Innovation Management: Session 3

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Innovation
Management
Session 3
Innovation Management– Antonio Marinho Torres 2023

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Intrapreneurship
Innovation Strategy
Innovation Engine
Innovation Enablers
Special Cases
Innovation Engine

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Intrapreneurship Ideation
Innovation Strategy Portfolio Management
Innovation Engine Go-To-Market
Innovation Enablers Project Management
Special Cases
Project Management

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Do traditional project management tools always work?

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Problems identified and addressed in three areas in parallel
Startups Low surviving rate Lean Startup
Software Low satisfaction rate Agile Development
New Products Low success rate Design Thinking

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The solution is hypothesis-driven management
Customer Vision &

Centricity Hypotheses
Fast, Iterative Scale-up after

Experiments reaching fit

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Lean startup is about learning through fast iterations
Product/
Vision Hypotheses Tests
Market Fit
Persevere Minimum Viable Product (MVP)
Pivot
Perish
Source: Ries, Eric (2017). “The startup way”. Currency, New York.

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Examples of stating hypotheses for lean startup
Drone-delivered artisanal lemonade

• Customers desire artisanal lemonade (e.g. 30% of people would buy it)
• Customers are willing to pay a premium for organic, locally-sourced ingredients (e.g. 80% premium)
• On-demand ordering increases customers’ lemonade consumption as they will share it with colleagues (e.g.
90% of orders with at least two units)
• Customers are willing to pay a premium for drone-delivery (e.g. $5 delivery charge)
• Customers are in drone accessible locations (e.g. 99% of orders delivered)

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Examples of testing hypotheses for lean startup

MVP1 MVP2 MVP3 MVP4
Street corner Landing page with Drone delivery Drone delivery
Description
lemonade stand order button service prototype service
Cost $250 $2,500 $25,000 $2,5m
Time 1 week 1 month 6 months 18 months
Customers desire artisanal
lemonade ✓ ✓ ✓ ✓
Customers are willing to pay
a premium for organic, ✓ ✓ ✓ ✓
locally-sourced ingredients
Hypotheses
On-demand ordering
increases customers’ ✓ ✓ ✓
lemonade consumption
Customers are willing to pay
a premium for drone-delivery ✓ ✓
Customers are in drone
accessible locations ✓

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Agile development is about delivering value to customers in short frequent cycles
Source: Bain (2016). “Agile innovation”.

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Waterfall vs agile development
Waterfall Agile
Team Large, functional teams Small, cross-functional teams
Customer
Heavy at the beginning and end Constant collaboration
involvement
Predict and design all features up front with Modularise and prioritise design features;
Design
exhaustive documentation welcome changes to undeveloped modules
Development Build all features at once to exact specification Iterative; build only what is proving valuable
Testing and Integrate and test when development is

Continuous, real-time testing and integration
integration complete
Delivery Large, infrequent releases Rapid, frequent increments
Source: Bain (2016). “Agile innovation”.

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Design thinking is about applying design principles to customer-centric problems
Main ideas
• Empathy with users
• Discipline of prototyping
• Tolerance for failure
Sources:
(1) Kolko, Jon (2015). “Design thinking comes of age”. Harvard Business Review (Sep).
(2) http://www.experiencepoint.com/

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Design thinking – steps
Step Output
Inspire Insights
Problem or opportunity that motivates the search for • Authentic (supported by the data)
solutions • Non-obvious (you would not immediately think of)
• Revealing (describes how users think/feel)
Ideate Ideas
Process of generating ideas • Inspirational (novel and exciting)
• Connected (solves a real problem)
• Relevant (related to the original design challenge)
Implement Experiments
Path from project room to market • Low risk (safe audience and low cost)
• Quick & easy (easy to build and run)
• Generative (will grow the idea)
Source: http://www.experiencepoint.com/

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A journey from inspiration to implementation

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Example of design thinking (1 of 2)
Define the challenge

• User focused/ broad enough / narrow enough
• How might we improve the banking experience for parents with young kids?
Observe people
• Extreme customers
• Analogous situations
Form insights
• Parents’ age does not define their financial behaviour, the life stage of their children does
• Many people round up their bill payments for speed, convenience and peace of mind
• Many parents had difficulty saving what money they had, whether due to a lack of resources or willpower

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Example of design thinking (2 of 2)
Frame Opportunities
• Refine the challenge
• How might we integrate savings into people’s everyday lives to help them save effortlessly?
Brainstorm ideas
• Work as both individuals and groups; feasibility is not important at first
• “Keep the Change” allowed customers to save while they spent - the product rounds up purchases made
with a Bank of America Visa Check card to the nearest dollar, transferring the difference from the individual’s
checking account into their savings account automatically
Try Experiments
• Several small pilots before launching “Keep the Change”
• Program has helped more than 12 million customers save more than $3.1 billion

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Approaches to innovation project management
Just do it! Lean startup

Strong
Customer feedback
(ad hoc development) (agile development)
Build it and they will come

Weak
(waterfall development)
Weak Strong
Vision
Source: Eisenmann, Thomas et al. (2013). “Hypothesis-Driven Entrepreneurship: The Lean Startup”. Harvard (9-812-095).

