"That the automobile has practically reached the limit of its development is suggested by the fact that during the past year no improvements of a radical nature have been introduced."
Scientific American, January 2, 1909.
(Henry Ford’s Model T moving assembly line came 5 years later).
Yesterday, I attended the presentation of Deloitte's 2016 Technology, Media and Telecommunications (TMT) Predictions given by Duncan Stewart. This is an interesting annual event (and report) now in its 15th year. One of the predictions involved autonomous vehicles. What comes to mind are self-driving or driverless cars that can pick you up, drive you to your destination and then go to a remote parking lot awaiting your next command. You wouldn’t even need to be able to drive hence among others, children, the elderly and the blind could benefit. This type of technology is advancing quickly by the likes of Google, Tesla, Apple, Volvo and Daimler.
Despite the advances including road tests in California, I for one have been a strong critic of autonomous vehicles. I based this opinion on the obvious issues that must be overcome including perfect operation and self-correction, assigning liability in an accident i.e. driver vs. manufacturer, and ensuring security i.e. the hacking of communication signals. As a result, I quickly dismissed this whole field as “crazy.” (For an excellent review of all the benefits and issues surrounding autonomous vehicles, check out the RAND report.)
In thinking about it a bit more and trying to be somewhat more positive, it occurred to me that there might be some early “killer apps” or markets where these issues were less critical thus making the technology viable. While watching a movie on the Diavik Diamond Mine, I thought about the value of having autonomous versions of those huge Haul (Dump) trucks that move the ore from the kimberlite pipes to the surface (1). Standard routes and no real traffic reduce the safety issues; Not requiring drivers that are difficult to attract and expensive to hire saves time and money; and There are no nearby hackers!
Duncan Stewart outlined a second and now obvious “killer app” that I had never considered as a result of my quick-to-judge bias. In his presentation, he stated that the costs of getting Level 4, or full autonomous/driverless vehicles to market will be high. Not just further technology development, but all the regulatory testing, infrastructure improvements, standardization efforts and failsafe systems will be required. Although it will happen someday, it will be quite far off in the future perhaps 2040! But of course, he went on to say, that many aspects of this technology are already in use in the aircraft industry with autopilots, automatic navigation and landing etc. In addition, Duncan explained that much of the autonomous vehicle technology being developed can be applied immediately under less-stringent Level 1, 2 and 3 situations. These are the so called function-specific automation, combined-function automation and limited self-driving automation respectively. Examples of Level 1 automation are already in widespread use and include anti-lock braking systems (ABS) and cruise control. Some Level 2 automation is becoming available including adaptive cruise control with lane centering, as well as automated speed adjustment and braking to maintain a safe vehicle spacing. Level 3 automation, which may only be a few years away, incorporates self-steering and speed control as well as the ability to negotiate hazards and change lanes, while allowing the driver to override it at any time. These insights have now led me to see autonomous vehicles, the technology underpinning them, and the investment opportunities in a new and far more positive light.
Clearly my biases and quick judgement impaired my ability to look at all of the technical aspects and commercial potential associated with controlling vehicles and making them safer. It is critically important when developing a product or service, that you consider as many routes to market as possible, so that the potential early winners are pursued alongside the potential big winners. Employing some of the creative thinking techniques can assist, such as the List of 100 (listing 100 routes to market for a particular opportunity), or SCAMPER (this acronym stands for Substitute, Combine, Adapt, Modify, Put To Other Uses, Eliminate and Reverse which encourages thinking “outside-the-box”).
Examples of dismissing opportunities offhand are everywhere. The irony of many statements made in the past by famous CEOs, entrepreneurs and experts, like the opening quotation, provides supporting evidence. So before dismissing any idea as “crazy" especially one in which others are investing heavily, take a moment to reflect and ask yourself: “In what ways, applications or markets could these technologies be applied alone or in combination with others, that could provide significant benefits and value to particular sets of customers in both the short as well as the longer term?” This will reveal potential opportunities and hopefully some that are worth of pursuing immediately (2). Additionally, one should never underestimate the rate of technology advancement; Perhaps Level 4 autonomous vehicles will be here in drive me around in my old age!
(1) These trucks, like the Komatsu 830E, carry 231 metric tons = 140 crushed cars, or up to 147 cubic meters = 3.5 full swimming pools
(2) In a related manner, embarking on or participating in grand projects, like putting a man on the moon, building out the internet and sequencing the human genome, are worthwhile as they are sure to generate numerous valuable spin-offs.
Here's a great quote from the TV series Person of Interest (Season 4, Episode 11, 6/Jan/2015 entitled "If-Then-Else") that applies to business and innovation as much as it does to the game of chess.
Harold Finch describing the chess to The Machine - an artificial intelligence computer he designed:
"Each possible move represents a different game, a different universe in which you make a better move. By the second move, there are 72,084 possible games; By the third, 9 million; By the fourth, (... 318 billion). There are more possible games of chess than there are atoms in the universe. No one could possible predict them all, (not) even (... a computer), which means that that first move can be terrifying. It's the furtherest point from the end of the game. There's a virtually infinite sea of possibilities between you and the other side; But it also means that if you make a mistake, there's a nearly infinite amount of ways to fix it. So you should simply relax and play."
“At some point, everything’s gonna go south on you and you’re going to say, this is it. This is how I end. Now you can either accept that, or you can get to work. That’s all it is. You just begin. You do the math. You solve one problem and you solve the next one, and then the next. And if you solve enough problems, you get to come home.”
Stranded astronaut Mark Watney (played by Matt Damen) in the movie The Martian (2015)
Roberto Verganti wrote an article in the recent edition of the Harvard Business Review (Jan-Feb 2016) entitled, “The Innovative Power of Criticism: Judgement, not Ideation is the Key to Breakthroughs.” In his article, he describes the problem with innovation efforts as not one of ideation, there are plenty of ideas, but one of proper assessment. His four-step process to capture the best opportunities involves developing ideas individually, subjecting the ideas to constructive criticism from a trusted peer before rolling it out to a larger internal group, and then and only then testing it on outsiders (customers and experts). This is similar to the process that I’ve experienced in early-stage companies built by a small team of colleagues. Two of the suggestions to facilitate this process are: developing a common enemy as "a powerful incentive for people to come together and articulate a new direction,” and "assembling two analytics teams, one to find data that supports the hypotheses of a new direction and the other to find data that undermines them, and then determine which results are more compelling."
These insights got me thinking about positivity, or being and staying positive, and how it could unlock innovation for would be entrepreneurs, and intrapreneurs (i.e. entrepreneurs within established firms). Instead of dismissing every opportunity as too risky during the assessment phase, in effect “throwing the baby out with the bath water,” we need to slow down and undertake a second positive phase. This “resolution” phase, as expressed in the quotation from The Martian, advocates that you should "get to work" and look for solutions or routes around the issues and challenges that arose during the assessment phase. Think about ways and means to strengthen an idea, in addition to the more natural Devil’s advocate efforts to reject it.
Ideation can be fun; running around a boardroom with 3M stickies or utilizing other creativity tools (More here). At least in the early stages, when criticism is withheld, it is also easy. As the need for, search for, and focus on good and viable ideas is realized, it becomes more difficult. When numerous unknowns and risks are identified following a more thorough assessment, as well as when the effort and disruption to current activities is taken into account (i.e. change), the will to innovate can be lost. With any change comes a degree of risk and logical resistance. Individuals and organizations are naturally and logically risk averse. (Until you have dealt with a venture capitalist [or have been one], you wouldn’t believe how actually risk averse they really are). These are barriers to successful innovation.
“Would be” entrepreneurs are constantly seeking out and generating ideas and opportunities, but never seem to engage. With out a doubt, some of these ideas were good as illustrated by the fact that we’ve all thought of great product and service ideas only to see them commercialized by others. The issue, as described above, is completing a cursory or occasionally thorough assessment phase and ruling the opportunity out as too risky. There are, indeed, no perfect ideas or opportunities. It’s easy to quit when you haven’t really started. There are always challenges, but a positive resolution phase (or even a series of assessment-resolution cycles) should be undertaken in order to allow the opportunity a fair chance.
The ideas of intrapreneurs working within established firms, that by their existence also implies that these firms are or have been successful, face a tough process. These ideas generally undergo a single-pass assessment processes involving a panel of senior decision-makers with significant industry knowledge and experience. These panelists tend to be quick and good at identifying risks, and are well aware of the difficulties and disruption that result from change. Without putting at least some ideas through a resolution phase and another pass through the assessment process, these opportunities will generally be dismissed.
