Perfectionism: A Barrier to Innovation

Source:  Best Buy

Take a look at this recent interview (start at 4:15) with Corie Barry, CEO of Best Buy.   In the interview she describes how Best Buy had been piloting curbside pick-up service in some of its stores prior to the COVID pandemic.  The introduction of curbside at some stores was part of a plan to introduce the service across the store network over the course of more than a year.  Then, in a matter of 48 hours, they decided to shift the entire nationwide store network to curbside pick-up ONLY because of the COVID quarantines and shutdowns.  48 hours.  The interview asks her why it had to take more than a year to introduce such a new service prior to COVID.  Why couldn't they innovate faster?  She offers a compelling explanation of the barriers to innovation at many large firms.  Barry explains,

"As a retailer, we are geared toward perfection around process... As a brick and mortar retailer, you are not as geared to just push out a new experience and iterate quickly on the process behind it.  We are geared at putting out there a perfect SOP (standard operating procedure), and then you just run it... It was not as much in our DNA to put out there something that might not be perfect." 

Barry highlights a key barrier to innovation at many large well-established firms.  They resist introducing new products and services until they feel as though the innovation is perfect.  They don't want any failures or mistakes.  They don't want any negative customer feedback.   Yet, the desire for perfection slows them down substantially.   Moreover, it deprives them of the vital learning-by-doing that comes with soliciting feedback from customers (and front-line employees) early and often.  Every brick-and-mortar retailer, and frankly every large firm, should consider this discussion about perfectionism and ask whether it's holding their organization back too.

Three Techniques for Smart Prototyping

Source:  Flickr

Here is my latest article about the prototyping stage of the design thinking process.   I've published it as a guest post on the Experience Point blog.  The title of the short piece is "Three Techniques for Smart Prototyping."  In the article, I explain some of the typical mistakes that we make when trying to prototype new ideas, and I offer several strategies for enhancing our approach.  I hope you find the article useful and informative. 

The Downside of Testing, Prototyping, and Experimentation?

I'm a big fan of the concept of testing, prototyping and experimenting during the product development process.  I believe in David Kelley's philosophy: Fail often to succeed sooner.   I think that "test and learn" and rapid iteration beats formal planning every time in highly ambiguous environments.  However, new research suggests one very important limitation to testing that involves going to market with a minimal viable product (MVP).  

Andrea Contigiani, a researcher at the Mack Institute for Innovation Management and a Wharton doctoral candidate, assembled a fascinating dataset on the product development efforts at over 1,000 software startups. He looked at how these firms' approaches to product development changed after a landmark court decision, Alice Corp v. CLS Bank International, made patenting software less effective.  He wondered if firms changed their behavior after this court ruling, for fear that prototyping and testing might invite many imitators and therefore make it harder to establish and defend competitive advantage.  He explains his findings:

I found two things, broadly speaking. One is that after Alice took place, the affected companies changed strategies. In particular, they seem to be less likely to test their product; they do less experimentation. Given that they can no longer use patents to protect their ideas, experimentation becomes risky. Sure, you get the benefit of learning, but the cost of doing so goes up. So it’s not necessarily a good idea.

On the other hand, they seem to launch their product faster. They go to market sooner and so they can start getting feedback. Adapting your product, or pivoting, once you are in the market is a little harder [than early testing], because adaptation costs are higher. But on the other hand, once you do that you are essentially creating other barriers to imitation, like brand and network effects. So it is safer.

The second result is more about performance, and there I looked at what happened to companies that did a lot of experimentation while in the new post-Alice regime where they could not really protect through patents. I saw a negative correlation between doing that and performance.

Companies that experimented a lot without potential access to patent protection were less likely to get funding, and they also seemed less likely to get acquired. And so overall, this choice seemed to really affect the performance.

The findings are fascinating.  I would offer one important caveat though.  Contigiani is studying testing that involves actually going out into the market with a product, or at least exposing ideas to public inquiry and study.  Much testing, prototyping, and experimentation can take place in a very private way, so as to not enable potential rivals to learn about innovations.  It seems to me that firms ought not to be eliminating testing and prototyping, but thinking instead about how to do it in a way that protects their ideas from imitation.  

Misunderstanding The "Fail Fast" Philosophy

Many innovators adhere to IDEO founder Dave Kelley's philosophy: "Fail faster, succeed sooner." Recently, venture capitalist Chamath Palihapitiya took issue with Silicon Valley's embrace of this mantra during a talk at Stanford. He argued, 

“Fail fast” has become the conventional wisdom of Silicon Valley. And when it comes to consumer businesses and apps, that makes sense, says Palihapitiya. Consumer internet businesses like Facebook are about exploiting psychology, and businesses need to fail fast to keep pace with the shifting tastes and desires of consumers. But that formula doesn’t work for “anything that really matters,” he says. “It is not how you solve diabetes. It is not how you use precision medicine to cure cancer. It is not how you educate broad swaths of the world’s population.”

