Kurt: Welcome to the IN90 Academy, where you will learn how to turn your ideas into reality in only 90 days. I'm your innovation coach, Kurt Baumberger. Let's get started.
Kurt: In this podcast, we're going to talk about adopting an innovation mindset. But let's start by introducing ourselves. I'm here with nine-time Emmy Award winner Bob Rathbun who's our Storytelling and Pitch coach.
Bob: And Kurt, it is a thrill to be with you. It's not often you get a chance to sit down and chat with someone who has worked with everyone from Apple to Tesla to G.E. to Coca-Cola. And started up a half a dozen companies to boot so it's a real pleasure for me to be with you.
Kurt: Well, I appreciate that. But you've also had a pretty amazing journey as well. Broadcasting for 30 years on every network and every media format and speaking around the world. You've certainly had an opportunity to see and interview some great leaders and coaches so I'm looking forward to hearing about what you've learned about leadership, teamwork and, of course, storytelling.
Bob: So let's start with a really tough topic. Kurt, you've read hundreds of books and journal articles on innovation. Why do innovation projects so often fail?
Kurt: I think it's helpful to just start by defining innovation. Innovation is the introduction of something substantially and meaningfully new; a radically new idea method or device. And I put emphasis on radical because I think a lot of times people get confused and think that an incremental improvement is an innovation. While it may be something that's new, it's not radically new. It's not substantially and meaningfully new. So when you think about the synonyms; a "brainchild" or a "breakthrough" or a "creation" or an "invention" - incremental improvement just doesn't match up with those words. Performance improvement is more like the antonyms of innovation; to "copy" or "clone" or "imitate" or "replicate." That's more descriptive.
Bob: So what is a good way to think about innovation when there are so many different definitions out there?
Kurt: I'd love to say that I've come up with a really great definition, but I've got to give credit where credit is due and that's with McKinsey & Company. They've come up with a model called the Three Horizons Innovation Model.
Kurt: Quite simply, what they've decided after they looked at all of their clients around the world is that Horizon 1 is really much more about making those incremental improvements, the tweaks and the derivations of an existing process. It's nothing new. But often times those are called innovations because they are new to the organization. Yet, it's not true innovation because it's not a breakthrough.
Kurt: Horizon 2 is where breakthroughs begin. Horizon 2 could be a new product platform that extends your current competencies in a meaninful way. In other words, a Horizon 2 innovation is different and it makes you more competitive, but it's still not going to be substantially different to disrupt the market. So you might see a nice uptick on some of your key measurements like revenue and profitability, but you're not going to see anything that's going to be transformational.
Kurt: Horizon 3 innovations are where you're looking at something like Uber or you're looking at the iPhone; something that comes in and changes everything. And that's Horizon 3. Horizon 3 innovations take a lot of courage, a lot of investment, a lot of strategic intent on the part of a company, but they're necessary. Those are the projects that are really important to drive the organization forward.
Bob: So the next question is obvious. How do you get to a Horizon 2 or a Horizon 3 innovation and what does it take to get there?
Kurt: There's really a combination of four factors that are important for an organization to get there. And one of them is Design Thinking. A lot of people have been talking about Design Thinking and they want to know how does Design Thinking work? What is this new fad? Well, it's hardly a new fad since it was begun in the 1960s. But it's popular now because it provides a way to empathize with your end user and come up with better solutions by understanding the context of how people use your solution.
Kurt: The second factor is Agile Development. And people are also thinking of this as a new methodology, but it isn't. Agile Development came from the 1970s when software developers and engineers were trying to be more predictive in terms of what they were doing. So rather than have these long three-year time horizons, they said, "Hey, let's set milestones that are closer and let's deliver against those so that we keep the momentum going."
Kurt: The third factor is Iterative Prototyping. That's something that has emerged more recently where people are recognizing that it doesn't make sense to invest a lot of money to come up with a final solution right off the bat. Instead, organizations are looking to build something small and see what works. And organizations recognize launching something that is "good enough" is the best way to learn how to continuously improve it. A lot of this experience comes from software development where companies release Alpha versions, then go to Beta versions before the final release.
