Enterprises of all sizes have confused novelty for innovation. Innovation institutes change: changing the offering, changing expectations, even (for the lucky few) changing the game. Novelty’s only benefit is its newness; like the smell of a new car, it rarely survives extended contact with its first customers.
The pressures of the changing market have compounded that confusion with the desire to do anything, instead of the right thing. In the arms race for what’s-new, too often innovation at scale becomes a synonym for “expensive diversion.”
Whether incremental or disruptive, enterprise innovation has to be relevant by being repeatable. Innovation must be rooted in the core competencies of an organization; their product portfolios must be a mirror of an organization’s value proposition.
Maintaining competitive advantage when the shelf life of a product has shortened requires producing change-making, unique products regularly a core capability of any enterprise.
Customers have voracious appetites for information. They engage so casually that retention is now the gold standard of success — ahead of capital return. Seamlessness between products and services within a portfolio is table stakes. The familiarity and effortlessness of personalized and relevant experiences are no longer differentiating.
This market is changing, and the customers are the ones changing it.
The enterprise is a victim of these customer-led changes, and it’s not proactively responding to them. Enterprises copy competitors – putting out something new, not something innovative. These organizations have tuned their process and people to maximize throughput, to push features. But while they’ve gotten skilled at getting software written, they’ve not gotten good at putting a useful product into the hands of their customers. In the quest for repeatability, they are only repeating what’s around them, not building the capability to release innovative products regularly.
As new markets are created or singled out for disruption, customers are spoiled for choice between incumbents, innovators, and fast-followers. In the rush to squat on any perceived opportunity, most marketplaces have turned into bowls of oatmeal: uninteresting, homogenized, different only in incidentals. Competition is on price and brand, not offering, features, and value—in short, they’re not competing on product-market fit.
The Arms Race, and its Insanities
As organizations join the dysfunction of seeking out novelty, they accumulate useless products: products with no true customer, products that fulfill no genuine need. Their portfolios suffer, service offerings become confused, and they waste limited resources on development and maintenance.
Most of the products without true market fit are in lock-step with existing strategies and expectations; it’s like trying to make water wetter. Remember that innovative products change the circumstances they’re put into. Portfolios of these products are full of plays for incremental revenue. They neither fall flat nor are success stories. An organization’s faithful customers may get some usefulness from it, but it doesn’t make them more loyal. A boring product doesn’t attract new business.
Even worse, the opportunity cost of missing other potential successes is compounded with the cost of maintaining a failure. These products act like holes in an organization into which you throw money. They compete for the shrinking resources and attention of the teams supporting them, and draw that attention away from potential opportunity.
An outsider’s perspective may see these organizations with long lists of product lines and services offered as success stories. However, as the cartoonist Kin Hubbard noted, “A bee is never as busy as it seems; it’s just that it can’t buzz slower.” More code goes into production, more press releases go out, but without the benefit of market fit, the investment never takes hold and never achieves innovative change.
For each spendthrift and copycat, there’s an equally pitiable organization with stacks of long-tail market research, an impressive collection of missed opportunities, and assets that were launched too late. They are the slow-followers, or the not-fast-enough ones. Their organization is tuned never to be wrong. They waste valuable time in perfecting the first release, or worse - perfecting its requirements. The products they squeeze through a rusted development process have all the wow of a “yes-and?” and compete uphill against established players. They lag the market both in terms of their offerings as well as any core capability to repeatedly release products to the hands of customers.
Their solution is briefly new, but often not novel, and rarely innovative.
These twin institutional insanities — fear of missing out and fear of building the wrong thing — paralyze an organization. These insanities create organizations that prioritize quantity over quality, where anything is a success, or quality over relevancy, where perfection exists at all the stages of the process—word-perfect requirements, pixel-perfect designs, defect-free code—except the last and most crucial one: Product-market fit.
Paralysis hides the awful truth that quality, relevancy, and even quantity are the triptych of the core innovation capability an organization needs to be successful in this market, where the customers are leading change.
