Start With the Stock Price
There are many ways to identify and manage risks in innovation work. Technical prototyping and RAT testing help us understand technology risks. User research helps use get ahead of user risks, and growth probes help shine a light on market unknowns. Tools like the business model canvas help us scan for business model risks. But how do you use this knowledge to help leaders make better decisions?
At Normative, we start with the stock price.
What does it mean to start with the stock price?
It means that you look at the external value of the company. You assess how it compares to value of the company in the past, and the expected value of the company in the future.
What does this quick dive look like in practice? Let’s say your team does user experience innovation work. You get an introduction to to an executive at Tesla who wants to meet and learn more about your firm’s expertise. I’ll walk you through how we’d prepare for that meeting.
I usually start with a quick visit to Bloomberg. It’s a good starting point and gives you an accurate and up-to-date perspective on how the street views a company:
A quick look beyond this can reveal headlines and analysis that highlight the external outlook on the company. Getting at the tension between the C-Suite’s vision and the market’s expectations will always reveal interesting insights. We worked with Thomson-Reuters for a number of years to produce their online annual report, and learned to appreciate the direction that executives set for the street with these documents. It’s always a good idea to get immersed in the company vision and outlook up front. Checking in on the most recent reporting calls is always worth the time.
If you’re lucky, one or more members of the executive suite will be active on social channels, blogs, or trade publications. When this is that case (and Elon is definitely one of the strongest cases) you can get a clear view into how leadership is thinking about the business. This pinned tweet by Elon is a great example:
Clearly supply chain innovation is top of mind for the CEO, especially after missing the mark in recent quarters. Do we think the stock price could go up if Tesla improves the effectiveness and efficiency of the the delivery experience to the customer? What would that look like if the last mile of delivery is driven by the car itself? You can bet that this shift in operational innovation will continue as Tesla tests the balance between its master plan and the demands of the market.
You’ll see. The effort pays off.
We’ve found that whether it’s a 15 minute scan or a intense deep dive, the effort pays dividends. My co-founder landed our first 7-figure relationship on the basis of a couple of figures he found buried in a recent annual report. During our proposal presentation, a senior leader cautiously asked us where we got a specific number. After we revealed our source the body language and tone of the conversation changed. We cared about the same risks and constraints that they did. Two days later the work was ours.
What do you do if the company in question isn’t a public company? It’s the same process, with the same questions: Who has put money in, and what are their expectations for returns or exit scenarios? We regularly work with funded startups and use Crunchbase Pro extensively as our starting point to understand the demands and expectations of the companies we’re supporting, and the markets they’re competing in.
What I’ve sketched out is the basic thinking behind why we think that the considerations around a firm’s external expectations are critical to understanding their innovation mindset and appetite for risk. In the future, we’ll share more about how we integrate business, technology and human needs from the start in our innovation process to support better decision making and focus.
Do you start with the stock price? How do you get your innovation teams aligned with C-Suite? How do you help your partners and leaders make better innovation decisions? I’d love to hear your stories and thoughts.
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I’m Matthew Milan, the co-founder and CEO of Normative, a software innovation firm headquartered in Toronto. We help leaders get their best opportunities to market, faster.
