One Hundred Days To Disruption

May 7, 2012 6:31 am 0 comments Views: 19

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However, we’ve noticed a disturbing pattern. If we check back with a company 60 days after a one-time ideation workshop, we frequently find that nothing has happened. Why? Managers returned to their desks, stepped back into the daily grind, and the optimistic feelings generated in the session slowly disappeared or were consumed by near-term priorities.

The gap between the germ of a disruptive idea and successful commercialization can be wide. Sometimes, managers can feel like they have not developed detailed enough plans to move forward. After a successful ideation session they might say, “How do we know we generated the right idea?” or “There’s no way we could, in a day, really develop a robust enough plan to actually spend money on.”

In Pictures: Five Steps To Disruption

And sometimes, managers will go to the other extreme. They will develop an extremely detailed business plan that requires massive investment of dollars and human resources. These plans typically never see the light of day, because senior managers intuitively (and correctly) get squeamish about placing big bets on highly risky plans.

There is another way. Through work with some of our clients-many of them in Asia-we have developed a simple, five-step process that can help companies go from a desire to disrupt to a funded disruptive business plan in less than 100 days.

Step 1: Identify opportunity areas (five to 10 days)

Before developing specific plans, companies should step back to identify broad opportunity areas (sometimes called “domains” or “growth themes”) that can form the basis of the investigation.

While companies sometimes think the key to innovation is to encourage unbridled creativity, our belief is that focus is an important enabler of success. As one senior executive told us, “What are our odds of success if we trawl the ocean looking for a whale?”

Finding new, high-potential opportunity spaces isn’t always obvious. One trick is to imagine adjacent markets that you touch, but in which you don’t actively participate. Look for a market that is close to the core so that your capabilities, assets, or knowledge could form the foundation of a new growth offering, but far enough away that traditional competitors might scratch their heads when they hear about the opportunity space.

The disruptive concept of nonconsumption can be a helpful tool as well. Consider markets in which factors such as product cost, complexity or inconvenience constrain consumption. For example, there are more than 46 million people in the United States without health insurance. This market has obvious potential for disruptive growth. Ideally, companies seeking to look beyond the “normal” opportunities that characterize their market should combine the wisdom and judgment of senior management with a healthy dose of experienced judgment that has been gained through achieving not only success, but equally importantly, painful failures. It is the pain from these failures that prevents decision-makers from taking easy or obvious paths when their gut instincts tell them something more is required.

Selecting domains requires striking a delicate balance. Howard Stevenson from the Harvard Business School defines entrepreneurship as “the pursuit of opportunity without regards to resources controlled.” However, companies do have to have (or be able to create) some kind of right to win in a marketplace.

Spotting opportunity spaces requires managing this balance, remembering that tomorrow’s capabilities might look very different from today’s capabilities. Selected opportunity areas should be broad, such as “real estate” or “low-cost tires,” and strategically important to the company.

Step 2: Generate idea list (14 to 35 days)

In the next stage, a small team should develop a long list of innovative ideas. The team’s goal isn’t to develop detailed business plans around each idea. Rather, the team should form nuggets of ideas that can be shaped and polished in the next steps of the process.

The concept of jobs-to-be-done aids this investigation. Remember, this concept holds that great growth opportunities are found in helping people address pressing problems that aren’t adequately solved today. The jobs lens provides a blueprint for innovation by zeroing in on key customer pain points.

Concurrent with the jobs-to-be-done investigation, the team should develop a detailed balance sheet of the corporation’s capabilities and disabilities. What assets does the company really have to bring to the identified opportunity spaces? What liabilities will they need to overcome? The goal is to see if there are internal capabilities that could open up new opportunity spaces (such as when Philips started selling its design capability to outside companies), and to begin to think about what capabilities the company will need to create or acquire to master growth.

The final analysis should quickly map out the trends taking place in the given industry space. Over the last week of this stage, the team should synthesize its work by creating a list of 15 to 20 potential opportunities, each described in two to three sentences that identify the target customer, the job they are trying to get done and preliminary thoughts about potential solutions. The emphasis during this stage should be on making quick progress. This should not be a boil-the-ocean analytical effort, nor is it intended to be totally exhaustive. Rather, it is a quick way to develop a long list of interesting ideas to get things rolling.

Step 3: Hold a disruptive business-shaping workshop (two days)

Now the team, key stakeholders and any other good, innovative minds in the company come together for an immersive two-day workshop. The purpose is to select the highest-potential ideas and begin to flesh out possible solutions.

The first day begins with an overview of the key principles of disruptive innovation, to stir people’s thinking about how to spot and seize opportunities. The rest of the session involves a series of facilitated breakout group discussions. During the breakout group discussions, the group divides into small teams to work on specific opportunity areas. Each team’s job is to prioritize the list of raw ideas in their selected area, and then develop one idea into a skeleton business plan. Teams do this by going through a three-step process. The first step is to define (or refine from the prework) a high-potential job to be done-an important innovation problem that isn’t being adequately addressed. The second step is to develop a solution that gets the job done better than current alternatives.

