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Innovate like a Software Start-up

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Large organisations tend to treat major new product developments as serious projects which require serious resources.  They use project planning tools and stage gate processes.  However, despite all of the management science the large majority of new products fail – certainly in the fast moving consumer goods sector.  So maybe corporations should copy some of the ideas and methods used by tiny start-ups.  These new-born enterprises have limited funds and limited time – if the funds run out before the product is proven they die.  So the basic philosophy of the start-up entrepreneur is risk mitigation.  Here are some other key precepts;

  1. The initial idea is the least important part.  This is because the initial idea is nearly always wrong.  The first idea is simply a starting hypothesis which will be tested to destruction.  Clinging rigidly to your initial ‘great’ idea is a formula for failure.
  2. Always begin with a problem statement. Don’t start with the idea; start with the problem which the idea solves.  It must be a real problem experienced by real people who you can describe and identify.
  3. Develop a value proposition which answers these questions. Who needs this? Why do they need it?  What does it do?  When and where will people use it?  How much is it needed and how much will customers pay?
  4. Openness to change. With limited time and money the start-up founder must be ready to rethink wrong assumptions and make quick changes to the plan.
  5. Removal of ego. Someone – maybe someone important – had a good idea.  But they have to be prepared to let go of that idea quickly if the customer feedback shows it to be wrong.  Many senior executives in big companies find this difficult and so they cling on but the start-up entrepreneur cannot afford a big ego.  He or she must let go swiftly.
  6. Build and show. Build a quick wireframe; not a real product or even a minimum viable product (MVP).  Construct a model, a screen shot, a story board or a picture and show it to real customers who have the problem.  Ask for their candid feedback.  What do they like and not like about it?  You can answer most of the key questions without building anything or spending a lot of money.
  7. Trust your team. Let them get on with it. Remove the roadblocks that get in their way.
  8. Every feature you add must solve a customer problem. Avoid nice to have add-ons that complicate things.
  9. Build your MVP, the simplest working prototype which shows what the idea is. Engage with customers at every step of the way. Do not worry about protecting your idea.  Show it to plenty of people.
  10. Listen and adapt.
  11. Done is better than perfect. Software companies often ship products which are 90% complete and let the final product test take place in the hands of the first customers.  This carries risks but they are worth it for the fast feedback you get.
  12. Stay in perpetual beta. Every product is a beta version needing experimentation and adaption to improve.  Accelerate evolution by constantly trying new thing and finding better ways to meet customer needs.

The big company’s innovation team needs to copy the start-up and learn these lessons fast.  Agility, fast feedback and risk mitigation are the watchwords.

This post was inspired by a talk by Matt Hubert of Bitmatica at a CIO Summit in London.

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