If you’re like most people, you’ve faced disappointment. Maybe the love of your life didn’t return your affection, you didn’t get into your dream college, or you were passed over for promotion. It hurts. And sometimes, that hurt lingers for a long time.
Until one day, something happens, and you realize your disappointment was a gift. You meet the true love of your life while attending college at your fallback school, and years later, when you get passed over for promotion, the two of you quit your jobs, pursue your dreams, and live happily ever after. Or something like that.
We all experience disappointment. We also all get to choose whether we stay there, lamenting the loss of what coulda shoulda woulda been, or we can persevere, putting one foot in front of the other and playing The Rolling Stones on repeat:
“You can’t always get what you want
But if you try sometimes, well, you might just find
You get what you need”
That’s also innovation.
As innovators, especially leaders of innovators, we rarely get what we want. But we always get what we need (whether we like it or not)
We want to know.
We need to be comfortable not knowing.
Most of us want to know the answer because if we know the answer, there is no risk. There is no chance of being wrong, embarrassed, judged, or punished. But if there is no risk, there is no growth, expansion, or discovery.
Innovation is something new that creates value. If you know everything, you can’t innovate.
As innovators, we need to be comfortable not knowing. When we admit to ourselves that we don’t know something, we open our minds to new information, new perspectives, and new opportunities. When we say we don’t know, we give others permission to be curious, learn, and create.
We want the creative genius and billion-dollar idea.
We need the team and the steady stream of big ideas.
We want to believe that one person blessed with sufficient time, money, and genius can change the world. Some people like to believe they are that person, and most of us think we can hire that person, and when we do find that person and give them the resources they need, they will give us the billion-dollar idea that transforms our company, disrupts the industry, and change the world.
Innovation isn’t magic. Innovation is team work.
We need other people to help us see what we can’t and do what we struggle to do. The idea-person needs the optimizer to bring her idea to life, and the optimizer needs the idea-person so he has a starting point. We need lots of ideas because most won’t work, but we don’t know which ones those are, so we prototype, experiment, assess, and refine our way to the ones that will succeed.
We want to be special.
We need to be equal.
We want to work on the latest and most cutting-edge technology and discuss it using terms that no one outside of Innovation understands. We want our work to be on stage, oohed and aahed over on analyst calls, and talked about with envy and reverence in every meeting. We want to be the cool kids, strutting around our super hip offices in our hoodies and flip-flops or calling into the meeting from Burning Man.
Innovation isn’t about you. It’s about serving others.
As innovators, we create value by solving problems. But we can’t do it alone. We need experienced operators who can quickly spot design flaws and propose modifications. We need accountants and attorneys who instantly see risks and help you navigate around them. We need people to help us bring our ideas to life, but that won’t happen if we act like we’re different or better. Just as we work in service to our customers, we must also work in service to our colleagues by working with them, listening, compromising, and offering help.
What about you?
What do you want?
What are you learning you need?
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It’s only my second time with escape rooms. My first wasn’t positive. I actually really disliked it.
In reflection, I believe it was because I was too in my head and didn’t lean into curiousity enough back then. I didn’t know what to do. I stood around, confused and overwhelmed. So I watched my team while I stood there helpless.
This time, I was ready to jump in. I chose to let my curiosity lead.
We were led into a very small room and after an intro sequence, the mission begun. During the intro, I looked around the room curiously. I noticed a small lantern-like light with an electrical symbol. Adjacent to it was an empty cavern with a power socket.
When the mission started, everyone stood wondering what to do.
💡The immediate next step was intuitive for me. I grabbed the lantern-like light, unplugged it and put into the adjacent power socket.
The door opened and we were onto the next part of the mission. “Cool! What’s next?” I thought.
The entire escape room experience was a fun exercise of curiousity and I found it delightful. I went into each room with lots of curiosity, wondering “What if I…? What happens if…?” I pushed buttons, pulled things, rotated, twisted objects, examined items, looked for patterns. It was thoroughly enjoyable.
Research shows when you satisfy your curiosity, your brain rewards you with a flood of dopamine. That’s why curious people are happy people.
Each new step of the escape room was another opportunity to exercise more curiousity. What would happen next? What would we be required to do?
In addition to this curiousity extravaganza, I also loved that this escape room required real collaboration.
In one room, I noticed there were two joysticks and a button on one side of the room. On the other side of the room, there was a viewfinder (like a periscope).
I was curious about this and thought the two were linked together so I told my wife, “hey, go over to the viewfinder and tell me if anything changes when I move these joysticks around.”
My curiosity was right. She said “Yes! It moves what I’m seeing!” We then proceeded to work together to figure out the puzzle.
In another room, we had to work together as a trio to solve a puzzle. We each stood in three parts of the room, interacting with the material and dialoging about what we were seeing and then using that as an input to the piece we were responsible for. Our collaboration leveraged our diverse perspectives and experiences. Some people needed to use math (thank goodness that wasn’t me), memorization, cartography, pattern recognition and other skills.
We couldn’t have achieved our mission without collaborating, it was literally impossible. We leaned into our diverse perspectives and experiences; it was wonderful!
As we left the escape room, I couldn’t help but thinking that I went through an immersive, innovation masterclass because the experience highlighted two very important innovation mindsets: curiosity & collaboration.