On the flip side, successful entrepreneurs are characterized by taking on existing businesses and markets in novel ways, and often having to pivot or shift their initial market focus. Challenging existing businesses and markets is something most would characterize as risky, however they reduce the risks by seeking novel solutions and routes to market as well as constantly being on the lookout for better and easier routes and opportunities to exploit.
Similarly, many companies with an intrapreneurially culture achieve and promote this by downplaying early assessments and encourage experimentation to resolve issues. Allowing employees time to work on their own ideas and projects as 3M, Microsoft and Google have done is one approach. A skunkworks structure in which a team operates outside of the routine organizational constraints, similar to a early-stage company is another approach. This was used successfully to develop the IBM PC computer and the Lockheed U-2 and A-12 spy planes. Nevertheless, a strong assessment and in effect, resolution process, like that afforded by Toyota’s A3 Form (see below) addresses the innovation issue head on as opposed to employing a work around.
Finally companies in crisis, although getting in this situation is not recommended, are forced to seek new ideas, assess them and resolve issues as best they can in order to survive. Here they employ the resolution phase out of necessity not design. As they are already invested, they are not afforded the luxuries of saying “No” or remaining undecided which is in effect a “No” as well.
A transparent, impartial, integrated, and iterative ideation-assessment-resolution process is the best way to evaluate innovative opportunities in order to support those opportunities with the highest probability of success and return on investment, and foster a supportive culture for innovation. Nevertheless, there are a number of tools and procedures that be employed to assist in reaching these two goals. In addition to the common enemy and two team debate format discussed in Roberto Verganti’s article, the following nine tools and procedures, listed in approximate increasing levels of effort, can be employed individually or preferably in combination to assist in finding resolutions:
1) Listing and questioning the underlying assumptions:
The simple task of taking a step back in the decision process to outline the assumptions and raise your awareness, permits a more thorough analysis of the pros and cons.
2) 5 Why’s analysis:
This technique was also developed at Toyota in the 1930’s. It involves examining a problem, asking why, formulating an answer which then forms the basis of the next problem, and finally asking why again. By going through five iterations of this process, the true root-cause is revealed.
3) Contingency planning:
Developing one or more viable contingency plans in advance, should the original plan face unsurmountable obstacles, reduces the risks and raises operational awareness.
4) The A3 Form:
This 2-page format, originally developed by Toyota, facilitates debate and resolution of issues by first outlining the goals and challenges, before suggesting countermeasures. (More here)
5) Must resolve simulations:
Instead of providing yourself an out, in which you deem a challenge too risky or unachievable, force yourself and your team to resolve the issues as best as possible, before making a final go-no go decision.
6) Two team debate:
As outlined previously, having groups debate issues can lead to significant insights. An old school trick to really draw out ideas is to have the supporters defend dismissal and those opposed to argue for going forward. Or like the reality TV show Survivor, force one or two team members to switch sides midway through their analysis.
7) Business Plans:
Drafting a business is a great way to identify challenges, the underlying assumptions, and especially inconsistencies. Efforts can then be made to address and resolve these items. (More here and here)
8) Scenario planning/ War gaming (related to Common enemy idea):
These techniques involve simulating the future by examining the possible impact of various macroeconomic factors (STEEPLE), or the moves and responses of competitors respectively. These can be done at various levels of sophistication from paper-based exercises to computer-based modelling, and even “war rooms” containing maps, data, reports and even competitive products for examination.
This involves testing out ideas and concepts, ranging from scientific and engineering-based experiments through secondary source research (patents, expert opinions etc.) to primary market research (focus groups, customer surveys, prototype review etc.). It is best done in a fairly sequential manner, focusing on the biggest issues, the "deal killers” first. As perfect solutions are not required at this stage, the resources employed, both capital and labour, should be kept to a minimum (More here).
Successful innovation requires you to not only identify, but also to work the problems; to recognize and then resolve issues not only once the project is underway but also while it is in the early and fragile conceptual stage. Thinking more positively can rebalance the natural tendency to dismiss ideas and opportunities out of hand, with the result of fostering successful innovation.
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Duncan Jones, Hexagon Innovating (2016) is licensed under CC BY-NC 4.0.