My presentation at LAST Conference 2016 titled “Agile Innovation and Thinking Like a Startup” is available on Slideshare.
Many enterprises are struggling to innovate whilst smaller startups are disrupting the market. Existing organisational business models work well in a known and predictable environment. However, these approaches fail when applied to an uncertain and changing environment.
In this session I will discuss the different approaches and how an organisation can balance a portfolio that both can exploit existing opportunities while enable the exploration of new opportunities.
I will draw on my experience working with some innovation teams in an enterprise and how we are re-focusing agile back to its roots and thinking like a startup to evolve the way we work.
Participants will also gain an understanding how Design Thinking/Human Centred Design, Lean Startup, Agile and Business Model Innovation can blended together to transform the way you work to enable innovation within larger enterprises.
Here are some of the tweets from the session:
Recently I was posed the question “how can we shape organisations to be successful in an environment of digital disruption?”
The convergence of technologies, such as cloud, social, mobile and information (the Nexus of Forces) …. are driving the Digital Industrial Revolution (Gartner). The convergence of these technologies has formed what Fred Wilson has described as the Golden Triangle:
“The three current big megatrends in the web/tech sector are mobile, social, and real-time.”
However, technology is just one part of the digital disruption equation. You can forget about digital disruption if you don’t disrupt your existing (traditional) business models.
Over the years oragnisations have updated their technology roadmaps and invested in new technologies to support their business strategies. Yet organisations have retained their legacy processes and policies and have not adapted new ways of working to compete effectively. Most organisations are built to sustain their existing business models which are not geared towards creating digital experiences for customers. Existing governance structures are often too slow, too siloed, stifles innovation, adds bureaucracy and all too inconsistent.
Increasingly organisations are embracing new paradigms and principles in the way they work in the era of digital. Many of these incidentally come from Agile and its related areas such Lean, Kanban, Design Thinking, Systems Thinking, and Lean Startup. Take for example the U.S. Digital Services Playbook:
- Understand what people need
- Address the whole experience, from start to finish
- Make it simple and intuitive
- Build the service using agile and iterative practices
- Structure budgets and contracts to support delivery
- Assign one leader and hold that person accountable
- Bring in experienced teams
- Choose a modern technology stack
- Deploy in a flexible hosting environment
- Automate testing and deployments
- Manage security and privacy through reusable processes
- Use data to drive decisions
- Default to open
and the UK Government Digital Services Design Principles:
- Start with (user) needs
- Do less
- Design with data
- Do the hard work to make it simple
- Iterate. Then iterate again.
- Build for inclusion
- Understand context
- Build digital services, not websites
- Be consistent, not uniform
- Make things open: it makes things better
Adoption of an Agile models, Lean Principles, a lean way to create a business model and a way to continuously innovate is vital if you want to compete effectively. These (modern) delivery models and principles no longer play a supporting role, but are center stage – it is becoming essential to the success of businesses in the age of digital disruption.
None of the principles and policies by the U.S. Digital Services and UK Government Digital Services is about technology. They are more about how work and business is to be done. The companies that will be successful in the disruptive digital era will be those who look beyond technology solutions but also disrupt their traditional organisation and governance structures and invest in new business models.
The digital disruption is forcing businesses to change how business is done. This requires a business transformation that uses technology to create digital experiences for customers AND equally adapt or introduces new processes and systems to successfully compete. Through evolution of work design, organisations need to adapt and change processes and policies (and we are not just talking changes in IT only). This will be BIG – it means changing one way of being to another. A butterfly is nothing like a caterpillar.
 W. Edward Deming defines a system as a network of interdependent components that work together to try to accomplish the aim of the system. In this case the system is not an IT system, but the organisation as a system.
In today’s era, organisations especially large enterprises are often challenged with shrinking revenues from existing products and services. Furthermore technological breakthroughs and incremental product development no longer necessarily provide the competitive differentiators to grow their business. Management need to investigate how to reinvent ways to sustain innovation and to stay in front of their competitors.
