Principles to Embrace Genuine Innovation

Does your product team build inspired things? Do you engage with disruptive ideas? How can you encourage genuine innovation from your team, today?

Here are my top three ways to make it happen.

Is your team a feature factory?

Don’t worry: most of them are! In these “feature factories,”(https://medium.com/hackernoon/12-signs-youre-working-in-a-feature-factory-44a5b938d6a2 ) ideas for new products or product features often come from stakeholders, occasionally come from customers, but almost never originate with the product team. The engineers and designers working directly on a product rarely have a say in its innovation!

The reason for this is simple: a high focus on agile delivery and streamlined operations. Product discovery is rarely done to identify real problems with an open mind, and more often justifies an existing plan to build something. Suddenly, a brilliant team finds themselves simply maintaining the status quo –– and not really innovating at all.

Sustaining Innovation vs. Disruptive Innovation 

Clayton Christensen – author of The Innovator’s Dilemma – is one of the most influential researchers in innovation, and distinguishes between two types:  sustaining and disruptive innovation. 

• Sustaining innovations are small, bit-by-bit optimizations over a relatively long period of time. Such improvements are done for existing products in a market that is well-known and clearly structured. 
• Disruptive innovations address a market or market segment that is not yet known or well understood. They can also focus on users or areas that are considered to be too small to satisfy a company’s business case calculations.

Disruptive technology might make it on the radar of an existing company, but never gets carried into production. For example, Nokia developed a smartphone prototype with touch display in 2004 – three years before the iPhone was introduced – only for the project to be shut down by management. (Source) 

By the time Nokia’s teams saw Apple’s iPhone success, the gap was already too big. Fast follower strategy works for sustaining innovation, but not for disruptive innovation. When a new technology sees outstanding product market fit in a relatively big market, growth happens so quickly that established companies simply can’t keep up.

So how can we foster innovation – sustaining or disruptive? There are many principles and ways to look at this. In the remainder of this article, I want to highlight my top three concepts to foster innovation: (1) empowered product teams (a term coined by Marty Cagan), (2) a balance of product discovery and product delivery, and (3) to utilize phase separation when you discover promising ideas that don’t fit your current organization.

Innovation Principle 1: Empower Your Product Teams

Marty Cagan – founder of the Silicon Valley Product Group (SVPG) – dedicated a whole book to the importance of empowering a product team. People – especially product managers, designers and engineers – want to work this way, and the world’s most successful software companies thrive by embracing this principle. Product Managers at Facebook, Airbnb and Netflix report that they’ve never written a single Jira Ticket: their main job is simply to provide context for engineers and designers

What is a product-centric company?

Product-led growth is achieved when product teams are autonomous in and responsible for making their own decisions. This autonomy allows them to build the right solutions for their customers in a way that serves their business.

Companies may claim this isn’t possible. Their leaders are afraid of losing control and oversight of product development. Product teams are kept so busy prioritizing feature requests to satisfy different stakeholders that they lose sight of any single product vision. Their focus disappears. 

Instead, there are roadmaps in place to plan at least the upcoming quarter, full of small changes and long lists of requests. While there is nothing wrong with a roadmap for your company, it’s essential to guide that map with a clear strategy about your product vision. Isn’t that the most important thing, after all?

Small steps make major changes

Empowering product teams is not easy, and I understand that it may involve significant changes. Don’t be afraid to take small, meaningful steps in this direction to experiment: see what works for you and what doesn’t. 

Try the following:

• Develop a meaningful and ambitious product vision that gets people in your organization excited
• Work out a product strategy that defines how to reach your product vision and puts it into action
• Provide focus: choose one main problem to be addressed throughout the quarter
• Work out quarterly OKRs with your product team that reflect the product vision as well as the current focus
• Measure the quality of your solutions with qualitative and quantitative data, and be sure to define these metrics before you ship (and even build) the product
• Ensure that product teams have access to everything they need to get the job done
• Establish a culture of regular feedback and coaching sessions

Innovation Principle 2: Product Discovery

It’s actually very simple. As Marty Cagan summarizes, innovative product management is “figuring out what to build (discovery), then building it (delivery).” Before I get into the details of this principle, I want to stress that it’s actually part of a bigger, more advanced iterative process called the product management lifecycle.

