The new face of r&d dc week
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This document summarizes an presentation about starting up lean innovation initiatives inside large banks using Capital One Labs as an example. It discusses how Capital One Labs is a team of entrepreneurs reimagining how people interact with their money. It then describes how they built an app that allows people to instantly purchase items using their rewards points based on customer feedback, and some of the lessons learned like keeping teams small, establishing an intent to fail quickly and cheaply, and acting like a startup on a budget.
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The new face of r&d dc week
- 1. 1 Starting Up Lean at Capital One Angie Shelton, @nolagal DCWEEK 2012
- 2. 2 My life resembles a pot of Gumbo…
- 3. 3 CAPITAL ONE LABS IS A PASSIONATE TEAM OF ENTREPRENEURS WHO ARE REIMAGINING THE WAY MORE THAN 60 MILLION PEOPLE INTERACT WITH THEIR MONEY. @capitalonelabs
- 4. 4 Capital One is no stranger to disruptive innovation.
- 5. 5 New entrants moving at digital speed are expanding what it means to be a bank. …forcing us to raise our game.
- 6. 6 What does it take to build innovative digital products inside a large bank?
- 9. 9 Create a collaborative, fun environment.
- 10. 10 Tap into customers’ rewards currency and allow people to "pay with points" on your own site or app. Allow customers to self identify and grant permissions to third parties. Open your platform.
- 11. 11 Let the magic happen!
- 12. 12 Every great story has a protagonist.
- 13. 13 33% of reward points go unused “ “I don’t have enough points for cool rewards” a “ “I never think to use my rewards points” a “ “Its hard to use my reward points” a
- 14. 14 “We need an App that allows people to buy cool stuff instantly with their rewards ”
- 15. 15 “I would use that” We showed a bunch of people, and they thought it was cool too. “There should totally be an app for that!” “That looks cool” “When get I Get it?!”
- 16. 16 So, we built an app for that...
- 17. 17 Discovery Conversion Redemption It looks something like this.
- 18. 18 Whoa Nelly! You want to do WHAT!??
- 19. 19 Big Company Benefit: Built in beta testers!
- 20. 20 The Beta testers used the app, and gave us a lots of great feedback
- 21. 21 We advanced to the next board...
- 22. 22 Some things we learned along the way:
- 24. 24 Establish that your intent is to FAIL as quickly and as cheaply as possible.
- 25. 25 Get out of the building
- 26. 26 Avoid over promoting your early work.
- 27. 27 Negotiate business terms for failure. Not success.
- 28. 28 Act like you are on a start-up budget.
- 29. 29 Start with a customer insight Keep your team small Invite Failure Be your own Guerilla research firm Don’t over promote your early work Act like you are on a Start-up budget Think Big. Build Small. Scale Fast.
Editor's Notes
- Nola- Xbox - GSB -- Wikia -- Africa -- Capital One Labs
- We are Appling the principals of great digital companies (open platforms, big data, agile development, human centered design) to reinvent how people interact with their money and Ultimately help people be smarter about how they borrow, transact, save and invest.
- Does anyone feel comfortable volunteering what their cc APR is? In 1998, Rich Fairbanks had belief that Information, technology and marketing could be combined to give people better spending power. So who had good credit history and paid their bills on time, got a lower interest rate and their spending power increased. This was coined IBS, there’s a cas eon it. Powered capital One’s pioneering use of Direct Mail marketing to micro-target consumers with offers, as well as the Balance Transfer product We recently acquired ING Direct
- Financial Services is one of the few industries that silcon valley has yet to take to the cleaners. Advertising, Publishing, Music, those stories are pretty well told.
- There are 4 thoughtful things we’ve done to give our self a leg-up.
- We opened two new offices dedicated to the lab and our lean product development efforts. One in the heart of San Francisco a few blocks away from Twitter, Yelp, Wikia, Linked In and many other hot tech companies. We are on the 2nd floor of the ING Café which means we have first hand experience with customers and the barista/bankers that service them. The 2nd is the lab space in Clarendon, just south of here. where the tech companies in DC/Arlington were. We felt it was not only important to have our own space so we could develop a distinct culture, but also to be close to the heartbeat of the tech ecosystem to better foster collaboration and to recruit the best talent. We didn’t just do this to be coo. Couple criteria. Max 30-40 people, Al disciples co-located (design, dev, strat, oper). No offices. Speaking of talent
- To foster real disruptive innovation you need people who are think differently. Most of our team comes from outside Capital One. And not just outside Capital one but outside the financial services industry altogether Small tech company experience – used to constraints, wearing lots of hatsConsumer product launch experience – Have designed built and launch products directly to consumers in the market. Have felt the exhilaration of launching a product into the wild, and are addicted to that rush. Have experienced the sigh of defeat when it doesn't’t work, or people don’t take too it. Learners not masters- This is super important. Masters tend to specialize. With technology and consumer behaviors changing so rapidly you have to be able to quickly realize that the thing you know how to do is no longer relevant and learn something new. Desire to make a big impact- we look for people think conceptually, and truly want to make a meaningful contribution to the world
- People want to play, learn and work at the same time now. So we’ve built an environment where we can do just that. No-one has offices. No-one wears suits, and no one has a PC. We’ve also hosted a few events here, modev
- Last month we announced at the Mashery, Business of API’s conference, a suite of api’s we have in development. These api’s will allow external developers to tap into some very powerful systems. And allow us to extend our universe and the relationship and value we offer to our customers outside the Capital One platform. Take the rewards API, for example. We have $50M card accounts, most of which earn rewards. Over $2bn of rewards balances on our balance sheet. What we are saying is, hey world. Come and help our customers put their rewards to work.
- At the end of the day this is all nice but, does it work? Today I want to tell you a story about a product we are currently incubating, some of the challenges we faced and some of the lean tactics we are using…
- Every great story has a protagonist. This is Chris Clarke, a Product Manager on my team and here is a picture of him with his pal Beiber. Chris are you in the audience? Sorry ladies he just got married two weeks ago. When Chris joined the lab, he did what most of us did, started thinking of what we could do to improve our experience with our credit cards. We kept hearing about all these un-used rewards points, we we decided to dig into it a bit more. ]
- When Chris joined the lab he did what any good PM goes and started looking for problems to solve. We started digging into rewards experience and learned that 1/3 of reward points go unused ($200 year of wasted $$). We are big fans of the Stanford D.School Human centered design thinking methodology. One of their big tenants is to start with a consumer insight derived from empathy research (code for talk to people) So we did and this is what we heard.
- So Chris, being a mobile developer, came up with an app idea. All that allows people to buy stuff (ie. Coffee, candy, pizza) instantly.
- Being also a big fan of Eric’ Reis’s Lean Stat Up movement, we starting thinking about the cheapest/fastest way to Validate our hypothesis was true. We had lots of ideas on the technology side but first we needed to test whether anybody cared. We created a few rough mocks, loaded them onto phones and started showing people. Just to be clear, we didn’t hire a market research firm.. We did it ourselves Guerilla style. We went to the Capital One main campus and intercepted people at the campus Starbucks and in the hallways. We asked them open ended questions like “What if you could have used your points to buy that coffee…” we let them lead the conversation. We learned some pretty important things in that phase. Most importantly that at least in concept, people were into it.
- We only wanted to build only what you need to test your most basic hypotheses. So we gave ourselves about 6 weeks. This is NOT about building the Best productWe removed any dependencies on teams outside of the lab. Standalone Native iphone app. Capital One app is HTML5 and one day if this was sucessful we would need to do that, but not know Found a external API that could power this redemption of points at a pos. It wasn’t perfect, it only worked at a few places. This allowed a team of 2.5 people to build this in under 6 weeks. At a big company, this mentality allows us to stay off the radar screens of many groups that would while good intentioned would slow us down.
- This was pretty much the reaction we got from all the capital one groups outside the lab when we told them we were going to launch this. At a large company, you can just go around willy nilly launching products to customers. There’s reputation and pr risk as well all kinds of operational needs to be supported. customer service, etc. And if you are a bank, you start getting into legal and regulatory risks especially when you are touching people’s real accounts. Ok, so we had two choices- we can spend the next 4 months meeting with folks and getting the app hardened enough to meet the requirements or we pivot. This is how we pivoted.
- Instead of releasing to app market, we found 100 beta testers who were employees. We knew there would be some bias, but our goal here is to fail fast.
- What we learned: There was huge pain-point that caused friction that we would have never known about People used it in totally different ways than we designed it causing us to re-think the orientation
- So now what, are we ready to launch? Not quite yet. But we’ve advanced to the next board. If we wouldn’t have launched with associates in this sandboxed environment, we would have still been on the first board working through the requirements of launching a product for a bank.. hardening an app that would have failed. Now we are once step closer to success. I want to really make this point clear. Big companies typically design their process to focus on execution at scale. This assumes you know your product is viable. In this new digital age, that is simply impossible. So Chris, congratulations you’re a cheap/fast failure!
- Keep team small. Small enough that the team can be feed on two pizza’s Each person should have a distinct role. (Eng, Ux, PM) There should be one person who makes the calls (consensus is bad for innovation) More people involved, the more complex a project takes, communication costs, etc.
- Establish that your intent is to Fail as quickly and as cheaply as possible. Be methodical about listing out your hypothesis and assumptions and try rigorously to disprove them. When you can’t you know you’ve got something.
- Get out of the building. This is another Lean Start-up Principal. Folks a big companies tend to 3-4 layers removed from their customers. Don’t rely on research reports or focus groups. Get out their and start talking to people. It will save you lots of time and heartache.
- Executives love shiny objects. and you are making one.. Reality its going to fail. The more you present the more attached you will get to your idea, the more you will have to defend it and the harder it will be to kill it or admit failure. Remember you are looking for customers validation, not executive validation!
- Negotiate business terms for failure not success. Given you expect your product to fail it’s a waste of time and energy on everyone’s part to negotiate scalable business terms upfront. Instead build a prototype service agreement where you’ll pay then a flat fee to “test their technology for x time period”
- Big companies means big budgets, fight this. Extra dev to handle edge cases, focus groupDon’t be tempted. The more work, the more waste. Constraints force prioritization, stimulate creativity, and at the end accelerate learnings
- Recruit a small team and carve out a small space (conf room, etc)