Designing for the Unknown: Demystifying Innovation, Failure & Success

Charles Reeves, Aviva’s Global Digital Product and Design Director, shares his thoughts on start-ups, innovation and how to make a success out of defying uncertainty.

All start-ups have in common the goal of creating something new, despite the inherent risks in doing so. In this way, all start-ups attempt to defy uncertainty — this commitment is a state of mind as much as a business category.

The other thing start-ups have in common is failure. 95% of them will fail and close their doors. The remaining 5%, however, will fail in a different way that leads to success.

The question is obvious: how do you fail the right way?

The answer lies in avoiding catastrophic failure, shortening the distance between an early failure and a resulting improvement and success, and building a culture that is failure tolerant. We create our greatest achievements by embracing failure, learning from it, and using it to make smarter decisions.

To get this right, we need to understand catastrophic failure — the kind we want to avoid. In a study of 200 failed start-ups, 70% of founders said they failed because they ran out of money trying to find a market fit. This means they designed products nobody wanted. Why?

Your “great idea” may not be great for someone else

At its inception, a start-up is likely to be technology-driven and led by a visionary founder who is highly attached to a “great idea.” Such ideas are too rarely interrogated or validated. Ego and anxiety often inhibit the very things necessary to make better decisions.

This is the breed of start-ups most likely to start with a solution and then go shopping for a market. It’s easy — and near-inevitable — to run out of money trying to find that perfect buyer for whatever you’re desperate to sell.

Given this pitfall, it seems smarter to start by identifying a market — a group of customers to help or inspire — and then create products for that group. But how do you know what people want?

You could ask those customers, but Henry Ford summed it up when he said, “If I asked people what they wanted, I would have wound up building a faster horse.” Customers demand better, but they can’t tell you how to innovate. Innovation is the unknown.

But innovation isn’t unknowable, undiscoverable or unrecognisable. Successful innovations are those which solve previously unrecognised customer problems.

Innovation isn’t a data-driven science; learn to deal with uncertainty

Identifying opportunities comes from observing customers’ behaviours and recognising their pain points. Empathy creates opportunity. The right foundation starts with good intelligence about the customer, followed by testing of hypotheses. Always test your riskiest assumptions first: start by checking on that core premise without which your idea would collapse. It seems obvious, but it’s easy to forget this when you’re in love with a not-yet-proven strategy.

Innovation operates in a realm where there is frequently no existing data set. Product managers like certainty and prefer data-driven decision making. Business is a world of imperatives: burn rate, time, budget, and risk. Lack of data seems risky. It looks like impending failure, and this is where the fear of failure drives actual failure.

Rushing to get the reassurance of data often results in teams operating with incorrect assumptions based on bad data in the form of surveys. Product managers often will run surveys to generate data, but surveys are not suited to addressing questions about behaviours, especially customers’ buying behaviours. This is especially true with new or unknown products and experiences. Surveys are often full of self-reporting errors. Hastily formed surveys are usually replete with confirmation bias. Asking customers to imagine a novel product and then say whether they’d find it appealing is equivalent to asking a blindfolded person to explain a painting they’ve never seen… they’re going to have to make up an answer.

For this reason, survey-driven product creation is a process of delusion. We can’t expect customers to provide accurate data on an imaginary scenario. Until customers really experience a product, everything is guesswork.

If you fail to plan (for failure), you plan to fail

There’s only one way to accurately gauge customer response to innovation and new products: prototype, test and learn.

This is the core process of Design Thinking, Lean Start-Up, and Agile. Taking the guesswork out of product innovation requires strong empirical methods — systematic observation of how customers interact with a Minimum Viable Product (MVP).

A MVP is a prototype with the lowest fidelity (level of detail) needed to get accurate customer feedback. It’s not a marketable product and is not intended to be successful — we want customers to show us how it fails to meet their needs. MVPs and prototypes should evolve, in both function and fidelity. They are for testing reality, failing, gaining insight, and trying again. Constructive, planned and intelligent failure is the only consistent method for successfully designing the unknown.

Despite this, cultures around the world hate and ridicule failure, and therefore fear it. Not surprisingly, innovation is uncommon. Innovators are the few who can confront fear, embrace the unknown, and defy uncertainty.

Design Thinking, Lean Start-Up and Agile can come together to form a great test & learn framework.

  • Design Thinking is a customer-centric process that has evolved out of engineering design processes. It uses ethnography, empathy and inquiry to identify customer pain points and locate innovation opportunities. It’s an action-oriented, creative problem-solving process that’s good at generating divergent solutions and prototypes, then testing towards success.
  • Lean Start-Up is a blueprint for managing an innovation business.
  • Agile is a method for building MVP prototypes, failing faster, and spending less time and resource on the wrong ideas. When correctly practiced, this framework improves the likelihood of success.

Culture, the defining factor in successful innovation

But there’s a crucial catch.

Peter Druker, one of the founders of modern management, says that “culture eats process for breakfast.” Any process will fail if the prevailing culture reacts against it or cannot support it.

Corporate culture often rewards short-term wins. The business world is not traditionally tolerant of failure. Compared to the bottom-line, creativity and curiosity can seem irrelevant or wasteful. To succeed, we need resilient business cultures that understand the process of test-and-learn, and support the kind of failure that leads to success. We need leaders and management systems that know how to support innovation teams while they navigate uncharted territories.

At Aviva, we are driven by our values: killing complexity, caring more, creating legacy, and never resting. We aren’t simply an innovation company; we’re committed to making meaningful improvements for our customers. In this way, we’re a 321 year old start-up. We’re a game-changer, but historically the insurance game has been woefully rigged.

To make this right, we are building a culture unique in our industry — one of fairness, curiosity, empirical decision making, and brilliant design. This is the culture we need to support the process which allows us to innovate, to defy uncertainty.

Our goals are aggressive: we want to change the world through amazing customer experience and unrivalled execution. Some may consider this an irrational goal. But we know we can do it, and we believe our customers will appreciate our efforts.

First published on LinkedIn.