The process of innovation is often seen as being very linear, with business models created from market research results, leading to large development efforts creating products that fail to meet customer’s need.
The goal of a new product development is to figure out the right thing to build—the thing customers want and will pay for—as quickly as possible. But why do new products fail so badly everywhere we look? The first problem is the allure of a good plan, a solid strategy, and thorough market research. In earlier eras, these things were indicators of likely success. So what has changed? In today’s era this approach does not work as organisations operate under extreme uncertainty.
We must learn what customers really want, not what they say they want or what we think they should want. We need to go beyond asking hypothetical questions, and observe real customer behaviour.
The following model combines ingredients from 4 different disciplines to help with this innovation dilemma:
- Design Thinking
- Lean Startup
- Business Model Canvas
Each part is fit for purpose in the cycle of innovation.
Download PDF version.
1. Design Thinking – develop customer empathy to generate insights and create ideas
Design plays a significant part of innovative business models and it is important in creating value for users.
Through working with a product development team in a large enterprise I have observed how well Design Thinking complements Lean Startup. Lean Startup is taking the world by storm, however, the build-measure-learn cycle does not address the design and ideation cycle – how do organisations and teams identify ideas, customer insights and leap-of-faith assumptions that need to be validated?
Thinking like a designer certainly will help transform the way you develop products, services, processes and even strategy [Tim Brown, CEO of IDEO] through contextual inquiry and observing customer behaviours. Immersing yourself in the context and observing customer behaviours helps you unearth details and intricacies of the problem space. Accurate observations will help you generate insights, create ideas and develop initial product designs for a customer segment. These ideas, designs and leap-of-faith assumptions can then be further validated using Lean Startup.
2. Lean Startup – scientific experimentation and validated learning
Lean Startup supports the launching of businesses and products. It relies on validated learning, scientific experimentation, and iterative product releases to shorten product development cycles, measure progress, and gain valuable customer feedback. In this way, organisations can design their products or services to meet the demands of their customer base without requiring large amounts of initial funding or expensive product launches.
Lean Startup is a learning framework for “disruptive innovation” defined as unknown problem, customer & market, solution & the search for “the right thing to build”. The primary output being a validated business model through, rapid iteration, empiricism & non-vanity metrics to measure progress.
The design thinking process provides a vehicle to generate tested ideas quickly. The Lean Startup approach can then be used to validate the ideas, customer insights and leap-of-faith assumptions using experiments.
Both Design Thinking and Lean Startup take a very similar iterative and customer driven development design approach. The combined approach of Design Thinking and Lean Startup provides a systematic approach for organisations to create disruptive innovation.
3. Business Model Canvas – Rapidly create a business model
The Business Model Canvas is one of the most used business model frameworks. The Business Model Canvas allows you to rapidly create and capture the rationale of how an organisation creates, delivers, and captures value. Design Thinking informs the Business Model of opportunities (eg who our customers are and what they value). The Business Model can be systematically validated/invalidated through Lean Startup experiments. Lean Startup is the framework to rapidly iterate over the business model.
Ultimately, this allows us to test the business viability, and to change and adapt our business model to take advantage of the opportunities. Any part of the business model that is validated can be quickly delivered to customers through small releases (minimal viable products) using iterative and incremental approach of agile development.
4. Agile – Implement and continuously deliver product features to the customer
Lean and Agile values, principles and practices provides the means for organisations to amplify the leap-of-faith assumptions by continuously delivering value to users through iterative and incremental development.
Mixing it all together
In the race to create new innovative product and services, organisations will need to move away from the linear approach to innovation using assumptions based on market research. The combination design thinking, lean startup, business model canvas and agile is a holistic approach that has a push towards customer centricity that really helps provide a framework to create and sustain an innovation pipeline. Ultimately these 4 parts provides a model to build an innovative culture and delight customers with the right product that has the right solution and market fit.