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Lean/agile can be applied in many situations… but not always
New Products
Customer Experience
Advertising
Market Entry

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Lean/agile is ideal for complex environments
Complex Complicated
probe/sense/respond sense/analyse/respond
Unordered Disorder Ordered
Pattern-based leadership Fact-based management

Experimentation and iteration Chaotic Simple Analysis and categorisation
act/sense/respond sense/categorise/respond
Source: Snowden, David and Mary Boone (2007). “A Leader’s Framework for Decision Making”. Harvard Business Review (Nov).

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Value of business experiments
Business experiments, successful or not, generate three kinds of value:

• Insight value: the insight into the unknown that comes from reducing uncertainty
• Option value: the option, upon resolving an unknown, to pursue, alter, or abandon a course of action
• Strategic value: the relationships built with potential customers while testing the prototype

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A startup state of mind
• Start with the customer in mind

• Be mission/vision driven
• Think big, start small, scale fast
• Work in small (two-pizza) cross-functional teams
• Focus on leading (as opposed to trailing) indicators
• Manage funding as a VC (metered funding and investment boards)
• Foster a meritocratic, experimental and iterative culture
• Think of entrepreneurship as a career path

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Essence of hypothesis-driven management
• Focus on solving the customer’s problem

• Raise hypotheses, test with simple experiments
• Work through iterations in short cycles
• Use MVP to test fit before scaling
Source: Furr, Nathan, and Jeff Dyer (2014). “The Innovator’s Method”. HBR Press.

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Innovation
Management

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Case Study:
Intuit PersonalPro

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Intuit – background
Company
• Intuit; technology/finance (primarily solutions for tax/accounting)
• $4.5B sales; 8K employees (2014)
Customers
• Consumers
• Professional accountants
• Small businesses
Competitors
• Tax preparation: 140 million returns annually
• Intuit is the leader in market share: 56% DIY; 33% DIFM
• Followed by other solutions (e.g. TaxAct) and tax stores (e.g. H&R Block)
Source: Ghosh, Shikhar et al . (2016). “Intuit: TurboTax Personal Pro”. Harvard (9-816-048).

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Intuit – framing the issue
Situation
• Intuit has developed a high-performing innovation management system
• PersonalPro is a high-potential innovation concept that cuts across BUs
• Optimal positioning for PersonalPro is still unclear
Key question
How should Intuit proceed with PersonalPro?
Framework elements
• What we aspire to
• Where we play
• How we win
• What we need

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Intuit – what we aspire to
Intuit’s mission
Our Mission is powering prosperity around the world
Whatever prosperity means to you, we’re committed to working on your behalf and making it happen
More Money, More Time, More Confidence
No matter your financial need, we have a solution that can help
Whether you’re a consumer, self-employed, or a small business owner, we’re in your corner to help make your
dreams of prosperity come true

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Intuit – where we play
Intuit
• Personal financial management (Quicken)
• Investments (Mint)
• Accounting (Quickbooks)
• Tax preparation
Tax preparation
• DIFM: ProConnect for professional accountants
• DIY: TurboTax for consumers

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Intuit – how we win
Important factors, but do not explain project success

• Leadership of high-talent managers
• Intuit’s strong brand
• Selling to existing customers
Factors that explain project success

• Identify an important unsolved problem
• Develop a solution that effectively solves the problem
• Sustain a competitive advantage in the area
Design for Delight

• Deep customer empathy
• Unconstrained idea generation
• Extensive experimentation

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Intuit – what we need
Organisational principles
• Innovation catalysts: middle managers trained in design thinking with time away from day-to-day jobs to
work with a coach new BD teams
• Executive sponsors: single-point of contact, remove barriers in the organisation
• Separate funding: strategic bucketing
• Focused teams: marketing, engineering, design
• Recognition and visibility: innovation award, time to work on the project
Decisions based on data from well-structured experiments rather than the insight of senior managers

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Intuit – PersonalPro
What is PersonalPro?
• Two-sided platform to connect consumers with professional accountants
• Bridges the gap between DIY and DIFM (DIWH)
• Convenient and cost effective for the consumer and efficient for the accountant
• Leverage ProTax relationship with accountants and TurboTax brand with consumers
• Potential sales $250M

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How well does it fit Intuit’s structure?

• Positioned across two BUs
• Struggling with existing policies and procedures
• Needs resources from TurboTax: brand, customer base, marketing
• Startup (Teaspiller) acquisition helped with flexibility and speed
• Identity vs integration

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Does it meet Intuit’s critical success factors?

