Starting with tests of business model innovation is always
a better idea than simply implementing a new idea. Specify
that each test must reasonably provide reliable information
about:
(1) how much ultimate consumption and intermediate demand
changed as a result of the test
(2) whether these changes in consumption and demand are
likely to be permanent to the same degree
(3) operational problems that the test created along with
suggested solutions
(4) effects on costs due to the test
(5) what difficulties would be presented by expanding the
test throughout the organization
(6) what went unexpectedly well and poorly during the
test, and why
(7) what the long-term impact of implementing this new
program is
(8) a forecast of the resources needed and results that
will likely be obtained by employing what was learned, and
(9) proposals for any other tests that need to be run to
take advantage of what was or could be learned.
After your organization has chosen to pursue whatever tests
it finds most attractive and can afford to do, you should
then call upon your partners and suppliers to see if they
would like to take lead roles in testing any of the other
opportunities. In many cases, the potential benefit to them
and resources available from them can greatly expand the
scope of tests that can be pursued.
After you have pursued whatever proposals make sense from
partners and suppliers, share your opportunities to provide
more benefits with customers and end users to see if any of
them would like to take the lead in establishing tests.
This is particularly powerful because it provides a potent
look at how valuable their initial perceptions are of the
benefits they would receive. In most cases, you will
probably be providing some funding and personnel as part of
a team approach. Cooperation should, however, lower the
cost and make the results more likely to bear fruit.
A good opportunity may unfortunately be represented by a
poor test proposal, while a poorer opportunity may have a
wonderful test outlined. Now is when you decide where to
place your initial bets. How should you choose?
Before deciding, make the proposals available to all of the
staff and functional organizations and ask them to comment
on what the company's risks are if the test fails. Also,
ask them how the nature and size of those risks could be
reduced. Invariably these reviews turn up important
problems that have not yet been identified and dealt with.
After attaching what you have learned from the risk review,
then ask the key functional heads to tell you how much is
the least amount they would agree to increase revenue and
profit budgets for during the first year after the new
approach was implemented, following a successful test of
each proposal.
Although these amounts will bear little accuracy with
regard to what the test will prove, they are usually quite
accurate at differentiating the larger potential areas from
the smaller ones. You will probably receive over 70 percent
of the demand improving potential from 10-30 percent of
your potential tests. You don't want to inadvertently leave
out one of those few tests that has the highest potential.
If you suspect that certain proposed tests cost more and
would take longer than is absolutely necessary, challenge
the proponents to speed them up and reduce the costs before
agreeing to or dismissing the proposal.
Copyright 2008 Donald W. Mitchell, All Rights Reserved
----------------------------------------------------
Donald Mitchell is chairman of Mitchell and Company, a
strategy and financial consulting firm in Weston, MA. He is
coauthor of seven books including Adventures of an
Optimist, The 2,000 Percent Solution, and The Ultimate
Competitive Advantage. You can find free tips for
accomplishing 20 times more by registering at:
====> http://www.2000percentsolution.com .
