This analysis tool was first created during a collaboration between McKinsey Group and GE’s Innovation center. They were looking for a way to test innovation ideas and business units strength to determine what the next strategic step for the unit or idea should be. I've found it to be a quick way to build a progressive scorecard to test and weed out ideas quickly. Innovation Centers are all about getting to great ideas as quickly as possible. This tool is a practical application of the idea of "Fail Fast and Fail Often" mentioned in the Pillars of Innovation series I wrote earlier this year.
They came up with two axes of influence- the Business Unit Strength or (BUS) against the Market Strength or (MS). After that it was a pretty straightforward dual factor sum of values to determine where a particular idea or business unit fell on the matrix.
The analysis is a function of a comparison of the BUS against an MS made up of the industry’s growth rate, size, profitability, opportunity, etc. Each variable is given a weight based on industry norms and then the combined industry attractiveness is then determined by multiplying the factor time the weight and then adding together all the variables to get a total score.
The BUS has the same variables created and then you look at how well the BUS competes against the industry norms. If your BUS falls higher and to the left of the industry rating, then you have a pretty good result. If you are to the right and below, then you need to look at conserving resources or complete liquidation.
This matrix is designed to give a top-level view of performance. It assumes that the compared units are comparable to each other or at least some adjustment is made to create comparable values. It does not often give an indication when an idea or Business Unit is ready to move out of the Innovation Center as an independent unit. Yet, for all these limitations, this weighted two-dimensional array can give some key insights to everyone about the overall performance of the Innovation Center as well as its individual component Business Units in incubation.
If you are using this tool to compare several Business Units or ideas, then the top rated ideas and units should get the most resources and support and the more poorly performing units are looked at for closure or containment. This process is designed to reward the top performers and weed out all others. You are looking for a winner, not feeding losers just because you can. This isn’t social justice, it’s business.
The Caveats of this tool.
Every analysis tool seeks to reduce risk and reveal weaknesses and strengths so decisions can be more rational. This tool does not have a design feature to consider the interrelationship of any particular Business Unit with another and the possible strength that relationship might bring to the larger organization. To gauge this might be difficult in that multiple relationships between more than two Business Units probably exists. To gauge the impact of symbiotic benefits or risks between uints is beyond this tool.
Also, there is the inherent risk in establishing the weights for each of the variables. Every case will be different. While there are some general guidelines for each type of business, every Business Unit or idea will have to be evaluated individually. Assigning the risk and weights to each evaluation factor will fall to the practitioner. There are some guides available to help understand how to assess the probable risk, but in the end, the practitioner has to make a judgment about the values to be used.
Finally determining the market size and market share for smaller early-stage efforts might be difficult. Startups have an inherent problem trying to assess where their possible market share might lie. This part of the matrix is an important scorekeeping point for this analysis to work well. Making sure you create the right kinds of experiments and actions that create traction and begin to generate results quickly are important to judge how well an idea or Business Unit can penetrate a market, or create a new market which will generate the desired results.
The Strengths of the Business Strength Array
A quick way to see multiple ideas and Business Units compared on a multi-variant array to quickly determine where weaknesses and strengths exist. This tool gives managers and directors a first level look at an overall scorecard of Business Units or ideas in a portfolio collection.
Better decisionmaking about how to allocate resources for each component in the portfolio collection
Develop and execute growth or exit strategies for each of the individual portfolio units and for the overall portfolio collection.
For a blueprint and process guide to prepare you own Business Strategy Array, enter your email address below
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mindmap of the process and a
spreadsheet that you can use to create an Innovation Center idea performance portfolio.
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I've mentioned the work of McKinsey Group and others when it comes to Innovation Models and idea maturity. I thought I'd add my thoughts on how I've experienced idea maturity and survivability. In a previous article, I talked about the Pillars of Innovation and one of those pillars was entitled "Never Fail to Fail." This gets to the heart of this article. Failure and change are inevitable and the organization that does not recognize this is doomed to stagnation and eventually be absorbed by someone else or just disappear.
The diagram at the right shows a typical model of business ideas and services in a hypothetical organization. There is a core business  that creates the majority of the value and income for the organization, but there is also another line of business that is beginning to grow and prosper . Eventually, it matches and supersedes the original core business and there is a Disruption Point  where a transition happens that changes the look and feel of the business because a new line of business becomes the dominate value creator. Now the former emerging business line becomes the primary business value generator and other less valuable ideas are being created to create value in the future. Note in this model the original core product continues to be delivered across this time, but it might not be [See Disruption Point 4]. There should be a conscious decision to either continue or quit this line of business. It takes resources of time, personnel and capital to continue to support a dwindling value. It might be better to take those resources and put them toward other opportunities that are rising in value  and have greater earning potential than keeping the old line of business in place. If you consider the difference between the current value of the original core business line and it's current value as a constant, if there was another opportunity that could replace that dwindling business with an increasing value business, you might be better off moving your resources to the new opportunity.
There are also other emerging ideas that break out and become competitors for the top value earning position . When this happens another Disruption Point occurs . Now the organization might experience another identity crisis if it has not planned for this disruption to happen.
Your Why Is Important
Dealing with this constant change in how products define an organization's identity has a classic example in modern business. IBM has undergone several identity changes over the life of the company. It went from a calculator company to a typewriter company to a computing hardware company to a processing services company. Each time the change in primary revenue generation changed IBM has changed their delivery model, a little. One thing has never changed and that is their commitment to excellent service and high quality. It has been said, "Nobody ever gets fired for picking IBM." for the simple reason IBM usually delivers at least good results over long periods of time and if there is a problem, they step up with a solution. They may have changed the what they were known for over time, but they have never changed the Why you do business with them.
Understanding it is not the product or service, the What, that drives a company, but rather the core principles of Why the business even exists at all. When you understand this principle, it is much easier to change your idea of What you are doing as long as you know Why you are doing it.
This is what the Ambidextrous Organization does. It is how it operates. It isn't always easy, but it is the way our modern marketplaces work now. The cycle between Disruption Points , ,  varies between businesses, but some are as short as 24 months and other are up to 10 years, but an obvious trend has been rapidly developing that clearly indicates the period between Disruption Points is getting shorter and shorter. You might run a restaurant and think this does not affect you, but I guarantee you that it does. Your menu items, or how you allow people to pay, or how you seat them or some other element in the How or What you deliver is probably going to change a big part of what you do, but the Why you serve food to people should remain the same, regardless of anything else. That Why is the core of your company and the sooner you figure out your Why, the sooner you are going to be ready to compete and stay in business for as long as you want to.
Remember, you were made complete, so claim it and be happy in your life.
Organic growth and health of your organization
When you begin to think about innovation you might begin to wonder how this new effort is going to affect the rest of the organization. You would be right to ponder this question. Sometimes thinking about this question keeps some of you from moving ahead. The possible disruption and change are too frightening to contemplate, but I would suggest to you that doing nothing is far more expensive and risky than continuing as you are today. So the initial questions still stands, "How is the innovation effort going to change our organization?" Let's look at a few ideas that have been put forward by some recognized leaders in modern organization and growth theory.
Gartner often refers to the Bi-modal growth model and McKinsey is often quoted about their Three Horizons growth model. I think the reality for most businesses is something different from either of these. There has been one idea floated that an extension of the McKinsey model is a four-horizon model that includes a new Horizon Zero which is the internal support organization that crosses many different business lines. Examples like centralized HR or Enterprise inventory are good examples of Horizon Zero efforts. These resources often get left out of the dialog around Horizon Two and Three growth until it is time to implement the delivery of products. By this time it is often too late to make effective changes to new models based on ingrained and established processes inside the Horizon Zero support organization when even a small change could have very positive outcomes. Often some of the most damaging waste and inefficiencies are hiding in the support infrastructures of established organizations.
In the Gartner growth model, you are either working inside the existing framework or exploring outside the known world. Once again in this model, it does not allow for the early transition models that would allow for the organic change of the internal modality or how to effect change from the external discovery mode to a new integration of the existing modality.
