Stop Typing. Start Testing
Barry O'Reilly
Co-Founder and Chief Innovation Officer at Nobody Studios | Launching 100 Companies Over the Next 5 Years | Keynote Speaker | Bestselling Author of "UNLEARN" and "LEAN ENTERPRISE"
“If I knew where all the good songs came from, I’d go there more often”, so said Leonard Cohen when asked how he wrote classic hits like Suzanne and Hallelujah. Formulating the ideas behind timeless hits is not an easy task – serendipity, stimulation and skill all equally play their part.
Yet in large organizations, a lack of ideas is rarely the problem. Business leaders and executives are inundated with suppositions, proposals and pitches on how to increase, invent and imagine new revenue streams for their organization. Most often, the biggest challenge is not conjuring up the concept… it’s killing it as quickly and cheaply as possible.
In The Principles of Product Development Flow, Don Reinertsen’s research concluded that ~50% of total product development time is spent on the ‘fuzzy front end’ i.e. the pitching, planning and funding activities before an initiative starts formal development. In today’s fast paced digital economy the thought of spending half of the total time to market on meetings and executive lobbying with no working product to show isn’t just counterproductive and wasteful – it’s ludicrous.
Furthermore, the result of all this investment is often an externally-researched, expensive and beautifully illustrated 100-page document to endorse claims of certain success. The punch-line presented through slick slide transitions is “All we need is $10 million, two years, one hundred people and we’ll save the business!” Science fiction, theatre and fantasy rolled into one.
What is really needed is a systematic, evidence-based approach to managing the uncertainty that is inherent at the beginning of any innovation process. Our purpose when commencing new initiatives is to collect information to help us make better decisions while seeking to identify unmet customer needs and respond to them.
New business possibilities are explored by quickly testing and refining business hypotheses through rapid experimentation with real customers. Our goal is to perform this activity as early, quickly and cheaply as possible. Lengthy stakeholder consensus building, convoluted funding processes and hundreds of senior management sign off sessions is not.
Decisions to stop, continue or change course must be based on the ‘real world’ findings from the experiments we run, not subjective HiPPO (Highest Paid Person’s Opinions) statements supported of how they’ve “been in the business for thirty years and know better”.
Imagine a world without costly executive innovation retreats, and where the practice of pitching business cases at annual planning and/or budgeting cycle meetings is extinct. Instead, a similarly sized investment is assigned to small cross-functional teams to explore given problems, obstacles or opportunities throughout the course of a year. Over a short fixed time periods a team creates a prototyped solution to be tested with real customers to see if they find it valuable or not.
We are investing to reduce uncertainty and make better decisions. You are paying for information. The question is really how much do you want to invest to find out?
In his book, How To Measure Anything, Douglas Hubbard studied the variables that hold the most information value when making investment decision is software projects. The results showed two important insights, how much a project cost and how long a project is going to take held little significance in terms of understanding if a project would be successful or not. What really matter was (1) will the project be cancelled, and (2) will anyone actually use it.
Now, let’s compare how investment decisions are made in the traditional and experimental worlds.
A traditional business case is a set of untested hypotheses and assumptions, backed up by subject matter experts, case studies and market research. In an experimental approach to innovation, real data is collected from working product prototypes that have been tested and informed by feedback from real customers. Which of these strategies do you believe will most effectively provide answers to Hubbard’s most valuable variables?
Similarly, what happens next? In a traditional world once a business case is signed off, detailed requirements are created and a project initiated to build, integrate, test and hopefully, release the entire recorded product requirement backlog – only once all the requirements have been captured, built and release will we find out if our customer will use any of it. With an experimental strategy, we already have validated or invalidated our early working product prototype upon which we can stop, pivot and/or immediately build new features and enhancements based on the customer feedback we collected through our early testing cycles.
Finally, and the most telling and critical piece, the most expensive way to find out if a product works is to build the entire product and then release it. The key to rapid experimentation is not to prove that all our ideas are winners, but to kill losing ideas early to cut out wasted effort, time and further poor investment.
Summary
Not all our ideas will have a positive impact on the business. By testing early and often with the real people we are designing for – our customers – we can use their feedback to make more informed and evidence-based investment decisions for the future success of our business.
Like Cohen said, “I think you work out something. I wouldn’t call them ideas. I think ideas are what you want to get rid of… [they].. dissolve into deeper convictions”.
Next time you have a new initiative in your organization remember these six principles:
- Stop typing documents. Start testing with real customers as soon as possible.
