Category Archives: Innovation

Quantifying the Opportunity Loss of Not Innovating

The Cost of Inertia

LAST UPDATED: December 29, 2025 at 12:15PM

Quantifying the Opportunity Loss of Not Innovating

GUEST POST from Chateau G Pato

In boardrooms around the world, innovation is framed as an expense that must be justified. What is rarely debated with equal rigor is the mounting cost of delay. In a world defined by accelerating change, inertia is no longer passive. It is actively destructive.

The cost of inertia is the accumulation of missed opportunities, weakened capabilities, and eroded trust that results from failing to adapt. While these losses may not appear on balance sheets, they shape long-term viability.

“Inertia is not the absence of change. It is the slow acceptance of decline.”

Braden Kelley

Why Organizations Underestimate Inertia

Leaders are trained to avoid visible failure. Innovation introduces uncertainty and accountability, while maintaining the status quo spreads responsibility thinly.

This creates a bias toward short-term stability over long-term relevance. By the time consequences emerge, the window for easy adaptation has closed.

Reframing Innovation as Loss Prevention

Innovation should not be viewed solely as growth investment. It is also a form of risk mitigation. Organizations that fail to innovate lose optionality, resilience, and talent.

The question shifts from “What if this fails?” to “What is the cost if we never try?”

Case Study 1: Media Industry Transformation

A traditional media company resisted digital subscription models to protect advertising revenue. Digital-native competitors moved quickly, capturing audience loyalty.

The eventual transition required deeper cuts and brand repositioning. Early experimentation would have preserved both revenue and trust.

Case Study 2: Enterprise Software Evolution

An enterprise software provider delayed cloud migration to protect legacy licensing models. Customers migrated to more flexible competitors.

When the shift finally occurred, it required aggressive pricing concessions and cultural change that could have been incremental years earlier.

Quantifying the Invisible

Leaders can make inertia visible by tracking leading indicators such as:

  • Declining customer lifetime value
  • Increasing time-to-decision
  • Reduced experimentation rates

These metrics reveal organizational drag before financial decline becomes irreversible.

The Human Cost of Standing Still

Talented people leave organizations where learning stalls. Customers disengage when experiences stagnate.

Innovation signals belief in the future. Inertia communicates resignation.

Designing Momentum Instead of Disruption

Overcoming inertia does not require dramatic reinvention. It requires consistent progress. Small experiments, clear learning objectives, and visible leadership support create momentum.

Innovation succeeds when it is treated as a system, not a side project.

A Leadership Choice

Every organization innovates or decays by default. The only question is whether that process is intentional.

Leaders who measure the cost of inertia gain the clarity to act before decline becomes destiny.

Frequently Asked Questions

FAQ

How do leaders justify innovation investment?
By framing it as loss prevention and capability building.

Is inertia always a strategic failure?
It becomes one when it prevents learning and adaptation.

What is the first step to overcoming inertia?
Making opportunity loss visible and discussable.

Extra Extra: Because innovation is all about change, Braden Kelley’s human-centered change methodology and tools are the best way to plan and execute the changes necessary to support your innovation and transformation efforts — all while literally getting everyone all on the same page for change. Find out more about the methodology and tools, including the book Charting Change by following the link. Be sure and download the TEN FREE TOOLS while you’re here.

Image credits: Google Gemini

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Designing for the Extremes, Benefiting the Middle

The “Dark Horse” Customer

LAST UPDATED: December 25, 2025 at 10:59AM

Designing for the Extremes, Benefiting the Middle

GUEST POST from Chateau G Pato

Organizations often say they are customer-centric, yet their design decisions quietly optimize for convenience, averages, and assumptions. The result is a polished experience that works well until reality intervenes.

Human-centered design reaches its full power when teams stop designing for the mythical “average” user and start learning from the edges. The Dark Horse customer — underestimated, inconvenient, or misunderstood — holds the key to building experiences that scale under real-world conditions.

“When a system works for people under stress, constraint, or uncertainty, it doesn’t just survive the real world — it earns trust in it.”

Braden Kelley

Why Extremes Predict the Future

Extreme users are not anomalies; they are early signals. Aging populations, increasing cognitive load, language diversity, and economic pressure all push more people toward what was once considered the edge.

Designing for extremes today is how organizations stay relevant tomorrow.

The Hidden Cost of Designing for the Average

Average-based design creates fragile systems. When stress increases — time pressure, emotional intensity, technical failure — these systems collapse.

Dark Horse customers experience these breakdowns first, but never last.

A Practical Framework for Designing at the Edges

1. Seek Out Struggle

Do not recruit only confident or successful users. Study frustration, confusion, and improvisation.

2. Design for Recovery

Extreme users make mistakes under pressure. Systems that allow easy recovery benefit everyone.

3. Reduce Cognitive Load

Clarity is the ultimate inclusive design strategy. If the experience works for someone overwhelmed, it will work for anyone.

Case Study 1: Healthcare Appointment Systems

A healthcare provider redesigned appointment scheduling after observing patients managing chronic illness and limited digital skills.

By reducing steps, clarifying language, and confirming understanding, the system improved no-show rates and satisfaction across the entire patient population.

Case Study 2: E-Commerce Under Time Pressure

An e-commerce company studied last-minute shoppers during high-stress periods. These users abandoned carts due to unclear delivery expectations and complex checkout flows.

Simplifying choices and emphasizing reassurance increased conversion rates not only during peak times, but year-round.

Designing for Dignity

At its core, designing for the Dark Horse customer is about dignity. It acknowledges that people are human, not idealized users with unlimited time, focus, or confidence.

This mindset shift transforms inclusion from a compliance exercise into a competitive advantage.

The Middle Benefits the Most

When organizations design for extremes, the middle experiences ease, clarity, and confidence without realizing why.

That invisibility is the mark of great design.

Frequently Asked Questions

FAQ

Are Dark Horse customers rare?
No. Most people become extreme users under certain conditions.

Is this the same as inclusive design?
Inclusive design is a result; designing for extremes is a method.

Where should teams start?
Start where customers struggle the most.

Extra Extra: Because innovation is all about change, Braden Kelley’s human-centered change methodology and tools are the best way to plan and execute the changes necessary to support your innovation and transformation efforts — all while literally getting everyone all on the same page for change. Find out more about the methodology and tools, including the book Charting Change by following the link. Be sure and download the TEN FREE TOOLS while you’re here.

