Product innovation usually results in a new product or new technology, and the innovators can visualize the singular outcome. Process innovation on the other hand is cumbersome, it is not immediately brilliant and the disruption is not obvious. A three-team sequential plan to design and build your fast fulfillment machine is introduced. This plan deploys the concepts and methods presented in the preceding chapters.
Team innovation is not looking for incremental ideas but rather ideas that lead to hyper-disruptive high-impact innovations. Ideas come from people, and people make the team. Who is on the team and who leads the team is what ultimately determines success. In start-ups, innovation teams are like rock bands, the business has a few employees, and everyone is creative and passionately driven by the disruption. But in all successful start-ups, some key innovators stayed through all the failures and earned that coveted knighthood of founder or cofounder. Numerous books are describing the innovation stories of these companies, plus many other books listing innovation traits and how companies can acquire these traits.
A key goal of this book is that companies will deploy the presented concepts and methods to create their fast fulfillment machine. Disruptive process innovations are what companies need to build the machine, but the underlying ideas and their disruptive value are not easily seen and realized. So, we introduce a three-team sequential plan.
1. Innovation Lookout Team: Would serve as a surveillance force that ensures the company is not blindsided by the disruptors.
2. Zero-Infinity Investigation Team: Would confirm the machine building opportunities and pathways.
3. Team Innovation: Would be tasked with designing and building (design-build) the fast fulfillment machine.
In the previous chapter, we described the investigation process and provided suggestions for putting together the zero-infinity investigation team. In this chapter, we do the same for the lookout team and team innovation. These formal or assigned teams serve as a surrogate for the natural teams that form in start-ups. Make no mistake, these formal teams will be challenged to match the drive and passion of the start-ups. The knowledge tactics of this book will help close the gap. Read and access the innovation team-building knowledge provided by many experts to close the gap further.
We all want that innovation recipe, a step-by-step plan or process that will get us to the endpoint. There is a library full of textbooks and management books on New Product Development, but the reality is that the disruptors never used any of these. The fulfillment machine is driven by process innovation, and the classical approaches do not work very well when you are looking to disrupt the current process or business. So, my recommendation is to construct a plan that is best suited to the team, the nature of the business, and the company’s aspirations. Rigid or highly structured plans are likely to be innovation hurdles, so keep it fluid.
In the previous chapter, we introduced the role of the zero-infinity investigation team in machine building, and earlier we had talked about the innovation lookout team. In this final chapter, we bring it all together and recommend a three-team sequential process (Figure 11.1). The first team, innovation lookout, is on all the time in a sort of constant surveillance mode. The other two, zero-infinity investigation and team innovation, are activated in response to an identified threat/opportunity.
Chapter 10 described in detail the tasks and outputs of the zero-infinity investigation team. Here we focus on the other two teams. Unlike the zero-infinity team, we do not provide a specific list of tasks, rather, this chapter proposes features and flavors that will drive team success.
Figure 11.1 Three-team sequential innovation process
Innovation Lookout Team
The classical view of innovation is periodic, that is, great things happen every N years. The reality though is that technology enablers are being created continuously, and more importantly, these are external to the company. A business, therefore, needs to be on a constant lookout for these creations and be prepared to immediately innovate products and services. The innovation lookout team is charged with seeding these innovations. Do not assume that you can skip the team and it will happen organically, or that technology officers, marketing departments, and data analytics will do the job. Here are the attributes of the lookout team:
Purpose: Constant survey of the business landscape to innovation derive threats and opportunities which could disrupt or current product/service portfolios.
Formation: Small team of one to three members. Rotating membership with a new team every quarter or semi annually.
Lookout Intelligence Report: A three- to five-page report prepared by the team and submitted to management and other key parties once every quarter. The report should include the following sections: (i) Technology enablers, (ii) Disruptors and/or potential disruptions, (iii) Customer shifts or trends, and (iv) Threats and Opportunities, which are the cumulative or summary effect of the previous three.
A report is only valuable if it is used effectively and generates necessary action. The obvious reviewers of the Lookout Intelligence Report are senior managers and stakeholders who will decide if a zero-infinity team should be activated. But often this group is not a sufficient group to ensure innovation success. Crowdsourcing information is a great way to reach out to a wider group of company employees and we introduce the Group Idea Sourcing method, as an additional tool.
The review must evaluate first, whether any further investigations are required, and second formulate business aspirations from the report intelligence. It is unlikely that every iteration of the report will generate follow-up action. The more threats and opportunities the team identifies, the more actionable the report. The biggest risk of an ineffective team is Titanic latency. Remember the lookout team on the crow’s nest of the Titanic, they saw the iceberg and alerted the captain, but the warning was too late to save the ship. Looking out at the innovation disruptor landscape there are four possible situations:
Situation #0: There are no disruptors and no technology enablers that could challenge the existing machine.
Situation #1: There are no disruptors, but technology enablers were identified and you have first-mover advantage.
Situation #2: The disruptors have built the machine and are ready to set sail.
Situation #3: The disruptors are at the gate! You need to build a machine at warp speed.
Apart from situation #0, all others should get the ball rolling on some kind of action. If situation #2 or 3# are detected, then you have Titanic latency, and you need an all-hands-on deck plan. When management decides to activate a zero-infinity team, then they must synthesize the intelligence report into a brief business aspiration.
Business Aspiration: A sketchy idea of process solutions or products/services that could counter the threats or leverage the opportunities.
This would include inputs of all reviewers, plus the comments submitted in the group sourcing platform. Let’s take a look at what the lookout team at a financial services firm would have reported (Table 11.1), and the resulting business aspiration. If done correctly and at the right time, the firm would have been able to innovate faster than upstarts like Robinhood94, and not just been copycat followers.
Table 11.1 Example Output of the Innovation Lookout Team
Innovation Lookout—A Financial Services Firm
Opportunity: An increasing population of young investors with small capital (less than $2,000) are looking for zero-cost solutions to fulfill their stock market investment plans. New programming and communication technologies make it possible to provide advanced services as a self-service utility.
Threats: A few companies have already built and deployed a first-generation zero-cost investment fulfillment solution.
Business Aspiration: Offer a broad service fast execution investment solution through an ultra-low-cost platform. Small capital investors are provided large capital services and utilities with no service fees.
Robinhood—On a mission to democratize finance for all94
Founders realized that big Wall Street firms pay effectively nothing to trade stocks, while most Americans are charged up to $10 for every trade and decided to build products that would provide everyone with access to the financial markets, not just the wealthy. They built Robinhood—a company that leverages technology to encourage everyone to participate in our financial system.
Group Sourcing
Those most vested in the current system are least likely to propose an innovative disruption, which implies that a business must reach out to individuals less vested in the current system to promote, propose, or validate innovative disruptions. Wired magazine introduced the term crowd-sourcing, and it can be a powerful tool for distributing the innovation process through the company and more importantly among those less vested.
Crowdsourcing is a sourcing model in which individuals or organizations obtain goods and services, including ideas, from a large, relatively open, and often rapidly evolving group of participants. Crowdsourcing typically involves using the internet to attract and divide work between participants to achieve a cumulative result. Some forms of crowdsourcing, such as in “idea competitions” or “innovation contests” provide ways for organizations to learn beyond the “base of minds” provided by their employees (Wikipedia Definition).95
The intelligence report includes valuable information that the business plans to transform into an innovative idea, so it is not something you want to share with a public crowd. Group sourcing using a forum style platform can limit participation to selected employees. The approach expands the numbers of participants, who can then add supporting, critical, and/or alternative viewpoints to the report. Additionally, they can tap and foster ideas from insightful individuals in the business. Here are some industry examples to show how group sourcing can be implemented.
What’s your Starbucks Idea?96—Revolutionary or simple, we want to hear it. This is a basic crowdsourcing idea platform, but it works.
L’Oreal Innovation Runway 202097—Open call for start-ups from the many fields of deep tech and various industries to shape the future of beauty together. Let’s cocreate revolutionary solutions that are scalable, sustainable, and environmentally friendly to transform the industry! Proposals are judged by LOreal innovation experts based on the following: (i) Technology description, (ii) Differentiation and Impact of the Value proposition, (iii) Business/revenue model, and (iv) Traction: KPI metrics and milestones. The program is run on Agorize98—an open innovation challenge platform.
Idea Drop99—An intuitive idea management software—Group sourcing can use many modes, includes e-mail, or a digital wall where participants can add notes to specific features of the proposed innovations and disruptions. You can also use a readily available platform such as Idea Drop.
Team innovation is tasked with the detailed activity of designing and building the fulfillment machine. The innovation lookout and zero-infinity teams have collected key data and information needed to give the team focus and direction. Similar to the lookout report, the zero-infinity report is reviewed by a management team, and a decision is made on whether to activate team innovation. Capital and talent resources required by team innovation could be substantial. A swift and democratic review of the seven investigative questions and the associated summary page is critical.
Machine Building Goal: Design-build a fast fulfillment solution that delivers the company’s current and future products/services in new innovative ways that disrupt the current process. The solution would involve process innovations that build on the identified: (i) Market Opportunities, (ii) Technology Enablers, and (iii) Value Potential.
Team innovation would formulate a more detailed goal that specifies products/services or functional parts of these products/services. The keywords in the goal are disruptive and process innovations and the team has a stated consensus on how these keywords are evaluated.
How the team functions and how the team is comprised will be different for every business, and no specific process or method is proposed here. The number of members and the required process skills will be determined by the business aspiration and process innovation scope. But here are some recommendations to consider as the team is put together. Remember the resulting innovations are only as good as the team.
XYZ Leadership
Teams have leaders, and their leadership style will be reflected in the output. Traditionally, businesses have followed a classical style of leadership, which I will call the ABC style. Vision, focus, and inspirations are the key elements of ABC leaders and this style works perfectly at the highest levels of the business organization. But this is not the style of leadership we see in successful start-ups or innovation projects. Rather, an XYZ leadership style seems to be the more popular and effective. Figure 11.2 compares the traits of the two leadership styles. Innovators need to channel their excitement, they need to validate their achievements and be democratic participants in the process, and they know new technologies make big innovations possible. The XYZ style promotes and facilitates innovations, and leaders should pivot to it.
Figure 11.2 Two leadership styles—ABC and XYZ
Technology will be an integral part of the fulfillment machine, and team innovation leaders and members must collectively have significant knowledge about the technology enablers. Outsourcing the technology role to a contractor, or assuming there is some plug-and-play vendor supplied solution is not going to generate disruptive innovations. The team leadership must view technology as a core process and a necessary strength for the business.
Flavors of the Team
Innovation projects are very different from traditional improvement projects. Why? Because the team has to assume and expect that process innovations are likely to discount all the strengths of the current system. Having a team with the right attitude is critical to success, and here we identify four flavors or characteristics, that are required of team innovation.
#1 Good Bones Good Soul—All teams have good bones: they have domain knowledge and expertise, the requisite analytical skills, and insightful curiosity. But the soul, ah! It does not come easily. The soul is the passion that drives the desire to build that disruptive innovation solution, and for most start-ups, it comes naturally. For a formal team, the risk is that we end up with Good Bones No Soul. I have no solution to transitioning from No Soul to Good Soul. Maybe that special canopy growth smoothie or that organic hyper botanical premium gin and tonic is what team innovation needs to create that collective passion.
Do what you love. Passion is everything. Innovation doesn’t happen without it. Dig deep to identify your true passion. Steve Jobs was not passionate about computers; he was passionate about building tools to help people unleash their potential. One of the most profound remarks Jobs ever made occurred at the end of one of his last major public presentations. Jobs said, “It’s the intersection of technology and liberal arts that makes our hearts sing.”
—The Innovation Secrets of Steve Jobs, Carmine Gallo100
#2 No Reservations, No Limitations—Legendary chef journalist Anthony Bourdain made food into a discovery journey, which was portrayed on his iconic TV show, No Reservations. He disrupted the structured recipe view of food shows and instead introduced millions to the innovative and unknown cuisines and cultures from all over the world.
Bourdain described his initial pitch for the show to The New Yorker: “I travel around the world, eat a lot of s***, and basically do whatever the f*** I want.”101
Overlooking the profanity, team innovation must adopt the same attitude. A great thing about process innovations is that they are often portable. The team should be ready to look far and wide, study a lot of innovations, and say whatever they want at team meetings. That’s what the business needs, not the 99 percent same as other innovations.
#3 Light my Fire—Missed opportunities; didn’t see it coming; or passed by that great idea. These are all common phrases used by businesses, teams, and individuals to describe a disruption. The greatest risk to team innovation is that even though all members have the needed skills, information, and experiential background, and the innovation trends and technology enablers are obvious, it still does not light an innovation fire.
The time to hesitate is through. No time to wallow in the mire. Try now we can only lose. And our “ideas” become a funeral pyre
—Robby Krieger and Jim Morrison, The Doors
The ability to scan and process the information and then spark it into an idea is a necessary flavor condition for the team. As the song says, hesitation, or waiting for more information, or looking for that certain winner is not going to light any innovation fires. In the absence of this ability or characteristic, team innovation will struggle to design-build a fast fulfillment machine. The 1979 visit to Xerox PARC by Steve Jobs102 is now folklore in innovation history. In one short visit, Jobs saw ideas that immediately lit a fire in his innovative mind and greatly influenced the design of the Macintosh.
#4 Front Loaded Optimism—A good team will be democratic and analytical, and should quickly progress on the design-build path. Legacy companies often correctly identify threats and opportunities, respond with an innovative design-build team, but ultimately end up with a weak dead-on-arrival product or service. Why? Innovation experts have a long list of reasons, but one frequent reason is the team shoots down its own great ideas. The net result, they end up with mediocre ideas.
Optimism Rule: For the first 20 minutes, anyone speaking about the idea has to be positive, contributing only to the bullish case. Say anything critical and you’re swiftly escorted from the room. The optimism rule is designed to thwart what the partners believe is the natural tendency for smart people to be skeptical and shoot down ideas prematurely—Baillie Gifford Investment Partners103
No idea will pass all the analytical discussions, so the team must follow the optimism rule and focus on why the idea will work, not why it will not work.
How you determine whether the team has these flavors is a matter of judgment. But start by asking the candidates themselves and then those who have worked with them. If all four flavors are not strongly present in team innovation, STOP, these are necessary conditions.
Disruption Icebreaker
Disruptive innovation is already happening and throughout the book, we have reviewed many examples. A great way to get team innovation started is to have them meet some disruptors. Since arranging actual meetings with disruptors could be a challenge, an easier and more efficient way is to learn about the disruptors, is from magazine reports and TV shows.
CNBC Disruptor 50 Companies104—CNBC identifies private companies whose breakthroughs are influencing business and market competition at an accelerated pace. The start-ups making the 2020 Disruptor list are at the epicenter of a world-changing in previously unimaginable ways, turning ideas in cybersecurity, education, health IT, logistics/delivery, fintech, and agriculture into a new wave of billion-dollar businesses. A key disruptor selection criterion is the ability to disrupt established industries and public companies. Scalability and user growth were the most important criteria plus a list of the key technologies driving their businesses.
Feature Company: Lemonade105—Offers homeowners and renters insurance in the United States, through its full-stack insurance carriers. Powered by artificial intelligence (AI) and behavioral economics, Lemonade set out to replace brokers and bureaucracy with bots and machine learning, aiming for zero paperwork and instant everything. Eliminates the conflict of interest between insurers and the insured. It offers insurance—powered by AI, chatbots, and behavioral economics—to renters and homeowners. Process innovations are given as follows: (i) Customers are guided by a chatbot through the application process in under a minute; (ii) AI optimizes insurance for what the customer wants to pay; and (iii) API integration of Lemonade into any other service fulfillment process.
Forbes Next Billion-Dollar Start-ups106—Forbes has teamed up with TrueBridge Capital Partners to search the United States for the 25 fastest-growing venture-backed start-ups most likely to reach a $1 billion valuation. TrueBridge asked 300 venture capital firms to nominate the companies they thought were most likely to become unicorns, while Forbes reached out directly to more than 100 start-ups. Then came the deeper look, financial analysis, user/customer count, and founder interviews.
Feature Company: Capsule107—Free, same-day prescription delivery from the safety of your home. Patients request to transfer their prescriptions to Capsule, schedule a same-day delivery time, and wait for a courier to deliver medication to their door via bike, subway, or other modes of public transit, all within two hours and free of charge. Process innovations are given as follows: (i) Pharmacy warehouse located in a dense urban area; (ii) Army of UberEats-style couriers; and (iii) App-based digitization of the physician to the pharmacy to the patient communication process.
A good start for team innovation is an icebreaker meeting where members share innovation stories and strategies. Each member can be assigned one company from the previous lists, and they can then present the disruptive innovations the company has developed and deployed.
Prepare for the Fulfillment Machine
Driven by the ubiquitous Internet, a host of new technologies, and an entirely new customer delivery expectation, fulfillment machines are being created by innovators in every industry and every country. We started this book by describing the Amazon fulfillment process and how it disrupted the retail supply chain. Progressively, we presented the building blocks of fast fulfillment: the physical machines and the intelligent fuel. The first goal was to convince you that fast fulfillment is spreading across industries. But the final goal was to describe a pathway for building your fast fulfillment machine with organically generated disruptive innovations.
Fast fulfillment machines are radically different from current business processes. New forms of process automation and Lite-AI-driven decision models will often challenge the business, and the workforce must be prepared for this dramatic process change. Executive involvement and C-Suite visibility are cliché requirements for team innovation, but more importantly, the workforce and stakeholders most closely associated with the fulfillment machine must be prepared with the needed training and educated on the what, why, and how. These preparations should start as early as possible. The zero-infinity report provides sufficient intelligence to initiate the training and learning programs. Amazon had the luxury of time and could develop its fulfillment machine at an evolutionary pace. Today businesses need to have an instant solution, and team innovation, and everyone else must work at warp speed. The preparation must introduce all participants to failure tolerance. The machine is not going to work flawlessly on day one, but we should be confident that the team is smart and robust enough to quickly recognize stress points and design-build a solution.
Failure is an option. If things are not failing, you are not innovating enough.
—Elon Musk, CEO of SpaceX and Tesla Motors108
Pandemic—Victorious
As I wrote the final chapters of this book, one of the most significant events of our lifetime occurred, starting from a market in the city center of Wuhan, China, a virus affected every country, every industry, every company, and every individual on earth. While we’re all overcome by the tragic news of case counts and deaths, I was simultaneously surprised and amazed by the remarkable design-build innovations that companies across the globe deployed to respond and sustain their business. In the most unusual Berkshire Hathaway annual meeting ever, the greatest investor of our lifetimes Warren Buffett proclaimed you just had to believe that the American miracle was intact.
Yes, Warren was right, but possibly not the way he thought. Over a period of five months, companies across the United States, and the globe, built fulfillment machines at lightning speed. It was Brownian uncertainty at its extreme: every family ordered a unique grocery list with several strange items that they needed in two hours; every patient wanted a virtual meeting with their preferred doctor at a convenient time tomorrow; every stuck at home do-it-yourself builder needed that special order flooring in an odd quantity in two days; and there were many more with their unique demands.
In August 2020, a full five months after the virus shut down the U.S. economy, several companies reported remarkable growth numbers: Home Depot (100 percent increase in digital sales with 60 percent fulfillment from stores), Walmart (97 percent increase in digital sales), Target (273 percent increase in same-day fulfillment digital sales), Best Buy, Chillis Restaurants all excelled. One remarkable innovation during the pandemic is the new restaurant concept: It’s Just Wings:
It’s Just Wings: The birth of ghost kitchen fulfillment109—As the pandemic closed restaurants across the United States, innovators at Brinker International (owner of the Chillis chain) were busy in the design-build of a new virtual restaurant. A purely delivery restaurant concept that leveraged the under-utilized kitchen capacity of associated restaurants and the fulfillment network of Doordash. Analytics and smart modeling prescribed a menu, preparation schedule and ready to deliver inventory. This was not simply a take-out expansion, it was a textbook disruptive innovation in food fulfillment.
Developments that would have occurred over the next five years were completed in five months. Jim Cramer the effervescent CNBC host created the Covid-19 Stock Index110, this was a list of companies who were either building fast fulfillment machines or providing technology enablers that made the machines possible. On the flip side, many companies, particularly small businesses, struggled in the pandemic economy and some would not survive. Speed—the necessary condition—is what determined the victors. The fulfillment innovators were victorious against the pandemic and progressively their solutions helped a resolute economy.
• A three-team sequential plan to develop disruptive process innovations and design-build the fulfillment the machine is presented: Innovation Lookout Team, Zero-Infinity Investigation Team, and Team Innovation.
• Leadership styles and the four flavors or characteristics that make a good team innovation are presented.
It’s raining ideas! Hallelujah!