- Our mission is to discover as quickly and cheaply as possible the most valuable information to base further investment decisions on i.e. will the project get cancelled or will anyone use it. Optimize for this.
- Define success before you start experiments. You need to hold yourself accountable to the results of your experiments to make decisions to stop, change course or continue with your activities. Doing that after the fact isn’t an experiment. It’s “Experiment Theatre“.
- Form small cross-functional teams and equip them to explore problem domains at speed.
- When uncertainty is high favour shorter, faster feedback cycles to generate information to make the next decision.
- Remember true progress is as more about killing bad ideas early than proving you’ve discovered the next unicorn idea.
References
Leonard Cohen: ‘All I’ve got to put in a song is my own experience’
How To Measure Anything, Douglas Hubbard
The Principles of Product Development Flow, Don Reinertsen
Business Mentor/ Chair-Walk to End Alzhiemer's 2017
8 年John passed away last year at 92. However, John and I moved everything to Harrisburg and opened in October. The very first of January, he became quite ill, for the first time and spent 4 months in the Hospital. Afterword, his involvement in the Company was very minimal. My primary reason for becoming involved with LinkedIn, was to try and assist young people who wanted to become Entrepreneurs, in understanding there are varying avenues to becoming successful without large investments of capital, nor streamlined Technology, and a considerable amount of wasted time and money on the perfect well read plan to becoming a millionaire. No one respects the LinkedIn Community more than I, and feel it to be the largest resource for credible feedback on particular areas of Business in the world. I don't spend an incredible amount of time online, but when I do, usually to just add my 2 cents as many times, our members tend to complicate issues, that are just not that complicated. Creativity,Instinct, and Intuitiveness were the 3 strongest assets of success for me. I never built lavish multi million dollar companies. In fact, when reviewing all my opportunities, everyone was addressed according to worst case scenarios. Fortunately, being blessed with certain instincts and always a student of all Business, my personal investment of $3,270 that either personally created or assisted other companies through 1099 contracts, close to a Billion Dollars in additional revenues. In many cases, I wouldn't suggest certain things, but not everyone, but many people could do the same thing. The main difference was that I always looked forward to solutions and never spent time on the fact, I screwed up. One day in the near future, my intentions are to go back 40 years and explain for my grandchildren, every thought process that I brought to each opportunity. Starting and learning at the age of 24 with my very first business, I negotiated a deal that was really simple P & L evaluation but earned $165,000 in two years as opposed to my salary, which would have amounted to $24,000. My apologies for the length.
Expert en organisations agiles ??♂? et produit ?? chez Rhapsodies Conseil | Libérateur de tous les potentiel de votre organisation ??
8 年Very good article. Thank you.
Business Mentor/ Chair-Walk to End Alzhiemer's 2017
8 年Hello Barry, This was a great article! Hopefully some CEO's will see it and a light clicks on. The content of the Article is undeniable. However, did you stop to think how many highly paid individuals just got cut out of what has become the norm. I read it through the eyes of a life long entrepreneur who through whatever means, chose successful opportunities based on what I considered to be credible, and did I KNOW, the challenge could be accomplished. There were different thought processes, but only after, I made the decision to jump. It's similar to so many experts in our LinkedIn Group, taking nothing from them as in their respective fields, much, much smarter than I, offering feedback on the infamous Business Plan. I've been successfully involved in 8 different Industries and yet to develop a Business Plan, as the dimensions, variables, and unexpected flaws never end. One Example that may parallel with your article: After closing one chapter, I went to North Carolina to visit my Father In Law. After 15 years owning a Country Western Store, he was in bankruptcy. Long story short, John, move what's left to PA and see what we can do. No planning, first thought, revenue needs to be year round. Added Motorcycle Leathers, Fashion Leathers, need to be unique, added NFL Jackets, Nascar, Cartoon Characters, etc. NEVER ONCE did I think in terms of Pig Leather, Cow Leather, Lamb, patched, or quality. I didn't send someone off to find out everything I needed to know about leather. Some hit some didn't, but I had cash flow to work with. 3 years AAA Rating D&B. Lastly, he had a small 20 page website. First night on, responded to a few emails. Wow, thanks for getting back to me so quickly, most sites are 10 days, if at all. Only thought pattern was some things here, didn't think about finding the greatest web designer of all time, found a self taught back woods technician and 6 years later, 5000 page e commerce site, most travelled Leather Apparel site in the world. Big Box stores were still using internet as a directory to their retail stores. I guess if money is irrelevant do it any way you want. I'll stick with JUST DO IT!
Solutions @ Alkimii
8 年Great article, Barry.