To create a sustaining innovation pipeline organisations may circle back through design thinking, Lean Startup, and Agile for implementation more than once as the product team refines its ideas and explores new directions.
- You may also like to read a very nice article by David Bland describing the need to combine Lean Startup + Business Model Innovation + Continuous Delivery and why each by itself is not enough. I have adapted David’s venn diagram to explicitly include where I think Design Thinking fits.
- A previous post I wrote, Enlightened trial and error succeeds over the planning of the lone genius illustrates Design Thinking in action by IDEO.
- The Lean Startup, Eric Ries
Recently a colleague and I were facilitating an agile project initiation workshop. To help the team to come up with ideas and formulate solutions for the problem they were trying to solve we used a method that combined the Walt Disney Creativity Strategy and Ritual Dissent.
The Walt Disney Creativity Strategy
The Walt Disney Creativity Strategy is a practical creativity process used by Disney to turn fantasies into concrete and tangible expressions and was used to create many of his classic animated films we have grown up to love such as Snow White, Pinocchio, Bambi and Fantasia.
One of the major elements of Disney’s unique genius was his ability to explore something from a number of different perceptual positions. An important insight into this key part of Disney’s strategy comes from the comment made by one of his animators that,
“…there were actually three different Walts: the dreamer, the realist, and the spoiler (critic). You never knew which one was coming into your meeting.”
This was not only an insight into Disney but also into the process of creativity. Creativity as a total process involves the coordination of these three sub-processes: dreamer, realist and critic. A dreamer without a realist cannot turn ideas into tangible expressions. A critic and a dreamer without a realist just become stuck in a perpetual conflict. A dreamer and a realist might create things, but they might not achieve a high degree of quality without a critic. The critic helps to evaluate and refine the products of creativity.
Everybody has the Dreamer, Realist, Critic inside them. Unfortunately, what usually happens is that the Dreamer and the Critic get into a fight. If you take a typical business meeting, you can have a Dreamer, a Critic and Realist in this meeting. Rather than functioning in some organised strategy, the Dreamer says something, the Critic argues against it, then the Dreamer has a polarity reaction to the Critic. The Dreamer and Critic go in conflicting directions until, finally, the realist says, “We’re out of time.”
In addition, one of the biggest problems is that the Critic doesn’t just criticise the dream. The Critic criticises the Dreamer. Part of why Disney could function so effectively is that he didn’t criticise his team or himself, he criticised the plan to accomplish the dream. The purpose of the critic is to insure that something meets certain criteria. What keeps the Critic and the Dreamer from being stuck in a polarity response is the Realist.
The three distinct stages of the creative cycle addresses different questions:
- What you want to do? (As opposed to what you want to stop doing, avoid or quit).
- Why do you want to do it?
- What is the purpose?
- What are the payoffs?
- How will you know that you have them?
- Where do you want the idea to get you in the future?
- How specifically will the idea be implemented?
- How will you know if the goal is achieved?
- How will the performance criteria be tested?
- Who will do it?
- When will each phase be implemented?
- When will the overall goal be completed?
- Where will each phase be carried out?
- Why is each step necessary?
- Does this plan match the criteria and purpose for which it was intended?
- Why might someone object to this new idea?
- Does the idea all fit together and is cohesive?
- Who will this new idea effect and who will make or break the effectiveness of the idea and what are their needs and payoffs?
- When and where would you not want to implement this new idea?
To facilitate the creative strategy, Disney had different rooms for the Dreamer, Realist and Critic. The ideas moved between the three rooms:
- Dreamer Room: This room had inspirational drawings and sayings all over the walls. This was the place were wild ideas and thoughts were born, no restrictions, no limits. Criticisms were not allowed – only dreams!
- Realist Room: This room contained all the tools and instruments that were needed to manifest the dreams. The room was arranged so everyone could see and talk to each other in a collaborative space. Here the dreams that were created in the Dreamer Room were put onto ‘story boards’. (The concept of story boards are also used in agile analysis, although they are more often referred to as user journeys or scenarios).
