Replace Your Product Features Mindset with Building an Experience Platform

By Richard Eichen, Managing Principal, Return on Efficiency, LLC

Yesterday, I purchased a replacement electric toothbrush, which came with a Quick Start Guide showing placing the device in one’s mouth near the teeth, and 12 pages of illustrated instructions.  It also has multiple settings accessible from the front via button selectors.  The better version has Bluetooth, and I assume the best version includes a satellite link and mouth-cam to post the experience. Still, like a toothbrush, it attacks the same problem as its predecessors, oral hygiene. It looks like a product overloaded with dubious features, probably intended to differentiate a tooth cleaning apparatus from a toothbrush, following this evolutionary path:

Product User Goal When Introduced to Market Conceptual Breakthrough Required of Customer # of Features Usefulness Lifespan
Twig Oral Hygiene 3000BC Ability to identify poison oak and ivy 1 Short
Stick Toothbrush Oral Hygiene 1498 Use over longer period of time 1 Medium
Synthetic Stick Toothbrush Oral Hygiene 1938 Purchase rather than make themselves 1 Medium
Electric Toothbrush Oral Hygiene 1954 Overcoming fear of having a plugged in device near their wet mouth 1 Medium
Rechargeable Electric Toothbrush Oral Hygiene 2000 Recharging so it becomes another personal electronic device like a phone 1 Medium
Overthought Electric Toothbrush Oral Hygiene 2015 Why is this a customizable experience? Can’t AI do it better? 3 Medium

 

When we develop new physical products, especially those controlled by software (and hence easily updateable), we have to be very careful to manage our urge to brainstorm a large set of features and settings to be whittled down later.  The issue, as pointed out by Jason Perez and the Interaction Design Foundation, is by thinking options and possibilities, the internal focus remains within established processes of proposing and delivering a set of product attributes and then seeing which the customer prefers.  It is classic inside-out thinking.

Tradition-bound companies assume a fixed customer expectation set to satisfy and do not understand when their customer and market have changed, particularly regarding velocity and continuous comparison by customers to their related, if not the same,  experiences.  Many of these companies have unknowingly transcended industries to consumer electronics, and have to adjust to a new customer relationship, rather than continuously trying to leverage existing manufacturing and distribution investments.

Tradition-bound Product Management functions have been successful for decades building discrete products, rather than having an updateable platform, but can experience fear of the unknown since the expected software refresh cycle in their new market is unfamiliar and faster than their usual cadence.  Car companies’ cabin technology around nav systems is an example, where customers compare their experience to Waze and other continually refreshed products.  As a Porsche owner recently said, “how come my 911 can’t get new software features just like my phone?”

Companies in markets under transition from physically instantiated features realized per a roadmap to software driven continuous improvement have to start with the customer’s goals and realize their product is a User Interface platform for a continuously evolving experience journey with their customers.

Getting it right and wrong about CIO’s and the Cloud

Richard Eichen, Managing Principal, Return on Efficiency, LLC

This morning’s WSJ CIO Journal  blog posting, ‘The Morning Download: Cloud Computing’s Hazy Meaning Creates Confusion for CIOs’ shows where Gartner is right and wrong regarding the evolution of the Cloud and how it affects internal IT, and more specifically, the CIO.

Our recent experience shows the influence Business-side perceptions of the Cloud is having on IT strategy and contracts regarding infrastructure. CIOs are increasingly asked by Senior Team leadership why internal IT cannot scale rapidly up or down at reasonable cost, or why DR is so expensive, or why millions of dollars have to be budgeted for a hardware refresh every 3-4 years.  CIO’s increasingly have to justify decisions and sunk costs more than participate in forward looking strategic discussions. It doesn’t help that ‘The Cloud’ is still a bit of a fuzzy term depending on the audience – technical vs. business.

