Big data, blockchain, artificial intelligence, virtual reality, augmented reality, robotics, 5G, machine learning... Billions and billions are poured into projects around these technologies, and for most organizations, not much is coming out of it.
And this is not because these projects are badly managed. Quite simply, it is because they should not have been started in the first place.
I believe that one of the main reasons that many innovative technology projects are started comes down to a fear of missing out, or FOMO.
FOMO is the pervasive apprehension that others might be having rewarding experiences that you are not. This social anxiety is characterized by a desire to stay continually connected with what others are doing.
FOMO can also be described as a fear of regret, which may lead compulsive concerned about the possibility of missing an opportunity for social interaction, a novel experience, a profitable investment, or another satisfying event.
In other words, FOMO perpetuates the fear of making wrong decisions on how you spend time and money, and it’s all due to your imagination running wild.
This fear is not limited to individuals. Organizations are victims of FOMO as well. And you will find that fear prominently on display in the many technology innovation projects that are started.
So before you start your next technology innovation project, please ask yourself the following fourteen questions. And if you’re not happy with the answers, don’t start spending time and money just because you fear missing out.
1) Why do anything at all?
First, be sure the project lies clearly in the direction your organization is heading.
It’s important to fully understand your organization’s latest strategies, priorities and targets. This helps prevent fundamental errors early on. Strategic thinking could even reveal larger opportunities than you first considered. After all, a complex technology project requires your very best people and a great amount of their focus.
2) Why do this exactly?
There are three basic ways to create value: earn more, spend less, or do things more efficiently. Decide what you’ll focus on and be able to explain why the project will do something meaningful towards that.
What customer do you want to serve with this solution? Will it involve selling more to existing customers, or pitching to entirely new ones? What job do you want to help them do better? Is the problem even big enough?
Clayton Christensen, the famed Harvard Business School professor known for coining the term “disruptive innovation,” believes that one of his most enduring legacies will be an idea he first put forward in his 2003 book "The Innovator’s Solution": don’t sell products and services to customers, but rather try to help people address their jobs to be done.
What if the benefits of the project are less tangible at this stage? Proceeding in order to gain market and product knowledge, develop new capabilities, find new partners and test possible models is perfectly valid. The challenge then is to articulate the benefits effectively.
3) What does success look like?
Before you start a project it's essential to work actively with the organization that owns it to define success across three levels:
i) Project delivery success is about defining the criteria by which the process of delivering the project is successful.
Essentially, this addresses the classic triangle of "scope, time, budget." It is limited to the duration of the project, and success can be measured as soon as the project is officially completed (with intermediary measures being taken, of course, as part of project control processes).
ii) Product or service success is about defining the criteria by which the product or service delivered is deemed successful.
For example, the system is used by all users in scope, uptime is 99.99 percent, customer satisfaction has increased by 25 percent, operational costs have decreased by 15 percent, and so on.
These criteria need to be measured once the product/service is implemented and over a defined period of time. This means it cannot be measured immediately at the end of the project itself.
iii) Business success is about defining the criteria by which the product or service delivered brings value to the overall organization, and how it contributes financially and/or strategically to the business.
For example, financial value contribution (increased turnover, profit, etc.) or competitive advantage (market share won, technology advantage).
Once these possible benefits are projected, examine whether those outcomes are realistic.
4) Will people pay for it?
This seems quite self-explanatory, but the amount of products that large organizations build for which there is little eventual market appetite is not to be snickered at. You want to build prototypes to not only validate the product/solution fit but also the revenue/pricing model.
5) Will it cost less to deliver than people are willing to pay for it?
What's the cost of delivery per customer and customer acquisition cost? You need to understand this and compare it to the lifetime value generated per customer. If each customer is worth approximately $1 million but it costs us $1.1 million to deliver said product, then you're operating at a loss and need to rethink your business model.
6) Is there already an effective but ‘less innovative’ solution to your problem?
Many of the problems we try to solve in technology already have solutions that we know work. For example:
> WORM storage vs. Blockchain when it comes to immutability
> Simple scripts vs. expensive RPA solutions
These solutions are not new and we have plenty of data to show that they are effective in solving the problem that they’re trying to address.
