CEO’s ask tough questions before they fund an innovation. The toughest arrive like arrows shot in the heat of a management meeting. They aim to kill an innovation, to add it to their growing pile of unfunded projects.
That’s been the experience of Tony Singarayar, the founding partner of Analogy Growth Partners LLC, a strategy consultancy that helps companies grow through business model innovation (www.analogypartners.com)
Singarayar held management positions at Johnson & Johnson, Shell Chemical (Lankem Ceylon Ltd.), and KPMG before starting Analogy. He is also managing director of an office technology business in Sri Lanka, and authored “Business Model Innovation Is What Counts Today,” in the Winter and Spring 2011 issues of CIMS Innovation Management Report. Here’s his hard-earned advice for answering those three big questions:
I’ve discovered that business survival requires answering three questions when you start a project—before the arrows arrive.
Years ago, while mourning the death of a favorite project, I asked the vice chairman of a Fortune 100 company why it was killed. “Because you didn’t answer my three questions,” he replied. I asked what they were, and he said, “Why This? Why Now? Why Us?”
On first hearing them, I didn’t understand. They seemed trivial compared with the sophisticated multi-year cash flow projections, the clear voice of the customer, and the compelling analysis of quantitative evidence. Experience has taught me differently.
Wisdom Gifts Are Worth Collecting
I call those three questions a “wisdom gift.” Innovators receive profound wisdom gifts as they go about the exciting and painful business of converting good ideas into commercially valuable products and services.
Wisdom gifts can arrive in the form of distilled advice from a kind senior manager, or as sharp questions that leave scars on your back. Collecting these gifts is an excellent defense against future killer arrows.
Why THIS? Why NOW? Why US?
The questions seem so simple, don’t they? Well, they are simple. The problem is, they are really difficult to answer. Go on, try to answer them for a key project on which you are working really hard.
1. Why THIS? is really asking, “How will THIS ever make us any real money? What makes THIS idea better than all the other things we can invest in?”
You eventually realize this is impossible to answer because you don’t know about “all the other things we can invest in.” So the only way to tackle this is to prepare good answers that show the project meets defined standards. For example (assuming an innovation):
• Explain why this is different than what competition offers.
• Explain why this is better than older or similar versions.
• Explain why the features that make it better can be sustained long enough to make some real money — perhaps by being first to market, or by filing broad patents.
• Show your evidence that customers will buy more than is being sold today, or more frequently. Ideally, present evidence that your innovation cleverly solves a serious customer problem they are already trying to solve unsuccessfully. This is a must.
• Show your evidence that customers will pay a premium for your innovation. This is tough.
Bottom line: You must have a better product that customers believe is a good value; in other words, a good Value Proposition.
2. Why NOW? asks, why should we invest NOW rather than wait, or have we waited too long? “If this is so good, how come no one else is doing it?”
Explain what is special about the timing by addressing one or all of the following three points. The more you can address, the better:
• Identify a window of opportunity that will close if you don’t invest now.
• Show why there is no need to wait until the market or the technology
gets more mature.
• Show you are not already too late to the party, that competitors haven’t already created an unassailable lead.
3. Why US? Our CEO’s third question asks, “Why should WE invest in this? Are we really the best to take this to market? How likely is a competitor to beat us? We tried this before and it failed, so why will it work this time?”
Demonstrate that your company has a special advantage — an existing skill, or perhaps privileged access to a raw material or a market that competitors cannot have even if they seriously invested in this innovation.
This advantage can come from many places, but look first in these six major “cornerstones” of the business model you will use to commercialize the innovation. If you have winners in any of these six, that’s a pretty compelling argument.
• The main functions of the product or service, the underlying science and technology.
• Your brand and marketing strength.
• The strength of your relationship with strong influencers of demand.
• The breadth and depth of your distribution channels.
• The quality, reliability and cost of your production and operations.
• The power of your revenue and profit model — how you make money.
Choose To Be Executioner, Not Executed
Bear in mind that if you push an answer to any of these questions too hard in the face of a senior leader’s opposition, you obviously don’t understand the big picture and have lost perspective. And if you don’t push hard, you clearly don’t believe in it yourself. Striking the right balance is like walking a tightrope while dodging killer arrows and spitting gold coins.
Of course, a shallow idea that has not been thought through will be the first to fall.
The good news is that answering these questions truthfully makes you realize that some projects should be stopped in their tracks. Even if you love them.
Why is this good? First, because you will get a reputation for being tough-minded about projects everyone knows you love. Management will believe that when you show up with an idea, it has already been pressure tested. Second, because being the executioner is better than being the executed.
So if you can’t find compelling answers to Why This, Why Now, Why Us? then kill the project yourself — before the CEO does.
Tony Singarayar; email@example.com