The Innovation Pyramid
An innovation project is one in which there is no historical data about the business, which is by definition new. As a result, forecasting, planning and budgeting techniques cannot be applied. Business plans built without acknowledging this difference are doomed to failure and this explains the catastrophic success rates of start-ups.
To address this problem, we are going to introduce you to a simple approach: the innovation pyramid, which transforms assumptions into validated knowledge and leads to business plans built on solid foundations.
The Difference between an innovation project and a traditional project
What is the fundamental difference between an innovation project and a traditional project? The former, by definition, aims to achieve something that has never been done before, something for which there is no history or previous experience to rely on.
However, all human attempts at anticipation are based on the existence of historical data. The financial officer forecasts his budget based on previous ones, the trader anticipates based on past trends, the project manager plans and evaluates workloads based on what has worked or not in other similar situations. When the architect designs a new building, even if it is larger or higher, he or she benefits from the knowledge accumulated since the first Pyramids were built.
The innovator explores unknown territories without a map, navigating the great ocean of uncertainties. The success rates of innovation projects are catastrophic because creators are asked to build business plans as they would for traditional projects, by planning and budgeting for the future. A plan for the future that is built in the absence of previous experience is flawed. Start-ups die not from improper execution of the plan, but from perfect execution of the wrong plan.
Innovation pyramid: Moving from theory to practice!
Breaking out of this spiral of baseless planning requires the humility to admit that you don’t know. A good innovation project starts with this simple idea, recently popularised by Game of Thrones: “We know nothing”. On the basis of this acknowledgement, a simple and common sense approach to successful innovation can be used: identify what you don’t know, check your assumptions and build a history as quickly as possible.
So how can you structure your innovation project to ensure it is secure? By relying, like the architect, on pyramids, albeit on a very particular pyramid, that of innovation:
In the following articles, we will see how this innovation pyramid can be used level-by-level to build unverified assumptions into validated knowledge, in order to construct a sound plan.
The bases to validate to suceed your project
In a nutshell, here are the key elements to be identified:
- Sore points: At the root of any innovation project is a problem, a sore point in the world as it is today, which the innovator proposes to solve. If there is no problem, there is no project. This is the phase during which we seek to properly understand the problem, the “Big Ugly Urgent Problem (BUUP)”. As Einstein put it, “If I had an hour to save the world, I would spend 55 minutes thinking about the problem, and 5 minutes thinking about the solution.” Understanding a problem requires patience and real ethnological work.
- Finding a solution: Once the problem have been well defined, when existing alternative solutions have been clearly understood, it is time to think about the solution. Whether it be technological approaches or practical approaches, large-budget blockbusters or JUGAAD innovation, or even design thinking, you will see that the search for a solution is not necessarily the most complex phase of a project.
- Problem-solution alignment: More important than the solution itself, its perception as a solution to the problem by those people who are actually inconvenienced by the problem. Sequoia Capital, the best venture capital in the world, sums it up in one sentence: “Focus on rich customers that you will delight with a compelling solution to a burning pain”. The guide to help you easily check your problem-solution alignment is on its way
- The fundamental assumptions: So, you now have an idea that may work. It’s time to check the fundamentals. The fundamental assumptions include those self-evident facts that are not actually self-evident and that could destroy your wonderful project: Practical integration (the way the product is used needs to be compatible with everyday realities), legality (so you won’t end up in prison!), cultural acceptance (you’ve got to be careful in these times of witch-hunts): there’s a whole list of points to be aware of and you will have a chance to learn all about them in one of the next episodes.
- Develop your market: So, you know what to do and you know you will be able to sell your solution, but there is still one thing you need to check before you go ahead: your ability to attract customers, your growth driver. After all, growth is the essence of being a start-up company since such companies start from nothing.
To help you build a business model that is entirely focused on growth, we will present the “Fast Growth Canvas”, a tool that is entirely focused on leveraging its customers to promote its services. This is the secret of the greatest unicorns of recent years, it is what sets them apart from the others, and it is what will transform your project into a resounding success.
So, you are fully prepared, with a solid business plan
Now, after acknowledging that, by definition, “we know nothing” when we start an innovation project, you have, thanks to the pyramid, validated your fundamentals. You now have real figures for the four values that make good business plans: the selling price, the production price, the customer acquisition cost, and the speed of acquisition of these customers.
If these figures, which are no longer assumptions but validated knowledge, show that your business will be profitable, it is time to start the project, and to start executing it, thus becoming one of the 5% of start-ups that are successful!