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Decision Insurance: Iterative Prototyping To Reduce Business Risk

Paul Sherman
Paul Sherman
Paul ShermanUX researcher, designer, educator | Generative user & product research

Presented at the 2015 UX Strategies Summit. San Francisco, CA, June 10 2015.

Decision Insurance: Iterative Prototyping To Reduce Business Risk

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Decision(Insurance:(
Itera/ve(Prototyping(To(Reduce(Business(Risk(
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xxxxx(|(Day(xxxx(Paul%Sherman%
ShermanUX%
%
UX%Strategies%Summit%2015%
Decision(Insurance?%
Me in 2005:
2
Product VP:
UX is blah blah contextual
inquiry usability heuristic
evaluation yadda yadda
etc.
Decision(Insurance?%
Me in 2005:
3
Product VP:
Oh. You mean you’re my
decision insurance. You
confirm whether we’ve made
the right decision. Or not.
UX is blah blah contextual
inquiry usability heuristic
evaluation yadda yadda
etc.
Decision(Insurance?%
Me in 2005:
4
Product VP:
Oh. You mean you’re my
decision insurance. You
confirm whether we’ve made
the right decision. Or not.
Um…yes. 
Yes we are!
In(This(Talk%
Biz speak
Risk
Disruption
Innovation

Prototyping 

A cautionary tale

Prototyping as part of innovation strategy

Your homework assignment




5
Biz Speak
6

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Decision Insurance: Iterative Prototyping To Reduce Business Risk