Image credits: Unsplash

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Allocating Innovation Time – The Strategy Behind the 20% Rule

LAST UPDATED: December 24, 2025 at 9:19AM

Allocating Innovation Time - The Strategy Behind the 20% Rule

GUEST POST from Chateau G Pato

The “20% rule” has become shorthand for enlightened innovation culture. Unfortunately, it is also one of the most misunderstood practices in modern management. Too often, leaders copy the label without designing the system required to support it.

Innovation time is not about generosity. It is about strategic resilience.

“Innovation time is not a gift to employees; it is a hedge against the certainty of change. Organizations that don’t invest time in continuous innovation will eventually spend far more time recovering lost market share.”

Braden Kelley

From Myth to Mechanism

The original insight behind the 20% rule was simple: breakthroughs rarely emerge from fully optimized schedules. Slack, when intentionally designed, creates room for exploration, reflection, and synthesis.

However, copying a percentage without addressing incentives, governance, and leadership behavior leads to frustration rather than innovation.

What Innovation Time Is Really For

Innovation time serves three strategic purposes:

  • Exploring uncertain opportunities
  • Building future-relevant capabilities
  • Increasing employee engagement through autonomy

Each purpose requires different design choices. Treating them as interchangeable undermines results.

Design Principles for Effective Innovation Time

1. Strategic Alignment Without Overcontrol

Teams should understand why innovation matters and where learning is needed. This creates direction without prescribing solutions.

2. Visible Executive Sponsorship

When innovation time conflicts with delivery deadlines, only leadership can resolve the tension. Silence is interpreted as permission to deprioritize innovation.

3. Learning-Centered Accountability

Innovation time should culminate in shared learning, not just demos. Organizations should expect evidence of insight, not certainty of outcomes.

Case Study 1: Enterprise Software Organization

An enterprise software company reintroduced innovation time after a failed attempt years earlier. This time, leadership connected it to explicit learning themes tied to future markets.

Teams shared insights quarterly, and several experiments informed the company’s next product roadmap — even when ideas themselves were not commercialized.

Case Study 2: Healthcare Services Provider

A healthcare organization facing burnout introduced innovation time focused on patient experience improvement. Clinicians were given protected time to explore workflow and communication challenges.

The program led to incremental but meaningful improvements, reduced frustration, and renewed professional purpose — outcomes more valuable than any single innovation.

When Not to Use Innovation Time

Innovation time is not a substitute for:

  • Clear strategy
  • Adequate staffing
  • Basic process improvement

If teams are overwhelmed by operational chaos, innovation time will feel like an additional burden rather than an opportunity.

Innovation Time as Cultural Infrastructure

Over time, well-designed innovation time reshapes how people think about risk, learning, and ownership. Employees stop waiting for permission and start seeing themselves as contributors to the future.

That mindset shift is the true return on investment.

Frequently Asked Questions

FAQ

Does innovation time reduce productivity?
In the short term, it reallocates effort; in the long term, it increases adaptability.

Can innovation time work outside tech companies?
Yes. The principle applies to any organization facing change.

What replaces the 20% rule if it fails?
Purposeful learning time designed around strategic uncertainty.

Extra Extra: Because innovation is all about change, Braden Kelley’s human-centered change methodology and tools are the best way to plan and execute the changes necessary to support your innovation and transformation efforts — all while literally getting everyone all on the same page for change. Find out more about the methodology and tools, including the book Charting Change by following the link. Be sure and download the TEN FREE TOOLS while you’re here.

Image credits: Unsplash

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Innovating with Customer Trust as Currency

Brand Equity as a Catalyst

LAST UPDATED: December 122, 2025 at 10:05AM

Innovating with Customer Trust as Currency

GUEST POST from Chateau G Pato

Many organizations talk about innovation as if it were primarily a technological challenge. In practice, innovation is a relationship challenge. It requires customers to believe that change will create value rather than risk. This belief is rooted in brand equity, and at its core, brand equity is trust.

As a human-centered change and innovation practitioner, I define brand equity not as recognition or reputation, but as the cumulative result of promises kept. When trust is high, innovation accelerates. When trust is low, even good ideas struggle to gain traction.

Trust as the Hidden Cost of Innovation

Every innovation asks something of the customer: time, attention, data, money, or behavioral change. Trust determines whether customers are willing to pay that cost. Organizations with strong brand equity start every innovation initiative with a credit balance. Those without it must pay upfront.

This is why innovation portfolios should be evaluated not only for financial return, but for their impact on trust. Some innovations generate revenue while quietly depleting brand equity.

Case Study One: Apple’s Trust-Driven Category Creation

Apple’s expansion into new categories has consistently benefited from deep customer trust. Users expect intuitive design, ecosystem coherence, and a degree of privacy stewardship. These expectations reduce hesitation when Apple introduces unfamiliar products.

Importantly, Apple reinforces trust through disciplined execution. When innovations fall short, the company responds quickly, preserving confidence. The result is an innovation engine fueled by credibility rather than hype.

When Innovation Outpaces Integrity

Organizations often damage trust by prioritizing speed over integrity. Dark patterns, hidden fees, and overpromising undermine brand equity even when innovations succeed financially.

Human-centered innovation recognizes that long-term value depends on consistency between intent and impact. Trust cannot be retrofitted after disappointment.

Case Study Two: Patagonia’s Trust Compounding Model

Patagonia has deliberately chosen growth paths that align with its environmental values. Innovations in recycled materials, product repair, and resale reinforce its purpose rather than dilute it.

Because customers trust Patagonia’s motivations, they embrace innovations that might otherwise face resistance. Trust compounds when actions consistently match words.

Operationalizing Brand Trust

Trust is built through systems, not slogans. Incentives, governance, and decision rights must reinforce customer-centric behavior. Employees are the primary interface between strategy and experience.

Organizations that operationalize trust design innovation processes that ask a simple question early and often: does this strengthen or spend brand equity?

Innovation as Stewardship

The most resilient innovators act as stewards of trust. They invest it intentionally, protect it fiercely, and replenish it through transparency and accountability.

In markets defined by skepticism, trust is not a soft advantage. It is a strategic one.

Conclusion

Brand equity is not what customers say about you when innovation is working. It is what they believe when something goes wrong. Organizations that understand this use trust as a catalyst, not a commodity.

