The Innovation InitiativeHow to get your whole company thinking and acting like owners.

Michael Harris VP of Information Technology, Ecommerce Inc.

My Contact Info

@mikeharris22

mharris22

michael.harris@ecommerce.com

Goals For This Talk

• Inspire business improvement through innovation

• Introduce a methodology for driving innovation within your company

• Share an example Ecommerce Inc innovation initiative

What Is Innovation?

Merriam-Webster defines innovation as:

1 : the introduction of something new2 : a new idea, method or device

“Innovation is the specific instrument of entrepreneurship...

the act that endows resources with a new capacity to create wealth.”

— Peter Drucker

Innovation On Purpose

• “Real” innovation is about truly understanding a problem and delivering solutions... consistently, deliberately and methodically

• The most successful companies have learned how to innovate with purpose using repeatable processes

Fast Company’s Most Innovative Companies of 2012

Source: http://www.fastcompany.com/most-innovative-companies/2012/full-list

Why Innovation Matters

• Innovation is often the difference between OK and Great

• A culture of innovation leads to engaged, passionate, motivated employees

• A culture of innovation denounces complacency

• Innovation will positively affect your bottom line

What Innovation Means To Apple (#1)

"Innovation distinguishes between a leader and a follower."

— Apple co-founder Steve Jobs

"Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It's not about money. It's about the people you have, how you're led, and how much you get it."

— Apple co-founder Steve Jobs

How Most Companies Attempt To Innovate

• Pay Consulting Firms To Help (Mentor)

• Rely on Leadership To Make The Right Decisions (Smartest Guy In The Room)

• Go With Their Gut (WAG)

We Needed a Better Way To Innovate ...

• We needed cost effective solutions

• We needed fresh ideas

• We wanted to create opportunity and excitement within the organization

• We needed a sustainable, organic solution

• We wanted to win :)

The Innovation Initiative Was Born

Primary Goals

•Create a culture of innovation and continuous improvement

•Focus the company’s best and brightest talent on our most challenging business problems and our most interesting opportunities

• Increase revenue and/or reduce costs

Program Structure

• Bring together small, cross functional teams (4-8 members)

• Each team receives a specific challenge to solve

• Teams operate in an entrepreneurial, “think tank” environment

• Teams are given full autonomy to innovate with full resource support (within reason)

Team Formation

• Select the best and brightest from each functional area (IT, Marketing, Sales, Operations, CR etc)

• Purposefully mix it up - experts and newbies

• No declared leader - let the team decide

• Celebrate the privilege of being selected

Advisory Board

Form an advisory board (AB) from company Sr. Leadership

• AB provides an experienced sounding board

• AB’s job is to support and challenge, not lead or restrict

• AB creates team accountability

• AB authorizes additional resource requests

Innovation Team Principals

• Prove Success or Fail Fast (either is a win)

• Leave your day job at the door (you are co-owners/partners)

• Wear Many Hats (do whatever it takes)

• Work Hard and Have Fun (make a difference)

• Think Outside The Box (be creative and innovative)

• Leverage Your Advisory Board (benefit from past experience)

Innovation Team Process

• Self organize (you create the process)

• Brainstorm and collaborate (all ideas count)

• Meet in person whenever possible

• Dedicate at least 20 focused hours per week (ideally 100%)

• Publicize progress (weekly status)

• Time box problems/solutions

• Seek out subject matter experts (SME’s) as needed

• Meet with your advisory board frequently

• Plan for small, frequent wins (eventually they will snowball into bigger wins)

Innovation Team Deliverables

A “Proof” for Success

•Project Proposal

•Marketing Plan

•Sales Plan

•Working Prototypes

•Design Mocks

A “Proof” for Failure

•Why this is a bad idea or investment

•Possible alternatives

OR

Innovation Team Conclusion

• The innovation team presents their proof to Sr. Leadership for consideration

• The project proposal will be weighed against competing opportunities and if approved:

- Project will be funded and moved to the “factory” for delivery

- Team members participate in the solution delivery as subject matter experts

• Team members get the opportunity to see their project through from beginning to end

Pre-Kickoff Marketing

• We made a concerted effort to build interest and excitement

- Email Teasers

- Posters

- Team T-Shirts

- Hand written invitations signed by the CEO

Posters

Posters

Initiative Timeline• Prioritize company challenges and create problem statements with metrics

• Started with company wide pre-initiative marketing (1 month)

• Worked with area leaders to select candidates and issue invitations (1 month)

• Kick-off meeting

• Innovation process (normally 2 - 6 months)

- No overall time box as long as progress is being made

- Timeline is relative to problem difficulty, team availability and project proposal required level of detail

- AB meetings as needed (every other week suggested)

• Innovation team town hall (1-2 months into launch)

• Innovation team project proposal to Sr Leadership (or open invite)

• Team celebration (important to celebrate successes)

• Hand over to factory for build/implementation

Advice/Lessons Learned

• Limit the number of innovation teams you run concurrently

• Try to include someone with project management skill on each team

• Truly empower your employees and it will pay back early and often

• Provide as much background material on the problem as possible

• Ensure that your problem statement goals are SMART

Advice/Lessons Learned Continued

• Truly challenge and stretch team members; this is an opportunity for stars to rise

• Team success is largely dictated by the effort of individuals

• Plan for increased workload on those not participating

• Reward success

- We provided iPads and a nice dinner with the AB at the conclusion of each project

- We gave out gift cards and “pat on the backs” along the way

Our Results

• We have completed 5 innovation projects to date

• We realized a sustained gain of more than $30k per month from one team in the first 3 months of its existence

• We created a new customer control panel focused on usability and user insight that is currently in beta

• We have 3 more “proven” winners queued up for the factory

An Example Kickoff Presentation

Team Persona(The Teal Team)

The Innovation Initiative

•To earn money

•To be challenged (to learn)

•To solve interesting problems

•For fulfillment/pleasure

•To change the world

•To build your reputation

•To be part of a team and/or mission

•To be appreciated

"Act as if what you do makes a difference. It does."— William James

Why Do We Work?

