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Design to Launch: How to Innovate Successfully Every Time

It’s no big secret: Most innovation projects typically die a slow and painful death.

According to research by PwC and McKinsey, 75% of corporate innovation projects fail, and 94% of CEOs are dissatisfied with their organization’s innovation performance. The problem is not (entirely) ideation, its execution: companies can and have successfully developed the big idea. Unfortunately, very few of these big ideas make it out of the organizational pipeline.

The headline diagnosis for the malady that is innovation failure is an over-reliance on innovative thinking, as opposed to innovative doing. CEOs invest substantial company time, money and resources in painstakingly fine-tuning innovative concepts based on market assumptions. Instead, a far better (and far faster) model is for CEOs to embrace a ‘Design to Launch’ approach to innovation. Doing so will allow corporations to avoid these 4 common (and fatal) innovation pitfalls.

1. The tyranny of the urgent. Death by quarterly results: CEOs are beholden to shareholders who judge performance by the bottom line. As a result, corporate decision makers are forced to evaluate near-term investments in innovation, despite the fact that innovation is a long-term game. Instead of letting perfection be the enemy of ‘good enough to test,’ companies need to get concepts off paper and into customers’ hands sooner. Even in prototype form, earlier customer validation creates progress toward commercialization and leads to nearer-term results.

“To better match risk to reward, companies should avoid the big bet approach altogether; instead, start small and get quick wins that justify bigger investment.”

Through their FastWorks program, General Electric built a new, high-end refrigerator with no plastic parts using processes that are built upon Lean Startup principles. Instead of conceptualizing and unveiling a perfected product, GE prototyped 18 iterations of the refrigerator—each one tested with customers. As expected, the earlier iterations tested poorly, but the early, in-market feedback led to quicker learning and reduced development time.

2. Risk without reward. With few exceptions, CEOs are rewarded for driving consistency (repeatable returns with limited variability) more than they are for spearheading big strategic bets that potentially drive disruptive growth. That said, big innovations are, by necessity, high risk and high reward efforts. To better match risk to reward, companies should avoid the big bet approach altogether; instead, start small and get quick wins that justify bigger investment. It’s akin to a venture capital approach wherein investment is based on milestones that reflect a better understanding of the long-term business opportunity and how to realize it.

In creating Zappos, CEO/founder Nick Swinmurn needed to understand the market potential for online shoe retail. The traditional approach would have been to spend a significant sum to acquire a large inventory of shoes and create a distribution network. Instead, Swinmurn made a smaller bet. He went to local stores, took pictures of shoes and posted them online, fulfilling orders by buying directly from the same retailers at full price until he was convinced that customer demand existed. Today, Zappos, now part of Amazon, generates $2 billion in annual sales.

3. Big pilot, small return. Seeking to eliminate risk and quantify financial impact, CEOs disproportionately focus on big pilots involving six-figure budgets and large numbers of customers. But complex innovations can’t be solved with just one pilot; components (target customer, value propositions, features, channel, business model) may shift, requiring multiple tests and explorations of hypotheses. Instead of big pilots, CEOs need to use more diverse, rapid learning experiments that vary in total cost, size and number of customers.

To define the experience around Rent the Runway, the online dress rental company, CEOs and founders Jennifer Hyman and Jennifer Fleiss started with a series of experiments to validate their premise—would women rent designer dresses? One of the early experiments involved creating a popup store and renting dresses to Harvard undergrads. Another experiment explored whether women would rent dresses they couldn’t try on, which they performed at Yale University. Through these and other experiments, Rent the Runway has built a healthy business with $800 million in annual revenue and over 350 employees.

4. Constriction by core competency. Traditional consulting firms encourage a focus on core competencies in seeking new avenues of growth, but the most compelling opportunities are usually outside the core. Banks are pursuing FinTech, healthcare companies are building digital products, and everybody is chasing new business models. These types of innovations require new capabilities, processes and skillsets with steep learning curves. To reduce the ambiguity associated with new capabilities, CEOs must avoid simulated environments with recruited customers as the dominant approach to testing. Instead, they should leverage quick digital tests, such as landing page testing, to explore value propositions and live, in-market prototypes to gain a deeper understanding of priority skills and processes.

In the early days of Airbnb, the company’s CEOs and founders hypothesized that listings with better photographs had higher booking rates. Uncertain about how they would eventually scale the idea, Airbnb’s team initially went to New York themselves to take high-quality pictures of customer listings and replace the amateur photos that were on their site. In a short amount of time, weekly revenue doubled, justifying an investment by the company in photography. Today, Airbnb provides a free professional photography service (through a network of global freelancers) for their Airbnb hosts.

Leading-edge processes and tools allow corporate innovators to run faster, iterate frequently, and eliminate risk iteratively, while simultaneously reducing the cost of failure. There is no tradeoff. By pursuing a Design to Launch approach, CEOs can build complex corporate innovations and navigate issues around timing, risk, and scale in a more nimble fashion than ever before.

Here is the rare case in which speed doesn’t kill, it saves.

About Gordon Hui

Gordon Hui
Gordon Hui is vice president of strategy for Smart Design, a design and innovation consultancy.