Killing Innovation Labs Isn't the Solution. Understanding the Disconnect.

I want to add some nuance to the now common bashing of Innovation Labs, claiming that 'Innovation Labs just don’t work'.

Indeed, it appears some innovation labs are being closed down, but is that ratio significantly higher than the shutdown of departments or other corporate (sub-) structures? Or is it that the closure of an innovation lab tends to come with higher media coverage and exposure?

Beyond that bias, I’d like to offer potential explanations of why innovation labs are actually failing.

Building and successfully running a corporate innovation lab is not an easy endeavor. I know this because I’ve built and consulted corporate innovation labs in Europe, the US, New Zealand, and Africa.

Why is building and running a Corporate Innovation Lab so difficult?

Innovation labs face strong opposing forces that they must navigate and withstand. Some of these forces require them to choose a side, while others present genuine dilemmas to navigate. While there is no ‘right solution’ to a dilemma, some options are usually better than others. Sometimes, innovation labs find themselves pulled in different directions at the same time, requiring them to juggle multiple priorities.

Those dimensions and distinctions are fundamental when designing or operating an innovation lab. It’s a tool to think strategically about innovation and finding the right balance for your organization and its relative market position.

Let me explain by taking this a step further:

• If innovation labs are external and have a high degree of autonomy, they pull towards the right of the above dimensions. This makes it likely that the core organization either rejects the innovation lab as something that is ‘foreign’, or even treats it as a threat. Or the core organization ignores it and doesn’t learn much from ‘its’ innovation lab.

• If innovation labs are internal and highly dependent on the core organization, they are pulled towards the left side of the above dimensions. Over time that can lead to cultural assimilation. Being no different than the rest of the business (units) comes with the duty to secure profits today, and not in some distant future. As a result, the lab risks losing its reason for being.

How can you navigate and withstand those conflicting forces?

It depends on your organization, the market you operate in, and your relative position in it.

For example:

• If you need to catch up on your competition - shift your lab to the right, but not too much, or you risk losing connection with your core organization.

• If your innovation lab is getting too much cultural backlash from the corporate immune system of the core organization, risking successful cooperation - shift a bit to the left. But not too much, or you diminish the impact on your core organization.

• If your core organization is operating in crisis mode and budgets are tight, you’re better off if you shift to the left for now and help out. To do this well, I recommend following a balanced portfolio approach, which I’ll write about in a separate post.

There’s no recipe, no one-size-fits-all, but you can use the above dimensions as a strategic tool to help reflect and navigate your options.

If you’re interested in more content on Innovation Labs, have a look at my 10 lessons learned when building Innovation Labs and 5 more lessons on the same topic.

Corporate Innovation: A Framework for Defining Innovation Initiatives

Corporations around the world are investing in innovation hubs, hackathons, agile training and design thinking workshops. Why? So that they can learn to innovate, become more agile, customer-centred, purpose-driven, profitable, efficient or disruptive.

I'm interested in how corporations make sense of the sometimes vague topic of innovation — how they manage innovation initiatives, and how they allocate funding. In my work as an innovation consultant I noticed that many innovation managers struggled to describe what type of innovation methodology they follow, and why they use one particular method over others. I believe this lack of clarity is due to the absence of a single model for reference. Moreover, the growing number of methodologies is adding to the confusion. If you check ask-flip.com, you'll see there is a categorisation of 565 distinct frameworks and tools for innovation. In this article, I outline the specifics of the framework I’ve developed for defining innovation initiatives. The different manifestations of corporate innovation initiatives lie in focus area (organization vs market focus) and innovation creation (problem-focused vs opportunity-focused).

I wrote this to help — to guide your innovation efforts or sharpen the value proposition of your innovation hub. It can also further serve as a model to create value streams by applying a portfolio approach to innovation. I'll talk more about this in a follow-up post.

Corporate Innovation Framework

Do you care more about the the inner workings of your organisation or about your customers?

Organisations with an internal focus typically aim at increasing efficiency by optimising processes and internal operations. Fast, repeatable processes are a prerequisite for quality and growth as they allow organisations to scale production or service delivery reliably. This is not new; many organisations participated in optimisation programs (Lean Management, Lean Manufacturing, Total Quality Management) during the mid-80s and 90s. Over the last ten years, the optimisation focus shifted towards digitalisation and digital transformation, while currently, artificial intelligence and process automation fuel optimisation approaches.

When it comes to reinventing your business model, one of the most significant barriers is the dominant industry logic and the things everyone takes for granted. It's likely for an industry outsider or a challenger brand to come up with a game-changing business model.

Organisations with an external innovation focus aim at improving either the customer experience, or they try to create new products/services that increase revenue. Currently, their organisations are undergoing a strategic shift —  from an internal perspective towards one that is more customer-centric. They now apply customer journey mapping and focus on designing services, touchpoints and experiences with the end-user in mind.

Creating original product, service or business model innovations is more complicated than merely improving upon products and services that already exist. This is because it's intellectually challenging, and it requires long-term orientation. Few organisations are able and willing to take a radical perspective on product innovation. Take Fujifilm, for example. Their innovation had nothing to do with digital photography but with skincare products. Fujifilm recognised that ageing film and ageing skin have a lot in common and that they could build on their expertise to introduce innovative Fujifilm skincare products.

Innovation always has risk association, with an uncertain and often distant payoff. Most organisations are just not patient enough: a study of innovation at Xerox showed that over 35 years, its most successful product extensions took an average of 7.5 years to generate an acceptable return on investment. However, the innovation programs that produced those spin-offs survived an average of only four years before they were shut down and replaced by new ones.

Corporate Innovation Framework

Are you solving problems or are you creating something new?

The horizontal axis looks at how an organisation creates innovation. The majority of corporates focus on improving the status quo by solving problems. Those can be problems the organisation faces internally, or it can be problems or needs their customers have — this is a great starting point. The right issues provide an area of focus, and your customer or employee advocates investment in finding a solution is high. There are a plethora of well-documented methods to approach innovation this way, with Design Thinking being the most prominent Human-Centred Design method (HCD). While I believe it's possible to come up with innovative solutions through HCD, Design Thinking is not an exact innovation method; instead, it's an excellent approach towards creative problem-solving.

On the contrary, you have opportunity-focused approaches — creating something new! Few corporates actively explore this radical field of innovation — because there is no problem to be solved, it’s harder to do well. Risk and ROI are often the deciding factors in pursuing a new product or service.

The opportunity-focused approach combined with an organisational focus (War Gaming, Build Your Own Enemy) can lead to uncover questions that can impact the very core of the organisation: 'How might we reinvent our own business or operating model?', or 'How might we create a new company that puts us out of business'? Of course, problem-solving and customer-focused design methods don't provide answers to those questions. While there are methods available for radical business model innovation or industry disruption, in-house expertise on how to apply those methods and overall adoption of radical innovation methods is low or non-existent.

What method should you apply for innovation? It depends on where you sit in the framework.

Let's look at the methods and tools you can apply to drive innovation initiatives in each quadrant.

The top-left quadrant (organizational & problem-solving) — Optimize is your efficiency and optimization toolbox. If the problem is well understood (and defined!) methods like Six Sigma, Lean Management, and Process Improvement do the job well. If the problem is ill-defined and confusing, and impacts people, consider a HCD approach.

The bottom left quadrant (problem-solving & market focus) — Improve. Here, your goal is to improve the experience your customers have. An excellent way of tackling this is to focus on the most common pain points or problems your customers currently experience, and to find solutions by following an iterative HCD approach.

Corporate Innovation Framework

The bottom right quadrant (market focus & opportunity-focus) — Create, is for those corporates who are creating value for customers and the organization - from scratch. Unfortunately, here, there may not be any pain points or customer problems to guide you. Thus, Human-Centred Design methods are of limited value. Your tools of choice are Foresight and Futures Thinking as well as Radical Reframing and Innovation of Meaning.

Few organizations dare to explore the top right quadrant (internal & opportunity-focus) — Reinvent because looking inwards at ways to improve your company can be uncomfortable, challenging, and disruptive. Change is difficult. There are only a few methods available to help you rethink your organization. Build Your Own Enemy, Wargaming, Business Model Innovation and Radical Reframing help you to go beyond the dominant logic of your industry.

How can you use this framework?

Having a clear understanding of the purpose and direction of corporate innovation endeavors helps you to communicate your why. It also supports course corrections and acts as a north star when facilitating strategic shifts of focus for your organization.

The final thing you should take away from this is that the four quadrants of this innovation framework are (hopefully obviously?) different in nature and execution; therefore, they require specific team arrangements and ways of working. Success metrics, budgets et al need to adapt to the characteristics of the quadrant you want to explore.

This follow up post provides content on the right team setup and budgeting approach for each quadrant.

Check www.innovate-strategy.com for more information and get in touch sebastian@innovate-strategy.com.

Posted by Dr. Sebastian Vetter

Corporate innovation: Team Setup, Budgeting Strategies and Return On Investment (roi)

In a previous article, I have outlined the specifics of a framework I’ve developed for defining innovation initiatives. In short, the framework differentiates corporate innovation initiatives by focus area (internal vs external) and innovation creation (problem-focused vs opportunity-driven). The resulting 4 quadrants can be labelled as optimise, improve, create, and reinvent. This follow-up blog post focuses on the right team setup, budgeting strategies and return on investment (roi) for each quadrant.

Practical Tips for Innovation Management within each Quadrant

When you’re positioned in the optimize quadrant your goal is to improve the way the organisation operates. You want to streamline processes and improve value creation. A two-pizza sized team does best, success criteria are easy to determine as you can refer to the current status quo as a baseline measure. In order to optimize existing processes of value creation you need people with deep process expertise and you need experienced facilitators and method experts who can manage team dynamics and support a productive working environment. From a budgeting point of view these teams cost mainly time and they should be able to quickly create efficiency gains that are higher than their cumulative costs.

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In the bottom-left quadrant your goal is to provide a great customer experience and to improve existing products and services. Here the two-pizza rule applies as well. Conducting customer interviews and making sense of qualitative data is something most organisations don’t do on a regular basis. If you don’t have the skills in-house you might want to hire experts who can support you. The Return On Investment (ROI) can be easy to measure for example in the form of a higher customer acquisition rate due to an improved sign-up process. The ROI can also manifest itself in behaviour that is not directly visible and therefore more difficult to assess. Think of a product improvement that leads to customers not switching to a competitors’ product.

Investing in a seamless customer experience pays off most of the time. You might also get beneficial carry-over effect for example from a reduced number of calls to the contact centre (costs-to-serve) due to an intuitive user experience.

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Positioned in the create quadrant, your focus is on creating innovative products and new services that will drive future revenue. In order to do so you will need people with a unique mind- and skillset. You want people who can imagine something that does not exist yet. Here I deviate from the two-pizza rule as smaller teams usually do a better job. A team of 3 to 5, not necessarily industry experts, is best suited to create future business opportunities. Don’t think ROI here, most of the future product or service ideas will not make it to the market. You simply can’t get the winners without investing in the losers. Also it could take years until a new product or service creates revenue. Hacking Industry Conventions and Cultural Beliefs and Innovation through a shift in meaning are your methods of choice.

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The reinvent quadrant is your innovation masterclass. Your team has the mandate to reinvent the core business and come up with new business models that can disrupt whole industries. Here you want to work with people who can leave the boundaries of what is considered normal. You need unconventional thinkers who are not only able to challenge but to reinvent the status quo. Keep the group small and don’t hire for industry expertise as it often comes with being conditioned to a certain way of thinking. The dominant industry beliefs can be the biggest barrier to disruption. Regarding budget and ROI, if you decide to operate in this field you will need to write the investment off. Don’t expect any return on investment and see it as an experiment. If you know it’s going to work it’s not an experiment. If this scares you, remember that you do not have to operate in this quadrant – in fact many organizations don’t. That’s okay but keep in mind that there are companies out there who are doing exactly this – trying to put you out of business or even changing your whole industry. If you don’t reinvent your own business or industry someone else might.

Don’t get stuck in the middle

You might have wondered what the area in the centre of the framework stands for. This is where you don’t want to be. It’s the danger zone of no focus. Trying to do everything for everyone, applying new methods because they are fashionable, and constantly shifting focus between business needs and customer needs and between problem solving and innovating. This is tiring to everyone in your team and hardly successful.

More details on the framework for managing corporate innovation initiatives can be found here.

Check www.innovate-strategy.com for more information and get in touch sebastian@innovate-strategy.com.

Posted by Dr. Sebastian Vetter

Successful innovation patterns for a crisis

Corporate innovation has been under serious pressure during covid19. Innovation budgets were frozen, teams were made redundant and innovation hubs came to a halt. Why did this happen, what can we learn from this crisis (for the next), and what does this tell us about the standing and maturity of corporate innovation?

Covid19 hit organizations with full force within just a few weeks. Supply chains were disrupted, existing business models became obsolete, and modes of service delivery didn’t work anymore.

What made covid19 unique is that it was a global crisis that affects us on many levels simultaneously. In addition to the impact it had on businesses, covid19 had a direct impact on our personal and social life. It was a crisis that affected us on an emotional level too. The root cause of covid19 - a highly contagious virus - is simple, something we can easily understand. In contrast, the financial crisis of 2007/2008 took years to unfold, its root causes were complex and difficult to understand and its impact was primarily economically.

A crisis is the ultimate stress test for corporate innovation. A crisis can help flush out unnecessary surface-level innovation initiatives that can be labeled as innovation theatre. As budgets are tighter than usual, existing projects need to justify spending and new projects need an even stronger case to kick off.

A key challenge of a crisis as severe as covid19 is that it can put organizations into survival mode. Survival mode is a necessary strategy for some organizations as it provides focus and helps deal with the situation at hand. However, the survival mode comes with a strong bias toward the short-term. As a result, many organizations have reduced their innovation budget and stopped promising innovation initiatives. In some cases, entire innovation teams have been made redundant. Furthermore, survival mode can be contagious. Even organizations that have the financial means to navigate a global crisis join in a collective survival mode by cutting innovation budgets.

Survival mode is about preserving the status quo. Innovation is about creating future opportunities.

• How are organizations responding?

• How do they manage to integrate both short-term fire fighting and exploring new possibilities?

• What approaches to innovation do organizations apply in a crisis?

From my perspective, you can observe three distinct survival mode patterns: back to the core, expand the core, and reinvent the core.

Back to the core

This pattern is followed by organizations that reduce their innovation efforts to save costs in the short term. Functions that are not essential to the core business are being deprioritized and existing innovation initiatives are being paused or shut down. Innovation is seen as a ‘nice to have exercise when things are going well. 



Advantages:

• 
cost savings can be realized in a short time frame. 


• serves as an emergency approach to keep the organization alive. 


• can be a valid approach for a short time frame only.



Disadvantages:

• 
organizations that don’t make innovation part of their core business risk their future business.


• reducing innovation budgets sends the wrong signals to corporate innovators and the rest of the organization.

• it’s difficult to ramp up innovation again when the crisis is over.

Back to the core is an effective pattern that produces results immediately and can help ensure survival. If followed for a prolonged time, however ‘back to the core’ is a risky approach and can be a sign of low innovation maturity. Most likely innovation has no seat at the table when it comes to strategic management decisions.

Expand the core

In the ‘expand the core’ pattern organizations do consider innovation as a means to navigate a crisis. Organizations that apply this pattern understand that saving costs is not sufficient to bring an organization back on course. Innovation is applied to expand the product and service offering. 



Advantages:

• a burning platform can accelerate innovation. 


• if successful, innovation can achieve new revenue opportunities.


• expanding the core is seen as a less risky move.



Disadvantages: 


• innovation is under immense pressure to save the day.


• designing new service offerings and business models takes time - innovation is no quick fix in a crisis.

• in order to make a real impact, fast innovation teams need more budget and manpower.

Organizations that apply an ‘expand the core’ pattern successfully can persist and even thrive during a crisis. The chances of success are high if innovation has sufficient management attention, is well resourced and innovation teams have already investigated new opportunities outside the core business. A neglected and under-resourced innovation function will have a hard time turning a crisis into an opportunity.

Reinvent the core

Organizations that apply a ‘reinvent the core’ pattern are either bold or desperate. Following this pattern is not just about seeking new revenue opportunities outside (new customers, or markets). It’s about the need to reinvent the core of the business completely in order to not only survive the current crisis but also to become more resilient in the future.



Advantages:

• a crisis is a unique situation to reflect on outdated belief systems.

• a crisis releases energy and organizational development can be accelerated.

• adaptability is a competitive advantage. Adaptable organizations are more likely to succeed in the future. 



Disadvantages:

• bold strategic moves during a crisis can create even more uncertainty. A balanced approach and good communication are key.


• reinventing an organization requires developing a vision, having long-term focus, and patience.


• the common fail fast and break things mantra of innovation can be harmful if applied to organizational development.

Organizations that follow the reinvent the core pattern realize that innovation can be applied internally as a means of organizational transformation and development. They understand that this is not a project that can be managed with your usual innovation approaches. It’s a complex social system of written and unwritten rules, conscious and unconscious beliefs, and formal and informal expectations including a corporate immune system that will push back if triggered. Reinventing the core benefits from a systems perspective and thinking techniques that are counter-intuitive yet effective.

Sign up for my newsletter below to receive exclusive content on the right team setup and budgeting approach for each quadrant.

Check www.innovate-strategy.com for more information and get in touch sebastian@innovate-strategy.com.

Posted by Dr. Sebastian Vetter

What is your paradigm of change?

The risk of becoming too steeped in any one framework is you start to be “subject” to that framework, you can only look through its lens, not at the lens. I recommend trying to hold a handful of frameworks in your mind simultaneously in order to maintain flexibility.

Change is a word that is connected to a broad spectrum of emotions. You might embrace or resist change or the word simply makes you cringe. You might see the need for change in your organisation or you might even be tasked with a specific project that relates to change - I invite you to take a step back and think about your own perspective on change:

• How do you see change and how is this impacting your work?

• How does your personal perspective on change differ from your organisations’ perspective?

• What are the benefits and shortcomings of different perspectives?

The bad reputation of change is connected to its history and the rise of change management in the 1990s and 2000s. Let’s take a brief (and incomplete) look at the beginnings of change management.

1. The invention of change management

Interestingly, many change management models are derived from grief studies. Management consultants observed that employees undergoing organisational restructuring showed emotions and behaviours that were similar to people who were diagnosed with a terminal disease.

In 1982 it was a McKinsey & Company consultant who published a change management model in the journal Human Resource Management. This publication was the starting point of a new industry - allowing management consultants to re-brand their engineering services as change management.

Over the following years academia picked up on this trend and several change management models were developed - adding a scientific foundation and legitimization to a growing industry.

The change models developed in the ’80s and ’90s followed the dominant management paradigm which can be characterised as engineering-minded, process-oriented, and target-focused. Note: The term ‘Human Resource Management’ is a good exemplification.

Popular and well-known change management models are:

• John Kotter's 8-Step Process,

• The Prosci ADKAR Model,

• Change Management Foundation and Model,

• Unfreeze - Move - Freeze,

• Plan-Do-Check-Act, and many others.

Most change models from that time are characterised by a sequential, repeatable process to induce and manage a period of transition in order to reach an improved future state of relative stability.

Benefits

• Provides easy to follow step-by-step models for managing change

• Change management is an empowering concept, it makes us feel in control

• An extensive change management toolkit, methods, and certifications provide guidance and evoke a feeling of mastery

• Change management speaks a language many executives can connect with

Shortcomings

• The mechanical and linear perspective oversimplifies the inherent complexity of change, neglects complex relationships and second-order effects

• The distinction between people who drive or induce change (changemakers) and people who are merely recipients of change lacks justification

• The extent to which one can control and manage change is overestimated and connected to the scientifically proven fallacy of illusion of control

• Too much emphasis on change management tools and methods stands in the way of seeing the bigger picture

Traditional change management has a problem, it simply does not work so well in practice. As Harvard Business Review and the inventors of change management McKinsey & Company now point out, roughly 70% of all change projects fail. How is this possible with this wealth of knowledge, dedicated institutes, scientific research, and thousands of change management books for sale on Amazon alone?

Perhaps the management paradigm that was popular at the time has skewed our perspective on change. Let’s look at a paradigm that matches the current management zeitgeist and gets increasing attention in organisations.

2. The rise of the VUCA World

VUCA is an acronym – first used in 1987 by the U.S. Army War College to describe the more volatile, uncertain, complex, and ambiguous multilateral world perceived as resulting from the end of the cold war. In essence, VUCA makes it more difficult to make predictions about the future; change is not only ever-present, its magnitude and impact are also non-linear. This is bad news as humans aren’t very good at dealing with non-linear effects.

While VUCA is a recent concept, the idea of our world undergoing constant change is not new - in fact, it’s ancient wisdom reflected in many cultures around the world (e.g. Buddhism, Hinduism, etc.). It’s more likely that the industrialisation of the world in the past century made us believe that we have full control over our environment (see the illusion of control). Accepting change as being ever-present, non-linear, and unpredictable means it cannot be managed directly using linear management processes.

Then something changed 😉, we invented a technology that is non-linear, connected, and complex: digital technology and subsequently the internet was born, characterised by exponential- and network effects. Therefore it makes perfect sense that it was a group of software developers who stated a manifesto of agility in the 1990s in order to better respond to changing requirements and new insights gained in the design process.

Today, agile principles are being applied way beyond their origin in software development - entire organisations desire to become more agile and move away from top-down management and hierarchical decision making.

Benefits

• A more humble perspective on change, recognising that we don’t have as much control

• A complex, systemic and interrelated understanding of change

• An extensive agile toolkit, methods, and certifications provide guidance and evoke a feeling of mastery

• A fast and iterative approach that integrates planning and execution (in traditional change management planning and execution are separated)

Shortcomings

• Being recipients of change neglects our human ability to create meaning and shape our world

• Responsiveness is reactive, it lacks drive, direction, and purpose

• Too much emphasis on frameworks, tools, methods, and certificates

• Unclear if and how agile principles that were made for software development apply to complex human systems - organisations

As we can see history repeats. What started with some IT nerds stating some basic principles has been monetised with training courses, certificates, methods, and tools and turned into a full-blown agile industry.

A major shortcoming of the VUCA paradigm and associated agile approaches is that it is responsive to change but it doesn’t actively drive it. Being agile means being able to adapt to a changing environment. While this is a valuable skill, especially for slow-moving organisations, it’s not sufficient as it lacks direction, strategy, and purpose.

Let’s look at a third paradigm of change.

3. Growth & development

Growth and development is a very popular paradigm for change as it connects deeply with our human needs and desires and it can be observed in all aspects of life. Unlike responsiveness, growth follows a direction - ideally forward, upward, and at an accelerated speed. Our entire society and worldwide economy is based on the paradigm of growth & development (see how we differentiate between developed and developing countries). It’s clear why growth & development is so appealing; organisations embrace change if it’s heading in the ‘right direction’, they want to become more successful, attract better talent and increase their market share. Growth & development is such an integral part of our reality that I find it the most difficult paradigm to critically reflect on.

Growth & development feels great and perhaps it’s even necessary, but it comes at the price of not always being sustainable. And I’m not talking about how we’re exploiting our eco-systems in search of more. Let’s stick with organisations and look at how growth & development surface; take for example senior leaders acting as role models by working 70+ hours a week, or managers trying to read 50 books a year in order to fuel personal growth and career development. None of that is bad, it just might not be sustainable in the long run.

Growth & development is a fundamental principle of life. But, and we prefer to forget this, so are stagnation and decline. All living things, systems, societies, and organisations go through both, phases of growth & development and phases of stagnation and decline. We’re better off to recognise and accept this duality. Then, and I believe only then we can build organisations that are truly beneficial for humans, our society, and our planet.

Benefits

• A desirable perspective on change. Growth & development is a psychological human need

• The paradigm aligns well with how we built our society and economy

• We don’t have an extensive toolkit for sustainable organisational change yet, promising concepts exist (donut and circular economy, post-growth frameworks, etc.), and its principles might impact how we build and run organisations in the future

Shortcomings

• Organisations that grow too big too fast concentrate power and money, create monopolies and harm our economy

• Too much focus on personal development and self-optimisation can lead to burn-out and decreased performance

• Humans are finite beings living in a finite world, yet many of us have adopted a belief in unlimited growth & development

What’s some specific advice for change in organisations?

• There’s no silver bullet for organisational change - keep experimenting with what works for your organisation

• Be wary of organisational change experts - or anyone who thinks they found ‘the one solution’

• Make use of the non-linear nature of change - small initiatives can have a huge impact (leverage effects). Most likely you don’t need expensive company-wide change programs

• Looking at change from a lens of duality means there are always things that don’t change - let’s put some more emphasis on the good things that we want to keep and maintain

• Use the three paradigms presented to assess the dominant paradigm in your organisation - aligning your change initiatives with it is the easiest but not always the best way. If you’re brave and patient you can also work on shifting paradigms within your department or organisation.

Get in touch if you need help with anything change or culture-related in your organisation. Have a look at my other posts on innovation and strategy design.

Part 1: You’re building or managing an innovation hub? This post is for you!

Innovation hubs – the buzzword of buzzwords. Every organisation wants one, all the big names have one. The promise sounds great – a space that fosters innovation. But do they deliver? And what differentiates successful from underperforming innovation hubs?

I have helped organisations in New Zealand and Europe build, manage, and operate innovation hubs and my answer is: yes, some innovation hubs do really well. Learn from my #10 lessons learned and increase the productivity of your innovation hub. If you liked this post, have a look at part two: #11 - #15 five more lessons learned when building or managing innovation hubs.

#1: it’s not about the space. 

Organisations, especially corporates invest a lot of money into spaces that look like playgrounds. They tend to believe that bean bags and nerf guns create a great office culture and magically lead to innovation. Many open plan offices are designed to impress clients or internal stakeholders. Often they don’t support the type of work people do. A problem with open space offices is that it can get very loud and it’s hard for people to do focused individual work. This is true especially for introverted people. Start with the work and find out what people actually need in order to get the job done.

• What is the best process for doing the work?

• When do people need to work individually?

• When do they need to collaborate?

• How can we design an environment to support different ways of working?

• What tools, systems and processes do we need to have in place to support this?

#2: start small.

People think money speeds things up. That’s not true. Money slows things down. How? Money buys you options, literally. While options sound great they come with a caveat - options create choice and choosing takes time and effort. This is something called the choice paradoxon. The more choice people have the slower is their decision making. That’s one reason why start-ups are more focused and often faster in bringing products to the market. They don’t have much money.

For example, if you can spend hundreds of thousand of dollars for let’s say an advanced audio system you will have to engage with multiple (international) vendors to ensure you find the best solution. A start-up approach would be to buy a couple of connected bluetooth speakers. Deciding which speakers to buy and actually buying them can be done in half a day versus weeks or months in the corporate example. Yes, the sound quality won’t be as good but this ‘quick & dirty’ approach does not distract anyone from doing the work.

#3: corporate immune system.

The corporate immune system might be your biggest enemy when building an innovation hub. Every organism has some kind of immune system to protect it from invaders. In the human body, the immune system creates anti-bodies and white blood cells to defeat invasions. Organisations are not that different in their immune response. Note that the corporate immune system is not evil in nature, it is simply trying to protect the status quo, the current way of working. How can you deal with the corporate immune system?

1. Go to the top! Setting up an innovation hub requires leadership support. Someone on the C-suite has to own it. That person has to protect you against attacks from people within the organisation who are trying to protect the status quo.

2. Go stealth mode! In the beginning you’re better off starting small and stay quiet. Too much attention is distracting and potentially harmful, as it can easily get political. Don’t communicate too much. Just focus on building structures around the innovation hub to stabilise and protect it. The best time to communicate and promote the innovation hub is when you have your first success story to tell. Some organisations create a different legal entity with a separate budget just for the innovation hub to avoid the corporate immune system response.

3. Go and find allies! Building an innovation hub is a big task, too big for just one person or team. You need to find supporters, allies and friends in your organisation. Don’t worry they are there, you probably know them already.

4. Deal with push back! You will get to a point where you’ll experience push back and you might be under (political) attack. This is normal. You should expect this to happen. It’s even a good sign. It can mean you are poking at the right spot. For now it can be a good idea to stop poking, try a different angle or just wait a bit and try it again.

#4: start with easy problems.

Okay, this will sound counter-intuitive. With your early days innovation hub you should NOT start with innovation. Do NOT try to come up with the next big thing. YOU WILL FAIL. You will fail because your team isn’t used to working together, because you will face unforeseen obstacles, because starting is always the hardest part. The worst thing about this is that the innovation hub will get a bad reputation. People will say I knew it, this is not working in our organisation, we have to go back to the way we’ve done things in the past, etc.

So what should you start with? Start with solving existing problems. Start with easy problems. If you solve problems in your organisation, if you make the life of your colleagues easier, they will trust you and start believing in the new way of working. In the beginning what you need most are success stories. Forget ‘fail fast’. You want to pick a problem that you can solve easily. Even a project that is already underway can be a good candidate for your innovation hub. Help the project owner to bring it over the line quicker or better and share the praise.

#5: take risks. 

Once your structures have matured, the members of your team trust each other and know how to collaborate, you were able to present a few success stories and you have more and more supporters in your organisation it’s time to take on bigger projects. In general you should always have a good mix of projects that are quick wins that can be easily delivered and more complex and therefore more risky projects. Those are the projects methodologies like design thinking and sprints were developed for.

Tip: choose a project that is big and painful for someone senior in your organisation. If you’re helping her to solve it, you have won another powerful supporter to protect you in tough times.

#6: leadership involvement.

Leadership support is absolutely crucial for an innovation hub to succeed. It’s almost the number one requirement. If you don’t have it - walk away. There is no point of even starting.

Leadership support matters most when things go wrong and when times are tough. You need someone who steps in when politics and the corporate immune system strikes. Obviously mutual trust is important. The key is to involve a senior supporter from the beginning. I recommend running a positioning workshop to define the purpose, values, vision, and strategy of the innovation hub together. This give you a common ground to start from and creates a shared understanding of what you are actually doing and what the innovation hub stands for.

#7: a separate budget.

Innovation, especially when it’s about creating future options for your business can not be measured against traditional performance and return on investment metrics. There is no mathematical model to predict the success of something that might or might not be the next big thing in 3-5 years time.

You need a separate budget and you need to apply a different type of thinking. What is the risk if you don’t investigate future options for your business? If you don’t investigate options that make your current business obsolete - someone else will. A well-known but often misunderstood framework from McKinsey illustrates this. The ‘3 horizons of growth' (in short: defend, expand, disrupt) differentiates tactics for each horizon (superior execution, positional advantage, insight and foresight). Organisations think they have to defend first before they expand and that they have to expand first before they disrupt. The key is to play in all three horizons simultaneously. The 70 / 20 / 10 rule states the amount of effort and investment organisations should allocate to opportunities in each horizon. 10% doesn't sound like much - it's 25 working days per person per year. Most organisations focus on H1, maybe H2 and underinvest in H3. The answer is simple, in order to remain relevant organisations have to start creating viable options for the future today. 

#8: protect the space.

Defend and protect the new innovation hub. This is especially important once you’ve gained some momentum and people in your organisation want to work with you. The common threats are:

1. Noise. Open space offices have become the norm for innovation hubs. For no good reason, simply because they look cool. If you see lot’s of people working with their headphones on, it’s a bad sign. Don’t get me wrong, open spaces can work well if they are designed to support the way people work. Just putting desks in an open office space and waiting for innovation to strike is a silly idea. If distracted by a colleague asking a quick question or an annoying ringtone it takes people 30 minutes to get back into the zone. Therefore you need to balance open plan offices with distraction free quiet zones or one-person cabins. Then you have one space for shallow work and one space for deep work.

2. Too many visitors to the space. People visiting your space means they are interested, that’s good. Random pop-in visitors who just want to see what’s going on are not so good. They are distracting your team. An innovation hub is not a zoo. Pick an afternoon slot on a Friday and set someone up to show people around and answer questions in a kind of guided 30 minute tour.

3. Too many projects. While this might sound like a luxury problem, too many projects can distract your team and lead to failure. Innovative ways of working are designed to prevent multitasking and task switching. Design thinking and sprints are designed to get a team to focus on one problem at the time. You can’t sprint on two projects simultaneously. So make clear that the innovation hub has the right to cherry pick the projects they want to work on. Simply growing the team is not always the right approach to deal with high demand. A larger team means more structures, longer stand-up’s etc. The best team size is 7-10 people. It’s a better idea to create a new team and let people rotate between teams.

#9: mission control.

An often overlooked part of innovation hubs is mission control. Especially in a hub where multiple teams work on different initiatives at the same time. The word mission control is misleading. It’s not about controlling the progress teams are making – it’s about removing barriers and protecting teams from business as usual and the politics that come with it.

How does it work? On a Monday morning all teams have a weekly 30 minute mission control standup where they discuss and visualise barriers they are facing. They note down options how these barriers can be removed. On Monday afternoon the leadership steerco team meets in the mission control space. They decide who is responsible for removing the barrier. Removing a barrier can be as easy as making a decision on the spot. Sometimes it needs more investigation. This meeting is not about checking in on the progress the teams are making – it’s pure purpose is to deal with things flagged as barriers by the teams. The teams manage their progress autonomously, supported by a facilitator. One wall of the mission control room is dedicated to identifying new ideas, problems, or pain points that exist in the organisation. There is a separate monthly steerco meeting where senior leaders prioritise those ideas or pain points.

#10: the secret sauce.

The secret sauce of innovation hubs is often invisible. It’s the operating model. It’s about the process and a specific way of working that makes a difference. Dropping people from different parts of the business into a new space won’t change anything. Teams need a specific process for innovation and delivery.

From my experience facilitated weekly sprints do the job best. In just one week teams develop a shared understanding of the problem, they create as many different solutions as possible, a decider who has been part of the process from day one decides which concepts get tested. The team prototypes the concepts and tests them with actual users. That’s it. Fast and simple. No room for opinions, politics, meetings and reports.

If you liked this post, have a look at part two: #11 - #15 five more lessons learned when building or managing innovation hubs.

And of course, I’m here to help, get in touch and let’s talk through your innovation hub and how you can increase the productivity of your team.

Sign up to my newsletter below to receive exclusive content on how to manage innovation hubs in more detail (I share one or two posts every month).

Check www.innovate-strategy.com for more information and get in touch sebastian@innovate-strategy.com.

Posted by Dr. Sebastian Vetter 

Part 2: You're building or managing an innovation hub? This post is for you!

In 2017 I published 10 lessons learned when building or managing innovation hubs and the feedback was overwhelming. The article was viewed by more than 10.000 people and I received emails from all over the world. Requests came from the US Airforce, startups from Kenya and Nigeria, medical corporations from Switzerland, New Zealand Universities, public sector organisations in the UK, and banks in the Middle East. 

In the meantime innovation hubs are not the hot new topic anymore and many articles have been written on innovation hubs. By now most corporations have built one. Some innovation hubs are doing extremely well, but many are still falling short of expectations. People have come to realise that a fancy office space will not magically lead to innovation. Real innovation is not easy, there are many road blocks to look out for, but it is possible! Don’t take the path of least resistance and blindly fulfil the demands from your mother organisation, you risk becoming a fancier version of the internal IT-department building products no one really needs.

Time for part 2. Here are 5 more lessons for how to make important course corrections to navigate your innovation hub on the path to success.

# 11: DON’T BE A TOURIST

Innovation hub tourism is now a thing. Senior leadership teams go on a start-up safaris (unfortunately that is a real term) to Cape Town, Berlin, the SF Bay Area and Tel Aviv to see how a new unicorn is born. Consulting firms serve as tour guides offering silicon valley package deals where C-level executives get an all-inclusive tour of the dominant tech players in 10 days - welcome drinks included. 

To do what exactly? Learn something I would guess!?

Exchange between organisations of different industries is a great thing and it could actually lead to insights if done right. For a robust learning experience to happen you need to be willing to learn and you need to be willing to look beyond the surface. Wouldn’t it be great to see what Airbnb, WeWork, or Uber is really struggling with? What are some of the problems they are facing? They can’t be getting everything right. Of course getting real insights is only possible if the organisations you visit allow you a peek behind the scenes. This requires trust, honesty and humility - on both sides. I doubt that you will get this by attending a staged all-inclusive tour. Without realising it you might find yourself looking mesmerised at actors performing innovation theatre with little meaningful for you to take home other than pictures on your smartphone. If you really want to learn from how innovation hubs function in other industries - agree on a mutual secondment where you exchange team members for at least 6 months. 

#12. WE LOVE SHINY THINGS

Once you have found a physical space for the new innovation hub it’s time to go shopping and buy some cool gadgets from kickstarter, some drones, AR goggles, IoT devices, 3D printers, maybe even a robot. Wait what? Resist the temptation to turn the space into a technology showroom. It will backfire because of three reasons: 

• First, todays latest technology will be outdated quickly meaning your once fancy showroom becomes a museum of old technology. Plus stocking your space with the latest gadgets costs a lot of money.

• Second, it creates a lot of attention and many people will want to come and play with it. Why is this bad? It’s bad because it makes people focus on the wrong things. It created the impression that technology is the most important ingredient of the innovation formula. It is not. Technology can be a means to achieve a desired goal or to solve a problem in a faster or better way but it’s no means in itself.

• Third, it distracts the people working in the innovation hub. Visitors will want to fly the drones, do AR painting, 3D-print a smartphone stand and talk to that cute robot. 

Why would you have all of these technology gadgets anyway? None of those were developed by you or your team. They are someone else's inventions and the creativity involved in creating them won’t rub off on you simply by purchasing. Don’t get me wrong if the problem you are trying to solve involves technology you need to get your hands on it and start experimenting. Don’t create use cases for the sake of having something to display. Ideally a use case is the by-product of a project you have completed or you deliberately designed a use case to convince a client to work with you.  

#13: WHAT DO YOU DO AGAIN?

If no one knows what the innovation hub stands for you will struggle finding clients. Or even worse your clients will define for you what type of problems or challenges you will be working on. You don’t want that, so you need to communicate clearly what you do. This is your service offering. A good service offering allows you to differentiate, it describes what you do, what you don’t do and therefore gives direction and focus to your team. When defining your service offering keep three things in mind:

• Describe the problem - not the solution. If you define your service offerings as solutions, e.g. chatbot or app development you risk being perceived as a supplier and not as a partner. As a supplier it will be hard for you to challenge a brief that doesn’t make much sense. It can also become a problem as your clients will want to pick and choose the solution they want as opposed to what they actually need. If you describe the problem or the ambitions your clients have e.g. wanting to create growth through new business models, increasing customer engagement through digital self-service options, becoming relevant to a new customer segment, etc. your chances of becoming a trusted partner are much higher. 

• Don’t be too specific. A very specific and detailed service offering will limit the variety of challenges you will be working on. Repetition is the death of innovation. Innovation works best if challenges are big and messy, ill-defined and poorly understood. If that’s the case you can actually learn something new, change perspectives and build unique solutions.  

• People don’t read anymore - tell a story. You have to keep it short, concise, and engaging. Don’t confuse storytelling with showing off. It’s not about the cool stuff you have built. It’s about what you have learned along the way, how you uncovered the underlying problem, how you course-corrected, how something unusual happened that led to a more radical solution. Good storytelling is about humility, wrong roads taken and unexpected twists in the plot.

#14: MEASURE TO IMPROVE?

At least that’s what we learned, right? While this might work for sustaining innovation (improving something that satisfies people’s current needs) it is not true for disruptive innovation (designing something with an often lower performance that satisfies people’s future needs). How do you measure how long it should take to create something that is truly new? Something that no one has created before?

Don’t revert to what you know, don’t use traditional Key Performance Indicators (KPIs) for disruptive innovation. They are designed for well-understood, often repetitive work where the relationship between the input (action) and the output (result or effect) is not direct and/or not directly visible. Often because work is broken down into many small tasks that make up a process, e.g. in production or service delivery.

It’s important to keep in mind that a KPI is not an exact measure of performance, it merely indicates it. Think of a shadow indicating the size and shape of an object. Depending on the light and angle a shadow can give you an idea of the true dimensions of an object, but it can be skewed and distorted by a small change in perspective. The same is true for KPI’s. The effect of distortion gets even bigger when we aggregate different KPI’s into one number. We lose information and create vanity measures. Whenever possible look at the performance directly, observe the work that is being done, observe the quality of the result instead of looking at numbers that are prone to distortion or even manipulation. 

#15: CONNECT AND PROTECT

If your early work has proven to be successful and you will have achieved some visibility inside your organisation it’s time to be on your toes. 

What often happens is that people from the main organisation will try to offload their slow moving projects to the innovation hub. This is not necessary a bad thing as long as the projects are a good match for the innovation hub. Don’t bite off more than you can chew and stay clear from politically loaded projects. Innovation only works if you can focus on one thing at a time, don’t fall into project management or multi-tasking mode.

The other aspect to look out for is if leaders from the main organisation are willing to let go of managing the project they handed over to the hub. This can be tricky as they are ultimately responsible for the project’s success and might feel the need to micromanage to ensure the project is on track. You can not allow this as it undermines the structures and processes you have set in place. Define clear roles for collaboration. For example let the person who is responsible for the project success be part of the sprint team. 

It’s a fine balance between being open to fulfil the needs of the main organisation and being a closed community with its own rules. A helpful analogy is a semi-permeable membrane. It lets specific elements that are beneficial inside and it blocks harmful elements from entering. The main form of exchange between the main organisation and the innovation hub is the input in the form of problems or challenges and the output in the form of innovative products, services, process improvements, business models and ventures. 

I have helped organisations in New Zealand and Europe build, manage, and operate innovation hubs and I’m here to help, get in touch and let’s talk through your innovation hub and how you can increase the productivity of your team.

Sign up to my newsletter below to receive exclusive content on how to manage innovation hubs (I share one or two posts every month).

Check www.innovate-strategy.com for more information and get in touch sebastian@innovate-strategy.com.

Posted by Dr. Sebastian Vetter

Business model innovation - Not another Uber story

Successful products and services are desirable (people want it), feasible (it can be built), and viable (revenue is created). From my experience most organisations these days understand the importance of customer centricity. At the same time they overestimate the role of technology with a lot of talk and buzz about Artificial Intelligence, Blockchain, AR and VR. Let's talk about money. Let's talk about business models and revenue generation. You don't need to live at the edge of emerging tech in order to build successful products and services. In many cases established technology will do the trick. 

Read on if you want to know how to do this and yes I'm using Uber as an example...

Uber Technologies Inc, the world’s largest provider of personal transport has surely made it into the top 10 of water-cooler conversations. Digital, technology and disruption are frequently used buzzwords when telling the Uber story.

Uber was founded in 2009 and is currently present in 60 countries and more than 300 cities. Despite extensive media coverage (mostly about countries trying to ban Uber), few people actually understand what makes Uber successful. Even most conventional taxi drivers fail to understand how Uber manages to offer a service with drivers who don’t have a taxi licence.

Many believe it is innovative digital technology that allowed Uber to disrupt the taxi industry. It is not! Yes, Uber uses a responsive website and an app with features like GPS location and automatic credit card payment. But these have been standard technologies for many years – hardly innovative!

So what makes Uber successful?

Uber works because of its peer-to-peer business model running on a digital platform. This means that Uber is connecting people who offer a service with people who have a need.

But let’s take a step back and look at what exactly a business model is. You’ll be surprised that there is actually no universal definition of a business model. According to the St. Gallen University in Switzerland, a business model (see figure 1) provides answers to the following four questions.

1. Who is your target customer?

2. What do you offer to the customer?

3. How is the value proposition created?

4. How is revenue created?

Figure 1. Structure of a business model according to the St. Gallen University.

Let’s have a look at how Uber would answer these questions.

Uber offers its service to two types of customers:

1. people who offer

2. people who want a ride.

The requirements to become a driver are straightforward: a clean criminal record, a newish car and a mobile phone. To get an Uber ride, customers simply need to download the Uber app, register, and provide credit card details.

Uber’s value proposition is in providing a highly flexible source of income for people who own a car. Drivers can determine when and for how many hours they work.

The value proposition for passengers is in:

• cheap, undercut market rates

• a wide network of drivers

• real-time information on where their ride is

• automatic credit card payments.

Then Uber creates value internally by not having to deal with:

• servicing and maintaining a fleet of taxis

• rent

• call centre agents

• administration

• parking fees

• recruiting and training drivers and issuing permits.

This all means massive savings in fixed and variable costs.

Uber makes money by charging a commission of up to 30% from the drivers. Uber uses an automated algorithm to adjust prices and influence supply and demand in the market, resulting in significantly higher fares at times of high demand. 

So what does this all mean?

Looking at all this, it’s clear that Uber is not a taxi company – it’s an online platform that connects people. And that’s not new either. The peer-to-peer business model is used by many organisations, including eBay, Trade Me, Airbnb, and essentially every dating service.

Technology itself is seldom disruptive. If your industry is going to be disrupted, it’s going to be by legacy technology combined with a trivial, but effective, business model. And it’s likely to be an outsider, a start-up or an organisation from a different industry that’s not constrained by current industry logic and thinking, that disrupts you.

Instead of waiting for an outsider to change your business, you can look at ways to change it yourself. The process of innovating your own business model is a creative, and iterative process. The first step is in analysing and understanding your current business model.

Start by finding answers to the following questions:

1. Who is your target customer?

2. What do you offer to the customer?

3. How is the value proposition created?

4. How is revenue created?

The next step is to get an overview of existing business models. The St. Gallen University in Switzerland has analysed hundreds of successful companies and identified 55 distinct business model patterns.

Figure 2 shows the two business model patterns applied by Uber: peer-to-peer and digitalisation.

Figure 2. Peer-to-peer and digitalisation business model pattern cards.

There are two ways to analyse other business models:

1. Look at the business models of companies that operate in a similar, comparable industry. For example, if your organisation is providing a commodity service like electricity, look at other service providers like insurance, banking, etc. If your organisation is selling lifestyle products like custom-made leather bags, look at organisations that sell motorbikes, watches, jewellery or smartphones.

2. Try a more radical approach by applying the confrontation principle. Pick business models of companies that are polar opposites to your company’s business model. The goal is to radically push your thinking by asking questions like, How would McDonald’s run our business?

It’s important to take this seriously and to think beyond grilling burgers. The McDonald’s business model is based on the patterns franchise and self-service. As a result, McDonald’s has highly efficient processes in place. A hamburger is made in less than a minute and it takes only 30 minutes to train a new employee. What would these sorts of processes do to your business?

I recommend running four moderated full-day workshops focusing on the following activities:

Workshop 1 – Understand and describe your own business model

Workshop 2 – Ideate on how applying the similarity principle would change your business model

Workshop 3 – Ideate on how applying the confrontation principle would change your business model

Workshop 4 – Select the best ideas and plan how to integrate new patterns into your existing business model.

The implementation of a new or revised business model can be a significant challenge, especially for organisations operating in traditional industries. This challenge is best approached by following an iterative process of prototyping and testing with both potential customers and staff.

Escape competition by changing the rules of the game

Investing in innovative technology is not enough and by far no guarantee for a successful and sustainable business. Product, technology or service innovation can be copied by competitors in a relatively short time and with little effort. The only way to beat the competition is to stop trying to beat the competition (Mauborgne, R. & Kim, W.C. 2005. Blue Ocean Strategy).

And of course, I’m here to help, get in touch and let’s talk through your business model and how business model innovation can help.

Sign up to my newsletter below to receive exclusive content on how to drive business model innovation (I share one or two posts every month).

Check www.innovate-strategy.com for more information and get in touch sebastian@innovate-strategy.com.

Posted by Dr. Sebastian Vetter

Don’t build a mobile app just because you can! A framework for service design

Unlike products, services are delivered over time through a series of interactions between a customer and a service provider, which we call touchpoints. Service companies are typically structured around channels e.g. digital, direct, phone etc. As a result of this the budget is also assigned in the same way. To visualise this, the below sketch shows the structure of a prototypical service company.

You might think of your work in the context of a particular channel. Important to bear in mind is that your customers don’t care about channels or how your company is structured. Every interaction they have forms their experience regardless of channels. Their interactions are driven by a specific need or goal they want to achieve.
Let’s have a look at the journey of Susan who has just received a bill from your company.

In this example Susan chooses the – at the time – most convenient channel for interaction. A poor service experience within one channel is likely to drive her to another channel. Jumping between channels however is time-consuming and often results in a poor and inconsistent service experience.
Creating a consistent customer experience across channels is often hindered by channel-oriented structure and budgeting. Focusing on just one channel is not enough as it is the weakest channel that defines Susan’s overall service experience.

How can you design great service experiences across channels?

1. Break down the silos between channels.
Allow for cross-channel budgeting and create cross-channel teams that work together on a regular basis to improve the service experience.

2. Understand your customers. Use qualitative field research techniques like observing and interviewing your customers in their environment or the context they experience your service to truly understand who your customers are and to shed light on their needs and pain-points. Enrich your findings by adding quantitative data like common reasons for complaints and cancellations.

3. Develop your own service design framework.
Create a specific measurement framework for your company to get an overview of customer needs, the channels available, and the touchpoints that result.

4. Review and analyse all touchpoints horizontally.
Focus on the customer needs and approach the matrix horizontally instead of vertically. That is, analyse all touchpoints for one specific customer need (e.g. ‘Learn about a new service’) according to the criteria below. Keep an eye on what potentially drives your customers to a specific channel. E.g. the use of jargon in your bills might drive people to call the contact centre instead of checking their usage online first.

5. Evaluate your channels systematically.
Use the below matrix to guide your decision process.

• PROMOTE a target channel for a specific customer need if it provides a good user experience at low costs. Try to serve most customer needs through this channel.

• DE-PRIORITISE cost-intensive channels with a high actual usage. These channels should only be used for specific customer needs.

• REMOVE channels for a specific customer need if the user experience is bad and the costs per customer are high. When removing an entire channel, make sure that you offer and promote alternatives.

• MONITOR low-cost channels that offer a bad user experience for changes. Find ways to improve the user experience. Although these channels are unlikely to delight the majority of your customers, they might still be required by some.

Succeeding in creating world-class services requires moving our thinking beyond service channels and putting customer needs in the centre, and designing and improving services around them. Good service design is not about adding more channels to your offering just because you can (“We need a mobile app – every company has one!”).

Good service design is about conducting existing channels to work seamlessly together to offer a consistent experience. New channels are added as they become a preferred and cost effective option. The framework above can help you to measure and to design service experiences that delight your customers.

And of course, I’m here to help, get in touch and let’s talk through your service and how this framework can help.

Sign up to my newsletter below to receive exclusive content on service design, customer experience and omni-channel management (I share one or two posts every month).

Check www.innovate-strategy.com for more information and get in touch sebastian@innovate-strategy.com.

Posted by Dr. Sebastian Vetter