Kurt: The fourth factor is Storytelling. And great storytelling is something that is grossly missing today. I've sat through hundreds and hundreds of entrepreneurial pitches and in the first two minutes, I am either in or I'm out. And it's all based on the story. It's even worse when you go to corporate America, because in the corporate world, every presentation is done by PowerPoint. It's as if PowerPoint is the story, rather than an aid in telling the story.
Kurt: And people slave over those slides that they project on a screen, yet no one's paying attention to them. They're paying attention to the person who's presenting. It's just crazy to me.
Bob: It's the best speech I ever read.
Kurt: Exactly. You look at those PowerPoint slides and they've got a million words on them and there's no story. And I think that fourth component of innovation, Storytelling, is really missing today.
Kurt: Now, you can think of these four components of innovation kind of like the Fantastic Four or the Four Horsemen or the Fearsome Foursome. You can call it whatever the heck you want, but remember those four things: Design Thinking coupled with Agile Development, Iterative Prototyping and Storytelling.
Kurt: But Design Thinking is where you have to start. As I mentioned earlier, Design Thinking was started back in the 1960s by a guy named Horst Riddle.
Bob: What a great name. You don't see many Horsts anymore.
Kurt: No. And when you have a guy named Horst, you need to mention it just to get people's attention. Remember, it's all about the storytelling.
Kurt: So Horst was a guy who was a Design Theorist and he studied what he called "wicked problems." They were problems that were very complex and very hard to breakthrough. Design Thinking is actually a really great methodology for complicated situations and I think almost everything out in the marketplace tends to be very complicated. That's why there's so much interest in Design Thinking.
Kurt: The power of this methodology comes from the fact that you need to be able to have deep empathy for people and experience the pain that they're suffering. Only then are people more likely to understand and care about why it's so important to alleviate their pain. Designers can then design things, whether it's a product or a service or a solution, that can actually alleviate the pain and that's what's really important.
Bob: So Kurt, how do you go about doing that?.
Kurt: The first thing that you really need to do is to get people on board who want to be part of the solution. One of the things that a lot of companies are struggling with right now is the fact that nobody wants to be on another project. Everyone is already overwhelmed. No one can really handle anything more and everyone says, "Why in the world would I want to take this thing on?" So the real challenge is to get them onboard by explaining to them that this innovation project is not going to be like a typical project.
Kurt: Think about the lifecycle of a typical project. It always starts out as, "This is the best idea ever!" And then over time, you become less enthusiastic and say, "Okay this is a little harder than I thought." A little more time passes and you say, "Wow, this really sucks and it's boring!" And then finally, you reach a point in the project that I call, "The Dark Night of the Soul."
Bob: We've all been there.
Kurt: Yes, we've all been there. And then some more time passes and you say, "Well, it'll be good to finish because I'll learn something for next time." And then when you're finally done, you're relieved that it's over and you say, "It sucks, but it's not as bad as I thought." Well, if all the projects that you've worked on follow this trajectory from the high of "This is the best idea ever!" to "The Dark Night of the Soul," you've got to create an environment where your innovation project is going to be different. The way to do it is with Agile Development.
Kurt: If you run an Agile project the right way, then every two weeks you're asking for executive feedback and you have a very disciplined approach. You start on the first of the month and you present on the 15th for feedback. You start again on the 16th and you finish up at the end of the month. By having that cadence and that predictive kind of experience of getting executive feedback where you are learing what they like about your project and what they don't like, the team gets engergized.
Kurt: It's really invigorating because now the team has something to go work on and received confirmation that it's headed in the right direction. It's that kind of two-week cadence going back and forth that keeps your enthusiasm high as opposed to spiraling down into "The Dark Night of the Soul."
Bob: And Kurt is going to show you as we go through this program, how the pressure of the deadline is a positive not a negative.
Kurt: Absolutely. Because without deadlines people drift. And what we really want people to realize is that deadlines are good. We want people to move quickly because we only have 90 days. And we'll talk later about why limiting projects to 90 days is so important.
Kurt: But if you think about most projects, people frequently don't want to be on a project because they think of it as a year long commitment. Well, how might people react if they knew your innovation project is only 90 days, people would get feedback from the top executives every two weeks, the team would reach a "Go/No Go" decision after 90 days, and each individual is only responsible for a small portion of the project?
