93% of all Innovations that ultimately become successful started off in the wrong direction.
JAY RAO_2 Marshmallow game + emergent strategies
Marshmallow Tower Game Jay Rao Professor Babson
Game Rules• Build the Tallest Freestanding Structure: – Tallest structure measured from the table top surface to the top of the marshmallow. – Structure cannot be suspended from a higher structure, like a chair, ceiling or chandelier. – Do not search the internet for answers.• The Entire Marshmallow Must be on Top: – Cutting or eating part of the marshmallow disqualifies the team.• Use as Much or as Little of the Kit – Spaghetti sticks, String and Tape: – The team cannot use the paper bag or scissors as part of their structure.• Break up the Spaghetti, String or Tape: – Teams are free to break the spaghetti, cut up the tape and string to create new structures.• The Challenge Lasts 18 minutes: – Teams cannot hold on to the structure when the time runs out. – Those touching or supporting the structure at the end of the exercise will be disqualified.
Marshmallow Game Lessons• Understanding known and unknown variables• Rapid Prototyping uncovers hidden variables and their relationships – Fail Fast, Fail Cheap, Learn Quick, Refine and Repeat• Diverse skills matter• Specialized skills + Facilitation skills matters• Incentives magnify outcomes – Big Bang vs. Start Small• Incentives without skills are useless Source: Tom Wujec, Autodesk
Empirical findings about Innovations 75% of all new products launched by established firms fail to make profit. Most are yanked/killedMore than 90% of all without shaping & developing themInnovations that weresuccessful started off in Given more money & time,the wrong direction firms are known to pursue the wrong strategies for a longer period of time. Most new innovations are started with access to no credit in Most of the great businesses today good times and in bad started without a lot of VC funding or any bank lending until 5-6 years after they were up and running Sources: Innosight; Amar Bhide; Barton
2008 McKinsey Study Highlights CEOs and Executives are frustrated with their Overall dissatisfaction efforts to jumpstart with dismal outcomes of Innovation initiatives Innovation programs Resources and Processes Unanimous agreement that are applied are either (94%) that people andunderutilized or not achieving corporate culture arescale to have a financial impact the most important drivers of innovation Mimicking and Benchmarking best practices have been ineffective Source: Leadership and Innovation, The McKinsey Quarterly, 2008 no. 1
Leading into the Future: Managing Innovation Projects Analytical and Emergent Strategies (Prediction and Creation Logic)20
“The Future ain’t what it used to be.”“It is tough to make predictions, especially about the future.” Yogi Berra
Environmental Conditions Normal Risk• Steady and Stable• Slowly changing, Predictable, Trends are Evident• Increasing Rate of Change with Some Predictability, Foreseen Trends May Complicated Uncertainty Appear• Rapid Change, Little Predictability, Many Surprises• Chaotic & Unpredictable Complex Ambiguity 23
Nature of Innovation Projects Unknown UnknownsOutcome Known Unknowns Ambiguity Uncertainty Known Risk Knowns Known Known Unknown Knowns Unknowns Unknowns Process
If you dont know where you are going, you might wind up someplace else. Yogi Berra
J. P. Guilford (Convergent & Divergent Thinking)Selecting the most suitable bomber pilot candidates during WW II
How do you “sail” from Barcelona to Mallorca? 27
Practice:How do you “sail” from Barcelona to Barbados?
Environmental Conditions & Strategy Normal Risk• Steady and Stable• Slowly changing, Predictable, Trends are Evident• Increasing Rate of Change with Some Predictability, Foreseen Trends May Complicated Uncertainty Appear• Rapid Change, Little Predictability, Many Surprises• Chaotic & Unpredictable Complex Ambiguity 29
Emergent Strategy Think Different Think Big Start Small Start Several Prototype RapidlyProof of Concept = Voice of Customer + Voice of Tech. Fail Fast, Fail Cheap, Learn Quick Pour Resources only after Proof of Concept Celebrate Success & Celebrate Failure 30
Leading into the Future Analytical Strategy Prediction Logic• Steady and Stable Environmental Scanning Predictive Models Set Strategy Project Planning• Slowly changing, Predictable, Trends Budget & KPIs Execution Plan are Evident• Increasing Rate of Change with Some Predictability, Foreseen Trends May Appear• Rapid Change, Little Predictability, Many Surprises Emergent Strategy Think Big Start Small Start Several• Chaotic & Unpredictable Prototype Rapidly Fail Fast, Fail Cheap, Learn Quick Pour Resources after POC Creation Logic 31
How to create a firm that is good at Emergent Strategy & Creative Logic?• Learning by Doing – Action vs. Analysis • Take action to produce data and uncover variables • Generate data vs. Using existing data – Grounded in reality vs. Speculation – Entrepreneurial Thought and Action• Value Diversity and Inclusion – Several functions and across layers• Learn to Improvise – Fluid and flexible processes• Portfolio of Projects (Risky, Uncertain & Ambiguous)