Presentation given at the INCOSE North Star Chapter Meeting on January 8th, 2015 at MTS Systems.
Established companies recognize the need to innovation. Systems Engineers recognize the value that innovation plays in the successful delivery of their projects and their company's future success. Yet the same processes that allow companies to scale and conquer sometimes make it difficult for innovation to thrive. This is my journey as an entrepreneur within an established company –what worked and what didn't – in the hopes of inspiring some ideas that you can bring back to your own company.
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INCOSE North Star Chapter Meeting: Innovation in an Established Company - One Entrepreneur's Journey
1. Innovation in an Established Company
One entrepreneur's journey
By Andrew Frenz
andrewfrenz.com
2. How many of you think that
innovation is important to your company’s future
success?
If so – raise your hand
3. How many of you think that
innovation is important to your product / project’s
success?
If so – raise your hand
4. Innovation And Systems Engineering
At first glance, you might wonder what innovation has to do with
systems engineering?
5. At first glance they seem different
Innovation’s emphasis is translating an idea into a marketable
product
while
Systems engineering’s emphasis is translating a user need into an
operational system that satisfies that need.
6. INCOSE defines it as:
Systems Engineering is an interdisciplinary approach and means to
enable the realization of successful systems.
It focuses on defining customer needs and required functionality early
in the development cycle, documenting requirements, then proceeding
with design synthesis and system validation while considering the
complete problem.
http://www.incose.org/practice/whatissystemseng.aspx
7. “the realization of successful systems”
Realizing successful systems is not simply asking the customer what
they want and delivering it. It means collaborating with the customer –
listen to what they want – but also help inform what they want!
Otherwise your competition might inform your customer of something
new or different and all of a sudden they want that and not your
product!
“It’s really hard to design products by focus
groups. A lot of times, people don’t know
what they want until you show it to them.”
15. The next software release was always
happening
And there was a backlog a mile long
AndrewFrenz.com
16. Pitfall #1: No Time For Innovation
The development machine keeps cranking out release after release
chipping away at a seemingly infinite backlog… leaving what appears to
be no time for innovation.
AndrewFrenz.com
17. I read what other companies were doing
Google had 20% time… 3M had 15%...
But that seemed too big a hurdle for us to start with.
18. I read what other companies were doing
Atlassian’s FedEx Day model stood out
It only lasted 24 hours – surely we could find the time to fit that in,
right?
AndrewFrenz.com
20. Here is what we did
1. We had no idea if the company would support it – so we didn’t tell
anybody above us
2. We got several software managers to agree to try it out for one day
3. We pitched it to software engineers
And here is what we came up with…
AndrewFrenz.com
21. Hackathon
Format
1. Told developers about it a couple weeks in advance so they could start
thinking of ideas
2. Had a kick-off on Thursday morning
1. Donuts
2. Went over rules / schedule
3. Went around the room – each person could brag about their awesome project
idea… or simply say “stealth”!