In the future of innovation, customer trust will be the rarest and most valuable currency.

Frequently Asked Questions

What does it mean to treat trust as currency?

It means recognizing that trust enables innovation and must be invested carefully and replenished through consistent experiences.

How can organizations measure brand equity beyond awareness?

By tracking customer confidence, willingness to try new offerings, and tolerance for change.

Who owns customer trust inside an organization?

Everyone. Trust is shaped by leadership decisions, employee behavior, and operational consistency.

Extra Extra: Because innovation is all about change, Braden Kelley’s human-centered change methodology and tools are the best way to plan and execute the changes necessary to support your innovation and transformation efforts — all while literally getting everyone all on the same page for change. Find out more about the methodology and tools, including the book Charting Change by following the link. Be sure and download the TEN FREE TOOLS while you’re here.

Image credit: Pixabay

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Fostering Innovation Across Physical and Digital Walls

Leading the Hybrid Team

LAST UPDATED: December 13, 2025 at 10:09AM

Fostering Innovation Across Physical and Digital Walls

GUEST POST from Chateau G Pato

The innovation challenge in a hybrid world is not about technology; it’s about equity of collaboration. When some team members are physically together and others are virtual, a crucial information gap emerges. Those in the room benefit from body language, side conversations, and spontaneous moments—the very things that fuel informal innovation. Remote participants, however, often become second-class collaborators. This asymmetry kills the diverse thinking necessary for truly radical ideas. Hybrid leaders must address this proximity bias head-on.

In the framework of Human-Centered Innovation, we view the hybrid environment as a design problem. We are tasked with intentionally designing processes and utilizing tools to ensure that every participant—regardless of location—has an equal voice and equal access to information. We must unlearn the default reliance on impromptu, analog collaboration and replace it with structured, asynchronous digital processes that prioritize inclusion. The goal is to move from managing where people work to managing the quality of the collaboration they engage in.

The Three Pillars of Hybrid Innovation Leadership

To lead an innovative hybrid team, we must focus on three strategic areas:

1. The Doctrine of Digital-First Documentation

Innovation thrives on shared, persistent knowledge. In a hybrid setting, if an idea is discussed verbally in an office meeting room, it is effectively lost to the remote team when the meeting ends. The Digital-First Doctrine mandates that all work artifacts—brainstorming notes, idea sketches, mock-ups, and decision matrices—must live in a shared digital space (Miro, Figma, shared docs) that is accessible, editable, and visible to everyone, always. The physical whiteboard is dead; the digital canvas is the common ground.

  • Action: Leaders must insist that all meetings, even internal co-located ones, use a shared digital board as the single source of truth. If it isn’t documented digitally, it didn’t happen.

2. Intentionality in Serendipity and Spontaneity

The “water cooler moments” are where informal innovation often happens. You can’t replicate spontaneous encounters, but you can design for intentional serendipity. This involves allocating specific, non-work time for unstructured interaction.

  • Action: Schedule short, recurring “Idea Coffee Breaks” where participants are randomly assigned to small virtual breakout rooms with no agenda other than to discuss current projects or personal interests. Use a hybrid work day for “Deep Co-Creation Days” where co-located teams come in specifically to work on complex, generative tasks together, while remote teams join via high-quality video links optimized for collaborative tools.

3. The Principle of Time Zone and Asynchronous Equity

Hybrid teams often span time zones, making mandatory real-time meetings a productivity killer and a source of burnout. Asynchronous work — where teams collaborate over time rather than simultaneously—is the innovative advantage of the hybrid model.

  • Action: Shift the innovation pipeline to leverage asynchronous tools. For example, instead of a two-hour brainstorming session, implement a 24-hour Digital Brainstorm where team members contribute ideas over a full day in their preferred working window. Use short, recorded video updates instead of live status meetings, allowing teams to consume information when it is most convenient. This is the Human-Centered approach to global teamwork.

Case Study 1: Re-designing the Global Product Launch

Challenge: Staggered Innovation and Decision Paralysis in a Multi-National Hybrid Team

A global consumer electronics firm (“ConnectCorp”) needed to launch a new product line. Their teams were spread across three continents (US, EU, Asia) and were struggling with decision-making due to time zones and a reliance on US-centric, real-time meetings. Decisions made in the US often felt like directives to the Asian and European teams.

Hybrid Innovation Intervention: Asynchronous Decision Making

The innovation lead, embracing Human-Centered Innovation, introduced a “Decision Document” protocol. All key decisions were documented asynchronously (e.g., via a shared Notion or Confluence page) that clearly outlined:

  • The Context and Problem (1-page maximum).
  • The Options Considered and their data-backed pros/cons.
  • The Proposed Decision and the deadline for final input.

The Innovation Impact:

By forcing decisions into an asynchronous, digitally documented format, the team eliminated unnecessary meetings. The European and Asian teams had ample time to contribute thoughtful, written critiques before the decision was finalized. This change not only saved thousands of hours of meeting time but led to a 35% reduction in post-decision rework because regional insights were fully incorporated before launch. The process became more efficient, more transparent, and radically more inclusive.

Case Study 2: Designing the Inclusive Brainstorm

Challenge: Dominating Voices and Proximity Bias in Hybrid Brainstorming Sessions

A marketing agency (“IdeaForge”) found that in hybrid brainstorming sessions, the four or five people in the office consistently dominated the conversation, leaving the eight virtual participants as passive observers. The quality of idea generation suffered due to a lack of diversity.

Hybrid Innovation Intervention: Parallel Digital Brainwriting

The team adopted a strict protocol for all ideation sessions: the first 20 minutes were dedicated to Parallel Digital Brainwriting. All participants—local and remote—were required to submit their first five ideas silently and anonymously onto a shared digital canvas. No one was allowed to speak until all ideas were submitted.

  • This technique eliminated anchoring bias (where the first idea mentioned shapes all subsequent thinking) and proximity bias (where the loudest voice or the person closest to the facilitator wins).
  • The anonymous digital submission ensured introverted, virtual, and junior team members had equal input from the start.

The Innovation Impact:

The agency saw an immediate 40% increase in idea volume and a noticeable jump in the originality of the ideas generated. They successfully moved from an environment where innovation was an accidental performance (dominated by those physically present) to one where it was a structured, equitable process for every member, fully embodying the principles of Human-Centered Change.