- Critic Room: Also known as the ‘sweatbox’ as it was located underneath the stairs and was cramped and hot. This is where people would critically review and evaluate the ideas (not the individuals).
The below table summaries the pattern associated with Disney’s creative strategy:
|Time Frame||Long Term||Short Term||Long & Short Term|
|Time Orientation||Future||Present||Past & Future|
|Reference||Internal – Self||External – Environment||External – Others|
|Mode of Comparison||Match||Match||Mismatch|
Ritual Dissent is a workshop method designed to test and enhance proposals, stories, ideas or whatever by subjecting them to ritualised dissent (challenge) or assent (positive alternatives). In all cases it is a forced listening technique, not a dialogue or discourse.
The basic approach involves a spokesperson presenting a series of ideas to a group who receives them in silence. The spokesperson then turns their chair, so that their back is to the audience and listens in silence while the group either attack (dissent) or provide alternative proposals (assent). The ritualisation of not facing the audience de-personalises the process and the group setting (others will be subject to the same process) means that the attack or alternative are not personal, but supportive. Listening in silence without eye contact, increases listening.
The Workshop – Combing the two approaches
One of the goals of the agile workshop was to come up with ideas and formulate solutions to solve a business problem. When coming up with ideas we want to quickly know if it will work or if the plan is achievable. We want the ideas to fail fast so we can succeed sooner.
We created a process to get fast feedback on ideas by drawing on elements from The Walt Disney Creativity Strategy and Ritual Dissent. The following steps describes the technique we used in the agile workshop:
- Split the group into 2 teams (or more). We ensured we had a good balance of skills and knowledge in each of the groups (eg business SMEs, developers, architects, business analysts etc).
- Each group went to separate rooms. Taking a Dreamer strategy, the group members worked together for 2 hours to dream up ideas, and develop solutions to the problem space without any limits. The groups also represented their ideas by drawing up a story board or visual map of the problem space.
- A spokesperson from one group (Dreamer) would present their ideas, explain them and the criteria and assumptions behind them in 6 minutes to the other group (Critic) who receives them in silence.
- We then allowed 3 minutes of Q&A time to allow the Critics to clarify the ideas with the Dreamers.
- We asked the Critics to turn and face the story board or visual map containing the idea so their backs were towards the Dreamers. The Critics then proceeded to criticise and dissent the ideas through verbalisation and placing post-it notes on the story board/visual map. The Dreamers received the dissent in silence.
At this stage we could have also asked the Dreamers to turn their backs to the Critics, but thought as long as the Critics were facing and dissenting the story board or visual map and therefore criticising the ideas, it was enough to de-personalise the process.
- Steps 3 to 5 were repeated with the groups switching Dreamer and Critic perspectives, so the group that was presenting their Dream become the Critics. And the Critics become the Dreamers.
- Each team then returned to their room clarify specific steps and actions by exploring the Realist questions and identifying ways to make the dream real based on the Critic’s input and feedback. The Realist then transcended to Dreamers once again to refine and come up with the next approximation (improvement) of the idea.
- We time-boxed the activity which only meant we had time to repeat the above cycle once more (two in total). We then combined the best ideas from the two different groups to form a single idea.
By following agile principles we only needed to do ‘just enough’ to get us to the next stage of the project where we can then iteratively refine the idea. But in practice, you can repeat the above steps as appropriate until you get a more grounded and improved idea.
If you had more than two groups, the Dreamers should present their ideas to a different group of Critics from previous ones to get new criticisms and viewpoints.
Throughout this process, the Dreamer focused on the ‘big picture’ with the attitude that everything is possible. The Realist acted as if the dream is possible and focuses on the formulation of a series of successive approximations of actions required to actually reach the dream. The Realist phase is more action with respect to the future, operating within a shorter time frame than the Dreamer. The Realist is often more focused on procedures or operations. Its primary level of focus is on ‘how’ to implement the plan or idea. The Critic seeks to avoid problems and ensure quality by logically applying different levels of criteria and checking how the idea or plan holds up under various “what if” scenarios. The Critic phase involves the analysis of the plan in order to find out what could go wrong and what should be avoided.