🌱Mindset #1: Curiosity is essential for innovation. It leads you to see new things, go down new paths and try new things. Walt Disney once said:
“We keep moving forward, opening new doors, and trying new things, because we are curious and curiosity keeps leading us down new paths.”
The problem with curiosity is that it’s become a buzzword. We tell people to “just be curious.” We’ve fallen prey to the belief that people are either curious or not curious. And the sad reality is, many adults have lost their curiosity. They’ve lost their child-like wonder. What if you could reinvigorate curiousity? What if you could learn how to be curious once again? It’s possible.
🌱Mindset #2: Collaboration drives innovation. True collaboration allows us to see new perspectives, gain insights and reach unexpected outcomes. Walter Isaacson, author of The Innovators says this:
Innovation comes from teams more than lightbulb moments of lone geniuses.
Collaboration is more mindset than skillset and most of us think we’re better collaborators than we really are. If you’ve experienced working in functional silos, a lack of communication, a lack of knowing what’s going on in other teams, you’ve experienced a lack of collaboration. A lack of collaboration roots in a lack of belief in the true power of collaboration. In order to move the needle on collaboration, you need to shift people’s mindsets on collaboration.
At the end of the escape room experience, my wife asked, “How did you know what to do? (It was her first ever escape room experience). I exclaimed, “It’s easy! I was curious!”
🪄Curiosity is powerful. In a 2019 research study, researchers discovered that a single-unit increase in curiosity on a seven-point scale was associated with 34% greater creativity.
🚀 Right now, I want you reflect on the following two prompts:
How will you stimulate your curiosity today? Is there a topic you’ve been curious to learn more about? Maybe it’s a topic, hobby or interest of yours. Some popular topics these days include: Generative AI & ChatGPT. Once you’ve identified an area of curiosity, go and learn about it. Explore it and enjoy the process. I’m giving you permission right now to go and do this. After you’re done, come back and share your experiences with me!
Who could you collaborate with on something you’re working on? It doesn’t matter if it’s a small or big thing.Invite them into your work and get their perspective. You’ll gain fresh insights and new ideas from them. Pro tip: Find someone you NORMALLY wouldn’t ask. Be surprised by what they share with you.
🌱Both curiosity and the collaborative mindset can be taught and nurtured. If you want to know how and bring this to your team, please reach out! I’d be happy to help.
Image credit: Leo Chan
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With one eye open and the other closed, you have no depth perception. With two eyes open, you see in three dimensions. This ability to see in three dimensions is possible because each eye sees from a unique perspective. The brain knits together the two unique perspectives so you can see the world as it is. Or, as your brain thinks it is, at least.
And the same can be said for an organization. When everyone sees things from a single perspective, the organization has no depth perception. But with at least two perspectives, the organization can better see things as they are. The problem is we’re not taught to see from unique perspectives.
With most presentations, the material is delivered from a single perspective with the intention of helping everyone see from that singular perspective. Because there’s no depth to the presentation, it looks the same whether you look at it with one eye or two. But with some training, you can learn how to see depth even when it has purposely been scraped away.
And it’s the same with reports, proposals, and plans. They are usually written from a single perspective with the objective of helping everyone reach a single conclusion. But with some practice, you can learn to see what’s missing to better see things as they are.
When you see what’s missing, you see things in stereo vision.
Here are some tips to help you see what’s missing. Try them out next time you watch a presentation or read a report, proposal, or plan.
When you see a WHAT, look for the missing WHY on the top and HOW on the bottom. Often, at least one slice of bread is missing from the why-what-how sandwich.
When you see a HOW, look for the missing WHO and WHEN. Usually, the bread or meat is missing from the how-who-when sandwich.
Here’s a rule to live by: Without finishing there can be no starting.
When you see a long list of new projects, tasks, or initiatives that will start next year, look for the missing list of activities that would have to stop in order for the new ones to start.
When you see lots of starting, you’ll see a lot of missing finishing.
When you see a proposal to demonstrate something for the first time or an initial pilot, look for the missing resources for the “then what” work. After the prototype is successful, then what? After the pilot is successful, then what? Look for the missing “then what” resources needed to scale the work. It won’t be there.
When you see a plan that requires new capabilities, look for the missing training plan that must be completed before the new work can be done well. And look for the missing budget that won’t be used to pay for the training plan that won’t happen.
When you see an increased output from a system, look for the missing investment needed to make it happen, the missing lead time to get approval for the missing investment, and the missing lead time to put things in place in time to achieve the increased output that won’t be realized.
When you see a completion date, look for the missing breakdown of the work content that wasn’t used to arbitrarily set the completion date that won’t be met.
When you see a cost reduction goal, look for the missing resources that won’t be freed up from other projects to do the cost reduction work that won’t get done.
It’s difficult to see what’s missing. I hope you find these tips helpful.
Image credit: Pixabay
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(including one that makes Radical Innovation easy)
GUEST POST from Robyn Bolton
You are a rolling stone, and that means you gather no moss! You read the September issue of HBR (and maybe last week’s article), tossed out your innovation portfolio, and wove yourself an innovation basket to “differentiate the concept from finance and avoid the mistake of treating projects like financial securities, where the goal is usually to maximize returns through diversification [and instead] remember that innovation projects are creative acts.”
