Pave the path to your Big Idea with value

I have had several debates over the years about the death knell of corporate innovation. R&D budgets for many companies are shrinking. Executives are willing to take fewer chances. The quarterly grind of Wall Street and the advent of high speed trading simply add to what could arguably be a bleak and deteriorating environment for breakout innovation. 

Having been in R&D for 30+ years I have a sympathetic ear for these arguments but with age comes a healthy dose of pragmatism – we must generate measurable value in return for investment dollars. I instill a deep sense of gratitude in my teams for the opportunity they’ve been given and a sense of urgency for repaying our benefactors with a return commensurate with their investment. 

The cold stark reality is that innovation is hard, bloody knuckle work that takes time while investors are notoriously impatient. Does that spell doom for the huge idea that will take years to deliver? It does if you shoot for a big bang delivery and make everyone wait for the return. Instead, decompose the big idea in to incremental steps each of which delivers value. This blog is about a few techniques that can help you do this.

Back in 2006 Mr. Elon Musk wrote this blog that ended with his super secret master plan to literally changing the world:

1. Build sports car
2. Use that money to build an affordable car
3. Use that money to build an even more affordable car
4. While doing above, also provide zero emission electric power generation options
5. Don't tell anyone.

Mr. Musk deeply believes in weaning humanity off oil. He decided that a great place to start was with transportation. He then built a series of all electric cars that enabled him to work out the manufacturing and battery complexities. Each car delivered innovations that have been building up to the Model 3, which is intended for “the masses.”

That would be the masses that can afford a $35K car, but that said, Tesla received roughly 400,000 reservations each of which cost $1,000. In other words, people ponied up $400M for a car that does not exist yet! Along the way, Tesla launched the Power Wall and is changing manufacturing. It is obvious that Mr. Musk has started something. Note that his big idea wasn’t an electric car. His idea was saving humanity from the ills of fossil fuels. The cars are means to an end.

There are countless blogs, papers, and books on this strategy, so I’ll let those more qualified than I am provide you with a deep dive into the genius of Tesla. For today, I want to write about a few key elements from the Tesla strategy that I have found to be critical for innovation and for terraforming creativity. These elements include:

1. A Big Idea that is arguably insane
2. Coming at the Big Idea sideways
3. Delivering Point Value along the way to the Big Idea
4. Finding “dual uses” for innovations needed to get to the Big Idea

Let us discuss each in order.

A Big Idea

I once attended a Web Summit conference where a Google executive said that 10X is not worth pursuing, but 100X is. 100X is arguably a Big Idea no matter what it is. For revenue, this would mean going to $400M from $4M. For savings, it would mean decreasing labor costs to 40 people from 4000. For production, it means going to 100,000 units from 1,000. Even talking about these numbers requires intestinal fortitude that many companies may not have.

An executive colleague of mine throws these kinds of challenges at me regularly. It is why I love working with him. It also causes a momentary flash of “the old man finally lost his mind” followed by “fine… he may be crazy… but what if?” In that “what if” moment is where things get interesting. 

I believe we have achieved a moment in our evolution where the power of contemporary technology has outpaced the power of our imaginations. In other words, we could achieve so much more with the technologies that are available to us right now, if we could just expand our vision. Yes, there is much work to be done, but I am convinced that we have reached a unique moment where we suffer from a lack of imagination, not of technology. The hard work is in learning and making your way to the solution with the tools that are all around us.

What are your 100X big ideas? Try a few of the following thought experiments to get you going:

1. Is there a market your company cannot penetrate for some structural reason? Then build a new structure in parallel to creatively destroy yourself.
2. Is your headcount growing linearly with your revenue? Then focus on building factories that can build factories (where a factory could be Chef).
3. Are your products losing their edge in the market? Reimagine your company as a pantry and see what ingredients you already have to make a new product. More on this later in another context.

