From capturing to creating value
Nathan Furr (United States) is a professor of strategy and innovation at INSEAD in Paris and a recognized expert in the fields of innovation and technology strategy. He has multiple books and articles published by outlets such as Harvard Business Review and MIT Sloan Management Review, including his bestselling book The Innovator’s Method.
Lean Startup has helped entrepreneurs, designers, and software developers manage uncertainty, but many managers and leaders struggle to apply these tools within their organizations, as they often run counter to traditional managerial thinking and practice. How do you suggest to solve this?
If we are honest, the real issue isn’t the difficulty of adopting Lean Startup.
Lean Startup is just one of several emerging methodologies (e.g., design thinking, agile methodology) that provide valuable tools to navigate the uncertainty of innovation.
The real issue is how to manage uncertainty, which is something very difficult for traditional management. Why? Because traditional management was designed to solve a different problem. Traditional management was developed in response to the coordination problems created by the emergence of large firms during the Industrial Revolution. Thus traditional management was developed to help managers capture value—to execute, optimize, and coordinate. It wasn’t developed to help managers create value—to discover, explore, and pivot.
Lean Startup represents one of many tools we are finding we need in this era of uncertainty to lead a more agile organization. This doesn’t invalidate the value of our existing management knowledge, but it does mean we need new tools to complement our existing traditional management tools if big companies are going to survive in an environment of increasing uncertainty.
To follow up on this, you talk about the Innovator’s Method. What is that?
I believe that Lean Startup, design thinking, agile methodologies, business model innovation, open innovation, and ideation are all related tools to manage the uncertainty of innovation.
Like the proverb of the blind men feeling and describing different parts of the same elephant, these frameworks each provide unique insights into the innovation process, but they ultimately describe the same underlying thing—the innovation process. The Innovator’s Method is a synthesis of these many frameworks and insights from our research about how to apply these tools in established companies.
Can you give some examples of these tools being applied in established companies?
First, we observed that many companies start with a single methodology (e.g., design thinking, agile methodology, or Lean Startup) and then eventually integrate two or more frameworks to create what is essentially the Innovator’s Method.
Our hope is that the book provides these firms a shortcut. But we have seen the ideas applied by many companies beyond more well-known examples (e.g., Amazon and Google), including Intuit, General Electric, Unilever, Philips, Cisco, United Technologies Corporation, and more recently, companies like Telenor and Solvay.
These methods are used for individual innovation projects (e.g., Cisco’s CHILL-X spinning out healthcare and supply chain startups) as well as transforming the company to become more agile (e.g., Telenor, General Electric, United Technologies Corporation).
You mention the Cisco CHILL-X, which is a very interesting concept, I think.
To those who don’t know about Cisco’s “innovation machine,” they have, among other things, their Cisco Hyper-Innovation Living Labs (CHILL). True to its name, CHILL provokes disruption by emulsifying solutions from noncompeting companies in various industries. This involves mustering senior executives from Fortune 500 companies at undisclosed locations around the globe for 48 hours. The locations of these conclaves are trivial; it’s the ideas and solutions that are most intriguing.
Of course, a big part of this lies in the leadership. So how does a leader support innovation in the best possible way?
Most leaders feel a great deal of responsibility as the chief decision-makers to lead the way into the future, but I would encourage leaders to see themselves instead as the chief experimenter. When you face uncertainty, rather than trying to be the next Steve Jobs and hope you can correctly guess the future, I encourage leaders to empower junior people to run the rapid experiments that will reveal the future. This involves helping to frame the experiment, liberate the resources, and then constructively push people to create the future with you.
So let us talk a bit more about CHILL and Lean Startup. CHILL is a boot camp for innovation. The Minimum Viable Products (MVPs) are raw prototypes born from sheer brute force. This makes sense, because Lean Startup is designed around the idea of uncertainty.
However, don’t we actually know quite a lot about the future, if we just manage to distinguish between hard and soft trends and understand the new technologies shaping our world?
I’m not sure we know what the future will be. I think we all know things are changing quickly, but where it will end up we may not understand well enough. We may never understand it until we arrive.
I believe we could learn something important from physics. Physics is the most tangible of all the sciences yet the only science with an uncertainty principle. In essence, the uncertainty principle underscores that there is fundamental uncertainty in the universe that no amount of measurement precision can resolve (i.e., the uncertainty principle argues the more precisely we try to measure one value, such as speed, the less well we understand its paired value, such as position). I think the same could be said of our macro future—we know things are moving fast, but the faster it moves, the less well we understand where it will end up.
What do we do tomorrow? Instead of the more general advice, what should the reader of this book do tomorrow? A five- or ten-step plan—as concrete as possible.
In the Innovator’s Method we lay out a four-element plan about what to do to generate ideas and turn them into new businesses.
More generally, I believe that in a world of uncertainty, taking action is the most powerful tool we have. One of my co-authors, Kate O’Keeffe, likes to say that she spent the first half of her career obsessed with finding the measures that could identify an innovation success early on. Ultimately, she gave up and argued, “Just start doing stuff.” I do believe there is magic in action. It reveals the uncertain landscape. So, beyond the book, I would simply say, Start today.
Perfectionism is a disease. Procrastination is a disease. ACTION is the cure.
Richie Norton