I would propose that there is something closer to a multi-modal system that is flexible in its implementation and may have as few as two and as many as four or five levels of a framework, depending on the complexity of a business model, it's maturity and management expertise. Those with greater expertise and maturity could manage a greater number of framework levels than a very young organization just starting out and feeling its way along a growth curve. I would posit that having more modes of business operations will be more difficult to manage, but the important point is to recognize what is going on and find ways to work with your assets. Make no mistake, each mode is an asset to be used. But none of them should be allowed to exist longer than they are needed.
As you think about how to implement innovation, be open to a flexible framework that leverages your strengths and minimizes your weaknesses. Certainly, a one-size-fits-all solution isn't going to always fit. In fact, I would suggest, it never fits. I've found more often than not you have to modify your implementation ideas to fit a framework, why not modify the framework to fit your organization? In today's marketplace, flexibility and change are the greatest assets you have at your disposal. How you manage them will tell the tale of your success or failure.
Until next time. Live well and remember you were made to succeed, so live like it.
I wrote a few days ago about the ambidextrous organization. This quick article follows that idea some further. This time I think about how you can begin to approach dealing with the complexities of the hydra of an ambidestrous organization.
There is a line of thought around the idea of business cycles that you have at least three levels of business, the first is your normal business that is established, this is your core effort and what you know works well and reliably, then you have the idea of tweaking what works to create some improved version of what you currently have. You are reaching the same market segments as before, but it's just "New and Improved." Then you have a possible cycle of taking an old idea and expanding it into a new area by tweaking it just a little to meet a new market segment. This is still really a refinement of an old idea you really haven't come up with something new yet.
Finally, there is the new idea generation business. Something that upsets the old order. It eats up the value in the old market, or even makes it disappear. Up to this point, we could probably manage the change and how important it is because the old ideas are just expanded and everyone understands how expanding the existing idea works. But now we are contemplating how to destroy what provides the monthly bottom line profit. We are eating our cake.
This means we are taking resources from the main business effort and putting it toward something that destroys our proven market. But wait! If you know your old market is going to die, then why hold on to it? Because it is more comfortable for us as humans to remain with what we know, no matter how bad it is than to take a chance on something we don't know about. For those people in an organization working with dying product or service, they haven't known anything else, so getting them to support something they don't understand or worse yet that will destroy what they have worked so hard to build up, will be difficult at best.
Dealing with The Ambidextrous
So, how does leadership deal with this dilemma? If you are going to try and deploy an Ambidextrous Organization one option is to be transparent about what is going on. Have a firm and workable transition plan for phasing out the old line and launching the growing innovation. Leadership has to have a consistent, unified message. If people know what is going on and why they can accept the change much better than discovering change is happening in spite of their best efforts.
An even better way is to get people engaged in how to make the transition happen for themselves. When they design their own transition, they own it. Yes, you will still have a competition for limited resources, but you now have an open and transparent plan to manage around. Now you can at least work on having more than one direction going on inside an organization. In fact, it might mean you have several different options moving ahead at the same time. But if each one has a published objective, even if they are in direct competition with each other. In the end, the winners are winners for everyone.
So, if you find you have competing ideas that want to take away from your core business, look hard at them and then come up with a way to openly test, validate and then move them ahead if they are successful. For if they are, they are probably your new future. If you remember from an earlier post, about testing and failure, having a plan and executing it is where success comes from.
How can organizations have multiple limbs or focus? But that's exactly what the markets today seem to demand. While a maturing market wants refinements in their products, other new segments are cropping up that demand attention to the detriment of the existing business. It is like we are being asked to eat ourselves to survive. That just does not make sense.
I once heard "You can't have your cake and eat it too." or "You can't have it both ways." But markets seems to be getting both. And that's the puzzling thing about today's business climate. The old rules don't seem to be working all the time. In fact, they seem to be working less and less over time.
The phrase came into use in the late 20th century and early part of the 21st century. There is a bit of confusion surrounding the idea of the Ambidextrous organization and that's no wonder, it's a word with confusing and contradicting ideas. The very definition conjures up confusion since it refers to the ability to easily change focus and abilities. After decades of thinking about creating managerial focus and clear communication someone comes up with the idea of bringing in a hydra of thoughts to give an organization an advantage. How does that work? Can it work?