Conclusion: Leadership Through Intentional Design

Leading the innovative hybrid team is a masterclass in organizational design. It is not about forcing people back into the office or simply tolerating remote work; it is about intentionally designing collaboration systems that overcome the physics of distance and the biases of proximity. The best hybrid leaders use the constraints of physical and digital walls to build stronger, more equitable processes. By adopting a Digital-First Doctrine, designing for intentional serendipity, and leveraging asynchronous equity, organizations can ensure that their innovation engine is powered by the talent of all their people, not just those who happen to share a common zip code. Innovation in the hybrid age is a conscious, inclusive act of design.

“If you want true innovation in a hybrid world, stop waiting for the hallway conversation and start designing the digital town square.”

Frequently Asked Questions About Hybrid Team Innovation

1. What is “proximity bias” and how does it kill hybrid innovation?

Proximity bias is the unconscious tendency to favor those who are physically closer to you (the manager). In a hybrid setting, this means co-located employees are often given more spontaneous access, better mentorship, and more visibility into key decisions, which starves remote teams of the crucial informal information needed for continuous innovation.

2. How does asynchronous work actually foster innovation, rather than slowing it down?

Asynchronous work fosters innovation by enabling deep work and reflection. Instead of being rushed into generating ideas live, team members have time to consume information, conduct research, and contribute high-quality, well-thought-out ideas when they are most focused. It trades the speed of live discussion for the depth and quality of measured contribution.

3. What single technology is most critical for an innovative hybrid team?

The most critical technology is the persistent, shared digital canvas (e.g., Miro, Mural, advanced shared docs). This tool acts as the central hub for all generative work—brainstorming, mapping, prototyping. It is the only way to ensure all team members, regardless of location, are working from the exact same, real-time visual information and have the ability to contribute equally.

Your first step toward hybrid innovation: Audit your last three brainstorming sessions. Document every idea and note, and then ask your remote participants to rate their perceived influence on the final outcome on a scale of 1-10. If the average rating is below 7, immediately implement the Parallel Digital Brainwriting technique for your next session.

Extra Extra: Because innovation is all about change, Braden Kelley’s human-centered change methodology and tools are the best way to plan and execute the changes necessary to support your innovation and transformation efforts — all while literally getting everyone all on the same page for change. Find out more about the methodology and tools, including the book Charting Change by following the link. Be sure and download the TEN FREE TOOLS while you’re here.

Image credit: Pixabay

Subscribe to Human-Centered Change & Innovation WeeklySign up here to get Human-Centered Change & Innovation Weekly delivered to your inbox every week.

Chief Intrapreneur – A New Role for the Modern C-Suite

LAST UPDATED: December 13, 2025 at 10:09AM

Chief Intrapreneur - A New Role for the Modern C-Suite

GUEST POST from Chateau G Pato

In most established organizations, the C-Suite is designed for execution, optimization, and defense. The CEO drives overall vision, the COO manages efficiency, the CFO controls resources, and the CMO owns the market message. But who owns the necessary creative destruction? Who is the executive dedicated not just to sustaining today’s business, but to building the profitable version of the business five years from now? The traditional Chief Innovation Officer (CIO) role often gets bogged down in R&D or incremental IT improvements. What we need is an executive champion of the internal entrepreneur: The Chief Intrapreneur (CInO).

The CInO’s mandate is not product development, but cultural orchestration. They function as the internal venture capitalist, allocating seed funding, securing resources, and, most crucially, shielding disruptive projects from the antibodies of the core business. This role is the organizational answer to the reality of Human-Centered Innovation, recognizing that the biggest barrier to innovation is not external competition, but internal bureaucracy, short-term financial pressure, and political turf wars. The CInO ensures that the organization not only tolerates internal challenges but actively cultivates them. We must unlearn the habit of punishing failure and replace it with a system that rewards calculated, iterative risk-taking.

The Three-Part Mandate of the Chief Intrapreneur

The CInO’s responsibilities extend beyond the traditional R&D lab and into the core operations and culture of the enterprise:

1. The Barrier Breaker: Cultural and Political Shielding

The most important function of the CInO is to act as the executive shield. New ventures are fragile and can be easily destroyed by core business metrics (e.g., demands for unrealistic quarterly returns). The CInO reports directly to the CEO, giving them the authority to push back on operational leadership and create dedicated, protected spaces — “skunkworks” or innovation sandboxes — where new ideas can be measured by learning speed, not profit alone. This requires strong political capital to override the objections of department heads who see innovation as a threat to their budgets or control.

2. The Resource Orchestrator: Internal Venture Capitalist

Unlike a traditional CIO who manages the IT budget, the CInO manages an internal Venture Fund. They allocate capital based on lean experimentation models, prioritizing small, rapid funding rounds over large, slow appropriations. They treat internal ideas as a portfolio of startups, measuring success by the validated learning generated. This requires fluency in venture capital metrics like speed of validation, pivot capacity, and option value, not just traditional financial forecasting.

3. The Competency Builder: Unlearning and Re-Skilling

Innovation requires new ways of working (Design Thinking, Lean Startup, Agile). The CInO is responsible for fostering a culture of intrapreneurial competence across the entire organization. This means creating rotational programs, mentorships (connecting internal entrepreneurs with executive sponsors), and training pathways that teach employees how to identify white space, run disciplined experiments, and communicate failure as a valuable learning outcome. The goal is to embed intrapreneurial DNA into the workforce, making innovation a shared capability, not a siloed department.

Case Study 1: Transforming a Legacy Financial Institution

Challenge: Stagnation and Fear of Regulatory Disruption

A large, centuries-old investment bank (“CapitalCore”) suffered from Status Quo Bias and political resistance to change. Teams were generating good ideas for fintech platforms, but these projects were consistently killed by the Compliance and IT departments, which prioritized regulatory safety and system stability over growth.

CInO Intervention: The Innovation Sandbox and Direct Reporting Line

CapitalCore appointed a CInO with a direct reporting line to the CEO. The CInO established a fully compliant “Innovation Sandbox” — a ring-fenced technology and regulatory environment where new platforms could be tested with real customer data but without risking the core system. The CInO had the authority to compel the Head of Compliance and the CIO to provide resources for the sandbox, turning them from internal blockers into necessary partners.

