Category Archives: BMI Phases

Design Thinking Innovation Nugget: ENVIRONMENT

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After completing a fairly detailed overview & training session (including a visit to Stanford’s d. School), I came away with several new tools that will be added to the BMI toolkit. So, without further delay, let’s get into the first of two key categories of tools that most definitely add tremendous value to today’s innovation process.

Environment & Physical Space

Whether in the Idea Generation or Commercialization Analysis phase of the Innovation Lifecycle, participants are likely to find themselves in a group setting to discuss / debate / ideate. For the vast majority of us, that usually means some conference room or hotel conference facility somewhere. Until my visit to the d. School at Stanford, I had pretty much accepted this as one constant that really didn’t warrant much extra attention. Sure, we could improvise by using flip charts, post-it notes, and rearranging the tables a bit, but most creativity would be unlocked by other facilitation techniques – carefully planning breakout groups, six thinking hats role-play, pre-mortem, etc.

I now believe we have been selling ourselves short by not taking advantage of a truly innovation-friendly environment. Although you can hopefully gain some perspective of what that means by looking at the pictures below, I think it is hard to fully appreciate the true impact it has until someone explains it to you (or to me, as John and Erin did)… NOTE: what follows is more about group discussion and dynamics than a simple “set direction” or status meeting. Think about the last group meeting you had in the typical conference room – someone presented or someone was urging a group discussion usually aided by slides or a handout. How many people truly participated? How much original thought surfaced beyond what was already on the slides? Did anyone really step up and help the content evolve? Why is that?

The fact remains that most conference rooms are designed for presentation, or are just a slightly more group-friendly version of our desks. Often, attendees are automatically in one of several modes: friend or colleague (want to be supportive), subordinate (don’t want to comment as it might be seen as criticism), boss (concerned about steering conversation in one direction over another). To make matters more challenging, it is not easy to share “rough” or “unpolished” thoughts – imagine going to the whiteboard (often at the front of the room) and sketching some doodles trying to explain your thoughts right next to the projected presentation that someone has spent the last month making perfect? Even if a few participants do manage to overcome the typical barriers, do the majority of people contribute? Likely not, and that means we are nowhere near our innovation capacity.

NEW DEFINITION ALERT!

Innovation Capacity: the total number of creative minds in a given setting… addendum: EVERY person has a creative mind, but some have yet to be “unlocked”… addendum2: all human children start out with a completely unlocked creative mind, but are slowly taught to keep that dangerous thing under lock and key with only scant visitation rights

So what are some of these powerful environment considerations that you can (hopefully) see in the pictures?

Nothing too rigid

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Easily movable parts (chairs, tables, walls, whiteboards, etc.)

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Looks like a work in progress

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Whimsical additions that can be used as aids

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Lots of medium upon which to sketch (ideally, easy to erase as well)

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An area for building prototypes (both tech and physical)… more to come on this topic in the next blog post

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A “reset” guide for when done using the space – essentially how to clear the canvas

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Having seen all these elements in sum total, I can definitely see how they collectively add to the feeling of “creative confidence” (Google it) that Design Thinking encourages.

Does this mean our usual corporate working space needs to go the way of the dodo? No, but it certainly does open up some valuable lessons about what we can do different if we are actually trying to encourage innovative thinking. In fact, based on what I saw first-hand at Stanford, I would strongly endorse that EVERY company interested in thriving in the 21st century and beyond should dedicate some of its current facilities to the ideal innovation environment principles. It can serve as both a training facility and as an innovation-focused conference center. It can also serve as a model of what to strive for if those perfect circumstances cannot be replicated in total – we actually “morphed” a traditional conference room into something more conducive by applying some of these principles.

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BMI Applied to First Responders (start)

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Working with the local fire chief in the Falcon district (in Colorado Springs area, and one of several local fire departments very much involved battling this year’s massive Black Forest fire), we have shared the following two BMI components to facilitate the discussion focused on how BMI might actually help – see how using a business model mindset coupled with a “jobs” focus could potentially identify new ways for the fire department to be more successful, grow, and achieve its longer term goals.

Business Model Canvas (current state)

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Jobs To Be Done (from a district resident perspective related to first responders)

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Although we wont be setting any speed records for delivery here (this is being done in our spare time), we feel pretty confident we can identify several new areas for the local fire department to make meaningful improvements in the business of running their department. A couple of key objectives that are front & center for this effort:

  • New funding sources (predictable being key)
  • New ways of working with local community (e.g. tapping into HOAs more)
  • Ballot planning (multi-year)

We will also we reaching out to other local fire departments around the country, and welcome your feedback/suggestions!

