decisions, solve problems faster, and identify big opportunities.

Three years ago, I was coaching a successful company that was very confused about the failure of a recent product launch. When I was first hired, they told me they were convinced they had done everything by the book.

Before developing the product, the company held five focus groups with potential customers to make sure they were going in the right direction. After the product received positive feedback from each of the focus groups, the company spent hundreds of thousands of dollars in a little over a year to bring the product to market.

The product launch was disappointing to say the least. No one—not even the focus group participants who said they were interested—bought it. This experience is one of the most financially painful experiences in innovation, but it’s an experience that can be easily avoided.

In this example, the company was very excited about its new product idea. That excitement was obvious during the focus groups when moderators asked client feedback questions like, “Wouldn’t it be great if [blank]?” and, “Don’t you think [blank] is a big problem?”

Leading questions like these broadcast the answers you’re hoping to hear to your interview subjects. And as we’ve covered before, once your interview subjects understand what you want them to say, they are very likely to give you the answer you are hoping for, even if they don’t actually believe it.

Leading client feedback questions often result in false positives that waste money, time and opportunity.

After the company’s new product failed, they let me create an open-ended interview questionnaire to contact their target market. Not only did they find how to talk to customers, that the problem their product aimed to solve never existed, but they discovered that their product created new problems that they had not foreseen!

Use Open-Ended Questions to Identify Migraine Problems

Your customers’ natural inclination is to be nice, not honest.

Open-ended questions give your potential customers the option to respond very honestly and to fully explain the problems they’re facing (that your product may or may not solve). For example, you might ask someone, “Wouldn’t it be great if you never had to scoop your dog’s poop during walks?” If they’re a dog owner, chances are they will say yes. But if you ask them, “What have you done to solve that problem?” they will probably say they haven’t tried anything other than using bags they get from the grocery store.

When you use open-ended client feedback questions effectively, you’ll know you’ve hit a real migraine problem when the customer tells you it’s a problem without your prompting and then explains what specific actions they’ve taken to solve the problem.

Leading questions that broadcast the answers you want to hear:

Open-ended questions start with less direct language:

They also avoid biased language, like ”Do you agree that…” or “Don’t you hate it when…”

Comfort, Conversation and Active Listening

Not only do open-ended questions elicit more honest answers, they often make the customer more comfortable. No one wants to be interrogated, and few people want to be sold. Open-ended questions demonstrate to someone that you know how to talk to customers and care what they think. It makes it obvious that your agenda is to learn, not to convince.

Unlike leading questions, open-ended client feedback questions turn the interview into a conversation. While your customer is talking—and if your questions are good, they may talk for a while—give them verbal and physical responses, like saying, “Uh-huh” or nodding your head. Talk as little as possible; you’re here to learn.

But in order to learn, you need to listen. Actively listen for any pain points, not just the one you expect to discover, and dig deeper when you’ve found one. You can do this by asking more direct questions:

Be Open, But Stay Focused

Even though open-ended client feedback questions can have a wide range of answers, the questions should still be focused. For example, if you have an idea for a client relationship management tool, you shouldn’t start by asking, “What are the three biggest problems in your life?” Instead ask the interviewee to tell you about how they keep in touch with potential and current clients. “Tell me about the tools that help you do that.” “Are there any that don’t work as well as you wanted?” After answering those few questions, you’ll have enough information to ask them to walk you through the process they followed for the last prospective client they targeted. “How did you hear about them?” “What did you do after the first contact?” “How did you stay in touch?”

By asking focused, unbiased, and open-ended questions during the initial interview—and digging deeper on pain points—you’ll have information you can immediately use to more effectively pursue the right ideas, and avoid ones that won’t work.

(Note: This is the second installment of a multipart series on conducting customer interviews and discovering true migraine problems.  And check out the first article in the series.)

Ok, you’re on the bandwagon. You understand that you need to a get to a new level when it comes to understanding your customers and finding their migraine problems. You need to understand them better than they know themselves.

Here’s the thing: When you go out to interview customers, they are probably going to LIE to you.