  • The CInO’s team, using the sandbox, successfully launched three new products in 18 months, compared to zero in the previous three years.
  • The success was achieved because the CInO de-risked the regulatory challenge politically and technically, protecting the intrapreneurs from the inevitable friction of the core business.

The Innovation Impact:

By establishing the CInO role, CapitalCore shifted its culture from one of fear-based gatekeeping to one of controlled experimentation. The CInO did not invent the products; they invented the process and authority structure that allowed the internal teams to succeed — the essence of Human-Centered Innovation.

Case Study 2: The Intrapreneurial Talent Pipeline

Challenge: High Turnover of High-Potential Talent Seeking Autonomy

A large manufacturing firm (“ManuFuture”) kept losing its best young engineers and marketers to startups because these employees felt their ideas were too slow to implement and that the organization offered no path for autonomy and internal ownership.

CInO Intervention: The Internal Incubation Fund and Equity System

The CInO at ManuFuture established an Internal Incubation Fund (IIF) with clear criteria for submission and funding. Crucially, the CInO worked with HR to create a new compensation structure: if an intrapreneurial project spun out into a successful new business unit, the founding team members were granted a phantom equity stake tied to the new unit’s performance.

  • This created a clear, financial incentive for employees to take risks internally, directly mirroring the startup environment’s reward system.
  • The CInO personally mentored the IIF teams, providing air cover and brokering access to existing suply chain and distribution resources that a true startup could never access.

The Innovation Impact:

ManuFuture saw a dramatic decrease in the attrition of high-potential employees, and the IIF successfully launched two new product lines that targeted adjacent markets the core business was ignoring. The CInO became the executive champion who provided both the capital and the career path necessary for internal entrepreneurs to succeed, transforming talent retention into a disruption engine.

Conclusion: The CInO as the Integrator of Change

The creation of the Chief Intrapreneur role is a strategic acknowledgment that innovation is a political act that requires C-Suite authority to overcome organizational gravity. The CInO is the architect of the environment, not just the ideas. By shielding projects, orchestrating resources, and building true intrapreneurial competency across the firm, this executive ensures that the organization remains capable of self-disruption. In an era of accelerating change, having an executive whose success is measured by the growth of tomorrow’s revenue — even if it competes with today’s — is not optional. It is the core requirement of sustainable Human-Centered Innovation. The CInO is the future of corporate longevity.

“Innovation dies not from lack of ideas, but from lack of executive air cover.”

Frequently Asked Questions About the Chief Intrapreneur (CInO)

1. How is the CInO different from a traditional Chief Innovation Officer (CIO)?

A traditional CIO often focuses on technology implementation, R&D, and incremental process improvements. The CInO has a broader, higher authority mandate focused on internal disruption and cultural change. They act as a cross-functional venture capitalist and political shield, ensuring new business models can scale without being suffocated by the core business.

2. To whom should the Chief Intrapreneur report?

The CInO must report directly to the CEO. This is crucial because their primary function is to resolve cross-departmental conflict and override the objections of other executives (CFO, COO, CMO) who prioritize short-term returns. Without the direct authority of the CEO, the CInO’s disruptive projects will be easily marginalized or defunded.

3. What is the most critical cultural shift the CInO must achieve?

The most critical shift is moving the organization from punishing failure to rewarding validated learning. The CInO must establish metrics that celebrate rapid, low-cost failure when it generates high-value insights, ensuring that internal entrepreneurs are incentivized to test risky assumptions quickly, rather than concealing problems until it’s too late.

Your first step toward intrapreneurship: Identify the top two most promising new ideas currently stuck in political or budgetary limbo. Assign them an executive sponsor (ideally the CEO or a CInO if one exists) whose formal job description now includes removing the next three barriers for that idea to progress.

Extra Extra: Because innovation is all about change, Braden Kelley’s human-centered change methodology and tools are the best way to plan and execute the changes necessary to support your innovation and transformation efforts — all while literally getting everyone all on the same page for change. Find out more about the methodology and tools, including the book Charting Change by following the link. Be sure and download the TEN FREE TOOLS while you’re here.

Image credit: Pixabay

Subscribe to Human-Centered Change & Innovation WeeklySign up here to get Human-Centered Change & Innovation Weekly delivered to your inbox every week.

Beyond the Prototype – How to Test and Iterate on a Business Model

LAST UPDATED: December 10, 2025 at 12:12PM

Beyond the Prototype - How to Test and Iterate on a Business Model

GUEST POST from Chateau G Pato

The journey of innovation often starts with a flash of insight, proceeds through design thinking, and culminates in a beautiful, working prototype. Unfortunately, too many organizations mistake this technical milestone for ultimate validation. They assume that because the product works, the business model — the economic engine that funds and scales that product — will also work. This is the most dangerous assumption in the innovation lifecycle.

The business model itself is the largest, most complex hypothesis we launch. It encompasses everything from how we acquire customers and what they are willing to pay, to the cost of our key resources and the nature of our partnerships. If your revenue streams are a guess, your cost structure is a hope, and your channels are a pipe dream, your product, however well-designed, is destined for the scrap heap. In the realm of Human-Centered Innovation, we must unlearn the product-first mentality and embrace the model-first testing philosophy. This requires shifting from testing product usability to testing business viability using model-specific metrics.

The Three Hypotheses in Business Model Testing

Testing a business model means breaking it down into its core, measurable assumptions. We focus on three interconnected areas:

1. The Value Hypothesis (Customer/Value Proposition Fit)

This is the foundation: Does the product or service actually solve a problem for a defined customer segment? While prototyping addresses product usability, model testing addresses willingness-to-pay and actual usage patterns. We test whether the perceived value aligns with the revenue model.

  • Test Focus: A/B test pricing tiers (monthly vs. annual, premium vs. basic), run “smoke tests” to gauge initial sign-ups for a non-existent product, or use Concierge MVPs where services are manually delivered to deeply understand the customer journey and price sensitivity before automation.
  • Key Metric: Willingness-to-Pay (WTP), Net Promoter Score (NPS) for the specific value exchange.

2. The Growth Hypothesis (Channel/Acquisition Fit)

A great product fails if you cannot affordably get it into the hands of customers. This hypothesis tests the efficiency and scalability of your customer acquisition channels and your key partners.

  • Test Focus: Run small, contained experiments across different channels (e.g., paid social vs. SEO vs. strategic partnership referrals) to compare costs and conversion rates. Test various partner roles — do they act as distributors, co-creators, or merely service providers?
  • Key Metric: Customer Acquisition Cost (CAC), Lifetime Value (LTV), and LTV/CAC ratio. This ratio is the ultimate test of viability.

3. The Operational Hypothesis (Cost/Resource Fit)

This tests the internal engine: Can we deliver the value proposition at a cost that is significantly lower than the price we charge? This involves testing key activities, resource assumptions, and supply chain scalability.

  • Test Focus: Create a “Shadow P&L” for the new model, tracking variable costs associated with early customer acquisition and service delivery. Run controlled pilots focused on simulating the Key Activities (e.g., if a new service requires 24/7 support, test that support capability with real, paying customers for a month).
  • Key Metric: Contribution Margin, Cost of Goods Sold (COGS) as a percentage of revenue, and scalability metrics (e.g., cost to serve the 10th customer vs. the 100th customer).

Case Study 1: The Subscription Anchor That Was Cut

Challenge: Failed Launch of a Health-Tech Diagnostic Device

A medical device company (“MedTrack”) developed a portable diagnostic device. The initial prototype was technically perfect, but the business model relied on a mandatory high-cost monthly subscription for data analysis software. The subscription revenue stream was designed to create recurring revenue and offset the low upfront device cost.

Model Testing Intervention: Value Hypothesis Pivot

Initial pilot testing revealed that while customers loved the device, the high subscription created massive churn after the first year. MedTrack tested the Value Hypothesis:

  • Hypothesis 1 (Failed): Customers will pay $150/month for comprehensive data analysis.
  • Test: Offer three options: $150/month (current model), $25/month for basic data (new tier), and a $1,500 one-time software license.

The Innovation Impact:

The test showed that the $25/month basic data tier attracted 80% of new customers and had 95% retention. The $1,500 one-time fee also proved attractive to institutional buyers. By iterating on the Revenue Stream (a key business model block) from a rigid subscription to a tiered and licensed model, MedTrack dramatically improved its LTV/CAC ratio. They realized their innovation wasn’t the device; it was the flexibility of the pricing model tailored to different customer segments, a critical element of Human-Centered Innovation.

Case Study 2: Testing the Delivery Channel of Services

Challenge: Scaling an Expensive B2B Consulting Service

A strategy firm (“StratX”) wanted to scale a high-value, bespoke market entry strategy service without proportionally increasing its headcount — a severe constraint in its Cost Structure block. Their initial Growth Hypothesis relied on high-touch, senior consultant sales.

Model Testing Intervention: Growth and Operational Hypothesis Test

StratX decided to test replacing the expensive consultant delivery with a technology-augmented channel. They ran an A/B test on their target customer segment:

  • Group A (Control): Full senior consultant engagement (high Cost Structure, high Revenue Stream).
  • Group B (Test): A “Hybrid Model” where the initial 80% of the strategy report was generated by AI/data science tools (saving Key Activities cost), followed by a single senior consultant review session (low Cost Structure, slightly reduced Revenue Stream).

The Innovation Impact:

The Hybrid Model achieved an LTV/CAC ratio that was300% higher than the Control Group. Customers in Group B were highly satisfied with the speed and data quality, accepting a slightly lower consultant touchpoint for a lower price and faster delivery. StratX had successfully validated a new, highly scalable Key Resource (the data science platform) and a new Channel, allowing the firm to expand its addressable market and free up expensive senior consultants for truly bespoke, complex client needs. This proved that innovation in service delivery is a critical component of the business model.

Conclusion: Business Model Validation is the Ultimate De-Risking

The successful launch of any new initiative, particularly in the realm of radical innovation, is determined long after the prototype is functional. It is determined by the rigor with which you test and iterate on your business model hypotheses. By dissecting your model into its core assumptions — Value, Growth, and Operational — and designing measurable experiments (MVPs, A/B tests, Shadow P&Ls), you move from guessing to knowing. This structured approach, rooted in Human-Centered Innovation, shifts the risk from catastrophic failure at launch to manageable learning throughout development. Stop perfecting the product; start proving the model.

“If your product is a masterpiece but your business model is a mystery, you have a hobby, not an innovation.”

Frequently Asked Questions About Business Model Testing

1. What is the difference between testing a product and testing a business model?

Testing a product focuses on usability, functionality, and desirability (e.g., does the app work, do people like the color?). Testing a business model focuses on viability and scalability (e.g., are people willing to pay enough for the app to cover the cost of acquiring them and running the service?).

2. What is a “Shadow P&L” in the context of innovation?

A Shadow P&L (Profit and Loss) is a separate, simulated financial statement created specifically for an innovation project. It tracks the real-world costs and simulated revenues associated with the new business model during the testing phase. It helps the team validate their Cost Structure and Revenue Stream hypotheses before integrating the project into the main corporate finances.

3. How do you test a distribution channel without a full launch?

Distribution channels can be tested using small, contained experiments. For instance, testing a partnership channel can involve a single pilot partner with clear, measurable KPIs (conversion rates, lead quality). Testing a direct-to-consumer channel can use A/B testing of targeted digital ads to measure Customer Acquisition Cost (CAC) without building out the entire logistics infrastructure.

Your first step toward model testing: Take your most promising new idea, map it onto a Business Model Canvas, and circle the three riskiest assumptions in the “Revenue Streams,” “Cost Structure,” and “Key Activities” blocks. Design one small, cheap experiment for each of those three assumptions next week.

Extra Extra: Because innovation is all about change, Braden Kelley’s human-centered change methodology and tools are the best way to plan and execute the changes necessary to support your innovation and transformation efforts — all while literally getting everyone all on the same page for change. Find out more about the methodology and tools, including the book Charting Change by following the link. Be sure and download the TEN FREE TOOLS while you’re here.

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Anchors & Biases – How Cognitive Shortcuts Kill New Ideas

LAST UPDATED: December 10, 2025 at 12:12PM

Anchors & Biases - How Cognitive Shortcuts Kill New Ideas

GUEST POST from Chateau G Pato

Innovation is inherently messy, uncertain, and challenging. To navigate this complexity, our brains rely on cognitive shortcuts – heuristics — to save time and energy. While these shortcuts are useful for avoiding immediate danger or making routine decisions, they become the primary internal roadblocks when attempting to generate or evaluate truly novel ideas. These shortcuts are our anchors and biases, and they consistently pull us back to the familiar, the safe, and the incremental.