4. Sometimes people would come without an idea and team up with someone else
5. Ready, Set, Go!
3. The hacking started
1. Their schedules were cleared
2. Pizza and pop brought to common areas for lunch
AndrewFrenz.com
22. Hackathon
Format
4. Sleep was optional Thursday night
5. Friday at noon we had the demo session
1. Ordered lunch and reserved a massive room with projectors
2. We invited all of the software teams
3. Each person/team had 5 minutes to demo their project
4. Audience voted for best projects across 5 categories:
1. Creativity
2. Business Value
3. Technical Complexity
4. Likelihood to end up in product
5. Overall
6. The winners received $25 / $50 gift cards and the overall winner got the
travelling trophy
AndrewFrenz.com
23. Once we saw it had traction…
1. On Thursday, we realized that this would work and be awesome, so we
told a few people what we were doing and invited them
1. Senior VP
2. Head of R&D
3. Etc
2. They loved it!
3. From then on, we invited tons of people:
1. CEO
2. VPs
3. HR
4. Recruiting
5. Engineering
6. Etc
AndrewFrenz.com
24. Hackathon
Rules
1. You can’t do something that you would normally do
2. At the end, you must have working code to demo
AndrewFrenz.com
25. Hackathon
Principles
1. Nobody dictates what the projects can be
1. PMs / Marketing can pitch their favorite developer friend, but it is up to
the developer to do what they want to do
2. Any project is fair game
1. You never know where the innovation will come from
AndrewFrenz.com
26. Hackathon
Principles
3. Most Important Principle: Make something work
1. This is not about making up fancy idea slides
2. It is all about a working prototype
3. The power of a working demo is 100X the power of a compelling idea
4. You have no idea how many people will see an idea working on the
screen and suddenly the value and potential hits them – even though
they have heard the idea 10 times before
AndrewFrenz.com
27. What happens when you do this more than
once?
We initially feared that people had a good idea and might struggle to
think of something new and unique the next time.
AndrewFrenz.com
28. Kept Getting Better and Better
We found that the ideas got better at the 2nd event, and even better at
the 3rd
Why?
AndrewFrenz.com
29. Hackathon
The Power of Repetition
We created a culture and pattern:
• Developers jotted down ideas when they had them
• Because for the first time- they knew they would get a chance to actually try
them out!
• People became comfortable being more creative
• They realized it was OK – and encouraged!
• There is actually a reason to come up with new ideas
• Culturally we had beaten ideas out of people with a
never-ending backlog – it took time to reverse this
• Practice makes you better
• Even at innovation!
AndrewFrenz.com
30. Hackathon
A Stage for Anyone
Any developer had 5 minutes to pitch the entire company, including the
CEO, on their best innovative idea.
Wow!
AndrewFrenz.com
31. Hackathon Results
Awesome new innovations
• better ways to do existing things
• new features
• new products
• proof-of-concept for things we had been wanting to do for years
• creative games built to demonstrate product’s flexibility
• Technology exploration
• And more!
AndrewFrenz.com
32. Hackathon
I ran the first Hackathon in December, 2010.
But I also participated.
Guy who doesn’t really look like
me
AndrewFrenz.com
33. My Project
For my project, I hacked together a way to monitor equipment in real-
time from a mobile phone and even control it
AndrewFrenz.com
35. After the event, life went back to normal
Although everyone was a bit more energized
AndrewFrenz.com
36. But my project idea felt like it had potential
So I tried to see if management would invest to make it for real
AndrewFrenz.com
37. They thought it was a great idea
and put it on the roadmap to work on in 2014
(This was back at the start of 2011)
AndrewFrenz.com
38. They thought it was a great idea
and put it on the roadmap to work on in 2014
(This was back at the start of 2011)
UM – No WAY!!
AndrewFrenz.com
39. I am an entrepreneur – so I couldn’t help but
imagine the potential of this technology
A new product
A new way to enable our business
A whole future world of possibilities
AndrewFrenz.com
40. Making It Happen
I started down two parallel paths
Building Out
the Product
Building A
Business
Case
AndrewFrenz.com
41. Building Out The Product
I had a day job of normal things at work
So I worked 30 – 40 hours extra each week at
home building it out
- Nights and Weekends -
Building Out
the Product
AndrewFrenz.com
42. Building A
Business
Case
Building A Business Case
I built a business case for the product
And a roadmap
And a compelling vision
And pitched it to anyone who would listen
(PMs, Marketing, VPs, and even the CEO)
AndrewFrenz.com
44. Parallel Paths Converged
The business plan was compelling
The product was deployed on a customer’s site in pilot mode – and
they loved it
And so I finally got approval and budget to hire a team to do this for
real!
AndrewFrenz.com
45. Cool Story And Good Ending – But it
Highlighted a Problem
How do we carry Hackathon projects forward to make something of
them?