Then you explained this to your CFO and received side-eye so devastating it would make Sophie Loren proud.
The reality is that the innovation projects you’re working on are investments, and because they’re risky, diversification is the best way to maximize the returns your company needs.
But it’s not the only way we should communicate, evaluate, and treat them.
Different innovation basket views for different customers
When compiling an innovation basket, the highest priority is having a single source of truth. If people in the organization disagree on what is in and out of the basket, how you measure and manage the portfolio doesn’t matter.
But a single source of truth doesn’t mean you can’t look at that truth from multiple angles.
Having multiple views showing the whole basket while being customized to address each of your internal customer’s Jobs to be Done will turbocharge your ability to get support and resources.
The CFO: What returns will we get and when?
The classic core/adjacent/transformational portfolio is your answer. By examining each project based on where to play (markets and customers) and how to win (offerings, profit models, key resources and activities), you can quickly assess each project’s relative riskiness, potential return, time to ROI, and resource requirements.
The CEO: How does this support and accelerate our strategic priorities?
This is where the new innovation basket is most helpful. By starting with the company’s strategic goals and asking, “What needs to change to achieve our strategy?” leadership teams immediately align innovation goals with corporate strategic priorities. When projects and investments are placed at the intersection of the goal they support, and the mechanism of value creation (e.g., product, process, brand), the CEO can quickly see how investments align with strategic priorities and actively engage in reallocation decisions.
You: Will any of these ever see the light of day?
As much as you hope the answer is “Yes!”, you know the answer is “Some. Maybe. Hopefully.” You also know that the “some” that survive might not be the biggest or the best of the basket. They’ll be the most palatable.
Ignoring that fact won’t make it untrue. Instead, acknowledge it and use it to expand stakeholders’ palates.
Then place each innovation in one of three buckets based on its fit with the organization’s identity:
Identity-enhancing innovations that enhance or strengthen the identity
Identity-stretching innovations that “do not fit with the core of an organization’s identity, but are related enough that if the scope of organizational identity were expanded, the innovation would fit.”
Identity-challenging innovations that are “in direct conflict with the existing organizational identity.”
It probably won’t surprise you that identity-enhancing innovations are far more likely to receive internal support than identity-challenging innovations. But what may surprise you is that core, adjacent, and transformational innovations can all be identity-enhancing.
For example, Luxxotica and Bausch & Lomb are both in the vision correction industry (eyeglasses and contact lenses, respectively) but have very different identities. Luxxotica views itself as “an eyewear company,” while Bausch & Lomb sees itself as an “eye health company” (apologies for the puns).
When laser-vision correction surgery became widely available, Bausch & Lomb was an early investor because, while the technology would be considered a breakthrough innovation, it was also identity-enhancing. A decade later, Bausch & Lomb’s surgical solutions and ophthalmic pharmaceuticals businesses account for 38% of the company’s revenue and one-third of the growth.
One basket. Multiple Views. All the Answers.
Words are powerful, and using a new one, especially in writing, can change your behavior and brain. But calling a portfolio a basket won’t change the results of your innovation efforts. To do that, you need to understand why you have a basket and look at it in all the ways required to maximize creativity, measure results, and avoid stakeholder side-eye.
Image Credit: Pixabay
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Imagine yourself as the CEO of a mid-sized organization that’s struggling to grow and adapt to the ever-changing business landscape. You decide that it’s time for a significant transformation, which will involve new partnerships, revamped processes, and a shift in the company’s culture.
Despite the potential benefits, the proposed changes are met with strong resistance from within the organization. Corporate antibodies, individuals who fight against innovation and maintain the status quo, are now the biggest challenge to overcome.
In this guide, we’ll walk you through a story that illustrates the impact of corporate antibodies on organizational development and explores the role of organizational culture, leadership, and employee engagement in fostering a supportive environment for change.
A Tale of Two Teams
In our fictional organization, there are two departments that perfectly illustrate the impact of corporate antibodies on organizational development: the marketing team, led by an open-minded and forward-thinking manager named Susan, and the finance department, led by a risk-averse and conservative manager named Mark.
Susan’s marketing team is known for embracing new ideas and encouraging collaboration. She has created a culture where employees are motivated to share ideas, challenge assumptions, and learn from failures. On the other hand, Mark’s finance team resists any proposed changes and defends the status quo. Mark is wary of any initiatives that could disrupt the stability of his department and is often skeptical of suggestions coming from outside his team.
The Power of Culture
One day, during a company-wide meeting, the CEO announces a new partnership with a cutting-edge technology company to streamline processes, reduce costs, and drive innovation across the organization.
Susan’s marketing team quickly embraces the idea, eager to explore the opportunities this partnership could bring. They begin brainstorming ways to integrate the new technology into their work and share their ideas with other teams.
In contrast, Mark’s finance team reacts with apprehension and skepticism. They question the need for such a drastic change and raise concerns about potential disruptions to their well-established processes. Mark himself is hesitant to support the initiative, fearing that it might expose weaknesses within his department and lead to a loss of control.
Detecting Corporate Antibodies
The stark difference between the two teams becomes apparent during meetings and discussions about the upcoming transformation. The finance team, led by Mark, expresses their resistance through statements like:
“We already tried something similar, and it didn’t work.”