The Innovation Initiative Will Enable You To

Fulfill Many Of These Goals

What is theInnovation

Initiative?

The Innovation Initiative was created to focus the company’s best and brightest talent on our most challenging business problems and opportunities.

With this unique initiative, we will bring together several small, cross-functional teams. Each will receive a specific challenge to solve. They will then be given all available resources – within an atmosphere of total creativity and innovation.

Why Now?

Increasing Average Revenue Per Customer (ARPU) is a largely untapped opportunity.

Every day that we fail to act, we are throwing money away.

The only way that we can seize the opportunity and start the transition from good to great is with your innovation, creativity, insight and most of all hard work.

Opportunities Abound

Why You?

Each of you have been specifically selected because you have demonstrated excellent skill, job knowledge, intelligence, drive and initiative.

We Believe In You!

"The innovation point is the pivotal moment when talented and motivated people seek the opportunity to act on their ideas and dreams."— W. Arthur Porte

How DoesAn InnovationTe

am Work?

• Prove Success or Fail Fast (either is a win)Leave your day job at the door (you are co-owners/partners)Wear Many Hats (do whatever it takes)Work Hard and Have Fun (make a difference)Think Outside The Box (be creative and innovative)Leverage Your Advisory Board (benefit from past experience)

Innovation Team Principles

"Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It's not about money. It's about the people you have, how you're led, and how much you get it." — Steve Jobs

What Is The Innovation

Team Process?

• Self Organize (you create the process)

• Brainstorm and Collaborate (all ideas count)Meet in Person Whenever Possible

• Dedicate at least 20 focused hours per week

• Publicize Progress (weekly status)

• Time Box Problems/Solutions

• Seek out SME’s as needed

• Meet with your advisory board weekly

• Plan for small, frequent wins (eventually they will snowball into bigger wins)

Innovation Team Process

"One thing is sure. We have to do something. We have to do the best we know how at the moment . . . ; If it doesn't turn out right, we can modify it as we go along." — Franklin D.Roosevelt

What Does An Innovation

Team Deliver?

• A “Proof” for Success

- Project Proposal

- Marketing Plan

- Sales Plan

- Working Prototypes

- Design Mocks

or

- A “Proof” for FailureWhy this is a bad idea or investment

- Possible alternatives

Innovation Team Deliverables

"Discovery consists of seeing what everybody has seen and thinking what nobody has thought."— Albert von Szent-Gyorgy

What Do We Do With The

“Proof”?

•The innovation team will present their proof to the Sr. Leadership team for consideration.

-The project proposal will be weighed against competing opportunities and if approved:It will be funded and moved to the “factory” for delivery. Team members will participate in the solution delivery as subject matter experts.

•You will have the opportunity to see this project through from beginning to end.

Innovation Team Post Delivery

"Creativity is thinking up new things. Innovation is doing new things."— American economist Theodore Levitt

What Is Your Challenge?

Your challenge is to provide the company with invaluable insight, clarity and understanding of our existing customer base. Explicitly stated, we would like you to profile 50% of our customer base within a 3 month period, 80% within a 6 month period and develop a strategy to maintain the 80% level while also sustaining a data “freshness” factor of 6 months or better.

Team Persona Problem Statement

"Innovation is the process of turning ideas into manufacturable and marketable form."— Watts Humphrey

But Wait There’s More?

“The way to get good ideas is to get lots of ideas and throw the bad ones away.”— Linus Pauling

Key Questions:• What type of information should we collect

about our customers to best support ARPU initiatives?

- Demographics

- Persona Qualifiers

- Product Utilization

- Customer Goals

- Customer Satisfaction

• How do we encourage customers to provide us with additional information without pestering them?

Tackle the final 20% to move as close to 100% customer coverage as possible.

Bonus Goal

Customer Metrics

Metrics as of 3/29/2011•Total Number of Distinct

Customers in GHCP = ###,###

•Total Number of Active Hosting Customers (Shared, VPS & Public Cloud) = ###,###

•Total Number of Customers With At Least One Active Product = ###,###

State Of The Customer

Team Persona Problem Background

"Innovation distinguishes between a leader and a follower." — Apple co-founder Steve Jobs

• Personas Developed

- Pass the eye test but not yet data backed

• Customer Value Scoring

- First attempt at assessing total customer relationship

• Surveys Attempted (limited success)

• Profiling capabilities not yet built into services or ordering

• Very Limited Voice of the Customer

How Do Customers Respond?

The Five A’s:

"The essential part of creativity is not being afraid to fail."— Edwin H. Land

Every time a customer interacts with our company, it leaves an imprint on them; pushing them either towards higher loyalty or further on the path to abandonment

Suggested Next Steps

And Resources

• Assemble team and determine meeting and project logistics

• Plan brainstorming session

• Meet with Advisory Board for additional problem background (Fathi, Mike)

Next Steps:

"If it is to be, it is up to me." - Anonymous

Resources:• Project Proposal Template (Mike H.)

• Personas, Value Scoring and Customer Analytics (Mike H.)

• The Temkin Group (http://experiencematters.wordpress.com)

• Basecamp Project

Thank You