Interestingly, this post also shows where Gartner got it wrong:

‘The politics of saying no. As IT shifts from service provider to revenue driver and everyone, from the CEO to new customers, offers input on the digital business, the ability to deliver an assertive ‘no’ is among the most powerful tools available to the CIO. Done right, it sends a leadership message while keeping lines of dialogue with the other party open. Done wrong and collateral damage can ensue’

CIO’s already have a nasty generalized reputation for saying “no,” fueling the Business to embark on Shadow IT.  Especially when a Cloud-based infrastructure is available, the Business increasingly responds with a shrug and then goes off and does their own thing.  We have seen clients with robust infrastructure, decent developers, and a growing Shadow IT presence because the Business is dealing with market dynamics while IT and the PMO talk about project portfolios. Concurrently, the internal IT Innovation Group is all about vision statements, cost analysis, and gate meeting after gate meeting rather than User Journey Mapping and rapidly prototyping.  The Business’ brain starts to hurt when discussing strategy with IT.

If CIO’s  want to participate in the move towards Digital as a full strategic partner and not as the leader of a captive utility,  saying “no” is not a wise strategy – the correct response is “let’s partner and figure this out together.”

Corporate Culture is a Continuum You Define For Yourself

By Richard Eichen, Managing Principal, Return on Efficiency, LLC, www.growroe.com

It’s circular – companies have cultures, attracting and retaining a type of employee who reinforces the culture, good, bad, or OK.  This is why some established companies struggle with becoming agile except in name only, or agile companies scale into inflexibility.

Based on our experience, here’s a quick view of where companies place themselves on the Continuum.  Note – the key phrase is ‘place themselves’.  What do you do? I worked for a Tech manufacturing company with a strategy and mandate to hire smart, already successful ‘oddballs’ (OK, this is self-incriminating but it’s true), compensate very well, and where no organizational unit could be over 500 employees. Innovations required a mix of new employees without internal history and a select few insiders who knew their way around the organization to get things done. Yes, it made for a messy org chart, but we could turn on a dime.

Here’s a visual summary of our take on the Corporate Culture Continuum :

Slide2 Slide3 Slide4 Slide5 Slide6

Can a company move their circle to ICI? Yes it can, but it requires dedication, hard work, a Board Mandate, and a willingness to live in the new and uncomfortable.

 

 

Does your company have managers or entrepreneurs running innovation?

From my experience, the difference between managers and entrepreneurs boils down to personality and therefore corporate culture (the aggregate of employee personalities). This is why many acquired companies soon have culture clashes with the new parent organization.
Managers will work within the system, no matter how bats**t crazy that system’s rules and processes. I did a project at a major police dept where there were over 100 forms to arrest someone, including a form on where to take the suspect’s horse (approved livery stables, long out of business). Each Chief implemented their own focus with rules, procedures and forms, and over the decades, it added up. We simplified it to a more ‘reasonable’ number. Another organization implemented a ‘modern’ innovation process, utilizing the ‘stage gate’ method from the 1980’s. More agile competitors are eating their lunch. However, all the right forms and docs are being used to control the process to avoid failure.

 

Who’s to blame? Blame the Board of Directors who often would rather have predictability over progress. Blame the major management consultancies who make a fortune by adding processes and controls to their clients because they are employees and managers as well, afraid of taking a potentially career-ending risk. It’s a beautiful cultural fit.
Entrepreneurs, since childhood, hate rules and limits and therefore see opportunities where managers see risks. I worked directly with the founder of a very successful tech company who made the mistake of hiring a ‘big company’ President so we could grow to the next level. All we got were forms, processes, rules, procedures, and slowness. Oh, and slick Board presentations. Oh, oh, and new management levels and layers. It sucked the oxygen out of the company in just a few years. A bunch of us used to joke we couldn’t go out of business because we didn’t have the right form to request permission.
In each company’s lifespan, there’s a need for the entrepreneurial founding team, followed by managers to execute but there has to be a pivot back to entrepreneurial culture before entropy sets in.
This post describes the difference very succinctly:
https://www.quora.com/What-is-the-difference-between-managers-and-entrepreneurs/answer/Peter-Baskerville?srid=tts6

Internal New Product and Innovation Groups Fail When They Fear Their own Board More Than The Competition

By Richard Eichen, Managing Principal, Return on Efficiency, LLC

In-house new product and innovation teams often fail due to a lack of boldness and self-limited creativity, afraid of damaging their careers when their ideas are shot down by their Board. I just saw this at a car show where everything looked the same.

