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The Innovation Engine
A framework for overcoming cultural and organizational impediments to
innovation at scale
Andrew Breen VP, Product Delivery American Express
Copyright 2015-6 Andrew Breen
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Who am I?
Studied CS, Human-Computer Interaction
and Business
Founder or early leader at 8 tech
startups
Spent 20+ years building tech
products as an engineer and now leading product
Five years at Palm
Learning a lot building iterative
software in a hardware process
Currently at American Express
Where I’ve been
asked to build a lean startup inside the
enterprise
Professor (adjunct) @ NYU Stern
Teaching technology product management and innovation using
lean
Advisor for VCs/startups as well as large orgs on innovation & product development
Copyright 2015-6 Andrew Breen
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We’re in an age of constant disruption
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Are you responsive?
Copyright 2015-6 Andrew Breen
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Responsive organizations are built to learn and respond rapidly through the
open flow of information
Copyright 2015-6 Andrew Breen Courtesy: Responsive.org
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Responsive organizations encourage experimentation and learning in rapid
cycles
Copyright 2015-6 Andrew Breen Courtesy: Responsive.org
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Responsive organizations organize as a network of employees, customers, and partners motivated by shared purpose
Copyright 2015-6 Andrew Breen Courtesy: Responsive.org
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Does that sound like your company?
Or is yours more of a command and control organization?
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Command and control was well suited for predictable environments
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In the digital era, the environment is less predictable and controllable
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Consumers are empowered
Information has been democratized and made transparent
Communication is instantaneous and ubiquitous
The only constant is changeCopyright 2015-6 Andrew Breen
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Many of our large organizations are vestiges of 20th century management
thinking
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21st century responsive organizations are designed to thrive in less predictable
environments
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More Predictable <-> Less Predictable
Courtesy: Responsive.org & ThoughtWorks Copyright 2015-6 Andrew Breen
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What are the cultural and organizational impediments to being responsive?
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Ideas are currency because execution is difficult
Siloed organizations lead to overlap or gaps in responsibilities
Alignment is needed for nearly all decisions
Middle management has no incentive to change and protects their fiefdoms
“You want to test what?” Sales & marketing shields customers and the brand from experiments
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IT is stuck in its ways and largely dependent on vendors
Big regression risk means high analysis and testing overhead
“Let’s all become Agile!” might not be the right decision
Stack ranking or similar performance systems punish risk taking and drive self interested behaviors
The culture does not accept failure
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None of this supports innovation
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If you do have an R&D team, they tend to focus solely on tech innovation…
…most innovation comes via biz model, customer experience or product
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How do you continue to evolve the existing business
while exploring new ones?
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Copyright 2015-6 Andrew Breen
Start a lab?
Put in the middle of existing
ops?
Is there another way?
Can you be ambidextrous?
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Copyright 2015-6 Andrew Breen
Optimization EngineKnown needs & solutions
Predictable Big bets with plans
Enhance Improve
Innovation EngineUnknown needs & solutions
Non-linear Small bets with hypotheses
Develop Invent
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Copyright 2015-6 Andrew Breen
Optimization EngineKnown needs & solutions
Predictable Big bets with plans
Enhance Improve
Innovation EngineUnknown needs & solutions
Non-linear Small bets with hypotheses
Develop Invent
60% 30% 10%
Low risk, operate Iterate existing products
Existing customers with known needs
Medium risk New solutions for existing
needs under existing model
High risk Disruptive
New needs & models Lab?
Existing Product Journeys
Goa
ls
Experimentation, leverage, purpose, new KPI Efficiency, optimization, CSat, company KPI
Focu
s
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Copyright 2015-6 Andrew Breen
Optimization EngineKnown needs & solutions
Predictable Big bets with plans
Enhance Improve
Innovation EngineUnknown needs & solutions
Non-linear Small bets with hypotheses
Develop Invent
60% 30% 10%
Low risk, operate Iterate existing products
Existing customers with known needs
Medium risk New solutions for existing
needs under existing model
High risk Disruptive
New needs & models Lab?
