Measuring the causes, not the effects of your idea’s success
Some companies that we know of — where our friends, acquaintances or ex-colleagues work now — are actually nailing that innovation thing. And that’s wonderful. But just how many ideas can they grow before things get out of hand?
Money leaks from small cracks in your framework. And most big companies are not entirely used to the new, lean way of doing things. They may be used to the way of thinking. We all are, we all read the books.
These big companies to which our friends work for may also be applying that way of thinking into some things they are doing. But rarely potential clients or acquaintances companies can say they are working full-speed on the governance of a portfolio of innovation.
Getting disorganised is part of the deal, but it shouldn’t be your part of the deal
A global CGT/Sopheon Survey concluded that over 79% of typical digital products miss the launch date. That shows there is real revenue wasted by delaying the launch date. It also means that the way of planning the launch can only be fundamentally wrong — if you arrive late for your personal trainer meetings 79% of the times, you may clearly see there’s something wrong with your routine; either the map route, the commuter hours or your personal scheduling skills. She will be on it, and make you pay that valuable time in ab crunches, to say the least.
Another alarming information from the International Chamber of Commerce, in Paris, released in May 2018 is that their global survey shows that 60% of banks are planning more impactful digitalisation, although only 9% say technology solutions have so far increased their efficiency.
It gets more interesting: according to Gartner’s 2017 reports, 58% of CEOs rank growth as No. 1 priority of CEOs. That would sound like business as usual, but no. In 2016/2017, growth was a priority only among 42% of CEOs. Still according to Gartner, that means CEOs are willing to invest heavily on technology, sales and product innovation. And new things, as we all know, bring new problems.
Now, imagine a situation of a company launching one product after another, always late. Someone’s reputation may be at stake. Someone will soon start joking about your utter inability of keeping deadlines. Due to the delay, the planned sales goes down, because you just missed one month’s worth sales. If the smallest thing goes wrong, the whole project starts to become a joke. Credibility tends to be harmed. And when the pace gets faster, it gets worse.
We have been working with a few companies that had kickstarted an internal startup. Later on, another. In a year or so, they had 6 internal startups. So three questions rise:
1. How do we keep these startups on track, so that money doesn’t leak from the cracks?
2. How do we ensure that new good ideas move faster, won’t get killed before they get a chance?
3. How do we ensure ideas will change into something better if they are not fit for the market?
We have combined several known frameworks to build our own. In the heart of the method, design it simple, make it measurable and grow it by results. And it works.
We often recommend our customers to focus on four principles:
Start as simple as you can, and focus on the one metric that enables growth. See, it’s not the metric that will tell you that your idea grew. It’s the metric that actually enables your idea (your business) to grow sustainably. Sean Ellis, from Growth Hackers, talks about this as the North Star metric. We have created our own way of defining these levers — keeping it at high and tactical level, and pairing those to a few other metrics. (Yeah, our alchemy is exclusive!)
2. Buy the CFO a beer
Combine this metric with the CFO’s favourite metric. Probably it’s revenue, but it can be recurring revenue, or full-price sales, or new buying customers, repurchase etc. Talk to the CFO. Get him to open up how growth is planned in your company and what are the realsources of revenue, not the apparent ones only.
3. Same rules, same game
Put everyone to work with this same metric. Enough said. No matter what they do. That’s one heck of an efficient way to break down silos, harmful rivalry and that annoying complaints of “I don’t have any idea of what is going on” (despite the fact this person has never asked a single question to know where we all are).
That’s the most important part: draw a milestone plan, with at least three milestones. You don’t even need to plan very much ahead before the first ideas cross the more advanced milestones. Start with a simple table saying “is this idea working?”, and base the answer in your growth enabler in reverence to your revenue metric. On the second milestone, say six months from now, focus on your customer experience. And on the third and more complex level, focus on making each idea being reported in the same place, by the same metrics.
Eric Ries, from The Lean Startup, calls these Innovation Accounting. Then you can simply focus on the governance of ideas that are already working. We have used many of his principles now, and adapted a few points — probably pioneering the practice in the Nordics, for example.
There it is a bit of the Silicon Valley, of our San Francisco state of mind, of the Netherlands data design, of the Helsinki design process, of the Stockholm design minimalism and more references that we took, transformed, adapted, adopted and saw that works.
Read more of my articles and dozes of valuable content from my colleagues at Digitalist.Global.