At the NY Auto Show, every car manufacturer had lots of shiny objects and a powerful combustion engine on display (this is a car show, after all). The sizzle-dollars went to pitching their claims to innovation – hybrids and a few electric vehicles. Since the Prius was first introduced in 1997, hybrids are now “me too”, not innovative. Even Toyota, with its full range of hybrids, is refining this now standard technology while innovating with fuel cells.

Electric vehicles are still an evolving art and here is where the innovation lesson is learned. Earlier in the week, Tesla announced their $35K+ Model 3 with 200-300 mile range, depending on the configuration. At the show, we took a test drive in a Ford Focus Electric, which was very comfortable and priced very attractively, but with only a 76-mile range at best. It is as if the engineers were striving for a Tesla killer but were pulled back from the brink of a breakthrough by the New Product Process Police. The Focus Electric is a nice car with a powertrain replacement, not anything new and exciting, i.e., not innovative. It’s what you would expect to see in the far corner of a dealership. It will not make your brain hurt, but won’t excite you either. This car reminded me of the famous US auto industry quote on innovation, “give them leather, they can smell it”, and yes, it had leather-trimmed seats. Ford’s Board could see the car pre-production and immediately gotten it and smiled. It fit their world view. I don’t know when the Focus Electric was announced, but I suspect it didn’t gather the more than 270K pre-intro deposit reservations Tesla received for the Model 3 in less than a week.

When we look at innovative companies, even larger ones such as Apple and Alphabet, there is one noticeable differentiator between the experience-repeaters and innovators. Innovative companies have a healthy mix of a high percentage of Independent Directors on their Boards, and a significant proportion of those independent directors are experienced in fast moving, innovative and creative industries. Sure enough, Morningstar lists Ford as having 1 Independent Director whose bio points towards innovation experience with the remainder having slower product refresh cycle – big organization backgrounds. Alphabet has almost half of its Board in the innovation and creative category and Apple has more than a third of its Board with direct innovation and creative backgrounds.

The combined innovation-obsessed Board and CEO, both with forward vision, are essential to creating the necessary innovation culture and excitement. Apple has a creative and dynamic Chairman, who repeatedly lobbied a resistant Steve Jobs to open the iPhone SDK for independent app developers. The first iPhone was not that innovative, there already were smartphones around in various flavors; the innovation and excitement came later with ‘there’s an app for that’. Alphabet has a similar Chairman and CEO. Tesla’s Board is a mix of backgrounds, but it’s really Elon Musk’s company, as is Bezos’ Amazon. Similarly, you can argue Apple without Steve Jobs is less innovative and more derivative.

What role does the Board play in innovation? Innovation flows from outsiders unshackled to past decisions and investments. The Board and CEO have to grant a company-wide ‘License to Innovate’ for those ideas to be heard, potentially obsoleting their own previous decisions, and only a Board can set that tone.

 

Can Samsung Actually Become a Startup?

Samsung and other companies are trying to morph to startup culture. By dressing down, working in hotel/open spaces, cafeteria banners? How do you get thousands or even hundreds of thousands of employees you hired into a particular culture to reject it and come to a new culture? Industries and verticals have different product and innovation refresh cycles, and so the organizational cultures and employee personalities are different, For example, hardware and software, or traditional CPG and electronically enhanced CPG.

Is Google’s restructuring into Alphabet the way of the future? Not automatically as we have worked with several companies where a new products innovation division has the same tempo and culture as the parent, cluttered with key resource sharing, multi-layer matrix management and processes slower than their target market is moving. Competitors with scrappier cultures, equally large and venerable, are beating them into new product areas, defining the market, becoming the default leaders.