Using the Ritual Dissent approach with the Critics facing the idea (story board or visual map) rather than the individuals de-personalised the feedback subjected by the Dreamers. And finally, using the forced listening technique, not a dialogue or discourse of Ritual Dissent also enabled fast feedback without getting into personal conflicts and arguments.
We found the above steps and approach provided a harmonious process between the three stages of creativity. It incorporated the different points of view of the group members in the three creative cycle (Dreamer, Realist, Critic) to get supportive outcomes.
- How Pixar uses Agile like practices to make their movies
- Enlightened trial and error succeeds over the planning of the lone genius
Nordstrom is one of USA’s leading fashion specialty retailers and is a Fortune 500 company (2011 – ranked 254). When I think of a fashion retail company, innovation isn’t the first thing that comes to mind. So how does a large retail company like Nordstrom innovate? Through the creation of a Lean Startup team, called Innovation Labs. According to their website,
The Nordstrom Innovation Lab is a new, and growing, team. We act like a startup inside of a large company: we move through ideas quickly, using whichever technologies make sense. We also walk the agile walk: the lab is a collaborative workspace with stickies and note cards everywhere, and we follow agile engineering practices like pairing and test-driven development. On the customer-facing side, we use ideas from both lean manufacturing and lean startup, and test our experiments with customers using human-centered design strategies and tactics.
The below video is a brilliant case study on how the innovation lab uses Lean UX and human centered design to build an iPad application (to help customers select a sunglass) incrementally and getting customer feedback in real-time as they work, so they were never working on anything that wasn’t valued by the customer. They were only doing things that was delivering value.
The innovation lab manager, JB Brown states:
Somebody will have an idea and we will find a way to prove that the idea will work.
We really don’t know what the features are yet. We are going to use customer feedback as we go along in order to build the best thing. Building a feature and testing it until we get to the point where we have something that is good enough.
Building the iPad application isn’t complex and the cycle time to develop a feature wouldn’t take long. But what the innovation labs team has done is cut down the feedback loop times. If this application was built in an office away from the customer, getting feedback would have been much longer. And by getting feedback directly from the end users rather than a user proxy, they have reduced the risk of developing the wrong features.
The innovation lab uses a concept called ‘flash build’, a variation of a flash mob, where a software team shows up at a surprise location to build a minimal viable product application so they can get direct customer feedback in real-time.
It is awesome to see innovation and the use of lean and agile principles and practices in action within a large company.
“Enlightened trial and error succeeds over the planning of the lone genius”
is a quote from a great video demonstrating how teamwork and agile concepts at IDEO is used to successfully deliver innovation and solutions in a non-IT environment in just 5 days!
Some highlights which I thought were pertinent to agile:
- The people are not experts at any given area. They innovate by using and applying the process.
- The person leading the team is the leader because he is good with groups, not because of seniority.
- There are no titles, no permanent (role) assignments – everyone is a generalist but brings specific skills.
- Everyone communicates and share what they learn.
- Iterative development with showcases/demonstrations of prototypes to get feedback for the next iteration of the product.
- Some of IDEO’s mantra for innovation:
- One conversation at a time
- Stay focused on topic
- Encourage wild ideas
- Defer judgment
- Build on the ideas of others
- No criticisms (this is self moderated)
- Time-boxing, to prevent the process from going on for ever (Parkinson’s Law and Pareto Principle comes to mind).
- Team judges what are the best ideas (team votes).
- Fail often in order to succeed sooner (fail safe culture).
- Having an open mind – think outside the box.
- Belief that focused chaos can be constructive.
- High use of visualization tools, story boards, information radiators.
- Fresh ideas come faster in a fun place.
- High level of collaboration.
- Teamwork, teamwork, and more teamwork!