Bias toward low risk, low reward, small i innovation > "internal traffic jams of safe, incremental innovations that delay all projects, stress organizations, and fail to achieve revenue goals" (59.6)
Source of bias: risk aversion and belief that rewards are too far into future (i.e., excess discounting of FV)
Solution: systematically distribution innovation work across spectrum of risk/reward
Two tools: risk matrix and R-W-W
Lots of little i projects drain R&D budgets (and emotional energy and creativity) as the organization struggles to keep up with demand for continuous little improvements and varieties
Definition of "failure" significantly missing the objectives that were used to justify the investment in an innovation(67)
"What questions, properly answered, would have" prevented us from undertaking this failed project?
IS IT REAL? Important point: assessing market takes priority over assessing product feasibility. (1) Easier to master new techniques and such than to understand new market. Most product failures come from not getting the market. (2) Establishing market can save big investment via "technology push." Excess focus on "how to solve a problem" rather than "what problem should be solved or what customer desires need to be satisfied" (71.8)
Market is real when: (1) there is a need (2) customer able to buy (3) big enough market (4) customers willing to buy (Note for education - the last includes does target have discretion to try it?)
Assessing product reality: will the tradeoffs we have to make along the way put too much of a dent in the attractiveness of the product?
CAN WE WIN? not just product's ability, but the organization's - can WE pull this off? Do we have superior resources needed? What does your brand give you permission to do? What markets will it permit you to enter? Balance champions' energy with tendency to be biased.
IS IT WORTH DOING? "Forecasts of financial returns from new products are notoriously unreliable" (79). Assess risk of forecast by asking how sensitive it is to small perturbations. Big effects from small changes mean big risk. Look at all potential causes of failure and ask how you'd mitigate them - which mitigations are within reach?
Does it make strategic sense? Does product fit our overall growth strategy? (education: are there affinities and resonances that will make this venture valuable in other ways down the line?) Impact on brand equity? Cannibalize existing customers? Enhance/harm relationships with partners/stakeholders?
Day: "Is It Real? Can We Win? Is It Worth Doing?"