AndrewFrenz.com
47. Innovation Fund
Idea is to set aside money specifically to drive innovation ideas forward
And a team that is interested in helping develop them into something
the company can get behind and do for real
I didn’t want to depend on a crazy “hero” to drive innovation forward
on their own dime and time
AndrewFrenz.com
48. How The Innovation Fund Works
• After each event – a team reviews the projects
• They have money to allocate to have the person do more work
• Maybe the idea needs to be taken further
• Maybe it needs to be focused
• Maybe they need to be teamed up with someone in marketing
• A review panel reviews the advanced projects
• Can recommend more money
• Or funneling into the formal process
AndrewFrenz.com
49. Hackathon + Innovation Fund
This seemed to work well
We were generating tons of ideas
And carrying the most promising ones forward
AndrewFrenz.com
50. How My Project Played Out
That original idea and plan that I put together continued to grow
I had created a plan to bring Smart Home like technology into the Lab
AndrewFrenz.com
51. How It Played Out
Eventually
The company slapped a fancy marketing term on it and it has now
become a strategic priority across the company
Transforming who we are and how we show up to customers
AndrewFrenz.com
52. But the story doesn’t end there…
I learned a new lesson of innovation a couple of years later
AndrewFrenz.com
53. My 2nd Big Idea
About 3 years after I had come up with the initial project idea, I had
another.
AndrewFrenz.com
54. My 2nd Big Idea
Other companies in other industries also wanted to introduce mobile
monitoring – yet did not have the time or means to easily do so
What if we could allow companies to add mobile monitoring to their
product?
And make it practically drop-in easy?
AndrewFrenz.com
55. My 2nd Big Idea
Just like Twilio allowed you to drop-in SMS messaging support…
We could create a product to allow desktop developers to drop-in
mobile monitoring support!
AndrewFrenz.com
56. My 2nd Big Idea
It would allow any company to do what we did, but 100X cheaper and
faster
AndrewFrenz.com
57. My 2nd Big Idea
Good thing we had Hackathon and the Innovation Fund
Hackathon Innovation Fund+
= Success?
AndrewFrenz.com
58. My 2nd Big Idea
This time – I didn’t need to do it on my nights and weekend
We had become the kind of company that would invest in new
innovative ideas!
AndrewFrenz.com
59. But There Was A Problem
That I Didn’t Expect
This new product was unlike anything we ever sold before
AndrewFrenz.com
60. Why Is That A Problem?
Well, established companies fall into a pattern:
Market Research -> Development -> Sell
AndrewFrenz.com
61. At My Company
Once a product was ready, we held a SRT (Sales Readiness Training)
On a web conference, we trained the sales teams on this new product
Then from that day forward they were expected to begin selling it
AndrewFrenz.com
62. And This Is Exactly What We Did Before
With the first mobile product from 2011, after making it, working with
pilot customers, we packaged it up and held a Sales Readiness Training
(SRT)
We walked the Sales force through our product and set them loose to
start selling!!
(mostly to our existing customers)
AndrewFrenz.com
63. But I couldn’t do that with this new product
It served a completely different market
It meant selling to completely different people
And selling in a different way
AndrewFrenz.com
64. Pitfall #2: Innovation isn’t just development
Established companies are optimized to sell more of the same such
that they struggle to sell new things!
They forget that innovation isn’t just development – but also sales!
AndrewFrenz.com
65. So I Had A Problem
My existing sales force could not just go out and sell it.
AndrewFrenz.com
66. I needed a new sales person
My first try:
Talk to the sales manager, pitch him on the idea, get him to hire
somebody to work on this
AndrewFrenz.com
67. The job opening got posted
But
It had morphed into 75% new, 25% existing products
AndrewFrenz.com
68. Pitfall of the Short Term
The sales manager had a big goal for next year and wanted to be able
to use this person for that goal too
AndrewFrenz.com
69. Then, just two weeks later
We pulled the job completely.
Why?
The big sales goal was looking even bigger and harder. They needed
someone to come in and turn the crank on traditional – and headcount
was limited.
AndrewFrenz.com
71. But How Do You Protect The Organization
From Itself?
How to have a sales person without bending to short term pressure?
And without a sales person – how could we explore new markets and
market opportunities?
AndrewFrenz.com
72. Pitfall #3:
Succumbing to the short-term pressures
Not clearly separating short-term and long-term roles
AndrewFrenz.com
73. How do organizations solve the short-term /
long-term tension?
