2 Minute CMO Guide to Better Innovation
What is this 2 Min Guide?
Ideally, you can consume this post in 2-5 minutes. The goal is that once you finish reading, you have a founding understanding of how an innovation program can significantly improve your product design and/or marketing. To make this piece consumable, the definitions are high level, the examples & details are simple and kept to a minimum.
The hope is that you get the basics and become interested enough to read more.
What is an Innovation Program?
An Innovation Program intentionally re-organizes (budget, time, process, people, milestones) your team to create increasingly innovative marketing and/or products.
What is the goal of an Innovation Program?
While all teams strive to create innovations, this brand of innovation program focuses on created leaps of innovation.
What is an Innovation Leap?
An innovation leap is a complete reframing of a product, customer need, or market. These innovations create new markets, which increase market values, block competition, and generate profit.
How is this different than traditional approaches to innovation?
Traditional innovation is end-product focused—for example, your website, product features, or banner campaign.
In a traditional innovation approach, the bulk of your time, money, stress, and effort focuses on execution. For example, kanban boards focus on what your making and when.
Traditional innovation places less focus on the causes of the end products. This cause is the intelligence and ideation that goes into generating new and disruptive products.
The approach promoted here balances a team's focus teams on the intelligence, process of idea generation, and execution of these ideas.
The approach does not eliminate excellent strategies for managing execution--for example, the kanban board. Instead, it adds tools for generating ideas (e.g. novel brainstorming) and managing ideation (e.g., hypothesis catalogs).
What does a focus on "intelligence" look like?
An intelligence focus means seeing all of your activities as ways of accumulating and more effectively using intelligence (or knowledge + decision making).
The KPI for this approach is learning on investment (LOI). The goal of this metric is to assess:
How much have we increased our team's understanding of our customers, technology, distribution channels, etc. with each sprint
How well are we using that intelligence to generate better marketing or better products
In day-to-day practice, you realized this goal through:
Reframing ideas as research questions
Reframing marketing or product features as experiments
Time and budget spent on tools and source material to aid research.
Time and budget spent on generating organization or team-wide models (e.g., customer model)
Distribution of those models organization or team-wide
New approaches to brainstorming
New approaches to idea validation
Project Managers as Research Managers
Leveraging marketing or product performance data (i.e., analytics) as inputs to your intelligence program
Measuring additional, ideation-focused metrics (we typically measure how well our development and product performs, we also need to measure how well we generate ideas).
Why this structure better reflects reality.
Your market is in continual flux and you can never predict how they will react over the long term. Even if you have historical data and sustainable market results, a new competitor can invalidate past performance.
When faced with uncertainty, companies tend to focus on what they can control: internal development and operations. However, the necessity and benefits of innovation require embracing the market unknowns, seeking to understand them, failing, and continuing.
Your long-term success depends on your accumulated intelligence and the speed at which you can use that intelligence to continue to provide value to your customers. Rebalancing your efforts to spend equal or more effort on your marketing or product's intelligence phase is the ideal way to build long-term success.
How does an Innovation Program work?
I define a balanced, intelligence-driven Innovation Program as a cyclical process with the following phases:
1. Acquiring data from multiple sources (e.g., analytics, research reports, neuromarketing, customer interviews, etc.)
2. Analyzing that data to create and enhance your models
Ideally, these models are causal; that is, they help you understand "why" and not just a correlation (e.g., more people click our orange button than our blue button). For example, our customer model predicts that a desire to feel strong in order to protect their children can drive fathers to purchase.
3. Using those models to generate product or ad ideas framed as research questions.
For example, given what our model predicts, will fathers respond to a picture of an athletic dad holding his baby in the banner ad?
4. Using those ideas (research questions) to develop experiments. These experiments become the campaigns, ads, or product features
For example, to test our customer model's validity, we will create a banner ad with a picture of a fit father carrying his baby and a headline addressing fathers. This banner needs to produce a statistically significant improvement over our baseline ads that only feature a picture of a baby's face.
5. Develop those campaigns, ads, or products.
6. Launch them
7. Measure their performance
8. Feeding this new data back into the data acquisition phase.
The process also includes reflection on the Innovation Program itself:
1. Review the performance of the innovation process
2. Generate ideas in the form of research questions to improve the innovation process
3. Implement the changes
4. Measure the results
What changes can my team and I expect when transitioning to an Intelligence-Driven Innovation Program?
Time
Innovation takes time. Intelligence takes time. If overburdened, teams tend to jettison long-term tasks. To counter this self-protective instinct, you must allocate and protect the time given to the innovation program's early intelligence & ideation phases.
Budget
Intelligence takes money, both in the form of the opportunity cost of fewer iterations per year and in the purchase of data or new systems that support an enhanced intelligence phase. As the leader, you, in part, signal the importance of this new approach through the allocation of budget.
Process
In traditional innovation approaches, teams generate ideas in one-off meetings. Those ideas get rejected or accepted by the boss. The process then moves as quickly as possible into implementation.