Existing Product Journeys
Goa
ls
Experimentation, leverage, purpose, new KPI Efficiency, optimization, CSat, company KPI
Focu
s
Key coordination
point
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Resentment is created when innovation teams put up walls, believe they are the ideas people and stop listening to ideas
(ironically, including from users)
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The innovation engine is NOT the ideas team
They are builders…
…just like the optimization engine
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However, its a unique skill and mindset as 2/3rds+ of your hypotheses are never
going to be realized
Innovation engine people have to be highly collaborative and willing to take
on risk
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Setup a process to capture ideas and feed them to the engine
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The engines validate with customers(Lean is pervasive across both engines)
Avoid “hack-a-thons” and the like…they only demoralize
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How do you organize the engines?
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Put people who are more product operational in the 60% optimization engine and those open to risk in the innovation engine
Lay out your top level product journeys as the key organizing paradigm (for 60% and 30%)
Kill any notion of a web or mobile strategy
Find a place for the 10% (a lab?)
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Make sure your functional organization is not making teams operate waterfall
How about flipping the strong-weak axis to the product team?
Product Team Design Team Engineering Team
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Consider a “squad” model
P
P P P
D
D D D
E
E E E
Product Team Design Team Engineering Team
Func
tiona
l Mod
el
“Project” Team
Squa
d M
odel
P
D E
Product Squad A
P
D E
Product Squad B
P
D E
Product Squad CCopyright 2015-6 Andrew Breen
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Walter Isaacson explains, "The lesson of Bell Labs is that most feats of sustained innovation cannot and do not occur in an iconic garage or the workshop of an ingenious inventor. They occur when people of diverse talents, mind-sets and expertise are brought together, preferably in close physical proximity where they can have frequent meetings and serendipitous encounters.”
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In short, process begets innovation(and large organizations are good at process, right?)
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Experiment across iterative cycles
Prototype
Problem & concept validation mostly using qualitative
techniques (e.g. 10-50 in-person
sessions)
Proof-of-Concept
Solution validation using qualitative &
quantitative techniques
(5,000-10,000 users in controlled env)
Production
Scaled solution validation using
mostly quantitative measures
(released to full user base)
Max 90 days Max 90 days Max 90 days
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Make sure your performance review system is driving the right behavior
Most corporate review systems are designed as annual review of individual performance…that’s a problem
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Focus on group goals in short iterative cycles
Company goals + Product KPI = Personal OKRs
Espouse hypothesis testing and make it transparent and part of reviews
Change employee evaluations from delivery to product performance (and learnings)
Separate reviews from comp and promotional cycles
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Let’s not forget the leverage a large organization can provide
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Resources: capital and support functions
Brand: ability to leverage an existing brand(but also be bound by it)
Customers: millions of installed, active and loyal customers to test with
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Some things that helpA product and process you can give to others
Real transparency and free flow of communication
(no information hiding to preserve power)
Constantly reviewing, iterating and adapting the process itself
Integrate your subject matter experts and support roles into your process
A foil
Copyright 2015-6 Andrew Breen
Exec sponsorship & IT buy-in with strong relationships across the organization
A like-minded tight team: they’ll face many hurdles
(regularly read the Agile manifesto)
A challenging product problem the company hasn’t been able to execute against
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And remember…
its better to beg for forgiveness than ask for permission…
but don’t be a cowboy
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A Lean innovation engine delivers products and services that users need at
a fraction of the time, cost and risk
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Are you responsive?
Copyright 2015-6 Andrew Breen
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The Product Commandments
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1. Empathize with and advocate for the user focusing on their need2. Know if you’re finding the user need or the solution for the need3. Don’t plan, establish a vision and build4. Define and drive toward your KPI5. Simplify everything: products and process6. Prioritize on user need, biz impact and constraints (in that order)7. De-risk your product by minimizing unknowns8. Validate don’t speculate (as early and often as you can)9. Iterate toward the vision but work on today...one thing at a time10. Show don’t tell11. Push, pivot or kill (no sacred cows)12. Launch it and love it...own it (release is a step not a goal)13. Organize by skills not roles and stay small14. Engage stakeholders for advice and action, early and often15. Communicate actively, passively and transparently16. Manage by supporting (don’t command)
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Thank youAndrew [email protected]
@buckybanjo linkedin.com/in/andrewbreen
Copyright 2015-6 Andrew Breen