I’ve lost count of how many companies I’ve seen fail while insisting that everyone they’ve talked to loved their idea. They think they’ve conducted the customer interviews they needed, but they didn’t understand one of the most important rules to customer interviews:

People’s natural inclination is to lie during interviews

Think about the last time a friend told you about their “brilliant” new idea that you thought was really dumb. Were you 100 percent honest with your friend? I bet you weren’t. You, and most people, would probably lie a little bit to get out of the awkward situation. It’s a lot like that for your customers. Their natural inclination is not to be completely honest with you during an interview. They want to figure out the answer you’re looking for and give you that answer so they can leave the conversation as soon as possible. Customers don’t lie to be malicious; it’s just the opposite.

Here are three main reasons customers will lie to you:

1.   They want to spare your feelings

They can clearly see how passionate you are about an idea, and they don’t want to be the one person to hurt your feelings.

When I was pregnant with my son and trying to decide on names, I conducted a fun experiment. I wanted to see what people really thought of the names my husband and I were considering, so when someone asked me what I was naming my son, I would give one of two responses. To one group, I said I wasn’t really sure, but I liked names like Branch, Major and True. To the other group I would say I was naming my son True, and that I was really excited about it. I quickly found that the two groups reacted very differently to my responses. When I told people I was still deciding, more than 90 percent would tell me they didn’t like any of the names I had picked. But when I acted excited about one name, over 90 percent of people told me they loved the name True and would go on and on about how unique it was. Obviously I wasn’t hearing the truth from everyone.

With my son’s name, I was just conducting an experiment. I didn’t really care what people thought. But, when you’re talking about starting a company, hearing the truth from customers is vital to your success. The problem is, if they can sense the answer you are hoping for, they will jump to give it to you.

2. They want to get out of the conversation

The key to understanding your customers real pain and current ways of solving existing problems is to get them talking.  You want to ask them open-ended questions that will elicit a lot more valuable details than the response to the specific question.  (More on open ended questions coming soon – make sure you are subscribed to get the article)

Now, think about the last time you got a call from a telemarketer trying to solicit a donation or get you to respond to a survey.  I bet with every question they asked, you went through a mental Rolodex of responses that might make the call end as soon as possible. You weren’t thinking of the real answers to their questions, let alone additional information they might find useful.  You were feeling uncomfortable and willing to say anything just to get it to end.

Most customer interviews are the same.  If you don’t do a good job of getting them comfortable and engaged before starting to ask them questions, they will just be looking for the fastest way to exit the conversation, and usually that means saying something like “That sounds awesome, I would probably buy that.”  They know that if they disagree with anything you said that you’ll want to argue with them, so they know that by agreeing with you and telling you how great your idea is, you’ll have no option but to end the conversation and go finish building your new product.

3. They want to seem smart

Many times when you present your idea, you’ll outline all the different ways it can benefit their lives, putting your potential customer in a situation where they look dumb if they disagree with you. For instance, you can tell them all of the money they are wasting each year from poor insulation in their home and all the benefits your product could provide to solve it for them.  What could they say?  “I don’t really care about all that money I’m wasting.” Or “I don’t really care about the environment.” Instead, they would likely try to save face by telling you how interesting it sounds and how they will think about buying your product.  They aren’t going to.  They just don’t want to look dumb, uncaring, or uninformed.

You have to trick people into telling the truth

Once you know that your customers are inclined to lie to you, your whole strategy should change. Your objective should be to trick them into telling you the truth, and to make it hard for them to lie by keeping them in the dark about what you’re really after. It’s the difference between asking someone’s opinion on a few ideas you’re considering and asking their opinion on one idea in which you obviously have a vested interest.

Interviewing customers is one of the most difficult steps in the entrepreneurial process. It’s not as exciting as launching a website or raising money. The truth can hurt too, especially if customers don’t end up liking your big idea. But, the only thing worse than not talking to customers is talking to customers who you don’t realize are lying to you.

No innovator fails because they couldn’t build their product.  They fail because no one found value in what they built.

Here’s what usually happens when someone gets a new idea:

  1. Their mind starts racing with all the possibilities of what it could turn into, the impact it could have on the world, and all the money it could generate.
  2. Next, they begin executing on their idea.  All of their focus is internal, working hard to come in on time and on budget.  They need to make this product amazing. First impressions are everything!
  3. Then, they work on marketing.  The product needs a catchy name and logo.  It needs beautiful collateral both online and offline. This has to look innovative!
  4. Finally, they take the product to market and, more often than not, get an extremely lukewarm reception.  So they blame marketing, and they blame the product for not having enough features.  Sometimes they bring new members onto the team and start the cycle from scratch.  Sometimes they just run out of resources and the project gets mothballed.

