I have been reading a fantastic book in the last few weeks. Well, actually I have been listening to the author read his fantastic book via Audible. (this post is sponsored by… just kidding)
The Third Wave by Steve Case is a gold mine of challenging ideas that arouse my passion in a Rocky Balboa training scene type of way.
Step one for an infant stage, diaper-clad startup is “product-market fit.” Their goal is to prove that people want what they have created by finding users to sign up or (woa, let’s not get crazy) fork over their credit card number.
Once they find a market and organize around a business model, it’s off to the races. The best early stage companies develop close relationships with their early customers seeking to intimately understand their problems and current solutions.
This is where companies iterate on their product, and in some cases pivot to a new market or business model as they get a clearer picture of what they need to do in order to meet their goals.
After all of that let’s say this company has grown into a healthy, post-pubescent, skinny jean-clad business who understands its market, has proven its business model and has a path to steady growth with a strategy in place to guide the way.
Then they glance up at their “AIM buddy list” and it looks like their mentor Steve Case just sent them a message that says, ”Hey. Congrats on your progress. Just FYI… now that your company has gotten good at optimizing for what your customers currently want, just remember that your job is also to serve them for what they will want.”
Well, damn. They have spent so much time in dialogue with their current customers, taking their feature requests and hearing their ideas for ways to improve on the current product, they have to figure out how to innovate beyond those improvements?
Here is where their deep understanding of their customers’ problems and current solutions comes in handy.
Case in point (from the book, paraphrased): Apple created the iPod and people loved it! A couple years later they created the iPhone and cannibalized sales of the iPod, one of Apple’s leading products at the time. Apple was and is notorious for courageously building what they think people will want and going all in on those bets for the future. They felt confident largely because of their understanding of problems and current solutions in the spaces they were innovating.
Apple has done this many times over, as have many great companies, but there are huge challenges to doing this successfully.
Here are the two opposing forces:
Yin – Organizations spend most of their energy, people, and money on maximizing shareholder profits which many times means prioritizing risk mitigation! New things are risky, costly, and the upside is largely unknown and therefore tough to prioritize above what has already been proven.
Yang – Starting a business and creating a TechCrunch-disrupting product has never been more accessible. If you don’t innovate, even the most dominant players in an industry can be relegated to an antiquity in less time than ever in history. In recent years this principle has been proven time and again. Barnes and Noble, Blockbuster, Kodak, and Blackberry who?
The most progressive behemoths these days (GE, Amazon, and Google to name a few) are using their best and brightest to figure out how to build innovation hubs inside their companies. The larger a company gets the more difficult it is to move quickly and innovate amidst complex and legacy systems, and many vested and credible conflicting opinions. But the leaders of those companies realize that they have two options: make risky bets on the future or optimize their way to the grave.
These companies also realize that this next generation will be characterized by entrepreneurship, and some of their best people are going to come up with great ideas inside their company that they will want to quit to build. That’s a big reason why GE and Google are leading the way with the attitude of “dream with us, we can help” by creating venture arms.
So… as Sarah Palin would say, for “Joe business exec” running his small to mid-sized business, what do you do with this information?
- Seek to deeply understand your customer… problems and current solutions. Built empathy for them and the user stories you write will come to life.
- Seek to understand the past and present in your industry and you will be more prepared to predict and impact the future.
- Continue to challenge your organization’s imbalance between Yin and Yang, and foster innovation in the midst of building the necessary structure for scaling your current business model.
The “P” in HP, David Packard once said that “more companies die of indigestion than starvation.” Focus and Simplicity are two of the most elusive principles in business, especially in the pursuit of innovation.
Let’s be real… there’s no new idea under the sun. These ideas are mostly regurgitated from some of these references… If you are like me, you too will hear “Eye of the Tiger” while thumbing through the following pages: