Whether you’re a part of any industry, you’ve probably noticed how swiftly things change – new products, fresh designs, innovative marketing techniques, and more.
Now, you might be wondering, “What should I do to stay ahead in this fast-moving market?” The answer is simple: keep innovating! Chances are, that’s exactly what you’re striving for.
For decades, companies have invested significant resources, both time and money, into research and development to stay competitive. But this process can be cumbersome, time-consuming, and costly.
So, if you’re eager to discover some valuable tips and tricks for innovating faster and more cost-effectively, you’re in the right place. Let’s dive into the exciting world of successful innovation.
Innovating on a budget
Business innovation is changing. In the past, big companies spent lots of time and money on research and development (R&D) to come up with new ideas and products. Think of it like making a fancy car or a high-definition TV – it required tons of planning and cash.
But now, things are different. Businesses are finding new ways to innovate that don’t break the bank. Instead of pouring loads of money into R&D, they’re doing small experiments that don’t cost much and are simple to carry out.
Imagine you have a cool idea for a new computer program, like Windows or Mac. Instead of spending a fortune upfront, businesses are now testing their ideas step by step, like making rough drafts or prototypes. If these small experiments work out, then they invest more money and effort into them.
This approach is catching on because it’s cheaper and faster. In the past, R&D teams might spend tons on market research, only to drop an idea if people didn’t like it. Now, businesses are using a kind of scientific method to test their ideas with small experiments. If something works, they make it bigger.
The 5×5 method: A simple way to test business ideas
The 5×5 method is a simple and cost-effective way for businesses to test their ideas and innovate. Think of it like a science experiment in a chemistry class. In this method, teams of five people with different skills (like a designer, developer, marketer, salesperson, and engineer) work together for five days to come up with five ideas. These ideas are then tested over five weeks, with teams competing against each other.
For example, let’s say you run a video game company, and you want to figure out why some players aren’t signing up for your newsletter. Traditional methods like web surveys can be time-consuming and expensive. Instead, you can use the 5×5 method.
First, divide your employees into teams of five and have them generate ideas. Suppose the best idea is to change when you ask players to sign up for the newsletter. You can then have all five teams test this idea. For instance, ask half of the players to sign up before playing and the other half after they’ve played for a bit.
The results will show which approach works better. Maybe most players prefer signing up after they’ve played, and this leads to more potential buyers.
The 5×5 method is efficient because it saves time and money compared to older research and development methods. It helps businesses quickly find solutions to their problems by testing different ideas and scaling up what works best.
Overcoming resistance to innovation
To make your business experiments successful, you need the right corporate culture and mindset. You might think that after learning about the 5×5 model, everything will be smooth sailing. But hold on, it’s not that simple. When you introduce changes, people who prefer traditional methods may resist.
Implementing the 5×5 model means changing how your company approaches innovation, which requires a cultural shift. In traditional models, your company may be used to top-down management where proposals involve a lot of analysis. So, top managers might see experiments led by small teams as a backward and ineffective way to innovate.
Many of these managers may have a negative view of experimentation because they think it lacks direction, leading them to resist scaling down.
That’s why you need a different mindset to implement the 5×5 model and test business ideas. For instance, it’s tough to generate and test new ideas when you’re surrounded by people with a planning mentality. They rely on past experiences and believe they have all the answers.
But remember, innovation comes from experimentation, not just experience. So, you need a searching mentality instead of a planning one. Searchers admit they don’t have all the answers and recognize the importance of running experiments to gain insights.
Searchers are also action-oriented and focus on turning hypotheses into working prototypes quickly. They are the right people to promote the 5×5 method and drive innovation in your company.
Getting everyone on the same page
In life, we often face challenges and resistance. It can feel like a constant struggle. However, by persisting and working through these challenges, life becomes more manageable and productive.
The same resistance can hinder innovation in a company. But there are ways to overcome it:
- Share your plan with company leaders and show them how it aligns with the company’s core values and strengths. For example, if a telecom company values user experience, propose ideas that enhance it.
- Don’t just involve the executives; include everyone in the company. Create a plan that assigns roles to each department, from sales to customer service. This way, everyone feels part of the innovation process.
- If your idea is significant enough, it will naturally involve the whole company. This approach legitimizes the 5×5 model for testing ideas and driving innovation.
For example, Avon turned its customers into salespeople, involving all departments in this major shift. By aligning your business hypothesis with the company’s values and engaging everyone, you can overcome resistance and drive innovation effectively.
AI’s role in future innovation
In the future, using advanced technology will be a lot like how you pick a Netflix show to watch when you’re feeling lazy. Netflix suggests shows based on what you’ve liked before, right? Well, imagine something similar happening in businesses.
Soon, special teams called 5×5 teams will get suggestions for experiments to try, just like Netflix recommends shows. Companies like Amazon and Spotify already do this with products and music, but this will be for business experiments and ideas. Instead of finding new songs or movies, these teams will get recommendations for what experiments to do next.
For instance, the recommendation engine might say, “Other account managers who tried this experiment also tried…” or “Marketing designers who did this experiment also did…” The cool part is that all of this will be done automatically using artificial intelligence (AI).
This AI won’t just look at what people have done before, like current recommendation systems. It will be fully automated AI. People are already using this kind of technology in science. There’s a robot named Adam in the UK that generates scientific ideas and experiments about yeast genetics.
In the business world, humans will still be the ones doing the experiments, but AI will help by suggesting the next big idea. This could lead to some amazing innovations in the future.
In conclusion, business experiments are a cost-effective, fast, and straightforward method to create more intelligent, improved, secure, and scalable innovations that will benefit both companies and their customers in the long run.
The key takeaway here is the importance of taking action. As renowned economist Joseph Schumpeter wisely noted, innovation isn’t just about thinking; it’s about doing. When you have a business hypothesis, don’t let it remain a mere idea. Take the initiative to put it into practice. Head to the store, gather the necessary resources, and make it a reality. Remember, innovation is driven not just by intellect but by determination and action.
Inspired by a book “The Innovator’s Hypothesis”; Michael Schrage”