Immensely successful companies are constantly embracing innovation, testing new boundaries and experimenting with new product development. Large enterprises, such as GE, have built and acquired dozens of new divisions spanning multiple industries.
AT&T has transformed itself from its roots as a telegraph and telephone company into a full blown entertainment company and provider of business services. In much shorter timespans, Uber has achieved lofty valuations and extremely rapid global growth by expanding its product line to include things like UberX, UberLux, UberXL, UberEats, UberRush and more.
From start-up to established, founders and C-Suite executives give much lip service for the need to adapt, change, transform and explore new markets and industries. However, actions and execution on this talk is often lacking – and usually stems from focusing too much on the longer-term payout instead of the day-to-day milestones that create needle-moving transformations. As the adage goes, “Rome was not built in a day.”
Early stage founders and entrepreneurs often look to the big buyout on the horizon; leadership in established enterprises can be rigorously focused on internal earnings-per-share figures and quarterly analyst expectations. Both environments are potential obstacles to launching new products and ideas that have market-moving potential. It is essential to founders, executives and division heads to create a platform to support product evolution as well as the underlying steps it will take to reach a measureable tipping point. This platform is important to allow new ideas the proper landscape to incubate new ideas and to provide employees a clear delivery path.
Ideas are in abundance, both in start-ups and established businesses. However, many ideas never reach the discussion table and often, the ones that do are lacking in defined substance or adhere to the ‘squeakiest wheel’ guideline. Without a structured process to test new ideas, it is easy to overlook exceptional opportunities. A series of mediocre results from unstructured ideas can result in executive-level fatigue and encourage more of a defensive culture versus a proactive culture that can produce transformative products.
Design an intake process to evaluate new concepts and ideas along with necessary inputs. The best venture capital firms have very strong filtering mechanisms in place to weed out the junk from the opportunities that may have some legs. At a minimum, new ideas should be accompanied by a concise presentation containing the product vision, market sizing, IRR calculations, customer discovery, an execution timeframe and milestones.
A clear submission and review process will encourage employees to step up to the plate and feel more engaged in the company’s goals and growth. It will also discourage haphazard ideas to making it to the discussion table. Choosing the new ideas and products that meet the company’s strategic and fiscal objectives creates a more balanced and less polarizing atmosphere.
Nothing scares investors and business leaders more than a “Wizard of Oz” mentality – the mysterious man behind the curtain. When leaders are left in the dark about the progress and targets of a project, it is easy to pull the plug on it. Future attempts to re-ignite the idea are more likely to be met with skepticism. A nightmare scenario would be a new, under-the-covers idea starting to gain traction, but the company is unable to fully support due to not having the right resource planning in place.
Full visibility into the daily activities of the transformation process will create a landscape of comfort, learning and accountability. Product road maps, project management plans with delivery milestones and budget numbers keep everyone focused on the day-to-day progress and in a constant state of learning. As this is a new endeavor, nobody will know everything about the new industry or product. Use this opportunity to absorb as much knowledge as possible – it will benefit the organization for this project and for others in the future.
The emphasis should be on learning as much as possible not on tracking down who is working on what or when certain things will be done. Generally speaking, it is natural to be wary of the unknown. With effective disclosure, executives and founders will find it much easier to gain much needed support from investors and other team members.
Patience & Accountability
It would be impossible to be patient without a clear plan (as described above), but being in possession of a fully documented plan does not mean patience is a given. Asking the transformation stakeholders if the end goal has been reached every day is detrimental to the day-to-day performance of the project. Instead, ask about the specific milestones per the project plan or what was done today to inch closer to a small milestone. If the milestone was met, celebrate it and look towards the next – if it was not by the required date, ask why and remind the team of the agreed upon timelines.
Do not fall victim to the mindset of looking for a reason to shut an effort down just because it has not moved EPS numbers ahead of schedule or attracted that new round of investment. If the agreed upon goal is $100 of revenue after 90 days, then showing lack of confidence in the transformation because there is zero revenue after day 1. In its first day of operations, FedEx delivered 186 packages – and probably at a not very attractive financial levels. Today, that daily number has swollen to over 3.4 million.
Yelp has an interesting story about the user-submitted review feature, the soul of the $2 billion company. Originally, the company employed paid, professional reviews with limited success. A new feature to allow for user-submitted reviews was reluctantly accepted, but allowed to go through the experimentation and innovation process. It started working and once it did, the company transitioned to focus on this immensely popular feature and growth skyrocketed. Without the call to accept this transformation and pivot the business, Yelp would have been hard pressed to achieve the level of success it enjoys today.
A plan to assign more resources or capital to a project once certain milestones are reaches is critical to turn a successful innovation test into a needle-moving transformation.
Business transformations do carry risk, but with a well-defined objective, execution plan and commitment to support the incubation and maturation stages, the likelihood of showcasing measureable results increases tremendously.
About the author:
Terence Channon is the Managing Director of SaltMines Group, LLC, a start-up studio and enterprise solutions provider with offices in Vero Beach, Florida and Bangalore, India. SaltMines works with early stage start-ups and Fortune 500 enterprises by bringing new ideas and innovations to market through structured innovation and venture development programs. Learn more at www.saltminesgroup.com.