The Innovator's Method: Bringing the Lean Start-up into Your Organization

305 Pages·2014·3.22 MB·English

by  Nathan R Furr

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Copyright
Copyright 2014 Nathan Furr and Jeff Dyer All rights reserved No part of this
publication may be reproduced, stored in or introduced into a retrieval system, or
transmitted, in any form, or by any means (electronic, mechanical,
photocopying, recording, or otherwise), without the prior permission of the
publisher. Requests for permission should be directed to
[email protected], or mailed to Permissions, Harvard Business
School Publishing, 60 Harvard Way, Boston, Massachusetts 02163.
First eBook Edition: July 2014
ISBN: 978-1-62527-146-4
Contents
Copyright
Foreword
Introduction
1 The Innovator’s Method
2 Leadership in the Age of Uncertainty
3 Insight: Savor Surprises
4 Problem: Discover the Job-to-Be-Done
5 Solution: Prototype the Minimum “Awesome” Product
6 Business Model: Validate the Go-to-Market Strategy
7 Master the Pivot
8 Scale It
9 Making the Innovator’s Method Work for You
Conclusion: Turn Uncertainty into Opportunity
Appendix: An Overview of the Innovator’s Method
Notes
Acknowledgments
About the Authors
Foreword
At some point soon, please take a trip physically or virtually to New York City,
Hong Kong, Singapore, and Dubai. In New York, go to the intersection of 6th
Avenue and 57th Street and start walking south, away from Central Park. On the
left side you will see Rockefeller Center—a set of skyscrapers that were built in
the 1930s. Then look to your right, where you will see a set of even bigger
skyscrapers designed and built in the 1960s. These are masses of rectangles and
right angles reaching into the sky, differentiated only by the type of siding that
was used and whether they had sixty or seventy stories.
Then go to Hong Kong, Singapore, and Dubai and contrast their skylines with
those on the Avenue of the Americas in New York. Most skyscrapers in these
cities that have been built in the last fifteen years are unique to the world. Most
are very attractive—and some are truly stunning. The curves, angles, accents,
and statements are unique to each building. What has changed? Have the
architects simply become more daring and creative? Are the architects in those
cities simply better at design than American architects?
The answer: No. Rather, the software that architects have been using in Hong
Kong, Singapore, and Dubai—and around the world—has become so
sophisticated that if an architect changes an angle, adjusts the weight-bearing or
a new curve in an H-beam, or adds a new type of weld to be used in an ornament
jutting out on the 23rd floor, the software automatically recalculates the design
of every other piece, showing what each one needs to do and where it must be
placed to account for interdependencies mandated by the unusual element of
each piece. The software’s power to calculate all the interdependencies among
the elements of these massive skyscrapers has yielded a set of rules that say “If
this, then that.” These rules are not of the sort that say “Don’t do this, because
we have no idea what will happen.” The rules of causality actually emancipate
artistry in design.
The reason why skyscrapers designed in 1960s had so little differentiation is
that there was little latitude for creativity: anything that was not a standard
straight beam or a 90-degree angle was risky and very, very costly. Even the best
architects struggled to come up with all the adjustments they needed to
architects struggled to come up with all the adjustments they needed to
implement elsewhere in the structure to account for anything that was unusual.
So how does this relate to management? Historically, management is about
“straight lines” and “right angles.” The tools of traditional business planning—
the “software”—that managers use today have helped them perfect the art of
analyzing, planning, and executing when the problem is standard and the
interdependencies are known. But innovation is about uncertainty and
nonstandard processes—“curves” and “weird angles”—and the management
literature and the tools we use have not yet caught up with the new kinds of
problems that managers and innovators face. New “software” is needed—a new
set of guidelines and rules—that managers can use for facing high uncertainty
problems.
Furthermore, although most companies are laced throughout with
interdependencies, most executives actually know little of what they are or how
they interact. Some interactions in a company are static, occurring at a given
point in time. Others are dynamic, doing their work over time. The reason why
many executives and employees adhere to standard processes is that changes in
interdependent processes are time-consuming, risky, and costly. Standard
processes mitigate innovation, but many managers instinctively opt for less
innovation nonetheless in their quest for order.
Executives face these paradoxes in part because so few researchers of
business have achieved the comparable exquisite understanding of business
interdependencies that software has brought to architecture. Many more of us
must follow the lead of these few, because the impact these researchers have had
on understanding systemic interdependencies of processes and organizational
structure has been profound. For example, Steven Spear and Kent Bowen
conducted a remarkable study of the Toyota Production System, examining the
complete process of production in industries from health care to aluminum.
From this deep understanding they were able to distill four rules for managing
(summarized in the HBR article “Decoding the DNA of the Toyota Production
System”) that went beyond what prior researchers had tried to describe in
simplistic terms. Similarly, in The Anatomy of Peace, Terry Warner and his
colleagues at the Arbinger Institute chronicled the interdependent process by
which conflict is created and resolved. Edgar Schein studied from beginning to
end the process through which culture is created and resists change, summarized
in his book Organizational Culture and Leadership. And finally, Chet Huber
wrote Detour: My Unexpected, Amazing, Life Changing Journey with OnStar.
As the innovator who built this very successful company within General Motors,
Huber explains the static and dynamic interdependencies within the company.
Huber did what nobody thought was possible, because he in fact distilled from
his own experience and the research of a few others a set of rules: “If this, then
that.”
I owe much to these and a few other researchers and writers who have taught
me to relish rather than retreat from the study and use of interdependencies in
business and academia, in church, and in my family.
And for this reason I thank Professors Dyer and Furr. With The Innovator’s
Method, they are the first researchers I am aware of who have attempted to
chronicle the process of innovation from beginning to end—laying out the static
and dynamic interdependencies that historically have made innovation so hard.
If one faces a high uncertainty problem, then the tools of lean start-up and design
thinking they describe are valuable innovation tools. They, along with many
others, are helping to build the management equivalent of the software architects
use today to create amazing new structures.
With my gratitude,
Clayton M. Christensen
Professor, Harvard Business School
Introduction
As a successful scaled company, you cannot
run the ship the way you used to. You’ll get
run over by a swarm of start-ups.
—Scott Cook, Founder and Chairman of
the Executive Committee, Intuit
H
AVE YOU EVER come up with an idea for a new product or service that you
thought would be very cool, but didn’t take any action because you thought it
would be too risky? Or maybe you just didn’t know how to take the next step?
Or at work, have you had what you thought could be a big idea for your
company—perhaps changing the way you develop or distribute a product,
provide customer service, or hire or train your employees? The fact is, most of
us have these kinds of ideas at one time or another. But neither we, nor our
companies, are very good at taking advantage of them. Why? Because typically
there is significant uncertainty around whether these ideas will work. They are
risky. And most individuals—and especially companies—are programmed to
avoid risk. But what if you could take much of the risk out of it? What if you
knew a process to quickly test and validate whether the idea had merit?
The key message in this book is that new tools and perspectives for validating
big ideas characterized by high uncertainty are emerging in many disparate
fields. Whether you call it lean start-up, design thinking, or agile software
development, these new methods are revolutionizing the way managers
successfully create, refine, and bring new ideas to market. These and other tools
help entrepreneurs, designers, and software developers lower uncertainty and
risk through cheap and rapid experimentation.
To help managers apply these new practices inside established companies, we
offer a new method for managing innovation that we call the innovator’s
method: an end-to-end process for creating, refining, and bringing ideas to
market. Drawing on our research of hundreds of established companies and start-