4 Steps to bolder innovation… with much less risk

I love the way Astor Teller, head of Google X, put it in his TED talk: “We spend most of our time trying to prove we’re wrong. We cheer… ‘Hey, how are we going to kill our project today?!’” Does this describe breakthrough innovation at your company? Or is the following more familiar:

  • The landmines that blew up past projects could have been recognized earlier.
  • We work on the “easy stuff” before addressing the toughest issues.
  • Nobody wants to tell management the project should be stopped.
  • We shy away from transformational innovation due to past failures.

At the root of the problem is this: Many business leaders consider high-stakes projects to be “risky” when they should simply treat them as “uncertain.” In order to assess risk, you must be able to assign a probability of a negative outcome. When you start a transformational project, you don’t have this information. You’re simply uncertain.

Your job is to learn as early and cheaply as possible.

 Is this just semantics? Far from it. When facing uncertainty, your job is to learn as early and cheaply as possible. It’s not about bravado, gambling, or fear of broken promises. It’s about learning intelligently. Here’s how to do this in a repeatable fashion that lets you become bolder and safer at the same time.

Step 1: Diverge to a broad range of risk factors

Imagine your company makes composites for wood decking, and someone has this bright idea: “Maybe the shipping cartons used by Amazon and others could be made out of our recycled plastic and wood fibers. Just think: better water resistance, stacking strength, and abrasion resistance, right?”

Your project team begins by brainstorming as many possible risk factors as possible. These should be phrased as, “For our project to succeed, it must be true that…”

Diverge to gather risk factors in Blueprinter software

When your team can’t think of any more risk factors, create a consumption chain. This is a step-by-step map showing how customers interact with a product: select, order, receive, use, maintain, and so on. This will generate fresh risk factors you missed earlier.

Then put all risk factors into one of three buckets: Market Dynamics, Internal Capabilities, and Customer Outcomes. In the graphic shown here, these are yellow, green and blue sticky notes, respectively.

Step 2: Converge to those risk factors that matter

The Certainty Matrix in Minesweeper software

Now it’s time for your team to rate each risk factor for impact and certainty. For impact, the scale ranges from “irrelevant” to “required.” For certainty, the choices range from “unknown” to “certain.” We like to have each team member first vote independently using a web-based app. Then a facilitator guides the team to a single rating.

The final team rating must not be a consensus where the majority rules. After discussion among team members, the final rating is whatever the most cautious team member is comfortable with. So if one team member thinks a risk factor has higher impact or lower certainty than the other team members… his or her rating is used.

Why so cautious? We use Minesweeper® software to place each risk factor on the Certainty Matrix shown. Those falling into the red (danger) or yellow (caution) zones will be further investigated. And hopefully the team will learn enough to move them into the green (safe) zone later. But if a team unwisely places a risk factor in the green zone at the onset, they won’t investigate further and could get a nasty surprise later.

Step 3: Investigate with a CheckPoint Plan

Any risk factor in the red or yellow zone is investigated by the team. It assembles a CheckPoint Plan that details “who does what by when.” Typical activities assigned here include…

  • purchasing secondary market research
  • conducting interviews with potential customers
  • working with industry experts
  • running preliminary lab experiments

Most of these activities can be done rapidly and inexpensively. If some require more investment, save them until you have quickly “cleared out” the other risk factors. In most cases, your team will move a red or yellow risk factor “up” on the previous chart (from uncertainly to certainty). But in some cases you’ll learn that what originally seemed to be “high impact” was not.

Step 4: Intelligently communicate progress to management

Your team needs a “Gantt chart to manage risk.”

Here’s the part most teams get wrong. Their progress reports to management are not comprehensive, and they do not boost confidence. The teams “zoom in” on some risk factors like a randomly-operated microscope, but they fail to show the big picture. Management senses this and asks, “But what about this?… and did you think about that?”

The Project Risk Profile in Minesweeper software

Contrast that to a 500-line Gantt chart used to guide a big project: Management asks if you’ve remembered three activities, and you say, “Sure, as you can see, these are covered on lines 146, 342, and 428.” Does this boost management confidence? You bet it does.

Just as a Gantt chart manages tasks, resources and timelines, your team needs a “Gantt chart to manage risk.” This is what the Project Risk Profile (also from Minesweeper software) does, as shown here.

At a glance, management can see where the major risk factors lie that still need to be investigated:

  • Market Dynamics: those risks common to anyone trying to pursue this market segment
  • Required Outcomes: end results customers now receive and must continue receiving
  • Desired Outcomes: end results customers would like to begin receiving
  • Internal Capabilities: competencies our company must have to succeed.
  • Required Solutions: our company’s ability to deliver Required Outcomes
  • Desired Solutions: our company’s ability to deliver Desired Outcomes

You must delivery all Required Solutions and at least one Desired Solution.

A quick note on the last two: To succeed in this market, you must deliver all Required Solutions and at least one Desired Solution. Fail in the last part, and you’ll enter a “red ocean” with a me-too product… and predictably disappointing results.

Learning More

I hope this process sounds simple… because it really is. It’s all about carefully planning your work before rushing into it.

We find that in just a day or two, a project team can get a wonderful grip on its risk factors, with a clear plan to knock them down one by one. Just as important, they can now intelligently discuss their risk-reduction plan with management. For more on how this works, check out our video here. We’re also happy to give you a free demonstration of Minesweeper software, which is now available as an “upgrade” to Blueprinter 5.0 cloud-based software. Just contact us.

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