Kurt: All of a sudden, the project looks interesting and achievable. And not only is it achievable, it has a high ROI requiring very little time and providing a big return for you personally and politically within your organization. So that's the second key to success; commit to tangible deliverables on a two week basis to keep enthusiasm high and the project momentum going.
Kurt: The third thing key to innovation successs is to develop Iterative Prototypes. What I mean by prototype is a way to explain your conceptual idea in a tangible and visable way. In the 1970s and 1980s as Design Thinking emerged, there was a recognition that some groups were doing much better than others in terms of bringing their ideas to life.
Kurt: The groups doing much better were advertising agencies and architects; people who turned things into physical objects where people could look, touch and feel the object and provide feeedback and input. The groups that struggled were engineers and designers of consumer products who labored over project plans, stage gates, and other control and command processes.
Kurt: But the more visual the output, the more likely you were to build more enthusiasm for your idea. And remember, a prototype is really just the first expression of your idea. You've got to recognize that 50 percent of whatever you come up with is going to be wrong. And it takes a lot of courage to recognize that half of what you've developed is wrong. But that's what happens. And it's only by listening to feedback that you can make quantum leaps. But the most important thing about Iterative Prototyping is having a bias for action. You've got to go build something and building forces you to get all of the team's enthusiasm channeled into that outcome.
Bob: And the fourth key to innovation success, and a personal favorite of mine, is storytelling. You know, you can have this wonderful idea, a long list of needs, an understanding of the pain and suffering out in the marketplace, and a solution to alleviate the pain, but if you can't tell the story properly, you're sunk. Storytelling is so important, not only getting interest in your idea in the beginning, but also down the road when you take it out to others.
Bob: Sometimes your idea will fail simply because of your story. We don't want that to happen. Which is why storytelling is the fourth component of innovation success. Just like any movie you've been to or any TV show that you've watched, great stories have a beginning, a middle, and an end. You've got to put the components together in a sort of a rhythmic presentation. You want your story to build to a crescendo and build tension as you tell that story. And we can help in so many different ways to demystify this process.
Bob: People have said that the greatest fear in life is public speaking. Death is number two. So we're going to try to alleviate some of that. And we'll explain how to "get up on stage" to make your pitch, how to feel very comfortable, how to tell your story, how to interact with others and how you can sell your big idea.
Kurt: Chaning your mindset is the first step in selling your big idea. You need a very different innovation mindset than the efficiency mindset you typically have when you go into work. Here's what I mean. Most large organizations are masterful in being efficient. Most individuals are responsible for overseeing a specific process or processes. You have metrics and measurements to know if process is running along as expected, and you look for are derivations to that process.
Kurt: If something good happens, you want to try to accelerate it or replicate it. If something bad happens, you want to fix the problem and usually add more processes to insure it won't happen again. Ninety percent of the time, something bad happens and you're trying to fix the problem.
Kurt: That's why people are frustrated at the end of the work day. Ninety percent of their day was just spent trying to fix things rather than build things. I think the most powerful aspect of the Innovation Mindset is build solutions that fix problems. You may not be able to fix everything, but you will fix something and you're probably being asked on an innovation team because the solution is going to touch on a part of your job. For that reason alone, you should think of joining an innovation team; it will make your life better.
Bob: Now, you've got a little bit of self-interest or skin in the game.
Kurt: Exactly. This is why the first component of the innovation mindset is so persuasive. When you focus on human needs, you will build what people want and not what you want to build.
Kurt: This is different from the Silicon Valley mentality of "If I build it, they will come." Well, sometimes that's the case. But if you look at the track record of most Silicon Valley venture capitalists, they have a couple of really big wins and the rest are all failures. In fact, roughly 90 percent of VC portfolios are failures and that's largely because they aren't really addressing human needs.
Kurt: Let me give you an example. I recently went to the Consumer Electronics Show and most of the new products focused on the Internet of Things or IoT. And there were all these different product offerings. The one that really struck me was a hair brush that was connected to the Internet. Now, I know as a bald guy I'm not really qualified to talk about hairbrushes, but I know what they are used for and I see my wife use one every day so I'm going to go out on a limb here.
