Three Fundamental Concepts
Experience shows that very few companies have a value creation methodology. There are three keys I look for, which are required for systematically successful innovation. Does the company or enterprise:
- Focus on important customer and market needs to make an impact?
- Share core value creation concepts, including NABC value propositions, for effective collaboration?
- Hold recurring team value-creation forums for rapid learning and improvement?
These three practices imply that metrics are in place for what “important” means to the enterprise. NABC value propositions are the first questions to be addressed for all enterprise initiatives. An NABC describes the customer Needs with an Approach for the offering that has superior Benefits/costs when compared to the Competition and alternatives. Value-Creation Forums are where 3 to 5 teams give short NABC value propositions for their initiatives every 2-4 weeks and receive team feedback. Forums and the use of NABC value propositions make exponential improvement almost inevitable.
Surprisingly, most companies even lack shared language for the most basic concepts, such as innovation, value creation, customer value, and the value proposition. That creates confusion and inefficiency. Here is a simple experiment you can perform. Have your teammates fill out the definitions for these four concepts on sticky notes. Then post them on the wall and ask everyone what they notice. We have yet to find a team that shares the same or effectively the same concepts. Often they are simply wrong.
We give workshops to companies where we share these concepts over two days. So far, no team, out of over 400 with 3-5 members each, has been able at first to compellingly address the four NABC questions. We find that typically less than 25% of an enterprise’s initiatives have any value for the enterprise. They decide this; we don’t. We just give them a framework.
You don’t have to use our methodology (see the book I wrote with Bill Wilmot, “Innovation: The Five Disciplines for Creating What Customers Want”). But if there are no mechanisms in place to assure that these three fundamental practices are in place, innovative success will be, at best, episodic. Successful exemplars of these practices include SRI International (when I was CEO), Amazon, Apple under Jobs, and DARPA in the government. We are aware of no university that comprehensively adheres to these core practices.