Piloting in business innovation means testing an idea effectively. This is not a straightforward process and requires addressing the right questions: What idea should we test? Which aspect of it? How should we go about testing? How should we measure the results? What do we allow these results to mean and what do we do afterwards?
Forget selection – Test all your ideas
“I think there is a world market for maybe five computers.” – Thomas Watson, chairman of IBM, 1943
“We don’t like their sound, and guitar music is on the way out.” – Decca Recording Company on declining to sign the Beatles, 1962
“There is no reason for any individual to have a computer in his home.” – Ken Olson, president of Digital Equipment Corporation, 1977
“Children just aren’t interested in witches and wizards.” – Anonymous publishing executive writing to J.K Rowling, 1996
“Two years from now, spam will be solved.” – Bill Gates, 2004 World Economic Forum
Humans are notoriously bad at predicting the future. Nine years after predicting which start-up would take flight, Paul Graham of Y Combinator conceded, “You can’t tell. […] I learned to keep a completely open mind about which of the startups in each batch would turn out to be the stars.” It is worth nothing that the spectacularly bad predictions above all came from within their particular industry. As shown in a fascinating research project called “Foresight in Hindsight”, by Reinier de Graaf and Laura Baird, we get blindsided by what we think we know. If asking an expert won’t guarantee that your predictions will be accurate, what does this mean when selecting ideas to test?
When you do need to choose
Testing everything won’t work when you have too many concepts. We are constantly choosing between ideas, so it helps to become aware of what should and should not influence choices. A legitimate approach is to strive for a multitude of concepts. In her book Creative Conspiracy, Leigh Thompson argues that “striving for quality results in less creativity than when striving for quantity.” The approach that we call “producing for waste” means you will end up with a whole batch of ideas from which to choose.
So how can we select an idea to pilot if we are famously flawed at predicting successes in our own domain? The answer is to be systematic. We have created a four-step checklist when selecting which concepts to pilot:
- Check your innovation priorities
- Check the origin of the idea
- Check potential impact along important KPIs
- Check that the path of implementation will fit your person or culture
Step 1. Check your innovation priorities
Some users might want to expand their current business or look for ways to improve customer satisfaction. Others with a broader focus -for example a portfolio of activities- might seek to balance the ideas being piloted. This balance can be sought along different axes: geographical regions, business units, risk profile, time to launch, customer profiles, etc. For both users, the priorities become well defined by maintaining a singular focus for innovation.
A valuable way of guiding your thinking when operating a portfolio of innovative activities is by using the three horizons framework, introduced by Mehrdad Baghai, Steve Coley and David White in The Alchemy of Growth. It provides a structure for companies to assess potential opportunities for growth without neglecting performance in the present.
Leaders can fall into the trap of directing their time and resources on the current business model, especially during times of uncertainty. The three horizons allow you to check that attention is distributed appropriately: by addressing the immediate needs of your current business (Horizon 1), bringing new businesses into existence (Horizon 2), and have something cooking that might turn into something exciting (Horizon 3).
Portfolio thinking suggests that it is good to revisit the following questions before you select ideas for piloting:
- What is the current balance in your portfolio of innovation activities?
- What is the desired balance?
- Given that desired balance, which pilot ideas should be given higher priority?
Step 2. Check the origin of the idea
We also call this “check the grammar.” Just as grammatically correct sentences have a subject, verb, and noun, each concept should have four ingredients that reflect the origin of the idea.
- The user. This may seem obvious, but many ideas lack a clear understanding of the user. Note here that we don’t just mean a description of a user, but a true understanding. Many ideas will have a target group, for instance, women between 35 and 65 in urban areas with an average income. But what happens when you hear that the idea is aimed at and inspired by Maria, a 45-year old single mother of seven-year old Max who works at her uncle’s shoe factory? You have more faith that the idea is built on real insights of the user, instead of a vague notion.
- The need. What user need is addressed by your idea? Insights around needs may have come from observing and interviewing users, as well as from factual analysis. If the idea was sparked by a need that is unmet or even latent – i.e. not clear to the users themselves -, it is a sign that the idea may be worth pursuing. The absence of any need would indicate that there is still homework to be done. If there is no need, it may be a “technology push” idea, i.e. an answer looking for a problem. Establishing the need means there is “pull” – users will want it, because the idea serves a need.
- Features. What are the features of the idea? How concrete have they become? Here is where you will find the bells and whistles. This should give a picture of what the user will experience when they encounter your idea.
- Benefits. Directly linked to the experience of the features. A good idea will contain clear benefits that the pilot customer will be able to articulate without prompting.