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Taking a Page from Biology

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Ecosystem:  A community of organisms together with their physical environment, viewed as a system of interacting and interdependent relationships and including such processes as the flow of energy through trophic levels and the cycling of chemical elements and compounds through living and nonliving components of the system.  Source:  American Heritage Science Dictionary

Borrowing from biology 101, most organizations today understand the essential role a network of business relationships – suppliers, distributors, customers, competitors – plays in bringing products and services to market.  Put simply. it’s the idea that each partner in the “ecosystem” affects and is affected by the others, creating an evolving set of relationships in which participants must be willing to bend and adapt in order to thrive.

In his book, The Wide Lens: A New Strategy for Innovation, Ron Adner, a professor of strategy at the Tuck Business School at Dartmouth, brings this point home by citing many commercial flops (e.g. Sony’s 2007 e-Book Reader; Hollywood’s attempt to bring digital cinema to American theaters in the 1990s) due to a failure to see the whole ecosystem.  His point:

“Greatness on your part is not enough. You are no longer an autonomous innovator. You are now an actor within a broader innovation ecosystem. Success in a connected world requires that you manage your dependence. But before you can manage your dependence, you need to see it and understand it. Even the greatest companies can be blindsided by this shift.”

Taking stock of the ecosystem required by new innovations is a core tenet of Business Model Innovation (BMI).  We advise clients that mapping stakeholder relationships (see illustrative graphic below for an IT department in a financial services company) surrounding the innovation is instrumental to illuminating the risks and dependencies that could catapult or kill a great idea on its way to success.

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Identifying the potential land mines in the ecosystem is only a starting point.  To vet the implications of the relationships on the innovation’s business model, organizations must run a series of experiments with stakeholders, focusing on each point in the ecosystem where uncertainty is greatest.  Through testing, organizations will gain the requisite insights for de-risking the partner selection process and the terms and conditions governing their roles.  As the business model evolves, so must the ecosystem to ensure that all interests between stakeholders and their end consumers remain aligned.

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The Wedge

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Assume the following:

  • New innovation idea has been qualified, with clear value and growth hypotheses
  • Target customer segments have been identified
  • The business model has been designed to support the optimal delivery of the idea
  • Innovation accounting principles have been employed to determine the appropriate metrics to track

Now the challenge becomes how to validate the idea (WHAT) and the business model behind it (HOW). Enter the “Wedge” approach to experimentation and deployment…

Wedge

Much as the name implies, a wedge approach to experimentation starts small – you insert the tip of the wedge where it is most likely to have positive effect (e.g. the door jam, or parallel to the seams in a log). In business terms, pick a customer segment that has the most underserved opportunity, and ideally is one that could have ripple effects across other segments when these needs are met. Put another way, pick a high-profile segment where success is very likely to build momentum.

It is rare that an actual wedge reaches its ideal state without a few taps – the experimentation version of the wedge works the same way. Given that this is early stage experimentation, start by validating the fundamentals of the idea – the value and growth hypotheses – with direct segment interaction. Note that traditional metrics (e.g. profitability, growth, retention, etc.) are NOT relevant for this early stage. Assuming both can be validated, then progressively add more detailed idea validation with the target segment, making adjustments at every stage based on validated learning. The key principle to abide by is to front-load the biggest, most uncertain assumptions early in the experimentation process. Using Ries’ Minimum Viable Product (MVP) principles is an excellent way to put this theory into practice (see illustration below).

MVP Illustration

So assuming the commercial viability gets validated, and now the time comes to deploy… what do you do? You keep using the wedge approach! This method is just as relevant for deployment as it is for experimentation.

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Look Forward and Then Act

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I had breakfast yesterday with a longtime colleague who was in town visiting with clients. After 20+ years in senior executive roles with global 500 companies, she decamped to a mid-sized firm that was trying to get to the next level.  Like many industries, this company has been reeling from disruption caused by the rise of digital technologies, and investors were expecting bold ideas.  With a board meeting just around the corner, the CEO challenged my colleague to work with the leadership team figuring out how to position the business to become more like a technology-led company?  Looking for guidance on how to proceed, my colleague asked, how do we do this?   As we spoke further, several issues emerged:

  • The company’s vision lacks a bold purpose
  • Clarity what it takes to look, feel, and act like a technology company is limited
  • An understanding of how its markets and customers are changing is not fully formed
  • Open collaboration and communication are the exception rather than the rule

Without a clear template for the future state, addressing these issues would be a challenge.  How could the organization make bets on its people, operations, and partners without first formulating its purpose and deciding what businesses it should enter? Like many companies, this organization seemed to attempting to optimize for the current rather than future business.  Its strategic planning process further reinforced this thinking.

As we parted ways, I left my colleague with the following food for thought:  set aside conventional wisdom about strategy formulation and take a hard look, instead, at who your future customers will be in the future and what they want.  Customer-centric thinking will clarify the types of businesses the organization may wish to pursue.  Apply this customer understanding to how the business could create and realize value from a new mix of offerings.

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