• Identify an important unsolved problem
• Develop a solution that effectively solves the problem
• Sustain a competitive advantage in the area

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Intuit – PersonalPro project management
Lean Startup / Design Thinking

• Challenge: help accountants save time and grow their practice
• Opportunity: create applications to improve collaboration between accountants and clients
• Observation: analogue experiences (borrowers and lenders in Quicken loans)
• Pain points: convenience, cost, and confidence
• Hypotheses setting: list of 40 biggest risks
• Hypotheses prioritisation: platform economics vs tax-payer behaviour change
• Experimentation: MVP
• Video: 250 people (validated)
• Live market test: a few accountants,50 customers, SEM (validated)
• Market research: tax-store users (rejected, F2F confidence)

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Intuit – PersonalPro iterative optimisation
Iterative experimentation
Optimising each part of the experience: messaging, pricing, how to present the network of accountants, how
to share documents
Conversion funnel
• Shopping funnel: search DIFM solution, select, and signup
• Product funnel: document sharing, price estimate, purchasing, and paying
Indicators
• Net Promoter Score (NPS): 70+ and growing
• Conversion rate: 25%+ product funnel, 1-3% E2E
• Customer Acquisition Cost (CAC): declining from $900
• # of customer served: 5,000 and growing
• # of accountants enrolled: 40, then 200, growing significantly
• Sales revenue: $2M

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Intuit – PersonalPro value proposition
For accountants
• Incremental business
• Convenient and efficient (customer acquisition and payment processing)
• Keep 75-80% of revenue
Validated
For consumers
• Two possible targets: tax-stores vs DIY rejecters and TurboTax defectors
• TurboTax brand important for confidence
• But is PersonalPro consistent with “it’s amazing what you’re capable of”?
To be defined

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Intuit – The way forward
How should Intuit proceed with PersonalPro?

A. Target tax-store customers
B. Target TurboTax rejectors/defectors
C. Kill the project

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Intuit – what happened (1 of 3)
Transfer to TurboTax unit

• Market test in Dallas
• Target: tax-store customers
• $2 million marketing campaign
Poor results leading to discontinuation

A. Market opportunity too small (head of TurboTax)
B. Poor job in GTM strategy (head of ProTax)
C. Not enough understanding of GTM strategy (chairman)
D. No focus on TurboTax defectors or ability to change behaviour of tax-store customers (project manager)

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Press Release: November 30, 2017

TurboTax Transforms Assisted Tax Preparation with Launch of TurboTax Live
Designed for the millions of taxpayers who want expert help, but also want to save time and money, TurboTax
Live has built an extensive network of thousands of credentialed tax experts […] ready to help people file their
taxes with confidence.
Sources:
(1) https://investors.intuit.com/default.aspx?SectionId=ee17ba43-03f9-469a-b271-64d417afc76e&LanguageId=1&PressReleaseId=ea1dea33-3b02-4e6c-8b67-d4887f524128
(2) https://turbotax.intuit.com/

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Source: https://turbotax.intuit.com/

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Innovation Management– Antonio Marinho Torres 2023

Innovation Management– Antonio Marinho Torres 2023

Innovation Management– Antonio Marinho Torres 2023

Do traditional project management tools always work?

Innovation Management– Antonio Marinho Torres 2023

Problems identified and addressed in three areas in parallel

Startups Low surviving rate Lean Startup

Software Low satisfaction rate Agile Development

New Products Low success rate Design Thinking

Innovation Management– Antonio Marinho Torres 2023

The solution is hypothesis-driven management

Customer Vision &

Fast, Iterative Scale-up after

Innovation Management– Antonio Marinho Torres 2023

Lean startup is about learning through fast iterations

Persevere Minimum Viable Product (MVP)

Innovation Management– Antonio Marinho Torres 2023

Examples of stating hypotheses for lean startup

Drone-delivered artisanal lemonade

Innovation Management– Antonio Marinho Torres 2023

Examples of testing hypotheses for lean startup

Innovation Management– Antonio Marinho Torres 2023

Agile development is about delivering value to customers in short frequent cycles

Source: Bain (2016). “Agile innovation”.

Innovation Management– Antonio Marinho Torres 2023

Waterfall vs agile development

Team Large, functional teams Small, cross-functional teams

Testing and Integrate and test when development is

Delivery Large, infrequent releases Rapid, frequent increments

Source: Bain (2016). “Agile innovation”.

Innovation Management– Antonio Marinho Torres 2023

Design thinking is about applying design principles to customer-centric problems

Innovation Management– Antonio Marinho Torres 2023

Design thinking – steps

Innovation Management– Antonio Marinho Torres 2023

A journey from inspiration to implementation

Innovation Management– Antonio Marinho Torres 2023

Example of design thinking (1 of 2)

Define the challenge

Innovation Management– Antonio Marinho Torres 2023

Example of design thinking (2 of 2)

Innovation Management– Antonio Marinho Torres 2023

Approaches to innovation project management

Just do it! Lean startup

(ad hoc development) (agile development)

Build it and they will come

Innovation Management– Antonio Marinho Torres 2023

Lean/agile can be applied in many situations… but not always

Innovation Management– Antonio Marinho Torres 2023

Lean/agile is ideal for complex environments

Unordered Disorder Ordered

Pattern-based leadership Fact-based management

Innovation Management– Antonio Marinho Torres 2023

Value of business experiments

Business experiments, successful or not, generate three kinds of value:

Innovation Management– Antonio Marinho Torres 2023

A startup state of mind

• Start with the customer in mind

Innovation Management– Antonio Marinho Torres 2023

Essence of hypothesis-driven management

• Focus on solving the customer’s problem

Innovation Management– Antonio Marinho Torres 2023