Eventually that paralysis can so severely affect an organization without a repeatable innovation capability that its value proposition becomes vulnerable and less relevant, forcing “bet the business” change initiatives. Innovation moves from being desirable to being critical, but the capability to get there is just as bad as it’s been.
The culture that created the paralysis of inaction or any-action has to be remediated while also trying to find something that changes the game. Building an innovation capability that is adaptive to market change and responsive to the customer is undeniably hard work. Instead of working toward it over time, endangered organizations take on the impossible task of building it all at once. Renowned systems theorist John Gall says:
“A complex system that works is invariably found to have evolved from a simple system that worked. The inverse proposition also appears to be true: a complex system designed from scratch never works and cannot be made to work.”
This is as true for organizational design as it is for products. It is also the cardinal sin that most enterprises commit, pressuring the success of a first release by overloading it. The most expensive way to see if something works is to build the entire thing, then release it to customers.
The story of enterprise-grade innovation is littered with one compromise after another, and the landing from dream to feasibility in those environments is never soft.
The same software that once fueled growth is now too slow to expose to the end user. It wasn’t even built with that purpose in mind. Information and process silos that grew up over the years have rope bridges between them, when customers want superhighways. The underlying technology limits and shapes customer experience. Maintaining feasibility and mitigating internal complexity become measures of activity, not addressing the customer’s need easily and efficiently.
The weight of this complexity is a pressure cooker for ideas. The path from the boardroom whiteboard to the hands of the customer doesn’t produce diamonds, but rather something with all the attractiveness and usefulness of coal.
To paraphrase Edmund Burke, “To make us love your product, your product ought to be lovely.” A key barrier to the loveliness and relevancy of a product is how long the path from the boardroom to the customer is. Strategy, product definition, and design are stop-gate waterfall processes that get dropped into an “Agile” delivery engine.
Enterprises have become skilled at building software, but still lag in building products.
In competitive and crowded markets, an enterprise can’t afford to mimic other solutions and compete on price or brand. Functional organizations compete on features and capability, and smart organizations compete on value and fit. Product-market fit is the true hallmark of relevancy: a product meets a core user need in an achievable and usable way. As the gap between the goals and activities of the user and the product offering and service design shrinks, the fit grows.
Finding that fit requires discovery, iteration, and being wrong just enough to be right.
Doing Innovation Right
Building a product requires discovery and synthesis: combining strategic direction, opportunity management, usability feedback, ethnographic and qualitative research, analytics, competitive analysis, and the technical skills and track record to pull it off. An innovation team can’t work with just all that raw data — data has to evolve into insight.
There is a thread of music in that sea of noise, and synthesis can turn that little ditty into a symphony. Convergent thinking can take disparate and opposing ideas and fit them into a framework where they can live side-by-side. An enterprise with a core, repeatable innovation capability must go through cycles of divergent and convergent thinking over the lifecycle of an initiative to discover and synthesize new information.
Building a product right means getting out of the room and away from the whiteboard; inside the room there are assumptions and groupthink. A recent Kellogg article on facilitating small group sessions cited a study where in typical six-person meetings, two people talk 60% of the time. What’s worse is sharing the airtime only gets worse as the group gets larger. Outside of the room, all of the people who “know exactly what the customer wants” are faced with actual customer feedback. Outside of the room, there’s the oxygen for taking a different perspective. Outside of the room, it’s safe to be wrong.
Creating winning products means discovering and delivering innovative new offerings, offerings that introduce change. As the organization paralyzed by the fear of being wrong will tell you, the biggest challenge to overcome is uncertainty. How will the imperative for the organization create value for the user? How will the product change users into customers? How can we take what’s-unique about this organization and make our solution a mirror of that? How do we shrink time-to-market, and build a product that evolves as the market changes?
Thoughtworks’ approach grew from the Lean principles of quick engagement with the market for the right product, built right: It’s a potent mix of practices, approach, and learnings. It represents a rough representation what a truly repeatable innovation capability would look like at the enterprise level.