An intelligence-driven innovation program is very different. Leaders distribute a significant amount of decision-making authority while maintaining accountability. Additionally, leaders add research, modeling, and ideation workflows. Further, the team regularly evaluates each section of the process (e.g., are we brainstorming most effectively?).
Meta-Ideation
Your innovation program will allocate time, budget, and resources to evaluating and abstracting previously generated ideas to see if there are leapfrog opportunities. You will ask, "can we reframe what we are doing here?" We make robot vacuums, but what if we could become a healthy-home platform. How might this help us expand into other markets? Or, we build electric cars, but are we really an energy company?
Meta-Innovation
Is this innovation approach working for us? How do we know? When do we upgrade our process? A well-designed innovation program will budget time and resources to review your performance. In the same way, you redesign your product as part of your innovation program, you also continuously redesign your innovation program.
Team Interactions
You usually have a social media manager, a content manager, and an SEM manager, all doing separate tasks. In this innovation program, the team works together, perhaps even working in pairs (similar to pair-programming). Everyone is accountable, with the loss in time from pairing or group work made up in more effective marketing and products, with fewer errors.
What can an Innovation Program do for my Marketing & Product Development?
A balanced innovation program aims to create the conditions by which innovation happens more efficiently, consistently, and with more impactful results.
This approach should result in marketing and product improvements that increase sales, reduce overall costs, and generate strategic advantages. Some of these improvements may come from more significant incremental improvements, but the true focus of an innovation program is big innovation leaps that open new markets and redefine existing ones.
How does an Innovation Program fit into my team's existing creative process?
Depending on your current program, a more balanced innovation program may wrap around your existing workflows or, over time, replace it.
What organizations are these right for?
Most.
The vast majority of organizations require ongoing innovation to survive, and innovation leaps to thrive. Markets, society, and competition mean businesses must continue to innovate, or they risk obsolescence. A heavy emphasis on just the end-product, while improving short-term results, can cripple your ability to see ahead and make the giant leaps requires to stay in front of fast-moving competitors.
What does it give me that I can't get in other ways?
Increased Profit.
By innovating more efficiently, you will generate increased sales while reducing expenses.
Industry Redefining Innovation.
By reframing your existing product or marketing, you can create new categories of products that generate new revenue streams, leap over the competition, and position your organization strategically.
Increased Market Value
The markets assume you are going to continue to improve your product. Analysts factor yearly improvements to your product and marketing into your current market price. The only way to reliably increase your market value is to surprise the market with an innovation leap.
How long will it take to implement?
Weeks to a year.
Some teams are itching to innovate and welcome anything that might help them. Other teams resist change. Further, some teams are more balanced in their approach to the intelligence + ideation phases of the innovation process and require fewer adjustments. However, regardless of the situation, it's important not to underestimate the amount of time necessary for a new innovation approach to settle in and become the norm. Your team will especially require patience if they frequently operate in crisis mode since these are teams that default to a short-term focus out of necessity.
Will a balanced innovation program affect delivery time?
If your current approach to innovation is unbalanced, yes.
Creating a balanced innovation approach will likely require rebalancing the time and resources toward the intelligence, ideation, and reflection phases of the innovation cycle. A team can't easily rebalance a design-develop-release cycle where they allocate 80% of their time to development and release. Since typically those phases are already as short as possible, you will need to take additional time from future iterations. However, you will likely make up what you lose in total iterations per year in the quality of those releases.
If your approach is balanced, no.
If you already have a more balanced (intelligence + ideation = development + release) innovation approach, there may be only a minimal amount of time needed to adapt.
How will it give me an unfair advantage?
Leaps of Innovation
The market and your customers assume you will continue to innovate. The market factors this into your market price. Your customers factor this into your purchase price. Your competition, specifically your small and nimble competition, will always attempt to innovate ahead of you.
When you reframe your market or product and create an innovation jump, the market drives up your stock price. Your customers are willing to pay more, and your competition is continuously playing catchup…and usually losing.
What are good examples of this?
Tesla
Before Elon Musk's takeover of Tesla, the founders had an innovative idea: make electric cars fast and sexy. This approach was a reframing of the electric car's existing paradigm, which was slow and practical. Now, Tesla is in the ongoing business of reframing. They have reframed their factory to become an innovative product, and they've reframed the car as an energy storage device and are now in the energy business.
Apple
Apple was a garage computer maker. They reframed themselves into an interface designer and, in doing so, redefined the computer. They then reframed themselves as interface developers and created new ways to interface with data: the iPod, iPhone, etc. In doing so, they reframed handheld devices as fashion accessories. Along this path, they redefined themselves as a platform and marketplace for content. And now, they are redefining themselves again as a content producer.
How can my team get started?
If you are open to exploring this brand of intelligence-driven innovation more, there are several things you can do.
Read - Subscribe to our newsletter. We will continue to put out short guides like this and more detailed posts.
Experiment - The process you develop will be unique to the "fingerprint" of your team. The key is intention & effort towards balancing intelligence & ideation with development & release.
Read More - A full post covering the design and development of Innovation Programs is coming.