Tools for fast strategic innovation, part 2: The five day process to support idea validation and risk management.
I recently did my EMBA about fast strategic innovations during which I created a set of practical tools and a process that should help anyone involved in innovating and validating new business. The process is simple and helps you to produce a report that answers to "Should we proceed with the innovation and invest in it or not?" within a week. The process will help you bring value in the shortest time meaning also that you won’t be wasting anyone's key resources, typically time and money. I’ll be presenting the process in three different blog posts. In this second post I present in more detail the five-day process and methods I developed for strategic innovation to support idea validation and risk management. Read the previously published part 1 for more information on the risks and motives related to innovation behind the developed model.
Behind the created model
Value Proposition Design, which I often use, provides concrete tools that perfectly fit strategic innovation by introducing a clear and visual way for thoroughly understanding the customer needs, comparing value proposition to competitors, and analyzing the global environment. To support the straightforwardness of Value Proposition Design with a more research-oriented approach, I include some aspects of design thinking into my model. Design thinking is an interactive process where the beginning of strategic innovation happens in the “research and define phase”: one needs to gather lots of information in order to understand what is relevant. The empathetic focus of design thinking helps to understand the real needs of actors such as the customer.
At the beginning of strategic innovation, the focus is on the “research and define phase” of the design thinking process.
For the actual work (collecting, combining, and visualizing information), I warmly recommend using digital tools that make it easy to add and edit text, create and re-use visual elements such as post-its and images, and create PowerPoint-like presentations – all inside one space. My choice in this moment of time is Figma, but there are many other good options available.
Before the 5-day process starts
Before the actual 5-day process begins, you need to get an assignment and collect the required related information. The target needs to be clear, and it should be backed up by all the relevant data that the company has to provide at this point. The assignment can be in the form of a hypothesis: “We believe that this idea has business potential.”
When the assignment is clear, the process can start to find an answer to the key question or to validate the hypothesis.
Research and define (the first 4 days)
In the process, there are four main phases for collecting and analyzing information:
- DAY 1: Market (overview, competition, typical business models, etc.)
- DAY 2: Customers (understanding the key customers, assessing value propositions)
- DAY 3: Competition (key competitors and their business model)
- DAY 4: Macroeconomic forces (markets, economy, customers, trends).
Each of the four phases are limited to one workday (7,5 hours). Limiting to 7,5 hours forces to be efficient: to constantly assess and focus on the work and give up on fine-tuning. The process allows an iterative way of working, and it’s encouraged to move between the four bases, adding information and insights as it builds up. Everything goes well when all of the four points of view are equally addressed.
Collect the information in the Internet
Information gathering can be done by searching the internet – everyone has the skills. The collected data needs to be gathered and here, supporting tools and methods are needed. I suggest the following:
- Forming the overview of the market with a customer journey map (source: design thinking)
- Understanding the customer needs, pains, and gains and the value proposition that addresses those needs by filling Value Proposition Canvas (source: Value Proposition Design)
- Understanding the competition and comparing value propositions by filling Strategy Canvas (source: Value Proposition Design
- Understanding the macroeconomic forces by listing the key forces (points of view: markets, economy, customers, and trends) and visualizing the effect with pluses or minuses (source: Value Proposition Design
Summary of the findings (day 5)
The last day is all about collecting every bit and detail into a clear summary that focuses on key findings, conclusions, and suggestions for the continuation – or to drop the innovation process. This summary is the first validation point in the innovation process: now we have enough information that we can estimate if the idea will succeed or not.
After the 5-day innovation process
If the innovation is seen as viable, feasible, and desirable, the innovation process will most likely continue after the validation. In this case, it is to be remembered that the summary is most likely faulty in many ways. The work should continue in an iterative manner, defining and validating the information gathered during the initial process. It’s good to keep in mind that one risk mitigation method in product innovation is to collect information iteratively throughout the whole innovation process.
In the next blog post, I’ll consider process and methods from its user’s point of view:
- How to use it effectively
- Where and when to utilize it
- The effectiveness and generalizability of the solution
- I’ll also add some concrete examples and tips for using the tools presented in this post.
Read Part 3: Why to use the 5-day method