1. Discovering the Market Need - Confront the unknowns of a product’s business model and customer need up front. The insight gained from a qualitative research and analysis cycle builds the confidence and understanding an organization needs to enter the market with an addressable solution. Experimentation with prototypes develops a framework of usability and expectation that acts as a scaffold for teams to pursue an opportunity.
2. Quick Pursuit - Endless research and experimentation won’t build more confidence, though. It generates noise and delays releasing a product to the point the opportunity may be gone. We quickly scale up using the scaffolds from discovery to pursue the market opportunity we’ve identified. Building a testable and viable product requires the discipline to focus on what makes a product unique in the market and innovative to its users.
It’s the work of weeks, not months and quarters. Transparent, collaborative development practices get a product into the hands of customers quickly.
3. Test, Learn, Pivot - Lean product development relies on getting just-enough information at the right time. During the discovery phase, determine that real needs exist in the market and that the organization is uniquely suited to addressing that need. A response to that need can then be built, and using customer feedback and usability test results, tailor and increase the efficacy of the solution. Experiment with real customers to get ideas to market quickly.
Based on the feedback from real customers about a real solution, respond actively to how well the prototype has addressed the customer need discovered earlier in the process. Sometimes it’s right immediately; double down on that success of the offering to build adaptive and scalable technology. Other times, refinement and tuning the approach is necessary, or trying something else entirely. By keeping the cycle from whiteboard to customer feedback short and investment tailored, being wrong is a way to get better, not a sinkhole for initiatives that are both wrong and too-big-to-fail.
4. Ongoing Discovery - I’ve already discussed how the market is changing, and how customers and users are driving that change. Discovery needs to be more than a point on a timeline; it’s an ongoing activity that increases the value and defensible position of a innovative product. Having rapid responses to changes is useless without the information and insight to respond to — discovery keeps teams plugged in and empathetic to customer need. Greater empathy and engagement with the market creates products with better and most lasting fit.
5. Scaling and Evolving the Opportunity - Discovering that a product’s value proposition has applicability in adjacent customer segments or even vertical industries is a precious opportunity to scale and evolve the offering. Explore, diverge, and discover applicable solutions, how to grow an innovative product offering into a core competency, and how to defend its market positioning.
Stop Confusing Novelty for Innovation
Organizations duplicate other enterprises’ market engagement without evaluating how their offering will reflect their unique positioning and capability. Enterprises have confused novelty for innovation and miss the chance for building change-making products. This dysfunctional race builds markets crowded with barely-different offerings that compete on things that don’t matter: Price, features, brand.
While the customer suffers in choosing between identical options, organizations have adopted the cost in maintaining and supporting their me-too solution. This expense gets compounded by the opportunity cost of missing the more valuable, innovative play.
Fear of missing out on an competitor’s perceived market opportunity is usually joined with the fear of being wrong — exacerbating the costs of chasing an undifferentiated solution with perfecting requirements and building too much without real feedback.
Innovative product opportunities are often tempered with the constraints of enterprise software: Scalability from day one, leaning on systems that were fit for their operational purposes but not digital scale. Maintaining feasibility and mitigating internal complexity become measures of activity, not addressing the customer’s need easily and efficiently.
Avoid the twin institutional insanities of (1) the fear of being wrong and (2) fear of missing out by using iterative, just-enough discovery. Lean principles can synthesize broad and contradictory pieces of information into a coherent, self-consistent representation of the true opportunity.
Experiment with your ideas quickly; build empathy with the customer and understand their motivations. Tightly relating an innovative products offering with customer need builds a strong and defensible market fit.
Develop just-enough solutions at the right level of maturity to pursue the opportunity with a rapid response. Understand when to advance to the next stage, what the right level of confidence looks like, and how being first and being successful can co-exist.
Continually listen to your customers, how they use your product, why they’re interested in a competitor’s offering. Learn from everything, but only respond to the smart things.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.