Feb 5, 2018
"Ideas are cheap; execution is everything," entrepreneur and venture investor Chris Sacca once said.
No doubt, execution is essential. A diamond is just a rock in the ground until it's been mined, washed, cut, and polished. But you have to admit that ideas are exciting — sometimes a little too exciting.
A while back, our New York team was working with a client that kept giving us new project ideas to sink our teeth into. At first, it seemed fantastic. As a young company, our finances certainly could've used the boost. But we didn't want to put too many eggs in one client's basket, and we certainly didn't want to spread ourselves so thin that our work suffered.
So we leveled with the client. We doubled down on its most promising projects, skipping those that were merely fun. Although we'll never know whether we dropped a solid gold idea, we asked ourselves five questions to choose our top projects:
Risk is a double-edged sword. On one hand, ignoring a project's risks can put it on the fast track to failure. In a survey from PMI, 27 percent of those polled said projects usually fail because of undefined risks. But avoiding risky ideas is a big risk in and of itself.
Risky ideas have the potential to be huge! The key is to prototype and test those ideas quickly and methodically. We use a framework for this called experiment-driven design, much like Lean Startup's build-measure-learn cycles.
So if you've got a big backlog, first cut it down with a precheck for potential regulatory or internal political hurdles. There's no sense in putting in all that work only for the project to get shut down. Then, test the riskiest of the remaining concepts and iterate on those that show promise.
With a telecom client of ours, for example, we decided to conduct one or two experiments per week from its list of third-horizon concepts. We moved quickly without dwelling, running user tests and stakeholder interviews until only the best bets were left standing.
At every business, initiatives fall into a few buckets, or horizons. Some of them are first-horizon projects, which keep the lights on and paychecks flowing. Second-horizon projects are for the near future. Third-horizon concepts are where things get interesting. Such long shots can fail, certainly, but they could be the company's savior decades down the road.
Can it be tough to make room for moonshots? For sure. With one client, we needed to continue building its existing product, focusing on 2 or 3 percent improvements. Hardly "big" stuff. But after some talks with the client, we carved out 10 percent of that budget to test some groundbreaking ideas. We didn't neglect the core product, but we started looking down the line at what could yield new funding or customer segments.
If you have a third-horizon team, you've probably been tempted to have it tackle something that could generate revenue in time for that next earnings report. But true third-horizon innovators should focus on outlandish ideas that could generate extraordinary results — think a 10- or 50-fold boost to revenue or customer engagement.
At the end of the day, companies exist to make money. Their innovation teams exist to help them do that. We get that.
But there are lots of ways to make money, some of which are more obvious than others. An idea could open new markets, improve the efficiency of a process, reduce staffing needs, or bring one of many other business benefits. It could even cut into user base growth — but tremendously increase the satisfaction of current users.
On a recent project with a major cruise line, our team worked to perfect a facial recognition system to improve customer onboarding. Obviously, making the customer happy takes time and money. But when those jaw-dropping ideas are brought to life, it can create an industry-leading (and revenue-realizing) customer experience.
Third-horizon teams work in an uncertain world. The ideas they chase often take them to places that they'd never expect to end up. Speaking from experience, that can be exciting, but it can also be overwhelming and time-consuming.
A nod to Lean Startup's minimum viable product, Jeff Gothelf's minimum viable conversation offers a smart way to control time investments. Instead of learning every detail about a project's subject area, conduct a minimum viable conversation to learn or communicate only what's needed.
Much of this depends on your timetable. If you have the luxury of time and money, feel free to dig into something that sits west of the y-axis on Giff Constable's Truth Curve. If your team needs a quick win, focus on a more well-known concept. The trip up the curve will be quick, and you'll have a tangible product sooner. Just don't sic your third-horizon team on something that might be better left to its first- or second-horizon peers.
Ideally, every innovation will translate to happier customers. But not every customer segment is equally valuable, and it's not all about the size of the segment. If you offer a freemium version of your product, for example, it might still make sense to prioritize the paying — but probably smaller — customer group.
While working on an innovation backlog for a credit card company, for example, we focused only on 1 percent of the user base. While working to grow user referrals, we realized that just one in 100 customers were delivering 80 percent of the referrals. Once we were satisfied with our work for that 1 percent, we dug into projects for the other 99. Talk about room for growth!
As someone whose professional home is in third-horizon territory, I know it's easy to become mired in big ideas. Innovators tend to have not just one "aha!" moment but dozens of them. Only by asking the right questions and prioritizing ruthlessly can creators avoid paying the price of indecision.