Kurt: I asked the company about the benefits of being connected to the Internet. And they said, "You can count the number of strokes that you make on the right versus the number strokes on the left. And, you can tell whether you are brushing up or down." And I said, "OK, so what do you do with that information?" They replied, "You'll know whether you're treating one side of your head and your hair differently than the other." I asked, "What do you do with that information?" And they never had an answer. This is Exhibit A on just because you can build it, doesn't mean that you should."
Bob: Someone funded this?
Kurt: Yes, and someone spent a lot of money to get a booth at the Consumer Electronics Show. There was another product that I saw which was very similar. It was a device that would look at your facial texture and determine what kind of moisturizer you might need. You placed the device on a part of your skin and then waited until an analysis was conducted up in the cloud.
Kurt: The analysis would tell that part of your face is dry and needs some moisturizer. Here's the thing. The total elapsed time from when you started this assessment to the time you found out that you needed some moisturizer was four minutes. I'm thinking that I can put moisturizer all over my face and be done in ten seconds. So I didn't get it. It was just another situation where just because you can build something, doesn't mean that you should. Make sure your innovation mindset is ruthlessly focused on human needs.
Kurt: The second component of an innovation mindset is really listening deeply. You don't want to listen for a validation of your idea, but rather to really to understand what's truly needed.
Kurt: Let me give you an example. I worked with a lighting company that wanted to leverage their technology to adjust the ambience and the temperature of their light fixtures. They believed people would be interested in creating different moods for different times of the day in different situations.
Kurt: But when we went out and we talked to actual consumers, they told us ambience and temperature were really nice, but what they were really concerned about was their safety. People wanted their lights to turn on as they (or someone else) approached their house and entry door. Safety was the number one concern.
Kurt: Nobody in the company had even thought about safety because in their narrow view of the world, everyone should know how to use their lights to provide safety. They also didn't understand the depth of people's fear. People were afraid of the unknown. They were afraid of the unexpected. It was only by listening deeply, that the company realized creating ambience for a dinner party versus putting kids to bed was a "nice to have" feature, not a "need to have" feature. People really wanted to be able to turn lights on remotely using a smartphone to provide safety and alleviate their fear. You have to really try to understand what people are saying and be courageous enough to recognize that your idea might be completely wrong.
Bob: And we will show you, as we continue, how to take your ideas, get organized, and listen deeply to validate your idea and act on it. So there's more to come on this. We are just whetting your appetite.
Kurt: The third component of the Innovation Mindset is to show, not tell. And this is kind of my mantra that you'll hear over and over again, "Death to PowerPoint. Death to PowerPoint." In order to really get people engaged, you have to build things. You have to create experiences, visuals, and stories to engage people's imagination. Until you do that, you can't sell your big idea. Everyone talks about their ideas, but talk is cheap. Doing something is far more valuable.
Kurt: Let me give you an example. There was a project that I worked on with for a health care system interested in taking care of millennials. As you can imagine, millennials are younger people who are generally very healthy, don't need a lot of care, and, quite frankly, don't think about their health all that much. But the health care system had secured a contract to get the millennial population in their region engaged in healthly behaviors to get them as healthy as possible.
Kurt: The health care system immediately focused on getting people to be more active to increase their cardiovasular health. They already had an email list so they thought they could just launch an e-mail campaign with a reminder to get up and go walk.
Kurt: I said, "Well, let's turn these emails into something tangible because you need something to take to the marketplace for feedback. So they spent a lot of time designing, writing, and crafting these stylish emails. (I failed in my efforts to get them to just draw stick figures on a piece of paper which would have worked just as well.)
Kurt: It surprised the team that millenials were not interested in emails. In fact, many of them only used email for work. They said the message, creative, and media were all wrong. No one was going to care and no one was going to pay attention. But the team did learn that their was power in providing a "Gift of Health."
Kurt: So the team went out to the market a second time with another round of prototypes. This time their message came in the form of a physical gift. The gift was put in a box that looked like it could have been something from Amazon. But it was gift wrapped and the recipient had to unwrap it. There was so much joy in opening a present, especially when they got a little gift of a Fitbit or a special invitation for a road race or mountain hikes or river rafting trip.
