Innovation hacks straight out of Silicon Valley

Never in history have so many stressed corporate managers been exhorted by their C-suite bosses to “Innovate, now!” In their annual global CEO survey , PwC lists innovation at the very top of the business agenda, ahead of even human capital. But the results are sadly less than impressive. The global analytics firm Nielsen estimates that nine out of 10 product innovations fail. The reality is that middle managers simply don’t have the tools, or the right mindset, to make innovation happen.

One obvious place to learn is Silicon Valley. After all, every start-up is a new product, service or solution going to market; essentially the same idea-to-value process large organisations are hoping to emulate. With this in mind, I’ve recently designed and led the first London Business School (LBS) Silicon Valley “innovation safari” for 25 senior executives from Faurecia Group, a major component and parts manufacturer in the automotive industry. We identified practical techniques that would cross over from the nimble entrepreneurial “Davids” to global “Goliaths”.

Here, I’ll share our top four insights, so you too can benefit from our West Coast odyssey.

1. Don’t sell a product, solve a problem

Start-ups don’t become a prisoner of their history, because that history is very short. As a result, they think more creatively about the best industries to disrupt. Their priority isn’t selling a product, but finding the perfect ‘product-market fit’ where the customer need is the most pressing. Serial entrepreneur Sean Sheppard of GrowthX Academy, who worked with our Faurecia innovation teams in San Francisco, put it this way: “Entrepreneurs do not need a product – they need a problem. Especially a problem they can solve well.”

The result of this problem-focused approach is a fluid, two-sided thinking process. The product is developed in parallel with exploratory customer conversations in a variety of different industries. Take the impressive young entrepreneur Sahas Katta, the brain behind the tech start-up Smartcar. We met Sahas at the legendary venture capitalist firm Andreesen Horowitz, located amid the low-slung buildings of the iconic Sand Hill Road.

Katta has built a technology platform that enables SMART phone apps to easily and securely communicate with vehicles. This allows other companies to develop time-saving services. One such is having your groceries delivered to your car while it’s parked (and you’re elsewhere). Sahas realised his best customers weren’t going to be car manufacturers. Instead, he is building a business to serve the hundreds of app developers keen to access the automobile industry.

Ask yourself: What is the problem your product is best-placed to solve? What other customer types that have the same problem?

2. Walk in the customer’s shoes

Amazon founder Jeff Bezos would insist on placing an empty chair in management meetings. It was a symbol to represent the needs of the customer. Entrepreneurs are obsessed with the perceived value of their product in the eyes of the customer. This goes beyond the obvious questions such as: ‘Who is our ideal customer?’ and ‘Will she want our product?’ It explores a deeper understanding of how she behaves, what makes her happy or frustrated, what she truly cares about.

This empathetic approach is an echo of the design thinking pioneered at Stanford University’s D-School and in the Palo Alto-founded global design agency IDEO. The first step of this human-centred process is always is to empathise with the customer, preferably by direct, hands-on observation. To walk in their shoes. Using the language of Zen Buddhism, entrepreneurs bring a humble ‘beginner’s mind’ to how a product works in the life of the user. The art of innovation is to question everything, rather than mindlessly accept what has gone before.

Ask yourself: What can you do to walk in the shoes of your customers? How might you inject a “beginner’s mind” in your innovation team?

3. Don’t look for Mr Right, find Mr Right Now

The life of a start-up is inherently time-limited. They live only as long as their venture capital lasts. They provide proof of concept, which allows them to access more VC financing. Or they die like a mayfly in midsummer. To cope with this reality, they can’t wait for the perfect moment and the flawless version of their product. Instead, they develop a “beachhead” strategy: an initial customer that offers feedback and much-needed revenue.

Eric Howie, founder of Life Detection Technology, is pioneering a product that captures heart and respiration rates without touching the human body. When he brainstormed potential customer types the list ran to a lengthy 41 industries. But his beachhead strategy was to focus on just one: baby monitoring. Sean Sheppard sums it up like this: “they’re not looking for Mr Right, just Mr Right Now”.

Reid Hoffman, the San-Francisco-based founder of LinkedIn, famously remarked: “If you are not embarrassed by the first version of your product, you've launched too late.” Rebecca Homkes, Strategy and Entrepreneurship Teaching Fellow at LBS and an integral part of our Valley team, said: “Corporate executives often take too much time trying to hit the jackpot. They go to market only when they have it all figured out. If you have a good idea that solves a critical problem, we will figure out how to scale eventually”.

Ask yourself: How might you speed up your innovation strategy by finding a “Mr Right Now”?

4. Think Big, Start Small, Learn Fast

Entrepreneurs experiment, learn, then pivot. They don’t lock themselves into long-term plans. Strategy is less valuable in an innovative space because nobody knows exactly where it’s going. This means instinctively favouring home-made cardboard mock-ups over expensive, fully-developed pilot products. Small steps over giant, risky leaps. It’s not just about saving money, it’s about learning faster than the environment is changing.

Prior to founding GrowthX Will Bunker was the founder of One-and-Only.com, the internet dating site which was acquired by Ticketmaster and rebranded as Match.com. He advised us: “Velocity of experimentation matters: It’s all about getting to the truth about your idea as quickly and cheaply as possible.”

LBS is in the forefront of helping large corporates use experiments to innovate with clients in industries as varied as automotive, banking and food and drink. The trickiest mental hurdle for corporate executives is to fully grasp the difference between experiments and projects. A project is often imposed from the top down, with a known and desired outcome. Experiments are radically different. The outcome is learning, they are inspired bottom-up and iteratively conducted as quickly and cheaply as possible.

The value of experimentation increases with the number of experiments you do. Giant Silicon Valley tech companies run a huge number: Intuit, Google, Amazon, Netflix and Facebook all run between 1,300 and 10,000 every year. The beauty is that experiments can utilise highly frugal approaches such as rapid prototyping, cheap role playing, low-cost digital surveys and crowdsourcing.

It’s understandable that global companies want to aim for the highest quality products and to crack billion-dollar markets. The irony is that a preoccupation with perfection in the long-term often prevents people from taking the first faltering steps in the short term. The corporate desire for guaranteed success is a recipe for an innovation desert – or gold-plated disaster.

These hacks challenge this mindset of fake surety and unchallengeable assumptions. They are a rapid and inexpensive way to help corporate middle managers to think, and act, like Silicon Valley entrepreneurs.

Ask yourself: How might you introduce experiments into your innovation toolkit?

Greg Orme is a London Business School Associate Programme Director and author of 'The Spark – How to Ignite and Lead Business Creativity'