The Innovation Engine, Andrew Breen, American Express

The Innovation Engine

A framework for overcoming cultural and organizational impediments to

innovation at scale

Andrew Breen VP, Product Delivery American Express

Copyright 2015-6 Andrew Breen

Who am I?

Studied CS, Human-Computer Interaction

and Business

Founder or early leader at 8 tech

startups

Spent 20+ years building tech

products as an engineer and now leading product

Five years at Palm

Learning a lot building iterative

software in a hardware process

Currently at American Express

Where I’ve been

asked to build a lean startup inside the

enterprise

Professor (adjunct) @ NYU Stern

Teaching technology product management and innovation using

lean

Advisor for VCs/startups as well as large orgs on innovation & product development


We’re in an age of constant disruption


Are you responsive?


Responsive organizations are built to learn and respond rapidly through the

open flow of information

Copyright 2015-6 Andrew Breen Courtesy: Responsive.org

Responsive organizations encourage experimentation and learning in rapid

cycles


Responsive organizations organize as a network of employees, customers, and partners motivated by shared purpose


Does that sound like your company?

Or is yours more of a command and control organization?


Command and control was well suited for predictable environments


In the digital era, the environment is less predictable and controllable


Consumers are empowered

Information has been democratized and made transparent

Communication is instantaneous and ubiquitous

The only constant is changeCopyright 2015-6 Andrew Breen

Many of our large organizations are vestiges of 20th century management

thinking


21st century responsive organizations are designed to thrive in less predictable

environments


More Predictable <-> Less Predictable

Courtesy: Responsive.org & ThoughtWorks Copyright 2015-6 Andrew Breen

What are the cultural and organizational impediments to being responsive?


Ideas are currency because execution is difficult

Siloed organizations lead to overlap or gaps in responsibilities

Alignment is needed for nearly all decisions

Middle management has no incentive to change and protects their fiefdoms

“You want to test what?” Sales & marketing shields customers and the brand from experiments


IT is stuck in its ways and largely dependent on vendors

Big regression risk means high analysis and testing overhead

“Let’s all become Agile!” might not be the right decision

Stack ranking or similar performance systems punish risk taking and drive self interested behaviors

The culture does not accept failure


None of this supports innovation


If you do have an R&D team, they tend to focus solely on tech innovation…

…most innovation comes via biz model, customer experience or product


How do you continue to evolve the existing business

while exploring new ones?



Start a lab?

Put in the middle of existing

ops?

Is there another way?

Can you be ambidextrous?


Optimization EngineKnown needs & solutions

Predictable Big bets with plans

Enhance Improve

Innovation EngineUnknown needs & solutions

Non-linear Small bets with hypotheses

Develop Invent




Enhance Improve



Develop Invent

60% 30% 10%

Low risk, operate Iterate existing products

Existing customers with known needs

Medium risk New solutions for existing

needs under existing model

High risk Disruptive

New needs & models Lab?

Existing Product Journeys

Goa

ls

Experimentation, leverage, purpose, new KPI Efficiency, optimization, CSat, company KPI

Focu

s




Enhance Improve



Develop Invent

60% 30% 10%

Low risk, operate Iterate existing products

Existing customers with known needs

Medium risk New solutions for existing

needs under existing model

High risk Disruptive

New needs & models Lab?

Existing Product Journeys

Goa

ls

Experimentation, leverage, purpose, new KPI Efficiency, optimization, CSat, company KPI

Focu

s

Key coordination

point

Resentment is created when innovation teams put up walls, believe they are the ideas people and stop listening to ideas

(ironically, including from users)


The innovation engine is NOT the ideas team

They are builders…

…just like the optimization engine


However, its a unique skill and mindset as 2/3rds+ of your hypotheses are never

going to be realized

Innovation engine people have to be highly collaborative and willing to take

on risk


Setup a process to capture ideas and feed them to the engine


The engines validate with customers(Lean is pervasive across both engines)

Avoid “hack-a-thons” and the like…they only demoralize


How do you organize the engines?


Put people who are more product operational in the 60% optimization engine and those open to risk in the innovation engine

Lay out your top level product journeys as the key organizing paradigm (for 60% and 30%)

Kill any notion of a web or mobile strategy

Find a place for the 10% (a lab?)


Make sure your functional organization is not making teams operate waterfall

How about flipping the strong-weak axis to the product team?

Product Team Design Team Engineering Team


Consider a “squad” model

P

P P P

D

D D D

E

E E E

Product Team Design Team Engineering Team

Func

tiona

l Mod

el

“Project” Team

Squa

d M

odel

P

D E

Product Squad A

P

D E

Product Squad B

P

D E

Product Squad CCopyright 2015-6 Andrew Breen

Walter Isaacson explains, "The lesson of Bell Labs is that most feats of sustained innovation cannot and do not occur in an iconic garage or the workshop of an ingenious inventor. They occur when people of diverse talents, mind-sets and expertise are brought together, preferably in close physical proximity where they can have frequent meetings and serendipitous encounters.”


In short, process begets innovation(and large organizations are good at process, right?)


Experiment across iterative cycles

Prototype

Problem & concept validation mostly using qualitative

techniques (e.g. 10-50 in-person

sessions)

Proof-of-Concept

Solution validation using qualitative &

quantitative techniques

(5,000-10,000 users in controlled env)

Production

Scaled solution validation using

mostly quantitative measures

(released to full user base)

Max 90 days Max 90 days Max 90 days


Make sure your performance review system is driving the right behavior

Most corporate review systems are designed as annual review of individual performance…that’s a problem


Focus on group goals in short iterative cycles

Company goals + Product KPI = Personal OKRs

Espouse hypothesis testing and make it transparent and part of reviews

Change employee evaluations from delivery to product performance (and learnings)

Separate reviews from comp and promotional cycles


Let’s not forget the leverage a large organization can provide


Resources: capital and support functions

Brand: ability to leverage an existing brand(but also be bound by it)

Customers: millions of installed, active and loyal customers to test with


Some things that helpA product and process you can give to others

Real transparency and free flow of communication

(no information hiding to preserve power)

Constantly reviewing, iterating and adapting the process itself

Integrate your subject matter experts and support roles into your process

A foil


Exec sponsorship & IT buy-in with strong relationships across the organization

A like-minded tight team: they’ll face many hurdles

(regularly read the Agile manifesto)

A challenging product problem the company hasn’t been able to execute against

And remember…

its better to beg for forgiveness than ask for permission…

but don’t be a cowboy


A Lean innovation engine delivers products and services that users need at

a fraction of the time, cost and risk


Are you responsive?


The Product Commandments


1.  Empathize with and advocate for the user focusing on their need2.  Know if you’re finding the user need or the solution for the need3.  Don’t plan, establish a vision and build4.  Define and drive toward your KPI5.  Simplify everything: products and process6.  Prioritize on user need, biz impact and constraints (in that order)7.  De-risk your product by minimizing unknowns8.  Validate don’t speculate (as early and often as you can)9.  Iterate toward the vision but work on today...one thing at a time10.  Show don’t tell11.  Push, pivot or kill (no sacred cows)12.  Launch it and love it...own it (release is a step not a goal)13.  Organize by skills not roles and stay small14.  Engage stakeholders for advice and action, early and often15.  Communicate actively, passively and transparently16.  Manage by supporting (don’t command)


Thank youAndrew [email protected]

@buckybanjo linkedin.com/in/andrewbreen
