Photo: by Anna Dziubinska in Unsplash.com
How can you mitigate the risk associated with bringing new or unfamiliar industry concepts to market? ‘Disciplined experimentation and agile commercialisation is the best way to do it’, says Peter Skarzynski.
The top innovation strategist spoke on October 2, at the last of three webinars featuring his special participation. The session was hosted by Pedro do Carmo Costa, Exago’s director and co-founder.
In previous presentations*, Peter defined guidelines and techniques for sustaining innovation within organisations and promoting insight-enabled innovation. This time he shared principles and methods of de-risking promising but uncertain concepts through a ‘test-learn-apply’ approach to commercialisation.
Understand the risks
The de-risking process starts with surfacing and prioritising critical unknowns regarding customers, economics and operational capabilities. According to the best-selling author, this means adopting an end-to-end view – building genuine expectations by asking: ‘What is our product and service point of difference? Who is the target and what is the benefit delivered? How do we go to market? Configure our channels? Create and capture value?’
‘Too many organisations view risk too generally and abstractly. You have to understand the difference between perceived and actual risks, such as regulatory, legal and geopolitical: things you can’t change,’ Peter said. So, ‘stretch, elaborate and iterate the opportunity’.
Test fast, test cheap and scale up
Then you have to learn and refine the opportunity through market experiments. Peter elaborated, ‘Design and manage an in-market experimentation plan to refine and iterate your new concept, often through small, cheap, fast, under-the-radar experiments.’
Innovation means experimenting boldly and often, since failure is part of the process. Peter gave Google as an example. ‘In one year, Google explored more than 13,000 proposed changes, 8,200 were tested in side-by-side comparisons, 2,800 were evaluated further in “live traffic”, 516 improvements were made to the search algorithm. That´s a 95% failure rate.’
Having enabled rapid experimentation, in-market scale steps in. But the process does not end. ‘Experimentation techniques can and should be used post-launch too, as they continue creating value’, he concludes. ‘Post launch innovation and experimentation is a practitioner’s frontier.’
Peter Skarzynski advises large, global organisations on strategy, innovation and organisational change and is a recognised leading expert in enabling renewal and growth by embedding innovation sustainably in large companies. He is a frequent corporate and conference speaker and a best-selling author. Recently published, his ‘The Innovator’s Field Guide’ (Wiley, 2014) details market proven methods and approaches to address the most critical innovation challenges facing organisations of any size.
*Have you missed Peter’s previous webinars? Know more here:
‘How can you sustain innovation inside your organisation?’
‘Insight enabled innovation: Principles and practice’
Feel free to request more information at webinars@exago.com.