Sadly, this is the typical cycle of innovation.  Most new initiatives fail.

But successful innovators know that they have a very powerful tool at their disposal to significantly decrease the risk of innovation: experimentation.

Experiments are small bets that you make to see if what you believe to be true is actually true - to see if your predictions about the customer and the market are right.   It’s something small that you do today to prove that you are spending time and money on the right things . . . on building something that people will buy.

In All in Startup, the reader meets Owen after he has followed the very process outlined above and wasted hundreds of thousands of dollars and a year of his life building something that wasn’t meeting any of his projections.  What could he have done before he committed his available resources to executing his plan, to make sure customers would be waiting for him when the product was ready?  He should have run some experiments!

But the hardest thing about experiments is running them correctly.

Here are some guidelines about what a good experiment looks like.

To run a good experiment, you need to determine and document these five elements before you begin:

1. The Goal

What is it that you’re trying to learn? Or what are you trying to prove? What are the riskiest assumptions you’ve made about your idea? For Owen, his riskiest assumption was that people would buy half-priced, used bicycles online.

2. The Hypothesis

Your high school science classes taught you what you need to know for this part. This is a statement that you’re trying to prove true or false through the experiment.  The result will be a “yes” or a “no” so you need to phrase your hypothesis appropriately.

For example, a good hypothesis would be based on this setup: “If I do this action, then this outcome will happen.”

The key is to make sure that your Hypothesis helps you get closer to the Goal you outlined above and reduce the risk of your riskiest assumption. The hypothesis can help you test whether you have identified the right customer segment, whether your target customers actually have the pain point you think they do, whether they perceive enough value in your solution to buy it, whether your solution actually solves their pain point, whether you’ve identified the right channels to target your customers, whether your supplier cost estimates are accurate, whether you’ve chosen the right price point for your product, etc.

The biggest mistakes in putting together a hypothesis include:

  1. Creating a hypothesis that isn’t measurable and lacks a clear beginning and end (ex. “People want to eat healthier”);
  2. Creating a hypothesis that isn’t about a specific group of customers (ex. Everyone wants a car that gets at least 30mpg);
  3. Creating a hypothesis that doesn’t help you reach your goal (ex. “If I send this survey to 100 people, 10% will fill it out”); or
  4. Creating a hypothesis that isn’t refutable, meaning that it’s difficult or impossible to prove it false (ex. “Restaurants want more customers”).

Some example hypotheses Owen could have created:

3. The Subject

Who are you targeting with the experiment? How are you filtering who will participate and who won't? For instance, if Owen puts up a landing page to see if people interested in road bikes will want to buy his bikes, what kind of information is he gathering on the landing page to make sure that the right people are seeing his messaging before he decides whether it's working or not?

Tip: If you are having trouble limiting your target subject for the experiment, try first listing out people who wouldn't fit into your target subject. I.e., for Owen it's people who want to buy a $100 bicycle at Walmart or Target or perhaps people who are interested in roadbikes but have never actually purchased one because they think they are too expensive.

4. The Logistics

How are you going to conduct your experiment? What’s the time period? How do we know when the experiment has started and has finished? How many people will you target? Who will carry out the experiment?

A key question to ask yourself here is: is this the least amount of time and effort I can spend to test this hypothesis? Remember, this is supposed to be a small bet you can afford to lose.  Too many people think their experiment is building a lighter version of the final product – taking 6 months to put together.

You should be able to run your experiment in under 2 weeks. I will frequently push my innovators to come up with a hypothesis and figure out a way to start the experiment within 24 hours.

5. The Currency

Something of value that the subjects of your experiment have to give you in order to prove whether your hypothesis is true.

The key is that it be something painful for them to give up in order to demonstrate their sincerity.  This can include anything from money to time to a commitment of certain resources.  Basically anything that demonstrates customers will be willing to part with something they value in order to obtain the product or service you’re offering. You want to make sure that they aren’t just trying to be nice to you or lying about their intent for some other reason.

When you are trying to de-risk an idea, the worst kind of evidence you could gather is a false positive (i.e., perceived interest from people who don’t actually see value in your product) because it gets you excited about moving forward and going All In on the idea. Simulate a world where your product already exists, and see if your customers will give you the currency you think you deserve.

In the Owen hypothesis examples above, Owen is asking for specific actions, a commitment of money or commitment of time to demonstrate whether he’s identified the right customer segments, marketing channels and distribution channels.

6. The Success and Failure Criteria

Before you begin your experiment, it’s important to define what success and failure will look like.  If success is having 25 percent of customers give you currency, what does it mean when only 15 percent provide it? Has your experiment failed?

You need to set up these parameters before you begin the experiment, so that you’ll objectively understand the outcome and not be forced to debate what the results mean with your team.

Additionally, a friend of mine, Justin Wilcox, suggests that innovators write out two separate plans of action to pursue depending on whether the experiment reveals the hypothesis to be correct or incorrect. He emphasizes that this should be done before conducting the experiment.  Some people have such a hard time deciding what to do if an experiment doesn’t go as they had planned that they end up making up a justification of why it was a success and allowing themselves to keep moving forward on their idea.


OK. Those are the elements you need to determine and document before you begin your experiment. And while this experiment framework can seem cumbersome, remember, it is your single greatest asset in reducing the risk that goes with creating something new.

Corporate innovation is all the rage these days. With plenty of money and time at their disposal, employees have ample resources to create the next big thing. But before they commit too many resources to an idea, these intrapreneurs can learn a lot from successful entrepreneurs who operate with fewer resources.

Innovation within a corporation comes down to two factors:

1. How employees generate ideas (problem-oriented vs. solution-oriented ideas)

Do you remember the Segway? The Segway is a two-wheeled, battery-powered machine that makes even the most popular kid in school look like he sits alone at lunch.  What I’m saying is you look dorky riding the thing.  There’s something about you not putting in much effort while standing and gliding down the street that just makes people uncomfortable.

When the Segway first came out, it garnered lots of attention. Steve Jobs predicted the Segway would be bigger than the PC. John Doerr, a prominent venture capitalist who backed Netscape and Amazon, said it would be bigger than the Internet. With this level of hype, the company raised more than $90 million. But it’s grand unveiling was a huge disappointment. It took the company its entire first year in business to sell the number of Segways it predicted it would sell every two weeks.

The company had generated a solution-based idea. The Segway was a shiny, new technological advancement…that nobody wanted. The product didn’t solve a problem for the customer. Most companies that are unhappy with the results of their innovation programs are generating these same kinds of solution-based ideas. They start with a technological advancement or a brain storming session that produce a product, and then they try to figure out who might want it.

They’re so excited to have created something new that they forget that no one necessarily asked them to create it in the first place. They just assume that if they build it, the customers will come. Unfortunately, that seldom happens.  What innovative employees – or intrapreneurs – do differently is come up with solutions inspired by their customers’ problems.

Instead of taking stabs in the dark and guessing what people might like, why not go directly to your customer and figure out for sure? When Paul Buchheit at Google created Gmail, he did just that.  He came up with a problem-based idea. Instead of modeling his email platform after others on the market (looking at competitors to see what features and benefits to include), Paul listed out all the problems he thought the existing solutions created for users.  The existing email platforms had limited storage space, were hard to search through and were slow to load data. By designing Gmail around these problems, Paul created something that generated a lot of value to email users.  He initially designed the gmail platform for his own use, but when others in the company saw it, they begged him to let them have access to the functionality he created.  And when Gmail became public, users flocked to the service because word of mouth marketing was so powerful at explaining its value.

Word of mouth marketing only works when people feel compelled to spread the word – and that compulsion is borne out of feeling that a product has solved a tangible problem. Gmail wasn’t just different to be different.  It was different in a way that generated a lot of value for its customers. So much value that they wanted to tell people about it at school or work.

1. How employees generate ideas (problem-oriented vs. solution-oriented ideas)
Do you remember the Segway? The Segway is a two-wheeled, battery-powered machine that makes even the most popular kid in school look like he sits alone at lunch.  What I’m saying is you look dorky riding the thing.  There’s something about you not putting in much effort while standing and gliding down the street that just makes people uncomfortable.

When the Segway first came out, it garnered lots of attention. Steve Jobs predicted the Segway would be bigger than the PC. John Doerr, a prominent venture capitalist who backed Netscape and Amazon, said it would be bigger than the Internet. With this level of hype, the company raised more than $90 million. But it’s grand unveiling was a huge disappointment. It took the company its entire first year in business to sell the number of Segways it predicted it would sell every two weeks.