Is the solution creating a new organization, located far away from the parent, with a balance of freedom and senior executive level oversight? In effect, the parent becomes an angel investor, but does the parent’s Board have angel investors’ risk tolerance?

We created this diagram based on our experiences; does it apply to yours?

A recent trip to Cuba made me think about corporate adaptation to new realities and reinvention

Old Havana Hotel interior converted form private house -slaves lived on middle floor Typical Havana Old US Car 2016 Incomplete overpass Cuba 2016

By Richard Eichen, Managing Principal, Return on Efficiency, LLC

 

It is hard to imagine how a Communist country can teach much of anything about business, but what we saw mimics elements of some larger, well-established companies stuck looking in the rearview mirror, afraid of seeing too far ahead, assuming life in the future is an extrapolation of the past.

First, a few personal observations about Cuba.

The Cuban leadership, like many companies’ Senior Leadership Teams, ran their strategy for as far and long as they could until they hit the T-Intersection at the end of the road, the bimodal distribution. There is no longer a middle path, they have to turn right or left. We spoke with an economist who is participating in Cuba’s rethink of its future economic structure, and while elements of Socialism will remain (much like Europe), a form of Capitalism will be encouraged. The question is, what form?

It may be China-like in having a social contract of ‘we’ll give you a higher standard of living, but the Party remains in power’. Since our hotel, the Hotel Nacional de Cuba was the venue for a Mafia Senior Leadership conference in 1946, where only the Mafia’s Senior Leadership Team could stay during the meeting dates (that meeting was recreated in the Godfather II, BTW), it’s highly doubtful if allowing outside interests to own and run the Island again will occur. It will most likely be overseas investments and joint ventures.

Until the Revolution, Havana must have been a jewel. Now, after 60+ years of neglect, many buildings are under serious rehabilitation back to past beauty. I have not read Das Kapital since college, but I don’t recall a chapter detailing the evils of paint, spackle, and preventative maintenance. Today, those rehabilitated buildings, some dramatically lit, are beautiful and I’d wager in 10 years Havana will be back to its former beauty.

Probably due to widespread literacy, healthcare, and subsidized or inexpensive food, people in the street seem healthy and friendly. You do not get the feeling of underlying anger or despair you often get in developing countries when walking around cities. We encountered several children asking not for money, but for candy. Unlike those I have seen elsewhere, these kids were clean and looked healthy.

There’s a lot of inconsistency in Cuba. For example, it is a police state where everyone assumes they are under constant surveillance. On the other hand, they are warm and happy to see Americans. We went to a brewpub by the docks in Havana and while admiring a beer tower, received a sincere invitation to pull up a chair, get a glass and share the beer.

Universal literacy is both their issue and solution. Cuba’s current economy can absorb only so many college graduates, and I am sure they must have a many-layered bureaucracy to employ as many as possible. As an example, this Sunday, the NY Times had an article on filming TV and movies in Cuba, specifically mentioning having to deal with a Cuban Gov’t department ‘drowning’ in its own bureaucracy, making it a challenging filming location, just when they need the business. Nevertheless, until you can employ all those people more productively, how can you cut the layers and encourage free markets? Employment equals stability and communist countries are big on both.

They also have what I call the Educated Small Market problem, ie a lot of educated brains but a population too small to consume a lot of output, requiring an export-oriented economy to employ the local workforce in something other than Gov’t or tourism. Cuba will continue small-scale self-sufficiency and limited growth unless they can develop, like Israel, a healthcare or hi-tech oriented employment and foreign currency creation sector. That economist mentioned above said they do not want to become just another Caribbean tourist economy since that role is crowded, and will design a uniquely Cuban solution.

Cuba went through a post-Soviet collapse period called the Special Period, where the Cuban economy imploded, imports and exports declined 85%, GDP dropped by 35%, and massive layoffs from mechanized farming and inefficient factories put people out of work. Albeit driven by artificial and political goals, for decades the Soviet Union was Cuba’s biggest customer. Then they weren’t and Cuba went out of business for 15+ years.

