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Killing Off the Eggs

By Evan M. Dudik

In the Business Maverick #8 I shared with you my suspicions that innovation in business isn’t all it’s cracked up to be. In fact, I leveled some pretty serious charges against innovation—enough to tear it down from its godlike pedestal in American business:

  • Often 70-80% of R&D efforts are dedicated to “fixing the past:” modifying or repairing past products and ensuring that current products are “backward compatible with past editions.”

Anyone who has suffered with popular office software applications—and their updates—knows what I’m talking about. As the saying goes, “when they update the software, they update the bugs.”

  • The “walking wounded.”. Often R&D projects linger too long. They attract champions, constituencies and soak up money.
  • Alternatively companies pursue pursuing projects only when they’re certain are “sure bets.”

I owe some clever executives four of my favorite innovation process ideas. But they all get to the poor solutions early, kill them off and get to the “good stuff” quickly.

The Sony Way—Acclerated Evolution

Here’s how Sony does it—a company rightly praised for it’s success at innovation, ranging from Betamax to Walkman to ___-disk to its dominant position in computer gaming—as well as for the quality of its products. And profitability.

We constantly have several alternative projects going. Before the competition is over, before there is a complete loss, we try to smell the potential outcome and begin to prepare for that result as early as possible. Even after we have consensus, we may wait for several months to give the others a chance. Then we begin to give important jobs [on other programs] to members of the losing groups. If your team doesn’t win, you may still be evaluated as performing well. Such people have often received my [Sony’s top R&D manager’s] ‘crystal award’ for outstanding work.

Wow! Look at the elements of this approach. It’s really quite sophisticated.

  1. Management has many projects for every solution. This means even more innovation. It means R&D management has less emotionally tied up in any given project. And it provides Sony itself with strategic options.

    Compare this to the large medical devices company in Business Maverick #8 that killed only 10% of its projects. Sony accelerates evolution by increasing the birth rate. And the death rate.

  2. Management makes the project teams compete. Management gets speed from interpersonal dynamics instead of relying on traditional project management props like deadlines, pep-talks, and go-no-go “gates”.

    It also means that project ideas get tested against one another. In the end the company gains more knowledge. And the knowledge created by the losing teams gets incorporated in the winning product. All this, instead of knowledge lying undiscovered, while an “all star team” pursues the one-and-only most promising route to innovation.

  3. It lets management identify, measure and reward MVPs—regardless of whether the team the innovator is on is the winning team or not. It separates the value of the contribution from the end result. So the innovator comes to regard his or her contribution rather than the product as the offspring to be proud of. And it always lives, even when the project is killed.

  4. It makes management decide early—before the project matures—whether it is likely to be a winner or a loser, rather than postponing that decision as late as possible. Why? Because Sony realizes that for the next innovation to occur it must occupy the minds and emotions of the innovator as soon as possible.

  5. Most obviously, but most importantly, it rewards the individual as well as the team—or indeed, instead of it. This only spurs the person to greater effort next time. It means management recognizes the role of chance in a very chancy business. That “crystal award” also ensures there’s no finger-pointing or tee-heeing about the losing teams.

Imagineering Sessions

The source for this technique is a long-time R&D manager of a highly successful medical products company. He isn’t a typical researcher. Instead, he is a co-founder of this $600 million, market-dominating company, now comfortably retired in the style to which you and I would like to become accustomed.

This technique avoids the problem of pursing only “safe bets.”

It is brutally simple. Once an innovation is preliminarily identified as promising from market, technology and manufacturing standpoints, this manager gathers team members from all functions together for an exhausting off-site meeting. They’re instructed to bring with them all the reference material they might need—and to have done their homework.

These sessions last at least two full working days and sometimes three or four. The team first brainstorms possible target solutions to addressing the opportunity. Then it selects a dozen or fewer for in-depth discussion of potential problems and solutions. It tries to actually address as many of these problems as possible on a “back of the envelope” basis until team members are convinced they are at least in principle soluble. The ones that aren’t are identified as “gating” items.

It’s amazing what such a small, talented group of people can do in a short period of time when they focus on a single problem. And excluded from contact with the outside world.

The result is that almost all sources of problems are identified immediately.

In the next step senior management sorts through all the overall project solution approaches. It kills the majority of them. They never get the chance to linger.

Then, the project manager assigns team members to solving the identified problems in the remaining solution approaches. The priority is not to develop the various product solutions, but to focus on the problem areas. This goes not just for manufacturing and engineering (or in their case, biochemistry) but also any unknown marketing questions—such as how much consumers would be willing to pay. Or what it’s going to take to convince doctors to adopt the concept.

The third step is develop product module prototypes. Sometimes they aren’t even prototypes, just mockups. They’re designed to test or model one aspect of the target product. A typical product might consist of a reservoir, a pump, a subcutaneous delivery system and an electronic metering/readout system.

Each subsystem may be mocked up separately, solving its own problems—sometimes in many ways. These are then tested using a friendly, existing panel of doctors and patients. Often they don’t function at all, but simply test a layout or probe user needs or acceptance. This way, difficult-to-problems are surfaced early and so are market acceptance problems.

Finally, once the tough problems are called—or the project is killed when they appear insoluable—the easy ones are tackled. And the product comes together very quickly.

The result of this process is that unworkable projects and solutions are weeded out early. When projects get killed—and they do get killed—it is only about 25% due to technical or engineering or scientific problems and 75% due to changes in the external environment: changes in competitive factors, market enthusiasm or pricing.

The Imagineering approach takes discipline, because it requires management to focus on what can go wrong rather than what should go right.

However, what both the Sony approach and the Imagineering approach have in common is that neither are what you might call radical. For more radical solutions to taming the innovation beast, tune in to The Business Maverick #10.

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