“Our current process has worked fine for years; there’s no need to change.”
“If that were a good idea, we’d already have thought of it.”
Some individuals in the finance team genuinely believe they’re looking out for the company’s best interests, while others prioritize their personal interests or fear the potential consequences of change.
The Battle Begins
As the transformation moves into the incubation phase, the tensions between the two teams escalate. Susan’s marketing team starts working closely with the new technology partner, sharing their progress and achievements with the rest of the organization. They demonstrate the positive impact of the change initiative and inspire other departments to get on board.
Meanwhile, Mark’s finance team continues to resist the change, erecting roadblocks and questioning every decision made by the marketing team and the technology partner. Their relentless negativity creates a tense atmosphere and slows down the progress of the transformation.
The Turning Point
As the organization enters the Acceleration stage, the CEO recognizes the need to address the corporate antibodies that are hindering the company’s growth. She decides to implement the following strategies to manage resistance and foster a more supportive environment for change:
Engage potential blockers: The CEO invites Mark and key members of his finance team to participate in decision-making processes, ensuring they feel valued and included. By involving them in shaping the transformation, she gradually turns some of the blockers into backers.
Encourage open communication: The CEO fosters a culture where employees can voice their concerns and suggestions without fear of backlash. This allows the organization to identify and address potential issues early on, reducing the likelihood of resistance emerging later in the process.
Provide support and resources: The CEO allocates resources to offer training and support to employees who need help navigating the change process. This alleviates anxieties and creates a more positive attitude towards the change initiatives.
Celebrate successes: The CEO acknowledges the achievements of Susan’s marketing team and other departments that have embraced the change. Recognizing progress and milestones helps maintain morale and motivation while demonstrating the benefits of the transformation.
Foster collaboration across departments: The CEO organizes cross-functional workshops and team-building activities that encourage employees from different departments to work together. This helps break down silos and promotes a greater understanding of the benefits of the change initiative across the organization.
Appoint change champions: The CEO identifies key influencers within the organization who can help advocate for the change and address concerns from their peers. These change champions play a critical role in maintaining momentum and enthusiasm for the transformation.
Establish a feedback loop: The CEO implements a system for collecting regular feedback from employees about the progress of the transformation. This allows the leadership team to monitor the effectiveness of their strategies, make necessary adjustments, and address any emerging concerns promptly.
With these additional strategies in place, the organization begins to witness significant progress in its transformation journey. The impact of the corporate antibodies is gradually diminished, and a culture of innovation and adaptability starts to flourish.
Monitoring Progress and Ensuring Long-term Success
The CEO understands the importance of monitoring progress and adjusting strategies as needed to ensure the long-term success of the transformation. To do this, she establishes a set of key performance indicators (KPIs) that help track the progress of the change initiatives and their impact on the organization. These KPIs may include employee engagement, cross-functional collaboration, efficiency gains, and financial performance.
Additionally, the CEO remains vigilant for signs of lingering resistance or the re-emergence of corporate antibodies. By maintaining open lines of communication and actively soliciting feedback from employees, she can quickly identify and address any issues that might hinder the organization’s development.
The conclusion is that identifying and tackling corporate antibodies is essential for successful organizational growth and transformation. By understanding the reasons behind their emergence and applying effective strategies to manage them, organizations can build a positive environment for change and promote long-lasting progress.
Emphasizing a strong organizational culture, good leadership, and employee engagement can help ensure your organization’s development efforts succeed, leading to a more resilient and adaptable business in a constantly changing world.
Image Credit: Stefan Lindegaard
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You are a savvy manager, so you know that you need an innovation portfolio because (1) a single innovation isn’t enough to generate the magnitude of growth your company needs, and (2) it is the best way to manage inherently risky endeavors and achieve desired returns.
Too bad you’re wrong.
According to an article in the latest issue of HBR, you shouldn’t have an innovation portfolio. You should have an innovation basket.
Once you finish rolling your eyes (goodness knows I did), hear me (and the article’s authors) out because there is a nuanced but important distinction.
Our journey begins with the obvious.
In their article “A New Approach to Strategic Innovation,” authors Haijian Si, Christoph Loch, and Stelios Kavadias argue that portfolio management approaches have become so standardized as to be practically useless, and they propose a new framework for ensuring your innovation activities achieve your strategic goals.
“Companies typically treat their innovation projects as a portfolio: a mix of projects that, collectively, aim to meet their various strategic objectives,” the article begins. “MOO,” I think (household shorthand for Master Of the Obvious).
“When we surveyed 75 companies in China, we discovered that when executives took the trouble to link their project selection to their business’s competitive goals, the contribution of their innovation activities performance increased dramatically,” the authors continue. “Wow, fill this under N for No Sh*t, Sherlock,” responded my internal monologue.
The authors go on to present and explain their new framework, which is interesting in its focus on asking and answering seemingly simple questions (what, who, why, and how) and identifying internal weaknesses and vulnerabilities through a series of iterative and inclusion conversations. The process is a good one but feels more like an augmentation of an existing approach rather than a radically new one.
Then we hit the “portfolio” vs. “basket” moment.
According to the authors, once the management team completes the first step by reaching a consensus on the changes needed to their strategy, they move on to the second step – creating the innovation basket.
