Lean Pilot Projects Are the Wind of Organisational Growth

Organizations that don’t innovate inevitably decline. Words of a wiseman who invented management – Peter Drucker.

Yet true innovation is always a journey into the unknown. In this respect, innovation efforts  resemble exploration ships, taking risks and crossing rough seas from the bloody but familiar red oceans to the distant but calm blue oceans. (-> a case of Lego journey).

The road from ideation to bringing a new product to market is often a long, winding, turbulent one. Between Scylla and Charybdis. On the one side, there are pressing fears of failure, on the other irresponsible myths of riding the exponential growth curve, revolutionary formulas of overnight startup success.

That’s why it’s all the more important that innovation teams don’t get lost along the way.

Having travelled quite a few project miles, I dare say that probably the most important navigational instrument on these innovation routes is the pilot project. In the language of lean methodology, we talk about the minimum viable product (MVP).

MVP = Minimum Viable Product, the first version of a product that is acceptable to users and customers.

— INNOVATION WITHOUT TESTING IS A LOTTERY

The bigger the project, the more important the intermediate stops and the loop that links the rapid collection of feedbacks with improvements.

Testing the new products, concepts, ideas with yet unknown markets and all the unknown variables seems obvious. However, we can quickly look around and find a bunch of examples where project managers, board members, government officials, etc., don’t use pilots – maybe too ignorant of the concept, or just plainly believing too much in their own infallibility.

Some even introduce nationwide reforms with a system of unknown variables that will shake up whole societies without validating them with successful, small-scale pilots. The cost is huge and the actual effects are quite different from the expected ones. Coming from Slovenia, I can mention almost 30 years of unsuccessful attempts to reform public health care institutions. Almost all the political attempts promised to do the change at once. Huge amounts of money, not to mention media attention were pumped into the medical pit. And the result? The public health card puts you in an unacceptably and ever-increasing long queues waiting for the medical operations of the “reformed” public health system. Only the bank card opens all doors – to a private, profit-based, health organizations. Costly years for all of us.

In the commercial sector, too, such premature “restructurings” or “transformations” of entire companies are often fatal. In a deep-dive article, I analysed the case of the US retailer JC Penney, where a star CEO – probably overconfident in his own abilities – transformed the whole company without testing his assumptions first. A chain with more than a century of tradition went bankrupt, and the case just reveals the pattern of failed market response seen all over the world.

But testing the prototype in a sample market allows us to see whether or not the new concept works in a real-life environment.

— 10 BENEFITS OF EXECUTING MINIMUM VIABLE PRODUCTS (MVPs)

Here are 10 benefits of the MVPs, which is at the same time

a) innovative enough to be perceived as new by users or the market

and

b) limited enough to drastically reduce the cost of deployment and accelerate the collection of customer feedback in a real-world environment.

