How the World’s Best Companies Build New Products
My first instinct as a young entrepreneur was to spend months crafting the perfect product before testing my idea with real people.
It took a long time to break this habit.
Eventually I realized my time was best spent figuring out which of my assumptions were true before investing more time and resources in the wrong direction.
This is the only way to do better than random chance.
Book publishers and movie producers would like to have a crystal ball which tells them which potential projects will be winners and which will be flops.
That way they would only invest their time and money in the winners.
Think of your time building a product the same way.
Before undertaking the long, delicate process of building something great, first understand if you’re moving in the right direction.
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” — Mark Twain
Learn the best possible path for success before moving forward.
The Problem with Predicting “Possible”
It will take you 20 product launches to get to a product that doesn’t suck.
How long will it take you to get there?
If you are like most companies, the answer is: you will never get there.
Between each product launch there can be months of planning, design, and building.
This way of building new products works rarely.
This is because when you build a new product you need to discover what can work.
At HackerFleet we call the process to reveal what we don’t know in product development Scientific Innovation.
What is Scientific Innovation?
Scientific Innovation rapidly validates and de-risks assumptions.
Traditional project management gets a known product built on time and on budget.
But it breaks when you need to discover the correct experiences, technologies, and designs that will succeed.
Scientific Innovation allows you to understand which products are worth building, how these products should be built, and what it takes to win customers. This happens before spending months or years planning, designing, and building.
Innovation Principles All Entrepreneurs Should Know
Increase the rate of learning by reducing time to try
The more frequent you test with real users, the faster you learn.
If 1 out of 10 of your ideas will succeed, how long will it take? If you spend 6 months to test each idea, you will need 5 years to hit an idea that can be successful. If you spend two weeks, than you will hit something valuable within 5 months.
Doing is the best form of thinking
If you spend more than 5 minutes debating and idea of feature, you are overthinking it; You don’t have enough information to make the right decision or the decision is arbitrary. Either way, run an experiment.
Product is the experience of the users
The customer is the source of truth. You only get new, validated knowledge when you observe the experience of your target users interacting with your product.
Regularly re-orient with reality
Reflect and record learnings. You can only know you’re making progress if you document and act on it.
The Five stages of Scientific Innovation
In order for an idea to go from something that is possible to something that is creating value, it must go through these 5 stages.
The billions of dollars wasted on failed innovation projects annually warn that doing this successfully is much harder than it looks.
Most companies rely on a traditional model of product development. They first build a product. Then they validate it.
This causes them to move through the process too slowly. These companies fall behind or miss the vital windows of opportunity that make a difference.
Scientific Innovation makes this process more efficient by reducing product launch cycles to a few days or weeks.
The highest performing companies on the planet succeed partly because they do this.
How the Best Companies are Winning Through Innovation
Most Innovative Companies
Companies like AirBnB (FREE case study on AirBnB here), Facebook, and Amazon have swiftly dominated their markets, outperforming their peers by large margins.
Their competitive advantage comes from rapidly spinning out new, successful innovations. They are reliable innovation machines.
One innovative company, Intuit, has gone through periods of stagnation only to be revitalized by organizational wide adoption of a proper innovation process.
In 2010 Intuit generated $10 million in revenue from products launched in the prior three years. That number jumped 10 fold to $100 million in 2012.
Intuit attributes it’s 70% jump in market capitalization from 2008 to 2013 to improving its innovation process.
What does this difference look like from an execution standpoint?
In 2006 their Turbo Tax unit ran 1 experiment. In 2012, they ran nearly 2,500 customer experiments. This lead to a massive increase in successful new products.
But, how do these companies actually innovate?
To find out, download my free innovation case study on innovation at AirBnB.
Next Steps
“Action always beats intention.”
You can choose to have your success be the result of chance or preparation.
At HackerFleet, we use Scientific Innovation as our preparation to reliably build successful products.
It’s not about predicting the future, it’s about being smart and fast about discovering what works.
The most successfully innovative companies on earth operate this way.
You can too.
To help you understand and apply HackerFleet’s innovation process I’ve created a case study on AirBnB. It’s free when you sign up for the Scientific Innovation newsletter.
Thanks for reading!
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About the Author
Marcus Ellison is a serial tech entrepreneur and the CEO of HackerFleet, an innovation studio that partners with entrepreneurs and fortune 500 companies to build disruptive products.
Want to chat innovation? Email marcus@hackerfleet.com