The company had generated a solution-based idea. The Segway was a shiny, new technological advancement…that nobody wanted. The product didn’t solve a problem for the customer. Most companies that are unhappy with the results of their innovation programs are generating these same kinds of solution-based ideas. They start with a technological advancement or a brain storming session that produce a product, and then they try to figure out who might want it.

They’re so excited to have created something new that they forget that no one necessarily asked them to create it in the first place. They just assume that if they build it, the customers will come. Unfortunately, that seldom happens.  What innovative employees – or intrapreneurs – do differently is come up with solutions inspired by their customers’ problems.

Instead of taking stabs in the dark and guessing what people might like, why not go directly to your customer and figure out for sure? When Paul Buchheit at Google created Gmail, he did just that.  He came up with a problem-based idea. Instead of modeling his email platform after others on the market (looking at competitors to see what features and benefits to include), Paul listed out all the problems he thought the existing solutions created for users.  The existing email platforms had limited storage space, were hard to search through and were slow to load data. By designing Gmail around these problems, Paul created something that generated a lot of value to email users.  He initially designed the gmail platform for his own use, but when others in the company saw it, they begged him to let them have access to the functionality he created.  And when Gmail became public, users flocked to the service because word of mouth marketing was so powerful at explaining its value.

Word of mouth marketing only works when people feel compelled to spread the word – and that compulsion is borne out of feeling that a product has solved a tangible problem. Gmail wasn’t just different to be different.  It was different in a way that generated a lot of value for its customers. So much value that they wanted to tell people about it at school or work.

Like Gmail, most successful products are built to solve problems. These problem-based ideas can only be found through customer interaction. You know you have a potentially great idea when you identify a group of customers who are ready, willing and accessible. Ready customers have identified a problem and are interested in fixing it, willing customers have taken steps to fix the problem in the past and have a budget to address the problem, and accessible customers are people you can easily reach. When you seek out this trifecta of customer interest for a problem-based idea, your product will practically sell itself.

2. How employees determine which ideas to pursue 

Webvan is one of the most famous examples of a seemingly good idea that flopped. In 1996, Webvan launched an online grocery delivery business on the theory that people would pay money to avoid the hassle of grocery stores. Webvan spent hundreds of millions of dollarsbuilding an infrastructure (warehouses, technology, sales/marketing) based on a business plan that should have worked. But it never took off, and eventually the company went bankrupt in 2001. The online news site CNET went on to name Webvan the worst dot-com failure in history.

The Webvan story follows a plan-based approach to business that is commonly taught in business school. You write a business plan, see whether the numbers add up, and predict the success of a business based on this creative writing exercise. The plan-based approach seldom works because innovation is iterative. Your first business plan won’t be perfect, but most people don’t give themselves enough resources to make necessary pivots. Instead, many companies spend all their money to build a perfect product that is often a failure.

Entrepreneurs with the most positive results, however, know their company will be a success before their product ever hits the shelves. Instead of trying to predict the future, these entrepreneurs try to play detective by using an evidence-based approach to innovation. Theevidence-based approach determines customer demand and value of a product through experiments with actual customers. Simply by using this approach, the creators of Webvan could have launched a successful company or, at worst, abandoned the idea and saved hundreds of millions of dollars.

Zappos, an online shoe retailer founded in 1999, is the opposite of Webvan. Before the company spent a dime on building its infrastructure, it made sure it had customers by verifying a willingness among customers to buy shoes online. In the beginning, founder Nick Swinmurn would take pictures of the shoes available at local stores and post them on Zappos’s website. After a customer made a purchase online, Nick would return to the local store, buy the pair of shoes at full price and ship the shoes out manually. Before Zappos had built a single shipping warehouse, it was able to prove that its business model would work. This evidence-based approach is what prevented Zappos from becoming Webvan.

A few years after Webvan closed its doors, Zappos was acquired by Amazon for $1.2Billion. Swinmurn’s early experiments, while time consuming, obviously paid off. It’s important to verify that customers will actually pay for your product. A customer can easily give you an email address or a verbal agreement to buy your product, but real “currency” is different. When a customer gives you something that pains them, like money, time or an endorsement, you have strong evidence that your product is highly valued.

