Why Do Some Companies have UX AND Innovation Teams?

Reflections from my time in product

When I tell people of my time working on (and establishing) innovation teams, I’m often left with a quizzical look. What does that mean, exactly?

Specifically, the question arose as I was establishing a dedicated innovation team at ReadyTalk. We already had a team of UX designers, who engaged with customers, identified their needs, and designed solutions. How would this team be any different?

This confusion wasn’t surprising to me. Many of the activities my team would perform would mirror those of the UX team. They’d be gathering data that could be turned into insights.

But even with a similar process, the difference in desired outcomes can make all the difference in the world.

Research vs Insights vs Strategy — each builds on the other

What’s Your Desired Outcome?

User Experience Means Optimizing for the User

The other day, Erika Hall tweeted:

If you are designing user experiences that are optimized to capture value for some other party, to the detriment of the user, are you still a UX designer? — Erika Hall (Twitter, 13 Mar 2019)

In my initial read of this tweet, I skipped over the “to the detriment of the user” and just thought about who you were focused on creating/capturing value for. I’ve worked with UX designers in the past who’d argue vehemently that we shouldn’t offer premium packages and tie content or functionality to different tiers of users. They were focused first and foremost on the user, and not on the business. Which is fine, but I’d say that this is where the paths of UX and Innovation diverge.

User Experience design is not data-driven. It’s insight-driven. Data is just raw material for insight. — Andrew Hinton, Twitter, 1 Jul 2009

People all across the organization can gather data. The question becomes what insights you glean from that data, and then what you do with those insights.

Serving Another Master: The Business

It’s easy to argue that information should be free and we shouldn’t withhold functionality from some users. Hiding things behind a paywall can be frustrating and is definitely ‘not an ideal user experience.’

A SaaS application offers some functionality for free, and ties other features to a paid plan

This is too simplistic a view. Ideally, you’re designing your tiers and packages to align with the value for a given persona. A free tier offers some value, but then there is a clear uptick in premium tiers, when both the organization and the customer agree on a higher exchange of value.

Another way to look at tiers or packages is to consider which features are valuable for a segment of users, but not all. Then creating a custom tier or package directly tied to this feature ensures that the feature is not being devalued. (I wrote more about this here: Applying Jobs to be Done to Packaging and Pricing)

UXers are very comfortable working with customer segments. We’ve created and refer to personas to drive our research and design efforts. Where we may be less comfortable, though, is looking at the upstream business impact of our recommendations. This often falls to the product manager: prioritizing the roadmap, considering resourcing issues, all that jazz.

In the innovation teams I’ve worked on, we didn’t have product managers. This blended role needed to consider both the user and the business needs and ensure both parties were benefiting from decisions made. It’s a game of compromises as you’re serving two masters. (Sure, everyone employed by a company has competing forces. But this is extra poignant when you’re creating a business case to spin up a new product team to launch something with a minimal acceptable ROI).

Generally an innovation team member is charged with identifying ways to create a non-linear jump in value for the business.

We already have all sorts of ways to increase profit in our existing products..

  • sell more doodads
  • sell doodads for a higher price
  • lower the cost of creating doodads
  • lower the cost of delivering doodads
  • etc

…but each of these reaches a natural limit, and it’s also worth noting, they’re not intrinsically improving the value of the product for the customer. They’re business-focused. Innovation is about identifying changes that can be made that result in a net increase of value for both the customer AND the business.

There are many different ways to look at this: the first that comes to mind is Blue Ocean Strategy. Through a better understanding of what different segments of customers value, you can create new offerings that offer customers more of what they want, and less of what they don’t. (Obvious, right?)

Exploration vs Exploitation

Of course, not every team has PMs, and especially early on in a company’s existence, it may be much leaner. An early reviewer of this post, Sara McWhorter Hill, asked “would you say an early-stage company is in a ‘state of innovation?’ When everyone is focused to some level of finding product-market fit, and identifying opportunities? At this point, I made her stop talking to me and returned to this post to write more :-)

The 2% Companies Excel at Innovation (Exploration) and Efficiency (Exploitation) — Sources: BCG Henderson Institute

Ventures go through several stages, and they’re sometimes characterized as Exploration vs Exploitation. Exploration is that stage where you’re gathering data. Things are messy but you value the learning and the possible futures you’re enabling. At a later point, say once you have product-market fit, you may turn on the Exploitation engine. This is where you’re leveraging what you’ve learned, you’re acting on insights, and you need those productive, efficient folks to make things happen. (The three horizons map nicely to this as well — there are times for identifying opportunities, and then times for taking advantage of them).

At both LexisNexis and ReadyTalk, we carved out an Innovation team to be sure we were investing in exploration. It also allowed us to set different success metrics for speculative vs in-flight projects. There was inherently more uncertainty for these speculative “innovation” projects, so we identified a new model to value our work (See: Calculating the Value of Innovation).

Many of the activities our team undertook to mitigate risk and ensure we understood what our prospective users valued were the same. As a member of an innovation team, I’ve done journey maps, Jobs to be Done interviews, problem discovery interviews, value proposition testing, card-sorting exercises, prototype design, concept testing, and more. But there was often a shadow of “more uncertainty” looming over the work than when I’ve worked on an existing product, and we had to look beyond just ensuring it met user needs, to ensure it was also financially viable (I just realized I never even got into technical risk here.. I’ll save that for another day).

At this early stage of exploration, we’re still looking for our first win, which seems to tie nicely back to Sara’s question about when a team is still in what is often a pre-PM stage. There’s no product yet to manage, no known-knows yet to exploit , so yes, everyone is in this stage of mitigating risk and exploring.

Uh, we’re not talking about UX anymore, are we?

Oh! Well, I suppose that’s up to you. It’s definitely customer-centric, although this level of strategic decision-making often is conducted behind closed doors. I hate those doors, which is why I’ve done my best to nudge them open with a big sword labeled “INNOVATION”.

If a company wants to make decisions about what features or products to prioritize, I want to be sure we have some customer insights fueling those decisions. If those recommendations are paired with some solid ‘market opportunity’ numbers (because people behind closed doors really, really like quantitative data), so be it.

I want to work on products that are valuable for users. I want the company that employs me to be successful, so I can continue to work on products that are valuable for users. That means considering the needs and values of all parties involved, and ensuring more speculative, strategy investigation isn’t ignored to focus on what’s short-term and more straight-forward.