These elements should all be part of an idea. Otherwise, be suspicious. Does it really arise from insights about the needs of the user, or is it perhaps more a personal whim from the originator? Should a little more investigation or sensing time be invested before it is ripe for the next stage? Making sure that the “grammar” is correct may be necessary for selection, but it is certainly not sufficient. Ideas do not always have a clear user, need, feature, and benefit to have the spark of innovation. Judge the origin of an idea, and by checking the grammar you’ll be sure to be onto a good start.
Three myths about the origin of ideas
When assessing the origin of an idea, try not to be influenced by the following myths:
Myth 1. Good ideas come in a “Eureka!” moment
Most great ideas have had a long incubation time, even if it sometimes seems that they arrived all of a sudden. Innovators like to tell the story of the moment of insight, often leaving out the 99% of perspiration that came before it. Sir Harold Evans said, “The trouble with the eureka myth is that it causes managers and investors to overestimate the pace of invention, and underestimate the fortitude required to move from the early stages of discovery to a marketable product.”
Myth 2. Good ideas are totally original
Innovation is often a combination of things – think of kite surfing, where surfing met kiting. It can take time for an idea to find its true application, and originality may have nothing to do with its potential. In a Tweet, famous Venture Capitalist Marc Andreessen mused that, “When you have the timing right, you almost always feel like you’re too late. Terrified you’ve missed the window = a great sign.” While visionaries have original new ideas, pragmatists have successful ones. You should select an idea to test market readiness, not product novelty.
Myth 3. Experts are best placed to come up with good ideas
Experts worried about their reputations often miss the playfulness or the willingness to fail that is required to come up with the new. Involve non-experts. Ask your hotel’s front-desk staff for their opinions on the restaurant’s menu, and see what happens. Try not to overrate the opinion of people with authority because innovation may not be what got them there.
Step 3. Check impact along important KPIs
Naturally, you want to select your ideas based on impact. But what kind of impact/value do you want? The first question investment bankers ask when an idea is pitched is “how big is it?” This means the potential in term of dollars. In 1996, Angel Investor Tony Hsieh received a business proposal by voicemail about starting an online shoe store. As his thumb was about to press the delete button, a figure of the current size of the shoe market made him pull his finger away- $40 billion, with 5% already purchased through mail order. If the potential was that big then maybe this was an idea worth pursuing. He was right. Zappos Inc. became a huge hit, and in 2011 had revenues exceeding $2 billion.
Revenue is not the only impact for commercial organizations to consider. When looking at ideas you can also look at:
- Impact on brand awareness
- Impact on user experience
- Impact through cost reduction
Different people in your organization will value different key performance indicators (KPIs), so knowing how your ideas impact the relevant KPIs will help in selecting the ideas, designing the pilot, and getting support for the ideas in the organization.
When aspiring for social impact, making ideas comparable can be even harder, as it is difficult to quantify impact. This is especially the case when ideas touch on deeply seated values. It helps translate the impact into figures that will be somehow measurable. The Center for Employment Opportunities is a working example on how to translate aims into metrics. They seek to help high-risk men released from prison to find their way in society through employment, so “individuals in the treatment group spend at least 8 percent fewer days in jail or prison than the control group, and show at least a 5 percent increase in their immediate and long-term employment.” Translating social impact into quantifiable metrics may not always work, but will benefit you in the selection process, as well as in the design and the efforts that may follow.
Step 4. Check that the path of implementation will fit your person or culture
An idea can have merit but still not be the right fit if it is too far removed from you and your organization. It could even become a liability to your core business or core culture. Consider whether you or your organization are ready for the hurdles that will be part of the path of implementation. Does it fit your lifestyle and passions? Will it go against the mainstay of your organization? Is the idea viable for you?
Ultimately, know why you select
We select and choose all the time. Choices based on personal preferences are easy, but will not serve innovation. Awareness will become a valuable asset when there is a lot at stake for both you and your organization. Make more conscious choices, and fewer automated ones. Challenge yourself to trust your gut feelings, while also doing your homework thoroughly. Mastering these combined skills will allow you to decide the best idea to pilot.
About the authors
Mark Vernooij has passion for entrepreneurship, education and innovation are what drive Mark. Prior to THNK, he has lead several start-ups in the fields of music and entertainment and online. Next to his entrepreneurial ventures, Mark travelled the globe as innovation and strategy consultant for Accenture and McKinsey.
Robert Wolfe has been part of THNK faculty since the beginning of THNK as a leadership coach, storytelling trainer and innovation facilitator. Before he was a management trainer and personal coach in many countries, an improv actor, and he still is a writer of fiction novels for young adults. He specializes in experiential learning and voice dialogue.
- Interview with Amy Stewart at Zappos, June 14, 2014
- Foresight in Hindsight, Reiner de Graaf at TedXHamburg https://youtu.be/u6M-Ab0GuPI
- This article was originally published at THNK.org