In the context of Human-Centered Innovation, we must shift our focus from just generating innovation to protecting it from these internal threats. The key is to recognize the most common biases that derail novel concepts and build specific, deliberate processes to counteract them. We must unlearn the assumption of pure rationality and embrace the fact that all decision-making, especially concerning risk and novelty, is tainted by predictable cognitive errors. This recognition is the first step toward building a truly bias-aware innovation ecosystem.

Anchors & Biases - How Cognitive Shortcuts Kill New Ideas

Visual representation: A diagram illustrating the innovation funnel being constricted at different stages (Ideation, Evaluation, Funding) by three key cognitive biases: Anchoring, Confirmation Bias, and Status Quo Bias.

Three Innovation Killers and How to Disarm Them

While hundreds of biases exist, three are particularly lethal to the innovation process:

1. Anchoring Bias: The Tyranny of the First Number

The Anchoring Bias occurs when people rely too heavily on the first piece of information offered (the “anchor”) when making decisions. In innovation, the anchor is often the budget of the last project, the timeline of the most recent success, or the projected ROI of the initial idea submission. This anchor skews all subsequent analysis, making it nearly impossible to objectively evaluate ideas that fall far outside that initial range.

  • The Killer: A disruptive idea requiring a tenfold increase in budget compared to the anchor will be instantly dismissed as “too expensive,” even if the potential ROI is twentyfold.
  • The Disarmer: Use Premortem Analysis (imagining the project failed and listing the causes) before assigning any financial figures. Also, use Three-Point Estimates (optimistic, pessimistic, and most likely) to establish a range, preventing a single number from becoming the dominant anchor.

2. Confirmation Bias: Seeking Proof, Not Truth

The Confirmation Bias is the tendency to search for, interpret, favor, and recall information that confirms or supports one’s prior beliefs or values. In innovation, this leads teams to design market research that validates their pet idea and ignore data that challenges it. This results in the pursuit of solutions nobody wants, but which the team believes they want.

  • The Killer: A team falls in love with a solution and only interviews customers who fit their narrow ideal profile, ignoring a critical segment whose objections would save the project from failure.
  • The Disarmer: Institute a Red Team/Blue Team structure. Assign a dedicated “Red Team” whose only job is to rigorously critique the idea and actively seek disconfirming evidence and data. Leadership must reward the Red Team for finding flaws, not just for confirming the status quo.

3. Status Quo Bias: The Comfort of the Familiar

The Status Quo Bias is the preference for the current state of affairs. Any change from the baseline is perceived as a loss, and the pain of potential loss outweighs the potential gain of the new idea. This is the organizational immune system fighting off innovation. It’s why companies often choose to incrementally improve a dying product rather than commit to a disruptive new platform.

  • The Killer: A new business model that could unlock 5x revenue is rejected because it requires decommissioning a legacy product that currently contributes 10% of profit, even though that product is in terminal decline. The perceived certainty of the 10% trumps the uncertainty of the 5x.
  • The Disarmer: Employ Zero-Based Budgeting for Ideas. Force teams to justify the existence of current processes or products as if they were a new idea competing for resources. Ask: “If we didn’t offer this product today, would we launch it now?” If the answer is no, the status quo must be challenged.

Case Study 1: The Anchor That Sank the Startup

Challenge: Undervaluing Disruptive Potential Due to Legacy Pricing

A B2B SaaS startup (“DataFlow”) developed an AI tool that automated a complex, manual compliance reporting process, reducing the time required from 40 hours per month to 2 hours. The initial team, anchored to the price of the legacy human labor (which cost clients approximately $4,000/month), decided to price their software at a conservative $300/month.

Bias in Action: Anchoring Bias

The team failed to anchor their pricing to the value delivered (time savings, error reduction, regulatory certainty) and instead anchored it to the legacy cost structure. Their $300 price point led potential high-value clients to view the product as a minor utility, not a mission-critical tool, because the price was too low relative to the problem solved. They were competing on cost, not value.

  • The Correction: External consultants forced the team to re-anchor based on the avoided regulatory fine risk (a $100k-$500k loss). They repositioned the product as an insurance policy rather than a software license and successfully raised the price to $2,500/month, radically improving their perceived value, sales pipeline, and runway.

The Innovation Impact:

By identifying and aggressively correcting the anchoring bias, DataFlow unlocked its true market value. The innovation was technical, but the success was achieved through cognitive clarity in pricing strategy.

Case Study 2: The Confirmation Loop That Killed the Feature

Challenge: Launching a Feature Based on Internal Enthusiasm, Not Customer Need

A social media platform (“ConnectAll”) decided to integrate a complex 3D-modeling feature based on the CEO’s enthusiasm and anecdotal data from a few early-adopter focus groups. The development team, driven by Confirmation Bias, only sought feedback that praised the technical complexity and novelty of the feature.

Bias in Action: Confirmation Bias & Sunk Cost

The internal team, having invested six months of work (Sunk Cost Fallacy), refused to pivot when the initial Beta tests showed confusion and low usage. They argued that users simply needed more training. When the feature launched, user adoption was near zero, and the feature became a maintenance drain, detracting resources from core product improvements.

  • The Correction: Post-mortem analysis showed the team needed Formal Disconfirmation. The new innovation process mandates that market testing must include a structured interview block where testers are paid to actively try and break the new feature, list its flaws, and articulate why they wouldn’t use it.

The Innovation Impact:

ConnectAll learned that the purpose of testing is not to confirm success, but to disconfirm failure. By forcing teams to seek and respect evidence that contradicts their initial beliefs, they now kill flawed ideas faster and redirect resources to validated, human-centered needs.

Conclusion: Bias-Awareness is the New Innovation Metric

The greatest barrier to radical innovation isn’t a lack of ideas or funding; it’s the predictability of human psychology. Cognitive biases like Anchoring, Confirmation Bias, and Status Quo Bias act as unconscious filters, ensuring that only the incremental and familiar survive the evaluation process. Organizations committed to Human-Centered Innovation must make bias-awareness a core competency. By building systematic checks (Premortems, Red Teams, Zero-Based Thinking) into every stage of the innovation pipeline, leaders transform cognitive shortcuts from fatal flaws into predictable inputs that can be managed. To innovate boldly, you must first think clearly.