Below are two thoughts on applying some of these observations to our companies:

The main takeaway is Senior Leadership cannot expect their customers, no matter how strong they seem and how much they buy, to always be there. The past does not guarantee the future, even after 60 years of staying the course. Sustained vitality is reinvention over time, and many companies are not good at it. They are great at re-orgs or staff cuts, product enhancements, and line extensions, but not material rethinks. Many organizations are missing the necessary skills for reinvention. Cuba, even though they had centuries of agricultural experience, realized they needed a new approach, and chose to engage senior Australian permaculture experts to hands-on teach the country food self-sufficiency. They had the need, but not the skills, for reinvention and wisely chose real-world experts and not the safest name brand consultancy.

Next, employees in long-lived organizations assume they will always have a job, food, and healthcare if they play the game and do not force change (and wind up playing resume whack-a-mole). Many of these organizations defined or created entire industries, developing strong internal cultures where multi-decade tenure and strong allegiances mattered as much as fearing making a mistake. Often they became closed societies, difficult for new employee integration, resisting non-conforming and status challenging ideas. Then an outside event occurs, the internal culture does not work as it once did and the best and brightest become doubters and frustrated. Recruiters crack the email convention. Which company could survive a combined outflow of top talent, an inability to attract equally skilled replacements and fearful remaining employees waiting to get “the call”?

About those famous 1950’s cars still running in Cuba – they’re a blast from the past and a tribute to Cuban ingenuity. Many I saw have steering wheels from original to trucks, Hyundai’s, and engines reportedly from anything including boats, and the bodies are often shiny. Boy, we used to build good cars in the US.

I’ve also been asked if I would visit Cuba again. Definitely, “yes.” My recommendation is to see it now and think about what happens when the Senior Leadership is unwilling to reinvent a company until they hit their T-Intersection.

Big ‘P’ process won’t take you to big ‘I’ innovation

By Richard Eichen, Managing Principal, October 2015

 

‘The living are soft and yielding; the dead are rigid and stiff. The rigid and stiff will be broken. The soft and yielding will overcome.’

  • Lau Tzu, c. 515 BC

Stage Gate Innovation Process introduced and then widely adopted with strict adherence.

  • 1988

In 1988, the business world was very different. Slower. Business was predictable, even for those of us in Tech.  Three-year and 5-year product roadmaps could be readily managed.  Robert Cooper introduced the then revolutionary Innovation Stage Gate process, which was perfect for a document, form and spreadsheet top-down world.  Business moved at the pace of inter-office floppy disk handoffs and paper; email, as we know it, wasn’t released until 1991. Life was predictable; you could safely eat lunch away from your desk and have a relaxing dinner at home at a reasonable hour.

Switch mental gears to today. What happened and why are many successful companies currently having issues with innovative new products, while excelling at incremental enhancements? Established companies are now routinely forced into new markets where newer more nimble competitors can be in their second or third version while the ‘successful company’ is still thinking it through. Calcification around command and control oriented Innovation Stage Gates is a theme we regularly see.

Established companies have become ‘rigid and stiff’, focusing on the small ‘i’ innovation large ‘P’ process as a repeatable and safely controllable logical first cousin to top-down and comfortable product iterating. Heavily defined Stage Gate processes also limit outside creative participation as concepts and user context insights typicaly elongate gathering sufficient clarity for Stage Gate promotion. As Lou Gerstner said when he took over a then failing IBM, and as many companies today exemplify, “You don’t launch products here. They escape.”

Since many employees of larger organizations are more comfortable with strict guidelines and processes, and Management likes stage gate oriented control and predictability, how do you affect this massive cultural change?

Begin by no longer applauding how many stage gates you have in your innovation process. Be reductionist – slash the number of gates to a bare minimum. Replace the internal policing process with design training, product-platform-component thinking, commonly defined terms, and establishing guidelines for expected ROI, timeframe, and market potential thresholds. We’re now at a point where innovations are bottoms up, where various specialists and domain thought leaders surface ideas and command and control processes and cultures will be not much more than a source of slowness.