The process of categorizing innovation projects is the next step, and it is where our process deviates from established frameworks. We use the word “basket” rather than “portfolio” to denote a company’s collection of innovation projects. In this way, we differentiate the concept from finance and avoid the mistake of treating projects like financial securities, where the goal is usually to maximize returns through diversification. It’s important to remember that innovation projects are creative acts, whereas investment in financial securities is simply the purchase of assets that have already been created.
“Avoid the mistake of treating projects like financial securities” and “remember that innovation projects are creative acts.” Whoa.
Why this is important in a practical sense (and isn’t just academic fun-with-words)
Think about all the advice you’ve read and heard (and that I’ve probably given you) about innovation portfolios – you need a mix of incremental, adjacent, and radical innovations, and, if you’re creating a portfolio from scratch, use the Golden Ratio.
Yes, and this assumes that everything in your innovation portfolio supports your overall strategy, and that the portfolio is reviewed regularly to ensure that the right projects receive the right investments at the right times.
These assumptions are rarely true.
Projects tend to enter the portfolio because a senior executive suggested them or emerged from an innovation event or customer research and feedback. Once in the portfolio, they progress through the funnel until they either launch or are killed because of poor test results or a slashed innovation budget.
They rarely enter the portfolio because they are required to deliver a higher-level strategy, and they rarely exit because they are no longer strategically relevant. Why? Because the innovation projects in your portfolio are “assets that have already been created.”
What this means for you (and why it’s scary)
Swapping “basket” in for “portfolio” isn’t just the choice of a new word to bolster the claim of creating a new approach. It’s a complete reframing of your role as an innovation executive.
You no longer monitor assets that reflect purchases or investments promising yet-to-be-determined payouts. You are actively starting, shifting, and shutting down opportunities based on business strategy and needs. Shifting from a “portfolio” to a basket” turns your role as an executive from someone who monitors performance to someone who actively manages opportunities.
And this should scare you.
Because this makes the challenge of balancing operations and innovation an unavoidable and regular endeavor. Gone are the days of “set it and forget it” innovation management, which often buys innovation teams time to produce results before their resources are noticed and reallocated to core operations.
If you aren’t careful about building and vigorously defending your innovation basket, it will be easy to pluck resources from it and allocate them to the more urgent and “safer” current business needs that also contribute to the strategic changes identified.
Leaving you with an innovation portfolio.
Image Credit: Pixabay
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How creating experiences for underserved markets can be a key innovation strategy
GUEST POST from John Bessant
It’s summertime, at least here in the northern hemisphere and chances are that August is a holiday month. Which might well see you sitting somewhere and watching an exotic sunset, glass of something suitably refreshing in your hand. As you see that golden disc slip below the horizon and the wonderful display of red shifting colour begins to settle towards nightfall you might spare a thought for the memory of Tom Gullick who died this month. Because for many of us jetting away to our exotic location might not be happening were it not for his innovation efforts….
An avid bird spotter (he held the record for the most birds (over 9000) spotted by an individual) he was a bit of a Don Quixote figure, not least because he took up residence in La Mancha in Spain and pursued a conservationist crusade during his later years, saving at least one species of duck from extinction.
But he has another claim to fame — as one of the founding fathers of the low-cost travel experience. His bird-watching abilities gave him good observational skills and led him to spot an opportunity in classic entrepreneurial fashion — and then to go after it with a passion.
Working for a hundred year old firm of shipping brokers (Clarksons) he was given the task one day of getting people to Brussels to attend the World Fair Expo58. The entrepreneur in him rose to the challenge; he chartered a DC-3 plane to fly from Southend airport and arranged coaches, refreshments and even a tour guide, offering the entire package for £6. It worked well but his interest was piqued when he found out that another entrepreneurial member of the party had seen his offer and bought a sheaf of tickets, reselling them via an advert placed in the London ‘Evening Standard’ newspaper for £8! That was the trigger.
He managed to persuade his rather conservative employers to set up a travel subsidiary and became a pioneer of what became known as package holidays. Coming after years of post-war austerity his offer of trips to places abroad, whether the tourist sights of Belgium or Switzerland or the beaches of the Costa del Sol was avidly taken up. He pitched his offer to those previously underserved by the travel industry, offering experiences to those whose normal holidays might be spent in a beach hut at Bridlington. As he later explained in an interview,
“My happiest moment was standing at Rotterdam airport at the end of the day, watching the buses return from the bulbfields with the Dakota DC-3s lined up waiting to take our customers home. They were so happy because they had never believed they could afford to go abroad.”
Within a decade Clarksons had become one of the major players in a market which was exploding with pent-up demand. They offered a wide variety of experiences, from wine tours in France to trips along the Norwegian fjords; their sunshine holiday business was particularly popular , built on a fixed price all inclusive model delivered at low cost. His skills as negotiator helped deliver this — he could guarantee to fill hotels or aircraft if the supplier was prepared to offer competitive pricing.
Other companies joined the party and it wasn’t just the British who were travelling; increasingly horizons for European tourists were extending. Inevitably this brought a highly competitive edge to the market and required a business strategy based on investing in being able to deliver experiences by assembling the different elements and engineering them down to a package with a thin profit margin. He found increasing difficulty in explaining this to a company whose core business in ship-broking operated on very different models and so he finally left in 1972, retiring to Spain to begin his second career as a bird watcher /conservationist.