  • 2. Decision(Insurance?% Me in 2005: 2 Product VP: UX is blah blah contextual inquiry usability heuristic evaluation yadda yadda etc.
  • 3. Decision(Insurance?% Me in 2005: 3 Product VP: Oh. You mean you’re my decision insurance. You confirm whether we’ve made the right decision. Or not. UX is blah blah contextual inquiry usability heuristic evaluation yadda yadda etc.
  • 4. Decision(Insurance?% Me in 2005: 4 Product VP: Oh. You mean you’re my decision insurance. You confirm whether we’ve made the right decision. Or not. Um…yes. Yes we are!
  • 5. In(This(Talk% Biz speak Risk Disruption Innovation Prototyping A cautionary tale Prototyping as part of innovation strategy Your homework assignment 5
  • 7. Risk(In(Business% There’s a metric crapton* of different risk types in the business literature… 7* 1,000 craptons = 1 kilocrapton
  • 8. New(Product(Development(Risk% We’re talking about the risks associated with new product development (NPD). Some fundamental points: Businesses don’t take risks without the possibility of reward. New product development risk can never be completely quantified. It is inherently uncertain. 8
  • 9. Perceived(Versus(Actual(Risk% We are biased. 9http://en.wikipedia.org/wiki/Risk_perception http://www.susannahertrich.com/risk.php PerceivedRisk ActualRisk http://http://www.psandman.com/
  • 10. Bias(In(Percep/on(of(New(Product(Development(Risk% Perceptions of NPD risk are affected by: Organizational culture Institutional barriers to innovation Perverse incentive structures Incumbency complacency And so on… 10
  • 11. The(Biggest(Risk(Of(All…% Time and again, it’s been shown that the greatest risk of all is not acting. Peachtree vs. QuickBooks iRiver & Creative vs. iPod 11
  • 12. The(Biggest(Risk(Of(All…% WordStar & WordPerfect vs. Office BlackBerry vs. iOS & Android 12
  • 14. Disrup/on:(Just(One(Type(Of(Innova/on% 14 Term Definition Innovation New products and services that succeed in the market. They meet customers needs or address their pain points. Sustaining innovation An innovation that improves an existing product or service. It sustains the current business model or revenue stream. Disruptive innovation An innovation that enters a market and disturbs the prevailing order of things, taking share from the market incumbents. The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (1997). Clayton M. Christensen. Harvard Business School Press.
  • 15. Sustaining(Versus(Disrup/ve(Innova/ons% 15 Existing New New Existing Product Market Disruptive New product Existing market Disruptive New product New market Sustaining Existing product Existing market Disruptive Existing product New market The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (1997). Clayton M. Christensen. Harvard Business School Press.
  • 16. Innova/on% “Innovation” is one of those terms that everyone thinks they know…but do we all share the same understanding? Innovation means creating new products or services that succeed in the market. Q: If it doesn’t succeed, is it an innovation? A: Nope. 16
  • 17. An(Innova/on(Fills(A(“Job(To(Be(Done”% People "hire" a product to handle a "job”… Innovation is the process of solving for the job. What is the job? It could be anything…either functional or emotional. 17 Finding the Right Job For Your Product. (2007, Spring). Clayton M. Christensen, Scott D. Anthony, Gerald Berstell & Denise Nitterhouse. MIT Sloan Management Review. http://sloanreview.mit.edu/article/finding-the-right-job-for-your-product/
  • 19. SelfRDisrup/on% Identifying a new basis of competition – a dimension of customer value – and orienting your efforts to this new world. Entering a market you’re already in with a low-end, high-convenience disruptive innovation. Letting your mature product’s profits decline naturally while the new product takes off. 19Blue Ocean Strategy: How To Create Uncontested Market Space And Make The Competition Irrelevant. (2005). W. Chan Kim & Renée Mauborgne. Harvard Business Review Press.
  • 20. What(Have(We(Learned?% The greatest risk is in not attempting to innovate. Failing to act leaves you open to disruption. Self-disruption is an effective way to maintain market position. 20
  • 22. 22
  • 23. Prototype(Versus(Mockup% Prototypes are tested in the field. Mockups aren’t. If you test your mockup in the field, it magically becomes a prototype. 23
  • 26. We(SpoVed(An(Opportunity% At a former company, product management asked the UX team to conduct field research with small businesses. We identified an opportunity for an accounting product that served new value dimensions. That’s awesome! Woo! 26
  • 27. Product management began writing up a business case. We created personas and goals… And mocked up workflows and views. We started testing the mockups… 27
  • 28. Product management began writing up a business case. We created personas and goals… And mocked up workflows and views. We started testing the mockups… And senior management promptly went batshit crazy. 28
  • 29. What went wrong? 29 Org Culture New products “just weren’t done here.” Growth by acquisition. Executives had no incentives to create new products. In fact they had strong disincentives.
  • 30. What went wrong? 30 Org Culture New products “just weren’t done here.” Growth by acquisition. Executives had no incentives to create new products. In fact they had strong disincentives. Institutional The organization had very few people who had ever worked on new products. There was no institutional memory or process.
  • 31. What went wrong? 31 Org Culture New products “just weren’t done here.” Growth by acquisition. Executives had no incentives to create new products. In fact they had strong disincentives. Institutional The organization had very few people who had ever worked on new products. There was no institutional memory or process. PM & UX Mistakes We had the data, but we failed to communicate the pressing need effectively. We failed to build awareness and alignment.
  • 32. What went wrong? 32 Org Culture New products “just weren’t done here.” Growth by acquisition. Executives had no incentives to create new products. In fact they had strong disincentives. Institutional The organization had very few people who had ever worked on new products. There was no institutional memory or process. PM & UX Mistakes We had the data, but we failed to communicate the pressing need effectively. We failed to build awareness and alignment. Once we started showing the prototype, it was perceived as insubordinate and threatening.
  • 33. We got shut down within a couple weeks of the first prototype tests. 33
  • 34. But organizational cultures are mutable. You can change an organization’s culture! So I gave it a shot… 34
  • 35. Prototyping As Part Of Innovation Strategy 35
  • 36. Picking(Up(The(Pieces% Executives like process. They really like repeatable processes. So I created a business process for catalyzing innovation at the company. It included: Field research (not just surveys) to discover new value dimensions. Rapid prototyping and design iteration. Cross-disciplinary involvement: product, design, development. And a whole lot more. 36
  • 37. It(Even(Had(Snazzy(Names% Rapid contextual innovation – RCI The 3-3-1 process 3people 3weeks 1viable opportunity 37
  • 38. 38
  • 39. Win!% Prototyping and iteration based on customer feedback became part of: Initial value discovery New product development Business strategy 39 UX UX
  • 40. Benefits(For(The(UX(Team…(And(The(Business% We moved UX up the value creation chain. We utilized our skills at the front end of the process… On an equal footing with product management and development. 40
  • 41. Win?% Of course it got shut down with the next reorg and change in management. And we never did get our executives’ incentives changed so their compensation was tied to new product development. 41 I never had any illusions of winning that battle.
  • 42. I(Made(Something(For(You% I’ve kept working on the process. I completely rewrote it and removed references to the prior company. It’s available under the Creative Commons license. Support open culture! Get it here: http://shermanux.com/ resource_rci.php Or http://bit.ly/1I0xz7Y 42
  • 43. What(It(Covers% The rapid contextual innovation model and the 3-3-1 process. How to get executive buy-in for observation research, rapid iterative prototyping, and opportunity assessment. How to make it an ongoing program, not a one-time deal. 43
  • 44. What(It(Doesn’t(Cover% It doesn’t cover prototyping tools or techniques. It doesn’t go into detail about how to run the discovery and prototyping sessions. Those are topics for another day. I’ll be providing more resources going forward. 44
  • 45. What(Else(You(Need(To(Implement(A(Program% More details for how the team works together. Training on how to spot opportunities. A rapid collaborative prototyping process. A template for pitching the opportunity. The validation and iteration process. 45
  • 46. The(Takeaways% Field observation and iterative prototyping are a powerful combination for discovering customer value. Take a strategic approach! Make the process yours. Create alignment across disciplines… And up the chain of command. 46 This leads to UX success!
  • 48. Make(a(30R60R90(Plan% 48 30 Days Learn about your organization. Where are the obvious and hidden barriers? Assess your / your team’s field observation & prototyping skills. Get current on prototyping tools and techniques. 0 90
  • 49. Make(a(30R60R90(Plan% 49 30 Days Learn about your organization. Where are the obvious and hidden barriers? Assess your / your team’s field observation & prototyping skills. Get current on prototyping tools and techniques. 60 Days Start the conversation with the power brokers. Make it clear you want to be a service to product management, not supplant them. Build your process model and ask to present it. Set realistic expectations: •  No home runs the first time out. •  It’s a learning process. 0 90
  • 50. Make(a(30R60R90(Plan% 50 30 Days Learn about your organization. Where are the obvious and hidden barriers? Assess your / your team’s field observation & prototyping skills. Get current on prototyping tools and techniques. 60 Days Start the conversation with the power brokers. Make it clear you want to be a service to product management, not supplant them. Build your process model and ask to present it. Set realistic expectations: •  No home runs the first time out. •  It’s a learning process. 90 Days Ask to pilot it. Ask for contributor nominations from product, dev, and any other organizations. Go to the field. Run it like an agile project. Report the results in terms of client value AND of culture change. 0 90
  • 51. Bonus!% If you pull this off, you’ll have a major stake in your organization’s future growth. That’s pretty neat! 51