Heavily regulated industries, under FDA, and other Federal and State regulators, will demand certain attestations and tests, but do not augment these gates with more and more internal stage gates. Actively think, at each step, “what gates can I remove where no one will notice the difference at the end?”  In the good olde days of mainframe IT, we would regularly stop printing scheduled hundred page fanfold reports to see if anyone would question us. We even used to send a certain executive a box of blank paper weekly (we were environmentalists even back then) to see if he would wonder why this essential report was light on details (and ink). Nada on both.

Think internal innovation, as well as external. In a recent survey, more Financial Services executives defined innovation as internal operational improvements than any other avenue, even over Digital and New Products. Why then, would you build a heavy process to manage reducing the number of internal processes under the banner of ‘innovation’?

Since many innovations today are concepts and thoughts needing instantiation, do not spend an inordinate amount of time on, as Cooper recently published, doing “heavy front-end homework before development begins.” Innovative ideas are stories about users and their daily lives evolving from concept to Steve Jobs’ term”insanely great products” through continuous big and small multi-party collaboration. Locking people in a meeting room for a 60-minute brainstorming session rarely works for innovation. Heavily detailed Proofs of Concept focus too much on features and functions that are typically actually enhancements to existing products – breakthrough innovation is based on a new storyline. Use minimally defined test beds and concepts, tested via quick ‘iterate-test-enhance’ cycles to refine the story and then backfill with features/functions. The result will be a product specification and roadmap with a substantially higher chance of market success.

Discontinue treating new products and innovations as ‘projects’ or tracking them as if they are. Most of today’s project management techniques and tools are the linear descendants of 1950’s needs to build nuclear submarines for the Cold War, where each submarine took 7 years to design and launch. RAG reports and team meetings were easily incorporated in that long timeline. Replace a high-friction document-oriented, electronic file cabinet and email-centric process with a near real-time collaborative culture empowered by modern innovation acceleration tools. For those of us using the various Office tools, collaboration is still difficult. Approvals, idea clarity, financial and progress controls remain, but typically, in our experience, the right mix of culture and technology cuts end-to-end cycle time by at least 30% and with broader input and buy-in.

World-class companies have changed their thinking radically (or in the case of many newer companies, never had old-think to begin with). They moved from living in a predictable and calm inwardly focused world where they reacted to market changes expressed in columnar formats to living comfortably, as Complexity Science defines it, ‘on the edge of chaos …where rigid order and random chaos meet and generate [a high need for] adaptation, complexity and creativity’.

Adaptive companies have two distinct advantages over their competitors. First, they create the Edge of Chaos where their less nimble competitors are then forced to struggle. Secondly, they attract, retain and develop the least linear, most creative and adaptable employees who operate at near real-time, not email and meeting speeds. Their employee DNA matches the pace of their evolving markets.

Can established companies make this transition – some yes, and some no. We have seen mighty efforts leading to not much more than sloganeering followed by over-control and have participated in clear transformational success based on innovation acceleration techniques and technology. Replacing your Stage Gates process and controls allows you to use your competitors’ ‘rigid and stiff’ cultures against them. Let them live inside their process while you invent the future.

 

Is Innovation Potentially Self-Destructive?

Dinosaurs were a successful species for millions of years. Change is inevitable, and those beasts standing on the sidelines saying they were both modern and progressive while watching others learn to fly ended their species in our gas tanks.

“We went through an industrial revolution and then an information revolution, and now we’re in a talent revolution,” Thomas Friedman recently said on MSNBC’s Morning Joe.

Read More

Innovation Ends With The First Sale, Not The Proof of Concept

The hi-tech furniture, scratched up modern hard shapes, and pale colors, looks like it belongs in a loft, not the back area of a suburban HQ. What was once an Innovation Lab, with its look and feel and budget, was shut down after spending over $20M and achieving a few proofs of concept and nothing else. Some employees left; others retooled themselves back into the areas from which they came. Physically, only the furniture, reused as needed piece-by-piece, remains. Mentally and culturally, what remains is the feeling “we can’t innovate here.”

Read More