He got out just in time; by 1974 cut-throat competition from the growing number of players, a devalued UK pound and the emerging oil crisis with its pressure on fuel costs forced Clarksons into collapse in the middle of the summer tourist season.
The business model hadn’t failed — but it did need development and fast learning. All the pieces were there — interesting destinations, hotels, buses, aircraft and so on. The difference was in the market — classically growing at the edges of an existing one. But bringing this new business model to life required reframing how both product and process worked. Margins were thin and so new approaches were needed to booking and operations, while delivering the package experience required a new profession — the tour rep — who would need enormous versatility (dealing with everything from entertainment, health and safety, administration, currency exchange, etc.) while all the while smiling for the customers!
It wasn’t disruptive innovation — yet. What was going on was learning to serve a very different market with a new experience based on lower cost. But the learning about how that model might work sowed the seeds for what later did become a revolution which transformed the travel industry. The evidence for this is with us today. Low-cost airlines like Ryanair, Wizz or Easyjet have revolutionised the world of short-haul travel and although they faced heavy setbacks during the Covid-19 crisis they are now returning to profitability and popularity.
But the package holiday was not a new idea. Some 100 years previously a certain Thomas Cook was looking for a new offering for his growing travel business. Originally a printer and Baptist lay preacher he’d built his original business organising day trips; his first didn’t run too far (the relatively short hop from his home town of Leicester to nearby Loughborough) but in 1841 it gave birth to his travel business. Four years later and he’d clearly tapped into a rich potential market; his trip to the seaside at Liverpool was booked by 1200 people and he had to repeat it two weeks later for another 800 happy travellers.
Cook began to extend his trips across the Channel and by 1863 had seen the possibilities of offering people the opportunity to see far-off places and sights (like the famous Mount Rigi in Switzerland) for themselves. In doing so he pioneered what effectively became the package tour, organizing not only the travel (by road, rail, boat, even mules) and accommodation but also providing guides to help conduct the tour.
Mind you his tour was not for the faint-hearted. In her diaries an intrepid young woman, Jemima Morrell described in detail a world of 4am alarm calls, 20-mile hikes and other challenges — not least of which was also being able to dress for dinner every evening in the hotels in which she stayed! But she clearly felt it was worth it for the experience.
“The days spent on foot, or by the sides of mules, afford the greatest satisfaction …..It was then that, away from the life of the city, we were taken into the midst of the great wonders of nature and seemed to leave the fashion of this world at a distance … It was an entire change; the usual routine of life was gone. All memory of times and seasons faded away and we lived only in the enjoyment of the present.”
Cook also created a system-level innovation, much as Henry Ford was to do with the motor car fifty years later. Putting together a successful package tour involves much more than simply arranging travel and tickets. Cook pioneered the complex logistics, arranged for integration of different travel and accommodation options, provided a system of coupons (the forerunners of traveller’s cheques) to help pay for goods and services, developed a network of guides and other support staff and printed brochures not only as sales tools but as a way of engaging customers in imagining and dreaming about the journey they were about to embark upon. In doing so he can rightly be considered one of the founding fathers of an industry which today is worth over $7 trillion.
What he pioneered was ‘experience innovation’ — not simply offering travel but a whole new experience. In his case it was the wonders of the Grand Tour brought to everyone, in Clarksons’ case it was the joys of sun-drenched beaches, endless sangria and exotic food to try.
‘Position innovation’ of this kind begins with a reframing of possibilities — classic entrepreneurial territory. Tom Gullick saw an opportunity in meeting needs for a different group and packaging the experience up rather than leaving them to select their own. Travel agents were involved at the time because the infrastructure for booking wasn’t developed; the later low cost revolution saw increasing disintermediation and the emergence of platform models where you buy your travel, car hire, hotel, parking, currency, anything else you might want, all of it via a one stop online platform.
But in order to meet the needs of an unserved or underserved market requires close interaction and fast learning with that market. By definition it doesn’t exist yet in developed form so the process of co-evolving with it is going to involve a bumpy ride. The Clarkson experience was one of experimentation and building fast learning — from the prototype of Expo58 to the slick summer exodus managed in the heydays of the 1970s.
This is challenging but it also means that position innovation can provide a valuable learning laboratory for those wanting to get out of the box which serving the mainstream market can sometimes represent.
A good example is the fascination (and huge market potential) of digital wallets and mobile money. We’re still (well I am) excited by the fact that we can now use our phones to pay for a whole raft of goods and services and the potential is of course huge. Given an accelerating shove by Covid-19 the shift towards a cashless society has been rapid. Not for nothing is Elon Musk trying to create a new brand X (why do I think of washing powder when I hear that?!!!) and give the bird the bird? It’s got little to do with messaging and everything to do with trying to emulate the power of the WeChat platform in China which is an ‘everything app.’ But at its heart it is about mobile money — so much so that even beggars in China have QR codes so that you can support them with a click of your phone button.