This seems to fly in the face of just about all the established and recognized management thought around today. But does it really? Those who embody this unique trait of being able to use either hand equally well possess remarkable communication skills and focus. They have a unique skill set that allows them to clearly differentiate skills and activities in a way others can't fathom. To those who can, it is natural, to others who don't have the skill and understanding, it is unnatural.
So this is the mental split facing us. Some organizations understand how to have multiple things going on at the same time that competes with each other, but both are being done successfully. In a world of "either, or" that may not make sense, but I contend our world isn't "either, or" anymore. It has become "either, more."
As we think about how innovation can change our lives for the better, we need to remember no single pillar is more important than any of the others. It takes all nine of them to hold up the roof of an innovation center.
While users are the reason we do this work, it should make a positive difference in our user’s lives. The new value we create should come from being open, transparent and being willing to fail and try something, even if it isn’t perfect. We try over and over again, discarding what does not work and moving ahead with what does. All along the way we are measuring our results to make sure of what our efforts mean to others.
This is important work. I happen to think it is some of the most important work anyone can be involved in. Helping others realize the excitement of seeing their ideas become alive and working helps employee engagement and raises awareness of the fact that what we do each day does matter to others as much or more than to ourselves.
This is why I think innovation and constant improvement is so important to our lives and why I spend the time I do to help others achieve that in their lives. I hope this short series has helped you have a little more insight as to how Innovation Centers work and the value they bring to our lives. I certainly enjoyed bring it to you.
Remember, "Collaboration is the Glue of Success"
In the spirit of giving more, here's a final pillar for innovation pioneers.
Finally, to make sure ideas do matter, you need to measure their effectiveness. You might have an intuitive feeling about what works, but when you build a measurable experiment and gather data on the results, you find out if your idea was right or not. But don’t stop at one experiment, as we encouraged you earlier to iterate often, the same applies to data. Look for new linkages and associations based on human behavior. Each new insight may prompt you to gather more information that is important, or you may find the information isn’t important. Either discovery is important. Once again, some failure is important and leads to more discovery.
Driving decisions on the facts of data enrich the experience for everyone. Today in our highly customized browsing experiences, it is driven by gathering data about what caught our attention and then displaying more of that kind of information until the browser sees we aren’t interested in that as much as something else. But all this experience is driven by data collected about what we have an interest in.
If you start early, iterate often, build tools that create great value and aren’t afraid to fail, are you still doing work that really matters to the world? Larry Page, one of Google’s founders has been quoted as saying,
“I have a very simple metric I use: Are you working on something that can change the world? Yes or no? The answer for 99.99999 percent of people is no. I think we need to be training people on how to change the world.”
When we get caught up in the excitement of ideas often we forget to measure the meaning and value of those ideas in context to the meaning for others. When our ideas create value for others and improve their lives we begin to change the world. Innovation Centers are all about constant improvement focused on the users, not the technology.
Sometimes we need better tools to get our work done more easily. Creating a tool is more valuable than creating a product that just gets used up. Tools create additional value. Think about how Uber, or Android OS or Google Earth or even a simple hand tool makes a difference where others take those tools and use them to build more value for others. When you can build tools that are platforms for others to create value you raise the tide for everyone. Now you have created a richer environment for everyone to participate in.
Now I don’t want to discourage you from creating great products that have value, but you create more value when you make tools that others use to increase their personal value. Be a platform. Be Value!
Perfection is the champion of failure. I don’t know where I heard that, but it is so true. It is what keeps good ideas from being tried. But more importantly when you start early you don’t have time to get something perfect and you will need to make small changes and try again. Perfection is an illusion and those who believe it can be attained do themselves and others a disservice holding onto that belief. Earlier I wrote about thinking big and starting small. That applies here too.
When you launch early you are starting small, simple and with a limited hypothesis. That’s a lot easier than trying to have everything worked out and not being able to figure out what went wrong with a complex idea. When you launch early you get the idea out and receive exposure for it and if it does produce value you are helping others. Now you have others who can help you make your basic idea better the next time you try it. That’s iteration. Do it over and over again. It is where the saying “Practice makes perfect” comes from.
This process is looking for improvement and positive change, not perfection. And the sooner you get started the sooner some positive change will happen. So start today, and improve tomorrow.