I strongly disagree with Palihapitiya's take here.  He has taken a far too narrow view of what the "fail fast" philosophy means.  Of course, a smartphone app is far different than curing cancer.  It's ok to fail if you launch a social media app into the market.   However, you do not want to put a poorly designed cancer drug out into the market simply to get feedback.  The FDA would not allow that anyway.   However, that does not mean the "fail fast" philosophy should not be applied in industries such as healthcare, where the stake are very high.   You can still embrace the notion that innovation should occur through an iterative process filled with prototyping, experimentation, and testing.   Prototypes come in many forms; they do not have to be finished products that could do potential harm to users in the marketplace.   

Panera Bread, Technology, and Wait Times: The Value of Prototyping

Popularity can be a blessing and a curse for fast casual and fast food restaurants.   Naturally, these chains want as many customers as possible to frequent their locations.  However, customers will become disenchanted very quickly if the wait times become lengthy.   The easy way to solve these issues is to open more locations.   You can't continue to do that forever though.  You have to be able to drive same-store sales, and you must address wait times in order to maintain the customer satisfaction necessary to achieve that revenue growth.  

Panera Bread faced this issue in recent years.  They tackled the problem head-on with a number of initiatives, including the use of technology.  The Wall Street Journal discusses their strategy in an article today titled, "How Panera Solved Its Mosh Pit Problem."   Mobile ordering became a key part of Panera's strategy.   They have done an amazing job with the Panera app, and the mobile ordering system put in place along with that app.  As a frequent customer, I find the mobile ordering system simple, easy-to-use, and very convenient.  I often will order on my phone when I leave my office or home, and I can simply walk in and pick up the order from a shelf near the entrance as soon as I arrive at Panera. Payment is already taken care of via the app.  

How did Panera develop such an effective system?   They prototyped, and they iterated many times.  They used a prototype store in Braintree, Massachusetts as their testing ground.  Even the top two executives spent a great deal of time watching how workers and customers interacted in this location.   They didn't settle quickly on one solution, devised in a boardroom somewhere. They listened to feedback, and they adapted based on that feedback.   What a great innovation story! The article describes the approach, led by CEO Ronald Shaich and President Blaine Hurst:

The chain opened a prototype Panera in Braintree, Mass., to test all elements of “Panera 2.0”: self-order kiosks, delivery, digital ordering and a new practice of bringing food to customers’ tables.  Messrs. Shaich and Hurst spent about 100 hours a week in that Braintree cafe observing what would work.  Easing the ordering bottleneck by taking orders online, instead of at the counter, wasn’t enough: The kitchen had to be able to handle the volume. Allowing customers to place orders themselves led to more customization, but also more staff mistakes. The company revamped the way employees process orders in an effort to minimize errors by simplifying the kitchen display systems.  “It was literally hundreds of these little things that we did,” said Mr. Hurst, who became company president last year after holding several other executive positions with Panera.

Is There Such a Thing As Slow Prototyping?

IDEO designer Keaton Herzer has written a terrific blog post titled, "What the hell is Rapid Prototyping?"  Here's an excerpt:

It implies that there is an alternative — slow prototyping. I’m not aware of any design team that practices slow prototyping. That would be a waste of time and money for everyone and thatis super obvious. Let’s remind ourselves what the purpose of a prototype is: to test our ideas!  History and statistics tell us that our ideas are wrong MOST of the time. So most of our prototypes will get thrown out after being invalidated. If that’s the case, why would we do anything but prototype rapidly? If you’re going to build a prototype — build it. Then test it. Then learn how bad your ideas were. Then do it again.  I guess you could do that slowly if you wanted to, but I don’t see the point. There is no such thing as “rapid prototyping.” There is only prototyping — and you should be doing it rapidly.

I think slow prototyping does exist though, and it's not a good thing.  Consider how large companies engage in what they consider to be prototyping.  They build a mock-up of a potential new product.  However, they take quite some time to do so.  They try to make it as "beautiful" as possible, as free of imperfections and problems as they can imagine.  Why?  They are actually trying to validate an idea that they have.  It's a demonstration to others in the organization, often used to solicit resource commitments.  It's not actually prototyping.  Why is it slow?  They do not want to hear lots of criticism.  They want positive feedback, so they take lots of time to make it as "good" as they can.   To me, that's the type of slow prototyping that does exist in many organizations, and it often is counterproductive.   It inhibits learning and adaptation, and thereby prevents the type of rapid improvement that Herzer describes.