So the cutting edge of innovation — right? Not necessarily. If you live in East Africa you might greet a lot of this with a yawn, it’s nothing special or new. Because M-PESA has been enabling this for over a decade, so much so that the mobile money app running on any phone now accounts for over 50% of all GDP transactions in Kenya and is widely used across much of Africa. What is M-PESA? Essentially it’s a mobile money app which was developed originally as a joint venture between Safaricom (Vodafone’s South African subsidiary) and the UK Department for International Development. The name comes from the Swahili pesa meaning money and the original idea began as a development aid project to enable microfinance repayments. Launched in 2007 it is now used by close to 20 million people and the system processes more payments than Western Union does across its entire global network.
What’s gone on, of course, is a classic piece of position innovation where learning has driven improvements and developments, not only to serve the new market but in products and processes to enable it to grow. And it’s created a platform economy, bringing in shops, transport, government services, etc. — and all of this with the innovative support of the central bank. It’s a model which has grown beyond Kenya to have world-wide impact. For example a valuable spin-off has been the use of this technology to enable more efficient aid distribution to help cope with humanitarian crises.
So position innovation matters and should form a key plank in our innovation strategy. It’s at the heart of the innovator’s dilemma — the emergence of innovation at the fringes of your core market was the threat so potently identified by Clayton Christensen. How you deal with that strategic challenge is still a major question — but making sure you spot emerging position innovation early at least buys you time to think through a strategic response.
And for entrepreneurs looking for new opportunities the challenge is simple — spot a market before it exists and then grow it! Not an easy thing to do when you can’t analyse or run focus groups about it. But — as Thomas Cook and later on Tom Gullick found out, being prepared to experiment can pay off handsomely. Which is why it might be worth raising a holiday glass in their direction to remind ourselves of the challenge…
You can find a podcast version of this here and a video version here
What if a tool had the power to delight your customers, cut your costs, increase your bottom line, and maybe double your stock price? You’d use it, right?
That’s precisely the power and impact of Service Design and service blueprints. Yet very few people, especially in the US, know, understand, or use them. Including me.
Thankfully, Leala Abbott, a strategist and researcher at the intersection of experience, innovation, and digital transformation and a lecturer at Parsons School of Design, clued me in.
What is Service Design?
RB: Hi, Leala, thanks for taking the time to talk with me today.
LA: My pleasure! I’m excited about this topic. I’ve managed teams with service designers, and I’ve always been impressed by the magical way they brought together experience strategy, UX, and operations.
RB: I felt the same way after you explained it to me. Before we get too geeked up about the topic, let’s go back to the beginning and define “service.”
LA:Service is something that helps someone accomplish a goal. As a result, every business needs service design because every business is in the service industry.
RB: I’ll be honest, I got a little agitated when I read that because that’s how I define “solution.” But then I saw your illustration explaining that service design moves us from seeing and problem-solving isolated moments to seeing an integrated process. And that’s when it clicked.
LA: That illustration is from Lou Downe’s talk Design in Government Impact for All . Service Design helps us identify what customers want and how to deliver those services effectively by bringing together all the pieces within the organization. It moves us away from fragmented experiences created by different departments and teams within the same company to an integrated process that enables customers to achieve their goals.
Why You Need It
RB: It seems so obvious when you say it. Yet so often, the innovation team spends all their time focused on the customer only to develop the perfect solution that, when they toss it over the wall for colleagues to make, they’re told it’s not possible, and everything stops. Why aren’t we always considering both sides?
LA: One reason, I think, is people don’t want to add one more person to the team. Over the past two decades, the number of individuals required to build something has grown exponentially. It used to be that one person could build your whole website, but now you need user experience designers, researchers, product managers, and more. I think it’s just overwhelming for people to add another individual to the mix. We believe we have all the tools to fix the problem, so we don’t want to add another voice, even if that voice explains the huge disconnect between everything built and their operational failures.
RB: Speaking of operational failures, one of the most surprising things about Service Design is that it almost always results in cost savings. That’s not something most people think about when they hear “design.”
LA: The significant impact on the bottom line is one of the most persuasive aspects of service design. It shifts the focus from pretty pictures to the actual cost implications. Bringing in the operational side of the business is crucial. Building a great customer journey and experience is important, but it’s also important to tie it back to lost revenue and increased cost to serve
Proof It Works
LA: One of the most compelling cases I recently read was about Autodesk’s transition to SaaS, they brought in a service design company called Future Proof. Autodesk wanted to transition from a software licensing model to a software-as-a-service model. It’s a significant transition not just in terms of the business model and pricing but also in how it affects customers.
If you’re a customer of Autodesk, you used to pay a one-time fee for your software, but now you are paying based on users and services. Budgeting becomes messy. The costs are no longer simple and predictable. Plus, it raises lots of questions about the transition, cost predictability, control over access, managing subscriptions, and flexibility. Notice that these issues are about people managing their money and increasing costs. These are the areas where service design can truly help.
Future Proof conducted customer interviews, analyzed each stage of the customer journey, looked at pricing models and renewal protocols, and performed usability studies. When they audited support ticket data for the top five common customer issues, they realized that if Autodesk didn’t change their model, the cost of running software for every customer would increase by 40%, and profit margins would decrease by 15% to 20%.
Autodesk made the change, revenue increased significantly, and their stock price doubled. Service design allows for this kind of analysis and consideration of operational costs.