With everything on the line, entrepreneurs with access to little capital are under heightened pressure to build a moneymaking product on the first try. The best entrepreneurs reduce risk and expense by generating ideas that solve a problem and verifying those ideas with customer-backed evidence. This approach is often used out of necessity by entrepreneurs, but successful employee-driven innovations result from mimicking this method within the corporate environment. A problem-based idea and evidence-based approach is essential for innovation anywhere. Whether you have one employee or 5,000, the pain of innovation can be both eased and energized by following the example of successful entrepreneurs.

Launching new products and services is the only way to stay competitive in the new economy. Unfortunately, most companies have a process in place that stifles innovation.

I recently gave a TEDx talk titled "Our Approach to Innovation is Dead Wrong" about why our traditional thinking with regard to launching new products or initiatives is actually killing those new ideas before they ever have a chance to succeed.

So how does your organization stack up?  

What's working well and what do you think isn't working?

Looking forward to your thoughts.

When I walked into a local car dealership in Columbia, Mo. earlier this year, I knew which car I wanted and I had a plan to get it at a great price. Within thirty seconds of walking onto the showroom floor, a sales rep named Chad asked me to step into his cubicle with promises of “any soft drink flavor you can imagine” from the dealership’s extravagant new vending machine.  “Just water, Chad.” I replied.  I was here for business.

When Chad returned with my cup of water, I handed him a folder containing all my research – everything from invoice pricing to examples of what customers in the local area had paid for the same car in the preceding months. Chad looked a little disappointed, but his face moved into downright despondency a moment later when I proposed what I thought was a fair offer.

Chad, a genuinely nice guy who deserved none of this hassle, briefly rebounded long enough to pivot to a few of the standard replies, but I wasn’t budging on my offer. Dutifully moving on to the next part of the ceremony, he took out in search of his manager and to learn whether it was “even possible to let this car go for so little.”

A few minutes later, Chad came bounding back into the little cubicle like a conquering hero and proudly delivered the news that he had been able to make the deal happen. I almost felt bad when I said, “Sorry, Chad, now I want this deal.” I handed him my phone so that he could see the certificate guaranteeing me a price $800 below what he’d just agreed to.

In the brief time that Chad had been negotiating with his manager on my behalf, I Googled deals for the car I wanted and found a service that pre-negotiated prices for the very car I was buying with the very dealership I was visiting and all I needed to do was show them a certificate on my phone guaranteeing me the lower price.  No additional negotiation necessary!

Since the invention of the automobile, sales reps have been heading off to talk to their managers, but never before has that moment extended such an advantage to the customer.

This is only one example of how the 21st century consumer shops.  Today’s customer, unlike those of 15 years ago, is in complete control. Here are the three biggest changes that have taken place in that time:

1. Customers have more information.

My recent experience buying a car is vastly different than the experience I would have had 15 years ago.  Back then, I would have walked into the dealership just expecting to get hosed because the only thing I knew about car prices was what I learned reading the stickers at various dealerships. Today’s customers, however, have nearly unlimited information about products. Online reviews and price comparisons can help a consumer become even more informed than their sales person.  This results in the further commoditization of your products.  If you don’t find some new way of connecting with your customers and creating value in their lives, they are going to continually narrow your profit margin by forcing you to compete globally.

2. Customers have all the power.

In 1999, if you wanted to buy a TV you had to go to one of a handful of stores in town and settle for the best option. In today’s world, supply of just about any product significantly outnumbers demand. Thanks to online retailers, a consumer has literally thousands of options each time they make a purchase. At the very least, they have thousands of prices they can expect you to match before they make their decision.  This is a never-ending race to the bottom. The only way to make it stop is to stop selling products and start solving migraine problems.

3. Customers expect perfection.

While in the past consumers had to settle for the best product they could find, today’s consumers expect perfection. They no longer have to settle. That means that even if you once had the perfect solution, it might no longer be perfect.  Customer needs and wants change and technology allows us to produce so much more for so much less. If you aren’t constantly innovating to create products and services your customers can’t live without, you’re going to follow in the footsteps of numerous others who thought they were doing well and suddenly found themselves out of customers. Think Kodak, Blockbuster, and Borders.

The only way to keep these kinds of customers and even have a chance of accumulating new ones is to stop selling them products and start solving their problems.

To be continued… (make sure you are subscribed to receive the next installment).

diana kander logo in black

READY TO FLEX YOUR CURIOSITY MUSCLE?

Sign up for Diana's monthly newsletter that gets you focused on thriving rather than just surviving.
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram