3 Steps to Building Your Own Innovation Machine (Part 2)

John Wanamaker, considered by some to be the father of modern advertising, once said, “Half the money I spend on advertising is wasted. The trouble is, I don’t know which half.” By using carefully designed experiments, you can do a better job than Wanamaker. For example, all professional advertisers today know about conversion tracking and A/B testing. These are basic tools of the trade for specialists in marketing or advertising that enable them to evaluate the effect of every small change in banner ads, landing pages and e-mails. But this kind of testing can only answer tactical questions and normally doesn’t affect business strategy. Is it possible to make the whole business structure respond to this type of feedback? "Lean startups," a term popularized by Eric Ries, are particularly successful at doing this. The main idea of a “lean startup” is to deploy a minimum viable product and test it as soon as possible. In today’s software world, it’s possible to release software updates several times a day, continuously getting feedback on every 20 new lines of code and aligning the direction of the product. This way, “lean startups” meet customers’ needs much faster than big companies, like Microsoft, which have a multi-year release cycle. In fact, staying in contact with customers throughout the creation of a product is the only way to make something they will actually use. This is especially true for the new companies coming up with new products. They always have to act in an unknown environment, relying only on their hypotheses. “No business plan survives first contact with a customer,” says Steve Blank, well known in the start-up community as the father of Customer Development theory. Our assumptions about what our customers need are no more than assumptions before we actually talk to customers and test the assumptions. Thanks to Web technologies, getting closer to customers has become a lot easier. We can regularly receive their feedback, without even getting out of the room. Still, don’t get too comfortable, since the dry bits, numbers and characters, while easy to aggregate, are often superfluous. So, at least initially, it’s very important to get out of your office and speak directly to your customers, person-to-person. You will see your product in a way you’ve never seen it before. But this will be no more than a set of interesting facts without taking the next step – learning from the feedback you got and aligning your product vision and business strategy according to it. I will speak about this in the last post of this series.