Sales is generally focused on the short term
While R&D is generally focused on the long term
AndrewFrenz.com
74. Idea: Business Development Reporting into
R&D
Hire a sales person reporting into R&D
Arm the long-term folks with the ability to do their job!
AndrewFrenz.com
75. Business Development Reporting into R&D
Give them a personal sales goal
But hide it from the sales organization
Anything they bring in is gravy as far as the sales org is concerned
The focus is figuring out how to sell new products into new markets
and creating a repeatable, scalable sales model
AndrewFrenz.com
76. The Handoff
Eventually, when success is found, the product can be handed off to
sales to turn the crank and drive short-term goals for it
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78. Another Realization
The first time, my product was an adjacent product to existing
products. In fact, it directly sat on top of our control software.
We were going to sell it to existing customers. Pretty straight forward,
huh?
AndrewFrenz.com
80. It Took A New Way To Sell
Mobile and Cloud were new – these are hard to talk about if you
haven’t before
The product solved business efficiency – this was a different problem
than any of our other products solved
It took a completely different conversation to sell it – to different
people – with a different set of background experience
AndrewFrenz.com
81. No wonder we initially struggled to sell it
Myself and a marketing buddy basically sold it for the first year
AndrewFrenz.com
82. Then I realized
I started to think about some various products we had introduced that
were “innovative”.
Every one of them had a personal “hero” who took on a business
development sales role to jump start the product
If they stepped out too early, we stopped selling it.
Slowly over time, they would be able to train others
AndrewFrenz.com
83. My “crazy” new product had made an existing
problem obvious
Innovative products, even if they don’t seem that different, could
benefit from a business development role to prove them out in the
market, figure out how to sell, who to sell to, BEFORE rolling out to the
traditional sales force (if ever it is rolled out)
AndrewFrenz.com
84. So did it work?
Can’t tell you yet. We are in the middle of it right now.
AndrewFrenz.com
85. Here is what I can tell you
We will run into another road block, guaranteed
And we will find a way around it
AndrewFrenz.com
87. Established Companies Have Huge
Momentum
And usually huge process all designed around cranking out more of the
same
Changing course is very hard
No wonder so many miss the boat on new technology, despite massive
budgets at their disposal
AndrewFrenz.com
88. Challenges at Established Companies
• Process
• Compartmentalizing roles
• Massive backlog
• Comparison to established products and revenue stream
• Short-term pressures
• Etc
AndrewFrenz.com
89. Is Innovation Impossible?
No way.
It just takes perseverance, awareness, and the willingness to do
something different
And a lot of work.
AndrewFrenz.com
90. Another Trick For Big Innovations
A really good strategy is to set up a separate “Startup” division to go
after some new opportunity
(if its big enough and game-changing enough)
Purposely break it out of the process and momentum that will stifle it
AndrewFrenz.com
92. Some Things That Worked For Us
Hackathon Events
Innovation Fund
Business Development
Breaking the Rules
Breaking Process
AndrewFrenz.com
93. Would this work at your company?
That’s not the point. Like Agile Development, there is no perfect
process.
Every company is different. In fact, even within one company, it should
change over time as the people, pressures, goals of that company
evolve.
AndrewFrenz.com
94. Would this work at your company?
But hopefully it gives you some ideas to try
And that is the point. Steal these ideas if you like them!
AndrewFrenz.com
96. Innovation Models Need To Keep Changing
No model works for every company
Each company is different based on situation, people, history, etc, etc
What works today might not work tomorrow
To keep innovation alive, you need to keep innovating your process
AndrewFrenz.com
97. Innovation is about smart people
Not about process
Innovation is not a machine. Smart people need freedom. And the
company needs to trust them and allow it to happen.
Create a process that allows for less process!
AndrewFrenz.com
98. Use startups as your inspiration
• No existing products to worry about
• Allowed to focus on nothing but making the innovation a success
• Individuals wear many hats
• Basically no process – relies on smart people instead
• Aim for changing the world
AndrewFrenz.com