Come at it sideways

Once you have your 100X Big Idea, now everyone thinks you are nuts. Congratulations. The challenge now is to find a way to decompose the idea in to components that deliver incremental value to fund work on the Big Idea without everyone knowing that you are working on the Big idea. Mentally I always enter in to this exercise by conjuring an Ishikawa diagram, also known as a fish bone diagram.

An Ishikawa diagram is a cause and effect analysis the people typically use to trouble shoot some event. In our case the Big Idea is the event. We are going to pretend that it already happened and it is perfect. Now we just need to put together an Ishikawa diagram to map out the innovation that would have to happen in order to realize it.

Next, we need to find branches in that diagram that are organizationally attractive, that your team can deliver quickly, and can generate some capital, savings, production capacity, etc. The goal here is to find some close in problem that exists in the market or the organization that we can simultaneously mitigate with research in the Ishakawa diagram that also drives the Big Idea.

Deliver Point Value on the way to the Big Idea

I always starts with a vision paper describing some Big Idea. The process of actually writing out a position, versus whipping up a Power Point, enables you to really think about the angles of attack. Call me old fashioned but I think the white paper is a lost art that affords the depth of thinking a Big Idea, and your investors, deserve. Mind mapping software is a great way to quickly flesh out such a paper and contemplate your Ishakawa diagram. With a well-articulated position paper in hand and we can break that Big Idea into stepping-stones using an Ishakawa diagram that delivers point value while helping us learn important lessons that drive us closer to realizing the Big Idea. 

This is an imperfect science fraught with pitfalls, blind alleys, and the occasional monster. To ameliorate the associated fear, think of this process as a series of experiments because, well, that is exactly what it is. State your hypotheses and then construct your experiments. If those experiments go differently than you expected, you could still look at the results objectively and the lessons learned independently. If they turn out the way you expected, then you end up with new revenue, savings, production capacity, etc.

Dual Use

While point value is a planned part of the journey to the Big Idea, dual use is often opportunistic and usually a long shot. Point value is also typically meant for those who will benefit directly from the Big Idea while dual use is for people who at first glance have nothing to do with the Big Idea. NASA has, arguably, one of the Biggest Ideas around: space exploration. 

What is not discussed much, however, is the spinoff value from their research, from LED’s to radial tires. So while I’ve not ridden in a space shuttle (yet), I have benefitted greatly from LED lights. The most famous dual use example from Tesla is their Power Wall technology that was a spinoff from their battery manufacturing capabilities. Next up, expect Tesla to sell manufacturing technology.

These dual use innovations are opportunities that can help further fund an R&D team while it continues to push forward towards the Big Idea. It can also open up additional opportunities for your investors and benefactors. I have seen many examples where some dual use innovation became the impetus to create a new team or even a new company completely disconnected from the original R&D team.

Seeing these opportunities is an art all by itself. To do this well, start by thinking of your R&D team as a company. Look at the entire portfolio of research, skills, and other assets and think of it as ingredients in a pantry (you probably spend most of your time thinking about the pantry). Now imagine that, through no fault of your own, your parent company has gone bankrupt and you need to liquidate. What other recipe can you make with those ingredients? Ask yourself how each component could be used in a different way, in different markets, in different industries, etc.

Distractions

There is, however, one major flaw in this approach – distractions. Point value and dual use can cause major distractions, pulling you off course or otherwise slowing you down. Just ask Mr. Musk about the Model X, the car that he now says should have never been built.

The Model X is a marvel of engineering. The gull wing doors are truly a remarkable sight. The air filtration system is, literally, sufficient to stop a biological attack. Ultimately, however, I doubt that any of those features were on the Ishakawa diagram to produce the Model 3 and save humanity from the ills of fossil fuels. They could have built a great car with towing capacity and SUV styling without the distraction of the gull wing doors.

I have applied this methodology over the years with increasingly effective results. The trick appears to be doing them consciously, as Mr. Musk is doing with Tesla. While there may be only one Elon Musk, these techniques will help you on the path to achieving your Big Idea.