The PoC of Innovation

Our CEO, Kristi Chickering, is known to walk into a room and say, “I give you permission to fail. I have your back.” For some of us, this is truly liberating. While for others, this can be confusing. What does failure mean for someone at work going through his or her daily routine? Failure is a part of experimentation and trying to do new things, or improve things, making things better, faster, cheaper and creating new strategies and solutions. Experimenting also means that the outcome will not always match up to expectations. All companies need to think about experimenting.

We experiment all of the time in our personal lives. We try new soaps and shampoos, new recipes, new restaurants, new workouts. While at work, many people stick to what they are told or expected to do, feeling that they lack the freedom to experiment. Companies that lack a culture of experimentation are companies with employees that don’t feel the need to try to do things better, faster, and cheaper. Those employees are not intrinsically motivated by the potential upside of experimentation or innovation.

Successful companies such as Amazon, Microsoft, and Google have a history of running online and real-life experiments in a continuous effort to make their products more valuable. A recent article by Harvard Business Review stated that each of these companies conduct more than 10,000 controlled experiments annually. Experimentation is equally embedded in companies like Walmart, Hertz, and Singapore Airlines, where the ability to ‘experiment with everything’ has resulted in large payoffs for them.

Examples of large payoffs can be found in both tech and non-tech companies. For example, 3M’s 30% rule requires each division’s revenue to come from products introduced in the last four years, instilling a culture of experimentation. Amazon’s CEO, Jeff Bezos, highlights that small experiments, also known as Proofs-of-Concept (PoC), should provide data that trumps intuition. Bezos recently said at a shareholder meeting that 99% of all innovations at Amazon are incremental. The big “Alexa” ideas happen, too – first with experimentation, then with scaling.

So, how should companies experiment effectively? One way is to create controlled experiments, or Proofs-of-Concept (PoC), that form the backbone of technical experimentations. The trick lies in starting small and failing fast. Eric Ries, the creator of the Lean Startup methodology, said, “If you cannot fail, you cannot learn.” Over 30,000 consumer products are introduced in most years and 95% fail, according to Harvard Business School professor, Clay Christensen. Developing a framework for developing PoC quickly and cheaply and then scaling the right PoC is often the answer to both incremental and strategic growth innovation strategies.

Sirius Solutions routinely works with companies on their innovation strategies with these goals in mind:

  1. Help leaders create, maintain, and prioritize on a growing list of PoC.
  2. Help leaders establish channels and partners to experiment with emerging technologies or processes, measure and test results, and when appropriate, scale.
  3. Help leaders understand that PoC should be cheap, quick with a fail-fast mindset, and scalable when appropriate.

Successful experimentation ties back to a company culture that allows failures, fosters innovation, and creates a culture to test and ferret out new ideas and solutions. For all of us, embracing change and experimenting at work should be a part of our job descriptions. The culture of PoC or experimentation based growth can start with one person who seeks to drive meaningful, value-creating change.

Rakhee Das – Innovation Practice Leader at Sirius Solutions, LLLP.