If the problem that you’re looking to “solve” already has proven and effective solutions, then maybe you don’t need an innovative new idea. You just need more funding for boring solutions that actually work.
7) Has it been done before?
It's important to look at already available analogs (other products that validate market appetite) and antilogs (products that invalidate market appetite).
For example, analogs for the iPod were the Sony Walkman (these validated mobile music consumption) and MP3 players (these validated that people would download MP3s to external devices). Likewise, you want to identify failures and understand why they failed and whether or not this learning presents an opportunity.
Be aware that other organizations may have already attempted the innovation that you are advocating, and failed. One of the problems we face in development is that not all failures are reported, making it hard to learn from all that has come before us.
8) Are you trying to solve the underlying problem using only technology?
Technology can do many things to an existing process. For example, it can:
> Make the process faster
> Make the process more reliable
> Store lots of data
> Make the process more interactive
> Allow people involved to communicate more easily.
However, technology alone cannot solve an underlying problem. Taking a bad system and replicating that bad system with better technology won’t necessarily lead to improvements.
In my experience, the most effective innovation projects are ones that make incremental improvements to an existing process or system using technology (e.g., making the process faster, more reliable, etc.).
A fundamental requirement is that people are already using the existing system. If they don’t use the existing system, then they probably won’t use the new one.
9) Can you test it relatively quickly, economically and effectively using your existing networks and ability to prototype?
If you can't, then you won't be able to move quickly enough and may over-commit time and money to something that there may be little appetite for. However, today all it takes is a little imagination to build prototypes for even the most ambitious technical endeavors. The first prototype for Google Glass was built in just one day.
10) Is this scalable?
If you are successful in finding product market fit and validating your business model, what will it take to scale up by 100x, 1,000, or 10,000? Can you scale, or do you need funding and partners? How would you go about that? Would scale affect your business model and what makes your company tick? What would be the cost per unit if you scale? Will your business model still make sense?
11) Why not wait?
Why act now? You need to be able to explain why failure to act now will threaten the organization.
There is often less risk in not being first to market. Competitors can react quickly and effectively, simply learning your methods and replicating your gains without making large investments themselves.
The net result then could be restricted to temporary market share gains and, potentially, lower long-term industry prices. Even if you’re seeking to respond to a new functionality launched by a competitor, be sure of why you can’t wait to see their market reception before initiating action.
If the additional revenue gains are not large enough to win sufficient internal support over other opportunities, you must be able to point to other reasons that compel action now.
12) Who could or should do this internally?
Often, the source of innovation is not where the execution ability sits.
Identify which internal departments need to be involved. If the project proceeds, they will hear about it anyhow. It’s better to learn from their perspective and insight early on.
This is also important if you need both central corporate and local divisional sponsors, and it is unclear where the full cost should appear.
13) Who externally could do this better?
Determine if you have the necessary skill-sets internally to achieve the optimum outcome.
It is expensive and risky to create an entire new platform yourself unless the opportunity is large enough. Can you outsource some of the components involved? Instead of developing new systems, could licensing or working with a third-party vendor improve speed, flexibility, and scalability? Maybe you could buy a startup in the space you are looking for.
14) What else could I do instead?
In a competitive trading environment with constant pressure to innovate, the project generation, review, and approval process often only involves a few individuals. This may help with focus, but it also removes valuable alternative perspectives.
Project sponsors should actively seek alternative views and ensure relevant experts are consulted. It is much more persuasive if project sponsors show they have thoroughly considered alternative, organic growth strategies.
Closing Thoughts
Ideally, organizations should only do as many things as they can do well.
You should, of course, ensure that you are exploring all opportunities that create value for the organization. However, once a growth area is identified, the key to making the right decision depends on many variables and estimates, as well as the judgments of senior executives.
In a nutshell: These deceptively simple but powerful questions help you in testing and refining technology project proposals, clarifying the business case, building support, and ultimately persuading others why they should invest scarce resources in an idea or not.