Kurt: Now, everybody was excited both giving and receiving a gift every month. The team figured out a way to get the cost of each present down to less than ten dollars per person. And they've been giving the gift of health to these millennials for over a year now by making it tangible and by having a bias to show, not just tell.
Kurt: The fourth element of the Innovation Mindset is to simplify your vision. Many times, people claim to have a vision of being more profitable or driving revenue or increasing throughput. But that's not a clear vision. What you need to do is frame what you're talking about and figure out a solution and a path forward on a messy problem that will inspire people.
Kurt: Let me give you an example of that as well. The vision of one innovation team was to increase the throughput at a doctor's office. They wanted to put iPad's in a waiting room at a doctor's office. They thought people would want to look at information about their condition and become educated. They felt like an educated patient is the best patient. They would sell advertising to pharma companies, drug stores, and other health care providers..
Kurt: But the doctors hated this whole process. The patients would come in for the visit and they started asking all these questions. Should I do this or do that? Well, what about this?It was a disaster. Throughput came to a crawl.
Kurt: But the doctors liked one thing. They liked patients using the iPad's to rate their experience of the doctor visit. They loved it because if they got a bad score, they could immediately intervene and correct it. The doctors were frustrated that they could receive bad ratings online and there was very little these proud professionals could do about it.
Kurt: What needed to happen was to simplify the innovation vision. It wasn't important to educate all these people or tie into electronic health records or suggesting different kinds of treatments. Doctors simply wanted to get better feedback and better ratings. Initially, the innovation team planned to charge three thousand dollars a month for a very complicated system. When asked, the doctors said, "I don't want all of this education and HIPPA integration stuff, but I'll pay 5000 dollars if you get me better ratings.
Kurt: In the end, the innovation team could make more money by simplifying their vision and tying it back to human needs and understanding deeply what's going on.
Bob: Diversity is the fifth component of the innovation mindset.
Kurt: Diversity in this situation is not what you would think it is. it's not about the color of people's skin or their beliefs. It's the notion that you have to think about all kinds of different stakeholders up and down the value chain. What I mean is you have to think about your idea from a lot of different perspectives.
Kurt: Let me give you an example. There is a new dispensing system that's come out from Coca-Cola called Freestyle. It is a dispenser that allows you to pour over 100 different drinks from a single machine. When this project first started, I was working on it.
Kurt: When we began, we knew that we had to think about it from a lot of different perspectives. Of course, one perspective was the consumer. We wanted to give them more choice. That was easy.
Kurt: But then we had to think about the restaurant owner. What do they want? What are they looking for? We also had to think about the distribution system which was usually a Coca-Cola bottler. What did they want? What are they looking for? And then we had to look at it from internal supply chain and accounting perspectives. Why? We discoverd there was a big problem tracking exactly how much product was going to each location, when it arrived, and how much should be billed and collected..
Kurt: So diversity, in Innovation Mindset terms, means looking at all of those different stakeholders to figure out what's important. The innovation team ultimately figured out the easiest way to satisfy the external bottlers and to satisfy the internal supply chain and accounting folks was to minaturize the beverages cartridges and deliver them via U.P.S. This allowed the company to track everything that was shipped and that tracking mechanism could then feed back into the accounting system. The bottlers liked the system because they didn't have to do anything and still got paid. So that deal worked out really well for them.
Kurt: The fifth component of the innovation mindset is building only what you need. You should only focus on solving the biggest problems and not every problem. For the Freestyle dispenser, they didn't try to build it for everybody who might serve a fountain drink. They started out focusing on a narrow target and found out that movie theaters were a great place to start because the innovation team could learn a lot. Movie theaters attract a good cross-section of people with a wide variety of beverage preferences. So the innovation team started small and now are expanding this dispensing system into other channels. You'll see it more and more in your local stores, and eventually they'll start to come into some of the regional or national food service chains.
Bob: I just want to explain, "What in the world are they talking about?" We're discussed a beverage dispenser from Coca-Cola that produces a plethora of beverages from a single machine with a single nozzle. Kurt, how many different beverages are we talking about here? How many different products of Coca-Cola are available out of this one fountain?
