Oct 27, 2017
Leading a third-horizon team is like jumping out of an airplane. The thrill of free-falling is tempered by the knowledge that you might be headed for a crash landing.
That’s why smart parachute junkies and third-horizon innovators plan ahead. For the former, it’s literally a life-or-death situation. For the latter, it's potential project death at the six-month check in. This is when C-suite stakeholders typically start asking questions, and without honest, smart answers, you might as well have a malfunctioning rip cord.
It isn’t the fault of the inquirers that so many third-horizon experiments tumble to an early demise or, alternatively, are shoved into second-horizon territory. Understandably, executives are skittish of anything that threatens the company's here-and-now products.
But even if it's blue skies ahead for your project, you can't expect executives to let it continue unchallenged. As the project lead, it's your duty to prove its worth.
As designers and developers by trade, my team and I learned the hard way that innovation initiatives must be more than technically strong. Not long ago, one of Philosophie's projects, a performance management tool, was shot down at the six-month mark.
Technically, we were humming along. We'd built out its data intake and gamification systems, but we'd neglected something even more important: user validation.
What we should have done was onboard plenty of users and obtain feedback. We didn’t, which meant we couldn’t paint a compelling picture of why our model was different than other dashboards. Without user data to stand on, we couldn't impress the project's stakeholders.
But like many lucky skydivers, we lived to jump straight into the heart of innovation again.
When a cruise line wanted to make onboarding simpler using facial recognition and beacons, we put its vision into action. Together, we debuted the prototype at a massive press event to showcase this unheard-of way to quickly get passengers into ships. At the event, people “boarded” a simulated cruise ship with a working facial recognition prototype loaded with images of the attending press members.
That prototype gave just a glimpse of our full project. But it was more than enough to show stakeholders that our work was worthy of continued investment.
Half a year flies by, so plan from day one for the four big questions that you’re most apt to encounter at your six-month weigh-in:
Executives evaluate first-horizon businesses by comparing performance against predictions, so be prepared to address these types of questions. We all know that predictions in startups are never right, and yet we have to play the game for investors. What they really need to know is whether or not the idea has traction and there’s an ROI somewhere down the line. Show that you’re innovating without overspending by being buttoned-up at executive check-ins.
Do your best to align the results you are getting with your stakeholders’ metrics. You might not be able to hit on all of them, but that's not necessarily a deal breaker if you can explain why. Another tactic is to try is Steve Jobs' famed “one more thing” approach. Delivered at MacWorld San Francisco in 1998, Jobs' very first "one more thing" was that Apple was once again profitable. It wasn’t necessarily expected, but it was exciting to hear.
When presenting your progress to execs, try saving a similarly unexpected metric for last. Think of it as your back-up parachute: life-saving information that will leave stakeholders impressed and wanting more.
Third-horizon projects are founded before a market is really established. But if your timing is right, you should begin to see movement in the space within six months. How accurate was your initial market assessment? Is it headed the right direction? Is there momentum? You won’t have revenue at this point, but you’d better have data. Use it to refine your revenue estimates, just like startups do when pitching investors.
Take the executive's context into consideration. If a company is doing billions in annual sales, a couple million promised from a third-horizon project might seem like peanuts. Know your total addressable market going in. More so than any other metric, your project's TAM shows how far-reaching your experiment could be.
It’s a sad fact: Third-horizon innovations are considered threats by many in business. For this reason, third-horizon teams are usually somewhat separated from their organizations — but they still need executive buy-in.
That's why having allies within the company is essential. The more you can accumulate to provide air cover, the better your chances of landing on terra firma.
Try to find at least one supporter on another team, such as a finance, legal, or IT leader. Ask that person to join you for the six-month progress review. If the winds are in your favor, his or her input will provide important extra-team validation in the eyes of the c-suite.
Eric Ries got it right when he said the companies that learn fastest will win. In the weeks leading up to your six-month evaluation, take note of all the unexpected things you uncover about your industry, business, and customers. These learnings will fuel growth — not only for third-horizon projects like yours, but also for the main business.
Executives who ask this are trying to understand how you will use your insights to make better decisions moving forward and teach other teams. It’s the perfect opportunity to share user feedback — positive and negative — and how you plan to apply those insights.
Third-horizon experiments are a leap into the unknown. Executives understand that. But at the six-month mark, they want to hear more than ideas. They're looking for progress, potential profitability, and applicability to other areas of the business. If you can't show them those things, then prepare to pull your 'chute.