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 change

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 & ThoughtWorksCopyright 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 Engine
Known needs & solutions
Predictable
Big bets with plans
Enhance
Improve
Innovation Engine
Unknown needs & solutions
Non-linear
Small bets with hypotheses
Develop
Invent

Optimization Engine
Predictable
Big bets with plans
Enhance
Improve
Innovation Engine
Non-linear
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
Goals
Experimentation, leverage, purpose, new KPIEfficiency, optimization, CSat, company KPI
Focus

Optimization Engine
Predictable
Big bets with plans
Enhance
Improve
Innovation Engine
Non-linear
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
Goals
Experimentation, leverage, purpose, new KPIEfficiency, optimization, CSat, company KPI
Focus
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
FunctionalModel
“Project” Team
SquadModel
P
D E
Product Squad A
P
D E
Product Squad B
P
D E
Product Squad C

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 help
A 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

The Product Commandments

1.  Empathize with and advocate for the user focusing on their need
2.  Know if you’re ﬁnding the user need or the solution for the need
3.  Don’t plan, establish a vision and build
4.  Deﬁne and drive toward your KPI
5.  Simplify everything: products and process
6.  Prioritize on user need, biz impact and constraints (in that order)
7.  De-risk your product by minimizing unknowns
8.  Validate don’t speculate (as early and often as you can)
9.  Iterate toward the vision but work on today...one thing at a time
10.  Show don’t tell
11.  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 small
14.  Engage stakeholders for advice and action, early and often
15.  Communicate actively, passively and transparently
16.  Manage by supporting (don’t command)

Thank you
Andrew Breen
abreen@assert.com
@buckybanjo
linkedin.com/in/andrewbreen

The Innovation Engine, Andrew Breen, American Express

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