Kurt: I believe it can dispense up to 106. I could be wrong. I know the number is over 100. In the past, a single piece of equipment could dispense six to twelve different beverages. So this is something that is definitely a game changer. Particularly for the restaurant owner who makes 80 percent margins on beverages.
Bob: But there are so many choices. How do you educate the consumer to know what's available? Especially, if you're encountering this for the first time?
Kurt: Your question leads me to the seventh component of the Innovation Mindset. You need to experiment and iterate. The intial digital screen on the dispenser tried to display all of the available brands. But it was very confusing. So the innovation team experimented by displaying carbonate brands and non-carbonated brands. That didn't work very well so now they are experimenting with different categories like low-calories to see how that works. Because they can change the actual display, they're starting to experiment by suggesting things that go well with the food offerings at an individual restaurant. Over time, this experimentation got them to a completely different place from where they started.
Bob: Now, if you'd like to try something different and fun, the next time you visit our great city of Atlanta, go to the World of Coke downtown and you can try beverages around the world for free. And you can take your new knowledge to a Freestyle dispenser and know you'll be happy when you really have put your money down.
Kurt: That's so true. The last component of the Innovation Mindset is to "Go for Great!" You know, a lot of times the world settles for less and you really need to fight for greatness. This is a challenge. It takes a lot of courage to do. But it's also very important.
Kurt: Let me give you an example. There is a startup called NeuroPlus. They came up with a way to use virtual reality to reduce the impact and the effects of ADD and ADHD among children. As you can imagine, putting a virtual reality product out for children, going through clinical trials, and trying to change the behavior of children was a daunting task. But they went for great because they were passionate about their work.
Kurt: It took them about three or four years to finally have a working prototype. The working prototype was necessary just to get started with clinical trials. But now they're looking to see if their technology might help the elderly who are starting to show signs of dementia and Alzheimers. The hope is to train the elderly to keep their brains sharper.
Kurt: This is a situation where you have to be in it for the long haul. You have to recognize that your innovation is not going to come and be completely manifest in 90 days. What we're suggesting is you commit to 90 days to know whether you're directionally on target or not. That's what's really important and what we're talking about with this Innovation Mindset.
Bob: What we've done here is prime the pump and establish the fundamentals of innovation. We've discussed the four core "secrets of success"; Design Thinking, Agile Development, Iterative Prototyping, and Storytelling. And we've gone through the eight different components of the Innovation Mindset that you need before you can go further down this trail. I guess the next thing, Kurt, is to let people know how they can get a copy of the Innovation Mindset.
Kurt: Just go to IN90pro.com then go to the in 90 Academy section of the website where you can download a PDF of the IN90 Innovation Mindset. It's a combination of a description of what we talked about but it's also very visual. The combination of the visual and the verbal will remind you to adopt that mindset on your next innovation project. And if you have any questions about it, just book an appointment on our calendars on the IN90pro.com website. There's no charge for an appointment. We just want to help you sell your big idea.
Bob: We do. We want to get you funded. We want to get that great idea off the napkin it into the marketplace. What are we going to talk about in the next podcast?
Kurt: Now that we've got the right mindset, it's time to roll up our sleeves and get to work. The first thing you need to do is to go find an executive to support your idea. We'll explain why it's so important to demonstrate the vulnerability to the organization and how dangerous it is to just make incremental improvements. Essentially, we'll show you how to push executives toward those Horizon 2 and Horizon 3 opportunities.
Kurt: We're going to go over the IN90 framework which is a Design Thinking approach to systematically strip out idea or concept risk, product risk and market risk. It basically takes all of the risk out of the process so that people feel more confident in backing your big idea. We'll also talk about how to become visual to get excitement and interest in your idea. We'll discuss how to select a big problem that people will focus on because it's actually going to move the needle and make the organization less vulnerable. And, finally, we'll talk a little bit more about this notion of Agile Development and how to deliver in 90 days.
Bob: We will take you step by step. Sounds excellent to me.
Kurt: Innovation is hard. But it doesn't need to be. We'll show you what to do. Go out and build something. Thanks for listening!