Source: https://www.pendo.io/pendo-blog/how-to-use-the-product-management-life-cycle-to-drive-better-business-outcomes/

However, from my experience balancing product discovery and delivery is the most underestimated thing companies can do to build better products. Discovery is hard, but worth investing in.

Product Delivery

Most organizations focus on agile software development. This addresses the delivery process. Unfortunately, in these cases there often is either no explicit product discovery process at all, or the process has relatively little importance. The focus is on shipping things, and providing output – not outcome. 

Agility in delivery often focuses on building things efficiently. In the process, it’s easy to forget the important step of building the right things. To focus on building the right things and foster effectiveness, we need more than product delivery: we need product discovery.

Product Discovery

Discovery is about figuring out what to build. It’s a simple idea, but it can certainly be a complex process!

Most companies divide product discovery into a range of activities: business case calculation, ideation, customer research, interviews, and so on. They often don’t have an explicit framework or process in place purely dedicated to product discovery, or anchored with their product team. 

In fact, these activities are often completely detached from the product team, leaving the product team solely responsible for the delivery process. This removes the creators, even if by a single step, from the discovery and purpose of the product they aim to build. It’s an opportunity to lose meaning, and to sacrifice potential for innovation. It’s essential to engage your product team directly in discovery.

That said, there is nothing wrong with a dedicated team for user research: these resources can be wonderful! However, this research is just one part of product discovery. Figuring out what to build involves many other processes: for example, building prototypes and showing them to customers helps designers to gauge real-time reactions to a product.

Dedication to exploration

Continuous product discovery should have a similar importance as the delivery process in your organization. That doesn’t mean it requires the same staffing or hours, but that it is done with the same dedication and accuracy. 

The hours spent on product discovery are paid off tenfold by focusing on building only the most important things: those that truly matter to your customers!

A discovery team usually involves product management, engineering and design or SME roles – depending on whether you are serving consumers or businesses. It should be relatively small; three people should be sufficient. They don’t need to be excluded from delivery teams, but these dedicated innovators need to be able to spend significant time on discovery.

Innovation Principle 3: Phase Separation

Enterprises can’t become startups. It’s tough for these large teams to innovate on new products outside of an existing portfolio: they just have too many existing boundaries in their mindsets, processes, and team structures. They can become more efficient in addressing their current customers, but they remain limited.

For quick adaptations – especially down market – it’s better to take a measure on organizational levels and embrace the concept of phase separation.

Why is innovation difficult for enterprises?

The established structures of an enterprise serve a very specific set of problems, and are designed to do so on a very large scale. The bigger a company, the more efficient it tends to be regarding its operations:  think employee / turnover or employee / profit ratios (Quelle). However, that advantage in size also adds bulk to the operation, and makes these companies slower, less flexible, and less ready to adapt to changing markets. 

It’s especially challenging for established companies to innovate down market. For example,  if you want to make a less expensive product for potentially less demanding customers in an earlier stage, such as early adopters, it’s nearly impossible: your cost structures reflect your existing product. That audience is beyond your reach.

Companies have a tendency to move upmarket during their lifecycle, producing products of higher quality with higher margins (Innovator’s Dilemma). Since disruptive innovation tends to come from the lower market end, it’s a genuine challenge for established companies to connect with those audiences.

What is phase separation?

A potential solution for an enterprise seeking to reignite innovation is phase separation: essentially, to create one’s own startup. Are you bold enough to build a safe space committed to innovation within your existing company? Then these two principles could provide the answer.

Safi Bahcall describes the ideas in Loonshots: phase separation and loosely coupled interaction. 

• In phase separation, we outsource innovation efforts outside of our own organizational capabilities. We separate the initiative into other organizations through foundation, partnerships or acquisition.
• We then loosely collaborate with these organizations, creating informational bi-directional exchange, but no operational dependencies. There should be no reporting, OKRs, etc. coming from the enterprise company for governance: utmost flexibility is necessary for these startups to operate and flourish. Reviews or informal exchanges about current operations are sufficient and important, though – remember, these insights can be mutually important for each counterpart.

There are many ways for enterprises to embrace phase separation: found startups themselves, partner up with startups, or set up their own incubators or venture capital funds. Outsourcing these efforts in new companies can make it possible to serve new market segments and create new business: true innovation!