Originally published in BA Times on January 25, 2016.
In past articles in this series, we covered topics such as the similarity between business analysis practitioners and entrepreneurs and the types and stages of entrepreneurialism.
In part 4, we focused on innovation and entrepreneurship and suggested that we could contribute to innovation in our organizations through intrapreneurship. But there are different types of innovation and different intrapreneurs are suited to different types of innovation. The author Tony Davila mentions four types of innovation, centered on whether they are incremental or breakthroughs, and summarized in Figure 1. [i]
Figure 1: Types of Innovations
Part 4 of our series included thoughts about how business analysis practitioners can best contribute to the various innovation types. Business analysis can certainly help with all four categories. This article will focus on how it can help with the two most applicable types of innovation and expand on how practitioners can best contribute to innovation.
The upper left-hand quadrant of Table 1 is perhaps the most traditional form of innovation. It has its roots as a “continuous improvement process” (CIP) but it is more than CIP. First, CIP is often done by the workers who perform a process or build a product. It is often a by-product of doing the work vs. an independent effort.
A continuous progress effort is similarly incremental, but performed by a specialized team with a charter to create improvements or “innovations” in a product or process. These teams are ideal avenues for intrapreneurs to help create innovations since they are focused on doing just that vs. workers focused on their normal jobs. The independence of intrapreneurs allows greater potential for innovations as opposed to smaller improvements.
Innovation translates ideas into products or services that customers will pay for.[ii] We would extend the definition to include new product features added to existing products as well as creating completely new products. According to Davila this quadrant is implemented “top-down,” meaning that the new products or features are requested by management and the development team is responsible for bringing them to life.
Example of Continuous Progress Innovation: The insurance company where we have our homeowner’s insurance accepts claims and helps homeowners recover from losses. They have long provided us with booklets and reminders to record our valuable possessions in the event of a fire or other catastrophe. We have yet to do more than superficial noting of our valuables by using a paper-based method that would easily burn up in the case of a fire!
Two recent continuous progress-type innovations they have created include 1) cataloging our possessions using a smart phone and uploading them to the company’s system (this feature has been such an easy and effective way to record things that we actually used it!), and 2) video submission of claim damages. While we fortunately haven’t had to use this feature yet, the concept is appealing and would save time when submitting a claim. Neither of these would be called a “breakthrough,” but they are valuable and count as innovative.
Learn more about Influencing Skills, key components to becoming more entrepreneurial.
The top right-hand side of Table 1, Emergent Improvements, are usually implemented in a “bottom-up” way. These types of innovations are also tailor-made for intrapreneurs, since they are suited to efforts by teams with the time and the responsibility to create innovative solutions. Whether bottom-up improvements remain incremental or become breakthroughs depends on several familiar factors.
- Time. The amount of time given the team to create new products and/or features. Creativity takes time, especially when trying to learn from customer use and preferences for the products we build. The more time, potentially the more breakthrough innovations can occur.
- Risk Tolerance. Organizations that have high risk tolerance can potentially achieve more breakthroughs than those who are more risk averse. Often there are huge failures (remember the Apple Newton device? No, well, that proves our point) before the breakthroughs occur (the iPhone). If the organization feels it cannot tolerate big failures, then the incremental kind of innovation is more feasible.
- Project Delivery. For IT innovations, an “adaptive” or agile type of project approach will generally be able to deliver more breakthroughs than a “predictive” or waterfall type. An adaptive approach to building products is better able to adapt to how customers will use a product or feature. Plus, adaptive methods are structured to learn from quick and early delivery of features and to adapt future deliveries based on that learning. A predictive approach tends to plan longer cycles. True, predictive approaches can be done iteratively and incrementally and benefit from the use of visual models like prototypes. But, they often fall into the trap of trying to predict how customers will like or use something long before product features are developed. Feedback loops in a predictive approach are not as direct and as a rule products are modified less in that environment than in an adaptive one. This fact results in potentially unused features and functions.
- Size Matters. The smaller the change, the more incremental the innovation. Breakthroughs usually require a larger “leap forward” than incremental improvements.
Example of an Emergent Improvement: A few years back Target Stores was falling behind its competition in social media engagement with its customers. The project started as a top-down Strategic Bet by management and a small intrapreneurial team was formed to work on it. The team hatched the idea of using a Facebook page they named Cartwheel to provide shoppers with discounts based on the type of products they frequently bought. The idea won management support and quickly grew to a large team of 200+ part-time people and bogged down.
To break out of the quagmire, the team convinced management to down-size the team to 50 full-timers (still a somewhat largish effort). They got approval for the team lead to become the product owner with final decision-making authority. The third key element was to convert the Facebook page into a mobile app and to release it in beta form. That allowed the team to monitor and change it in real time and to respond accordingly.
With the independence gained from these changes, the effort turned into a successful bottom-up innovation. Target’s share of social media engagement rose 251% the year after Cartwheel launched and 80% of that was attributable to the new app.
The above example started off as a Strategic Bet, and stalled until the team involved was able to turn it into an Emergent Improvement. The smaller sized and dedicated team was more effective. Successfully managing the risks of releasing an app in beta form allowed some of the innovation. Changing the project delivery mode to an adaptive approach supplied much of the rest of the innovation.
Organizations have different tolerances for innovation and that is an important factor for how we can be most effective at helping them innovate. This article listed various ways that business analysis practitioners can help contribute to innovation based on the various types, focusing on the two most likely ones.
[ii] “The Innovation Strategy Big Companies Should Pursue,” by Tony Davila, https://hbr.org/2014/06/the-innovation-strategy-big-companies-should-pursue/. Downloaded April 12, 2015.