1. Only MVPs can truly reveal customer response or market potential. Focus groups and other surveys can be important as inputs, but they often elicit verbal responses from the participants. But there’s a great gap between what is said (claimed) and what is done (real). See green or local or sustainable products as example. Almost without exception, the respondents – people like us! – claim to support them. Claimed decision. But when get to the retail shelves, and see a cheaper alternative, we make our real decision. In these cases, the research is extremely far from reality. But MVP is research in a real environment. A test of reality, not of pleasing those who ask us.
2. The MVP helps to integrate the different functions of a product into a new solution. Innovation is not a single feature of a product, but a group of improvements that act as a novelty in the market. A first-hand example. When we introduced coffee on the go for a convenience stores chain, we initially changed the flavour of the coffee several times, and the suppliers, but it hardly changed the sales result. Then the new project manager brought all the elements together: cup + cap + tasty coffee + communication + accessibility of the machine + in-store visibility + … Only then was the MVP – a new coffee on the go offer.
3. The overflow of ideas is also a problem. While it is important for innovation to try out different ideas, and not be afraid of the more unusual ones, a common problem is also the block to liking too many ideas. De Bono. SME helps to reduce ideas to only those that we consider necessary for the success of the product.
4. Feedback or the meaning of failure. Almost certainly, the first iteration of an innovative product will not be a super success. The first time you ride a bike and fall off, that’s the first iteration. But with a few iterations, we ride and then we know how to ride forever. Room for improvement. Iterations.
5. Reducing the pressure to succeed leads to innovation that is bolder and more visible to the user. As soon as we announce a prototype, the pressure on participants is reduced. Playing with the whole population is infinitely more expensive than testing on a smaller sample of early adopters.
6. Often teams are blocked by the organisational system at place. It seems as if nothing innovative can really be brought to life. But a transparent MVP that guides the team together from ideation, through the first sketches and then to test implementation manages to bring the participants together and show them that they have scissors and a canvas in their hands. An MSP – even if it is not super successful at first – has great transformative power. Elevated energy.
7. MVP serves as a test of our implementation strenght. Only implementation shows us where the bottlenecks are, how our teams and members interact and react, which elements are key to success and also what we need to improve in the implementation itself. If we are only sketching on paper or showing presentations, this element is completely missing.
8. The MVP brings together knowledge from different departments. It therefore involves a wider group of employees in innovation, which also increases the connection to the final product and the motivation to succeed.
9. MVPs increase the return on innovation investments. By quickly checking responses, establishing benchmarks and making improvements, we can progress to a first version sufficient for scaling up. On the other hand, the cost of potential failures on a sample is much lower than if we go for a population-wide roll-out.
10. We need stakeholders both inside and outside the company to support innovative projects. With a successful iteration of the MVP, measured and presentable impacts, the possibility to directly test the power of the product, gaining stakeholders support is much easier than just by producing paper presentations.

— INNOVATION CAN BE LEARNED

In a direct contact with organisations, in my pursuit of development solutions for them, but also in my close encounters with high creative people, such as film-makers, writers, innovators, I can confirm the following thought of Peter Drucker (Innovation and Entreprenuership):

“Innovation is capable of being presented as a discipline, capable of being learned, capable of being practiced. Entrepreneurs need to search purposefully for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. And they need to know and to apply the principles of successful innovation.”

Yes, all innovation is challenging but is capable of being learned.

— NAVIGATING THE HAZARDS OF INNOVATION: CREATIVE ALGORITHMS FOR HEALTHY GROWTH

In an effort to help organisations in improving innovation success, I’ve drawn together first-hand experiences from the projects, combined them with research and study, and tested them with real organisations and real people.

The refined workshop product is called Creative Algorithms for Healthy Growth, where the MVP is one of the key stages in the sequence of steps from ideation to market success.

Creative algorithms are a combination of play, facilitated brainstorming and the right sequence of steps – an algorithm – to solve a problem that sets the team on the path to healthy growth. Group dynamics and diversity of views become a part of the solution, not the problem.

How Creative algorithms work?

1. They ensure to free the team off the “iron shirt”, the dominant way of solving problems that no longer produces the right effects
2. Playful format helps to generate unexpected new ideas
3. Ideas are channeled into a completely new solution to the initial problem
4. An action plan is prepared, and linked to the MVP (minimum viable product).

A well-planned sequence of stages serves to decrease unpredictability of the outcomes. It’s a methodology where MVPs play a role of navigational devices to guide innovation ships through rough seas. Just as beacons help ships to find their way, a well-placed MVP significantly increases the chances of success for innovation.

The methodology Creative Algorithms provides also another ingredient I have found critical for the success of innovations.  It is summarised in the formula MVP + I.
Where I stands for Innovation, Inspiration, Instigation.

The key is: the product or service tested in a pilot needs to impress, inspire, instigate at least some of the early adopters. Impress, Inspire, Instigate a spark. The small group of such Ignited Adopters is more valuable then a broader group of a  lukewarm users.

That’s closely connected to a tradition of the breakthroughs, yes, call them “punk”, guerilla guys starting out in garages, either as musicans or computer wizards. Their ethos was not mediocrity, also not technical brilliance, instead putting “the rough why” at the audience, the customers, the users.

More on this in next article.