“The mind is not a vessel to be filled, but a fire to be kindled — and often, that fire is choked by the ashes of old assumptions.” — Braden Kelley

Build a Common Language of Innovation on your team

Frequently Asked Questions About Cognitive Biases in Innovation

1. What is the difference between a heuristic and a cognitive bias?

A heuristic is a mental shortcut used to solve problems quickly and efficiently — it is the process. A cognitive bias is a systematic pattern of deviation from norm or rationality in judgment — it is the predictable error resulting from the heuristic. Biases are the consequences of using mental shortcuts (heuristics) in inappropriate contexts, such as innovation evaluation.

2. How does the Status Quo Bias relate to the Sunk Cost Fallacy?

The Status Quo Bias is a preference for the current state (a passive resistance to change). The Sunk Cost Fallacy is the resistance to changing a current course of action because of resources already invested (an active commitment to past expenditure). Both work together to kill new ideas: the Status Quo protects the legacy product, and Sunk Cost Fallacy protects the legacy project that failed to deliver.

3. Can AI help eliminate human cognitive biases in decision-making?

Yes. AI can be a powerful tool to mitigate human bias by acting as an objective “Red Team.” AI can be prompted to ignore anchors (e.g., “Analyze this idea assuming zero prior investment”), actively seek disconfirming data, and simulate scenarios free of human emotional attachment, providing a rational baseline for decision-making and challenging the human team’s assumptions.

Your first step toward mitigating bias: Before your next innovation meeting, ask everyone to write down the largest successful project budget from the last year. Collect these, then start the discussion on the new idea’s budget by referencing the highest and lowest numbers submitted. This simple act of introducing multiple anchors diffuses the power of any single number and forces a broader discussion.

Extra Extra: Because innovation is all about change, Braden Kelley’s human-centered change methodology and tools are the best way to plan and execute the changes necessary to support your innovation and transformation efforts — all while literally getting everyone all on the same page for change. Find out more about the methodology and tools, including the book Charting Change by following the link. Be sure and download the TEN FREE TOOLS while you’re here.

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The Value of Using Futures Research to Drive Innovation

The Value of Using Futures Research to Drive Innovation

GUEST POST from Art Inteligencia

The world is changing faster than ever before, and businesses must innovate to stay competitive. To stay ahead of the curve, businesses must look to the future and anticipate the needs of their customers. Futures research is an invaluable tool to help businesses stay ahead and drive innovation.

Futures research is the practice of predicting and researching potential changes in the future. It involves scanning the environment to identify signals of change, understanding potential scenarios, and exploring emerging trends. It is an invaluable tool for businesses to understand and anticipate customer needs, stay ahead of their competition, and develop strategies to drive innovation.

Futures research can help businesses better understand their customer base and anticipate customer needs. By understanding the trends in their industry, companies can create products and services that are ahead of the curve and meet customer demands before they become apparent. This helps businesses stay competitive, as they can create solutions that meet customer needs before their competitors.

Futures research can also help businesses understand emerging trends. By understanding the emerging trends in their industry, businesses can identify opportunities for innovation and develop new products and services that will meet customer needs. By anticipating customer demands, businesses can create solutions that are ahead of the curve and keep them competitive.

Finally, futures research can help businesses develop strategies to drive innovation. By understanding the trends in their industry and the customer needs, businesses can develop strategies to create innovative solutions that will meet customer needs. This can help businesses stay ahead of their competition and create solutions that their customers need.

In today’s ever-evolving world, businesses must stay ahead of the curve to remain competitive. Futures research is an invaluable tool to help businesses stay ahead of their competition and drive innovation. By understanding customer needs and emerging trends, businesses can anticipate customer demands and create solutions that are ahead of the curve. This will help businesses stay ahead of their competition and create solutions that their customers need.

Bottom line: Futurology and prescience are not fortune telling. Skilled futurologists and futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

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A Deep Dive into Horizon Scanning

What It Is and How It Can Help Your Business

A Deep Dive Into Horizon Scanning

GUEST POST from Art Inteligencia

Horizon scanning is a powerful tool that can help businesses anticipate and prepare for future changes in their operating environment. It involves researching, analyzing and predicting future trends, developments and opportunities. This process can provide businesses with insights into potential risks and opportunities, allowing them to plan accordingly and maximize their chances of success. In this article, we’ll take a deep dive into horizon scanning, exploring what it is and how it can benefit your business.

What is Horizon Scanning?

Horizon scanning is a process of identifying and analyzing emerging developments, trends, and opportunities that may affect a business in the future. It involves researching and gathering information from a variety of sources, including the news, industry reports, and experts. This data is then used to identify potential risks and opportunities. The goal is to provide businesses with advance notice of changes that could affect their operations, allowing them to make informed decisions and plan accordingly.

How Horizon Scanning Can Help Your Business

Horizon scanning can provide businesses with a number of benefits, some of which include:

1. Improved Strategic Planning: By researching and analyzing future developments, trends, and opportunities, businesses can gain valuable insights into potential risks and opportunities. This allows them to make informed decisions and develop effective strategies for dealing with these changes.

2. Enhanced Competitiveness: Horizon scanning can provide businesses with an edge over their competitors. By being aware of potential changes in their operating environment, businesses can be better prepared to take advantage of opportunities and minimize the impact of potential risks.

3. Improved Decision Making: By predicting future changes, businesses can make more informed decisions. This can help them make the right decisions at the right time and maximize their chances of success.

4. Increased Efficiency: Horizon scanning can help businesses save time and resources by providing them with the information they need to make informed decisions. This can help them reduce costs and increase efficiency.

5. Building Resilience: By preparing for potential risks and opportunities, businesses can become more resilient and better able to cope with changes in their operating environment. This can help them remain competitive and profitable in the long term.

Conclusion

Horizon scanning is a powerful tool that can help businesses anticipate and prepare for future changes in their operating environment. It can provide businesses with a number of benefits, including improved strategic planning, enhanced competitiveness, improved decision making, increased efficiency, and greater resilience. By researching and analyzing potential risks and opportunities, businesses can make informed decisions and plan accordingly.

Bottom line: Futurology and prescience are not fortune telling. Skilled futurologists and futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

Image credit: Pixabay

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