Stop Struggling with the Upside/Downside Risk of Innovation

In my work as an advisor, coach, and mentor with business leaders and intrapreneurs at incumbents, and with founders at startups and scaleups, and as an angel investor - one key question always comes up - what's the future potential of this specific business idea?

And then starts the process of forecasting and simulations of pessimistic, base, and optimistic scenarios- aka holding the crystal ball. Unfortunately, this is unavoidable - because one does need to understand the business case - will it be successful or not? Will it deliver the desired goals and impact or not?

Let's take a look at some innovation successes and failures.

??Post-Its was an accident, and 3M certainly didn't visualize it becoming a multi-billion $ business. ??When payment by credit card was first rolled out at McDonald's nearly 30 years ago, the initial response from customers was - it wouldn't work; we don't need it... And, as they say - the rest is history! ??The first time the New York Times?wrote about cheeseburgers?in 1938, they ranked the burgers as a Californian eccentricity ??And, the same New York Times, in 1985,?reported?on the tragic demise of laptops, saying, "From now on, airplane tray tables would hold beers and cocktails instead of computers."

At the same time, we have examples such as ??Microsoft Zune, ??Apple Newton, ??Colgate Lasagne, ??Google Glass, ??Ponds Toothpaste, ??Harley Davidson perfume, and ??Tata Nano, which were expected to be the next big thing BUT, didn't go too far.

While it is easy to recognize the significance (or lack of) of different innovations retrospectively, their true potential (or lack of) often doesn't become apparent until many of the applications are actually developed and taken to the market.

Per results from a recent survey published by MIT, as shown in the image, the R&D leaders from 300 large corporations across seven industries in seven countries show some fascinating insights - they PREDICTED the outcomes (aka success) of their innovation efforts COMPLETELY WRONG.

This reminded me of a famous quote by Bill Gates.

“Most people overestimate what they can do in one year and underestimate what they can do in ten years.”

? The Conundrum

When executives rely on their initial assessments of an innovation’s radicalness (and hence the potential upsides), they typically tend to avoid or skip the hard work needed to purposefully consider a broad array of contexts and industries the idea might affect.?

In my experience, this is often because of a dogmatic preference for focus, a lack of expertise and knowledge of different markets, and the fear of losing value from intellectual property while disclosing the idea wider, but rarely because of a lack of time (it's a good excuse but never the truth!).

?? The Solution

Often, unanticipated use cases emerge and, in many instances, are far afield from those that were originally imagined, and, in fact, sometimes turn out to be bigger successes than the originally planned value proposition.

Instead of such serendipity, Innovators should discover proactively to identify the different possibilities and use cases the invention or idea might offer. And, a very simple yet powerful question is the answer - what else can it be used for (in existing or morphed form), and where else could this be a big play?

One might imagine that such 'pre-anticipated' and 'pre-planned' innovations could lead to the innovation project or the business venture becoming more difficult to manage than 'unanticipated' and 'incremental' innovations. But, I always say - it's a nice problem to have. Ultimately, innovators must be open to and, in fact, enthusiastic about taking advantage of surprises.

Once you see the upside, you can create a multi-generational plan and a multi-horizon value proposition roadmap showing the journey your venture might take. Remember, it's a roadmap - not cast in stone. But, it will certainly inspire you, your team, investors, and partners that you are aiming big and long term (while staying focused and grounded in the immediate in the short term).

And, in case the results of your discovery process show limited potential - at least you know the limitations, and can make decisions on whether to stay invested or pivot.

So, 4 Cardinal Rules for Innovators:

? Problem Solution fit before Product Market fit

? DIVERGE and then CONVERGE

? AIM and EXPLORE long-term and FOCUS and EXPLOIT short-term

? Planned Discovery rather than Unplanned Surprises

What's your experience as an Innovator and a Business Leader?

Do you agree or otherwise with the four cardinal rules?