Finally, the third step is to craft a compelling business model and develop a rough plan to take the idea forward. At the end of this activity, the large group comes together to prioritize ideas that it thinks have the most growth potential. One good way to do this is to emulate venture capitalists and allocate play money to the ideas that have been developed.

Useful criteria for selecting an idea include:

1. Is the idea truly disruptive? Consider: Is the job BIG, as well as unsatisfied? Can we find a compelling foothold customer and solution to make progress? Can we start small and earn early profits? Can we avoid competition from large incumbents?

2. Can we find a way to implement with low fixed costs (to allow for iteration) and to pilot the concepts cheaply?

3. Are there long-term sources of competitive advantage available (especially learning curve advantages)?

4. Is there a path to profitability in 24 months or less? Then, the groups switch up, pick up another set of ideas, develop skeleton business plans and select the two with the most potential. Finally, the entire group steps back to evaluate the four to six ideas that it identified as having the highest potential, selecting the leading candidates that will be evaluated in the next stage of the process. While the two days can be intense, we find this facilitated process-winnowing down the list, building skeleton plans and focusing on the ones with highest growth potential-is an effective way to make quick progress on a number of ideas, draw in widespread expertise and begin building organizational buy-in around the ideas.

The results of this workshop aren’t immutable decisions about which business plans to write. We find that about half of the output of the process’ next stage emerges from discovery and bears little in common with what was discussed in the workshop.

Step 4: Build business plans (42 to 56 days)

Over the next six to eight weeks, the team should further flesh out the selected skeleton business plans, specifically driving toward creating a detailed plan for a low-cost pilot to test the selected idea. Guiding this effort is a disruptive template that facilitates addressing a series of questions about the opportunity, such as:

-What “job” are we trying to attack?

-What is the size and nature of the benefit from getting it right? Financial? Emotional?

-How many, and which, customers currently have these jobs?

-What three to four key features define our solution?

-What combination of “gives and gets” will meet the job more effectively?

-On which dimensions will we be only good enough?

-Who are the major competitors?

-If we get this right, how much money is in it? When?

-Can we run an operational pilot with limited funds (e.g. less than $200,000)?

The team can answer these questions and build their plans via intense working sessions augmented with some focused research efforts. The primary goal is speed, so tools such as focus groups, rough mockups, and subject-matter-expert interviews are appropriate. While companies might feel pressure to create several-tab-level-deep financial forecasts, we caution against that. Instead, we are big proponents of using qualitative assessment tools that can help further unearth risks and unknowns.

On the financial front, companies should start with their targets. What kind of revenues must an opportunity generate on an ongoing basis to be attractive? How soon must it produce positive cash flows? Then calculate backward from those figures to determine what has to come true to reach those projections.

This process is highly emergent and intuitive. Often, the best idea comes midway through the process, as investigation shows that an idea discarded in the workshop actually has growth potential, or unearths an idea that had never been discussed. The team has to remember that it isn’t following a pure paint-by-numbers exercise and to be careful to watch for these emergent signals.

Step 5: Decision-making workshop (one day)

Finally, the team and selected senior managers coalesce to make decisions about which pilots to fund. The first time through this kind of process, it is useful to start with a review of key disruptive principles. Then move to the specific ideas. Try to make sure the presentations don’t drone on, but are used as opportunities to engage management in the ideas and begin active problem solving.

This session is itself an opportunity to change interactions between senior management and project teams. In disruptive circumstances, senior leaders must shed their devil’s-advocacy hats and take more of a problem-solving role. This session can be a great way to begin to engage in collective problem solving about how to address the unknowns. However, at the end of the day, senior management must put its money where its mouth is and sign up to move forward with at least one of the pilots.

Keys To 100-Day Success
There are three keys to succeeding with this approach. The first is for senior management to provide clarity about its goals and boundaries for the innovation exercise. The second key is allocating financial and human resources toward the efforts. Finally, key senior managers should participate actively in the process. Unlocking the power of disruptive innovation requires senior leaders to shift mindsets and act differently.

The approach described in this article is straightforward; however, it is not purely rules-based. Nor does it work in every circumstance. For example, this process would not work for capital-intensive industries that have multi-year development processes (such as pharmaceuticals). As noted previously, seasoned judgment and intuition must inform many of the strategic decisions made during the process.

Companies also must recognize that going through this kind of approach won’t produce perfect answers. Instead, the idea is to quickly make progress on an idea and learn from real-world experience. Following these steps can help teams quickly develop actual, fundable business plans that allow their companies to realize returns from their desire to do things differently.

The U.S. newspaper industry has been struggling over the last few years to cope with seeming hordes of disruptive attackers. After going through a version of this process, Ron Welby, of Enterprise NewsMedia, remarked, “It was a lot of work. We had to make time for these meetings, but I think it brought us all much closer together. It really built the strength of the team. We feel like we can take on the world.”

Just 100 days from a glimmer of hope to an ability to take on the world. Not too shabby.

By Scott D. Anthony and Brad Gambill from: Scott D. Anthony is president of Innosight and co-author of The Innovator’s Guide to Growth (to be published in May 2008 by Harvard Business School Press). Brad Gambill is the managing director of Innosight Ventures .

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