The "I"-word! How to drive Innovation in this era of extreme uncertainty

Maanda Tshifularo is CEO at SuperLead and host of the Leadership books unpacked podcast on Cliff Central. In this episode, he presents the formula for leaders to successfully infuse innovation in their organizations.

Innovation has become a buzzword in recent years, a term that has been thrown around so much it risks losing its meaning. The fact is, innovation is hard and that’s why so many fail at it. I explore how leaders can lead in this area using the methods outlined by Eric Ries in his book ‘The lean start-up: how today’s entrepreneurs use continuous innovation to create radically successful businesses.’

For innovation to happen, Ries asserts that leaders need a process for implementing, testing and refining great ideas and concepts to truly live up to the definition.

According to Ries, by using the lean start-up approach, companies can create order not chaos by providing tools to test a vision continuously. These are the 5 steps he prescribes;

1.????Identify the problem or opportunity from ?the point of view of the customer. People often think of the next ‘cool’ thing and mistake that for innovation. I remember when chatbots were popular and there was the temptation to deploy them to prove that one is ‘innovative’. It may be impressive to claim you’re innovating, but leaders need to do the hard work of knowing what the problem is and know for a fact what it is that they’re solving for the customer.

2.????Identify both commercial and technical leap of faith assumptions on how to solve a problem. A business plan has in it a list of assumptions, as a leader you should highlight those assumptions up front. A leap of faith by definition is believing in or accepting something without any proof or evidence. People often confuse facts and assumptions which is dangerous because when teams or organizations buy into an idea, they put resources behind it. Unfortunately, assumptions are often wrong and when the product reaches the market, it doesn’t succeed, leaving resources wasted and reputations tarnished.

3.????Create a series of experiments to test assumptions. A core component of the Lean Start-up methodology is the build-measure-learn feedback loop. Ries recommends creating a Minimal Viable Product (MVP) that allows you to learn and test out assumptions and get feedback before you sink resources into something that still needs tweaking or even overhauling.

?

4.????Transform learnings from experiments into learning metrics. This is about getting the learning metrics right. For example, what are the ways your product is consumed, rather than what you think it will be.

This is where the idea of Innovation Accounting comes in; it is a way of evaluating progress when all the metrics typically used in an established company (revenue, customers, ROI, market share) are effectively zero. The benefit of this approach is that even if your project fails you learn something for the future

5.????Use learning metrics to make decisions to pivot or persevere. When you have tested your assumptions and have the insights you need, then you have to decide whether you will drop the project, or keep going, what Ries calls ‘Pivot or persevere.’ He defines a pivot as a "structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth." He clarifies that pivoting is not starting again because what you tried didn’t work. Instead, it’s about re-focussing on areas that work and expanding on them using the insights you have gathered.

What I really like about this approach is that its rooted in humility. In order to successfully innovate, we need to know customer needs from their perspective. For example, the founder of Vimeo looked at what customers were actually using the video-sharing platform for. The data was telling them something different from what industry leaders thought. Instead of going following industry trends or going with preconceived ideas and assumptions, she trusted what the insights were saying and became hugely successful.

My sense is that we don’t spend time studying the actual behaviour of our customers. While we may use our own experience as point of reference, the process of doing this allows us to add value where it’s needed.

I love the quote that, “We don’t learn from failure, we learn from reflecting from failure.” This is a key part of innovation; being willing to course correct and have the flexibility?to adjust and shift where required.

Increasingly, leaders are asking consultants to help them become more innovative, especially in these complex times when past assumptions can’t be relied upon and the future is so uncertain.

I think a great first step for leaders to take is to ask if their view of innovation is the right one; is it purpose driven and is the team being flexible enough, testing with customers and finding the right measures to inform the next steps.