May 16, 2016

11 Questions to Ask Before Starting an Innovation Project

11 Questions to Ask Before Starting an Innovation Project

Ask good questions and you get good answers. Ask the wrong questions, or worse still, don't ask questions at all, and you're essentially driving blind with no sense of direction.

When it comes to innovation in a large company, it is an end-to-end commitment and each stage of the innovation lifecycle must perfectly integrate into the stage before and after it.

If the foundations aren't stable, then chances are that all of the subsequent steps will be flawed, ultimately resulting in questionable outcomes and little benefits realisation, if any.

When starting an innovation project, particularly one that focuses on Horizon 2 adjacent innovation or Horizon 3 disruptive innovation, we need to ask the following elevent questions:

1. What customer job are we addressing?

Is the job of a lawnmower to cut grass or is it actually to keep the lawn tidy and amongst other things, spare us the judging eyes of neighbours? Understanding the customer job helps us identify pain points and gains sought. 

2. Are we actually solving a problem or creating a gain?

Once we understand the customer jobs we can define pain points and gains sought, This puts us in a position to design solutions and ultimately define the value proposition. 

If we defined the customer job of a lawnmower as 'cut grass' then we will only come up with solutions that have blades. However, if we defined the job as 'keep the lawn tidy' then it lends itself to a whole range of solutions. 

3. Is the customer over-served or under-served by existing solutions?

 

Understanding whether a customer is over-served or under-served by existing solutions allows us to determine the size of the opportunity and prioritise between competing ideas.

4. Can we build it?

This is pretty straightforward. Can we build it? If not, can we find somebody else to build it at a reasonable price? Early on all we want to do is build a prototype to help us test assumptions underlying our value proposition and business model. If we can validate these core assumptions then we can justify spending a little bit more building out the next phase of the product. 

5. Are we entering a treacherous red sea or a clear blue sea?

Entering an already polluted red sea where competition is rife is no way to innovate. Innovation is about capturing new markets - if you can be first to market with a disruptive innovation you are six times more likely to succeeed and the revenue generating potential is 20 times greater. If you enter a red sea, margins are slim, cost to market is high and growth opportunities are small. 

6. Has it been done before? 

It's important to look at analogs (other products that validate market appetite) and antilogs (products that invalidate market appetite) in the market. For example, analogs for the iPod were the Sony walkman (validate mobile music consumption) and mp3 players (validate that people would download mp3s to external devices). Likewise you want to identify failures and understand why they failed and whether or not this learning presents an opportunity. 

7. Can we test it relatively quickly, economically and effectively using our existing networks and ability to prototype?

If we can't then we won't be able to move quickly enough and may over-commit time and money to something that that there may be little appetite for. However, today all it takes is a little imagination to build prototypes for even the most ambitious technical endeavours. The first prototype for Google Glass was built in just one day

8. Will people pay for it?

Quite self explanatory but the amount of products that large organisations build for which there is little eventual market appetite is not to be snickered at. We want to build prototypes to not only validate the product/solution fit but also the revenue/pricing model. 

9. Furthermore, will it cost less to deliver than people are willing to pay for it?

What's the cost of delivery per customer and customer acquisition cost? We need to understand this and compare it to the lifetime value generated per customer. If each customer is worth approximately one million dollars but it costs us $1.1m to deliver said product then we're operating at a loss and need to rethink our business model. 

10. Is the market large enough OR have we got a strategy in place to grow a new market? 

While the market size question can be the death of disruptive innovation is most large companies - because the market is initially insignificant by large company standards - understanding how we might grow and capture a new market is another question. Have you identified some early adopters, initial marketing and channel partners?

11. Is this scalable?

If we are successful in finding product market fit and validating our business model, what will it take to 100X, 1,000X or 10,000x the business? Can we scale or do we need funding and partners? How would we go about that? Would scale affect our business model and what makes us tick as a startup? What would be the cost per unit if we scale? Will our business model still make sense? 

If you're embarking upon what is dubbed a disruptive innovation project but most of the above questions remain unanswered, you might want to spend a little bit of time understand them otherwise you might be confusing action with effectiveness and prioritising the urgent over the important. 

Innovate or die.

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Steve Glaveski

Steve Glaveski is the CEO and Co-Founder of Collective Campus which he established to help companies and their employees to create more meaningful impact in the world in an age of rapid change and increasing uncertainty. Steve also founded Lemonade Stand - a children's entrepreneurship program, wrote the Innovation Manager's Handbook vol 1 and 2, hosts Future², an iTunes chart topping podcast on corporate innovation and entrepreneurship and is a keynote speaker. He previously founded HOTDESK, an office sharing platform and has worked for the likes of Westpac, Dun & Bradstreet, the Victorian Auditor General's Office, Ernst & Young, KPMG and Macquarie Bank. Follow him at @steveglaveski and Book a free 15-minute call with Steve to talk through your innovation objectives.

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