How to Learn More
RB: Wow, not many things can deliver better service, happier customers, and doubling a stock price. Solid proof that companies, and innovation teams in particular, need to get smart on service design. We’ve talked a lot about the What and Why of Service Design. How can people learn more about the How?
Ever since Eric Reis published his bestselling book, The Lean Startup, the idea of a minimum viable product (MVP) has captured the imagination of entrepreneurs and product developers everywhere. The idea of testing products faster and cheaper has an intuitive logic that simply can’t be denied.
Yet what is often missed is that a minimum viable product isn’t merely a stripped down version of a prototype. It is a method to test assumptions and that’s something very different. A single product often has multiple MVPs, because any product development effort is based on multiple assumptions.
Developing an MVP isn’t just about moving faster and cheaper, but also minimizing risk. In order to test assumptions, you first need to identify them and that’s a soul searching process. You have to take a hard look at what you believe, why you believe it and how those ideas can be evaluated. Essentially, MVP’s work because they force you to do the hard thinking early.
Every Idea Has Assumptions Built In
In 1990, Nick Swinmurn had an idea for a business. He intended to create a website to sell shoes much like Amazon did for books. This was at the height of the dotcom mania, when sites were popping up to sell everything from fashion to pet food to groceries, so the idea itself wasn’t all that original or unusual.
What Swinmurn did next, however, was. Rather than just assuming that people would be willing to buy shoes online or conducting expensive marketing research, he built a very basic site, went to a shoe store and took pictures of shoes, which he placed on the site. When he got an order, he bought the shoes retail and shipped them out. He lost money on every sale.
That’s a terrible way to run a business, but a great — and incredibly cheap — way to to test a business idea. Once he knew that people were willing to buy shoes online, he began to build all the elements of a fully functioning business. Ten years later, the company he created, Zappos was acquired by Amazon for $1.2 billion.
Notice how he didn’t just assume that his business idea was viable. He tested it and validated it. He also learned other things, such as what styles were most popular. Later, Zappos expanded to include handbags, eyewear, clothing, watches, and kids’ merchandise.
The Cautionary Tale Of Google Glass
Now compare how Swinmurn launched his business with Google’s Glass debacle. Instead of starting with an MVP, it announced a full-fledged prototype complete with a snazzy video. Through augmented reality projected onto the lenses, users could seamlessly navigate an urban landscape, send and receive messages and take photos and videos. It generated a lot of excitement and seemed like a revolutionary new way to interact with technology.
Yet criticism quickly erupted. Many were horrified that hordes of wandering techno-hipsters could be surreptitiously recording us. Others had safety concerns about everything from people being distracted while driving to the devices being vulnerable to hacking. Soon there was a brewing revolt against “Google Glassholes.”
Situations like the Google Glass launch are startlingly common. In fact, the vast majority of new product launches fail because there’s no real way to know whether you have the right product-market fit customers actually get a chance to interact with the product. Unfortunately, most product development efforts start by seeking out the largest addressable market. That’s almost always a mistake.
If you are truly creating something new and different, you want to build for the few and not the many. That’s the mistake that Google made with its Glass prototype.
Identifying A Hair On Fire Use Case
The alternative to trying to address the largest addressable market is to identify a hair-on-fire use case. The idea is to find a potential customer that needs to solve a problem so badly that they almost literally have their hair on fire. These customers will be more willing to co-create with you and more likely to put up with the inevitable bugs and glitches that always come up.
For example, Tesla didn’t start out by trying to build an electric car for the masses. Instead, it created a $100,000 status symbol for Silicon Valley millionaires. Because these customers could afford multiple cars, range wasn’t as much of a concern. The high price tag also made a larger battery more feasible. The original Tesla Roadster had a range of 244 miles.
The Silicon Valley set were customers with their hair on fire. They wanted to be seen as stylish and eco-friendly, so were willing to put up with the inevitable limitations of electric cars. They didn’t have to depend on them for their commute or to pick the kids up at soccer practice. As long as the car was cool enough, they would buy it.
Interestingly, Google Glass made a comeback as an industrial product and had a nice run from 2019 to 2023 before they went away for good. For hipsters, an augmented reality product is far from a necessity, but a business that needs to improve productivity can be a true “hair-on-fire” use case. As the product improves and gains traction, it’s entirely possible that it eventually makes its way back to the consumer market in some form.
Using An MVP To Pursue A Grand Challenge
One of the criticisms of minimum viable products is that they are only suited for simple products and tweaks, rather than truly ambitious projects. Nothing could be further from the truth. The reality is that the higher your ambitions, the more important it is for you to start with a minimum viable product.
IBM is one company that has a long history of pursuing grand challenges such as the Deep Blue project which defeated world champion Garry Kasparov at chess and the Blue Gene project which created a new class of “massively parallel” supercomputers. More recently were the Jeopardy grand challenge, which led to the development of its current Watson business and the Debater project.
Notice that none of these were fully featured products. Rather they were attempts to, as IBM’s Chief Innovation Officer, Bernie Meyerson, put it to me, invent something that “even experts in the field, regard as an epiphany and changes assumptions about what’s possible.” That would be hard to do if you were trying to create a full featured product for a demanding customer.
That’s the advantage of creating an MVP. It essentially acts as a research lab where you can safely test hypotheses and eliminate sources of uncertainty. Once you’ve done that, you can get started trying to build a real business.