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The Innovation Engine
A framework for overcoming cultural
and organizational impediments to
innovation at scale
Andrew Breen
VP, Product Delivery
American Express
Copyright 2015-6 Andrew Breen
Who am I?
Studied CS, Human-
Computer Interaction
and Business
Founder or early
leader at 8 tech
startups
Spent 20+ years
building tech
products as an
engineer and now
leading product
Five years at Palm
Learning a lot
building iterative
software in a
hardware process
Currently at American
Express
Where I’ve been
asked to build a lean
startup inside the
enterprise
Professor (adjunct) @
NYU Stern
Teaching technology
product management
and innovation using
lean
Advisor for VCs/startups as well as large orgs on innovation & product development
Copyright 2015-6 Andrew Breen
We’re in an age of constant disruption
Copyright 2015-6 Andrew Breen
Are you responsive?
Copyright 2015-6 Andrew Breen
Responsive organizations are built to
learn and respond rapidly through the
open flow of information
Copyright 2015-6 Andrew Breen Courtesy: Responsive.org
Responsive organizations encourage
experimentation and learning in rapid
cycles
Copyright 2015-6 Andrew Breen Courtesy: Responsive.org
Responsive organizations organize as a
network of employees, customers, and
partners motivated by shared purpose
Copyright 2015-6 Andrew Breen Courtesy: Responsive.org
Does that sound like your company?
Or is yours more of a command and
control organization?
Copyright 2015-6 Andrew Breen
Command and control was well suited for
predictable environments
Copyright 2015-6 Andrew Breen
In the digital era, the environment is
less predictable and controllable
Copyright 2015-6 Andrew Breen
Consumers are empowered
Information has been democratized and
made transparent
Communication is instantaneous and
ubiquitous
The only constant is change
Copyright 2015-6 Andrew Breen
Many of our large organizations are
vestiges of 20th century management
thinking
Copyright 2015-6 Andrew Breen
21st century responsive organizations are
designed to thrive in less predictable
environments
Copyright 2015-6 Andrew Breen
More Predictable <-> Less Predictable
Courtesy: Responsive.org & ThoughtWorksCopyright 2015-6 Andrew Breen
What are the cultural and organizational
impediments to being responsive?
Copyright 2015-6 Andrew Breen
Ideas are currency because execution is difficult
Siloed organizations lead to overlap or gaps in responsibilities
Alignment is needed for nearly all decisions
Middle management has no incentive to change and protects
their fiefdoms
“You want to test what?” Sales & marketing shields
customers and the brand from experiments
Copyright 2015-6 Andrew Breen
IT is stuck in its ways and largely dependent on vendors
Big regression risk means high analysis and testing overhead
“Let’s all become Agile!” might not be the right decision
Stack ranking or similar performance systems punish risk
taking and drive self interested behaviors
The culture does not accept failure
Copyright 2015-6 Andrew Breen
None of this supports innovation
Copyright 2015-6 Andrew Breen
If you do have an R&D team, they tend
to focus solely on tech innovation…
…most innovation comes via biz model,
customer experience or product
Copyright 2015-6 Andrew Breen
How do you continue to evolve
the existing business
while exploring new ones?
Copyright 2015-6 Andrew Breen
Copyright 2015-6 Andrew Breen
Start a
lab?
Put in the
middle of
existing
ops?
Is there another way?
Can you be ambidextrous?
Copyright 2015-6 Andrew Breen
Optimization Engine
Known needs & solutions
Predictable
Big bets with plans
Enhance
Improve
Innovation Engine
Unknown needs & solutions
Non-linear
Small bets with hypotheses
Develop
Invent
Copyright 2015-6 Andrew Breen
Optimization Engine
Known needs & solutions
Predictable
Big bets with plans
Enhance
Improve
Innovation Engine
Unknown needs & solutions
Non-linear
Small bets with hypotheses
Develop
Invent
60% 30% 10%
Low risk, operate
Iterate existing products
Existing customers with known needs
Medium risk
New solutions for existing
needs under existing
model
High risk
Disruptive
New needs & models
Lab?
Existing Product Journeys
Goals
Experimentation, leverage, purpose, new KPIEfficiency, optimization, CSat, company KPI
Focus
Copyright 2015-6 Andrew Breen
Optimization Engine
Known needs & solutions
Predictable
Big bets with plans
Enhance
Improve
Innovation Engine
Unknown needs & solutions
Non-linear
Small bets with hypotheses
Develop
Invent
60% 30% 10%
Low risk, operate
Iterate existing products
Existing customers with known needs
Medium risk
New solutions for existing
needs under existing
model
High risk
Disruptive
New needs & models
Lab?
Existing Product Journeys
Goals
Experimentation, leverage, purpose, new KPIEfficiency, optimization, CSat, company KPI
Focus
Key
coordination
point
Resentment is created when innovation
teams put up walls, believe they are the
ideas people and stop listening to ideas
(ironically, including from users)
Copyright 2015-6 Andrew Breen
The innovation engine is NOT the ideas
team
They are builders…
…just like the optimization engine
Copyright 2015-6 Andrew Breen
However, its a unique skill and mindset as
2/3rds+ of your hypotheses are never
going to be realized
Innovation engine people have to be
highly collaborative and willing to take
on risk
Copyright 2015-6 Andrew Breen
Setup a process to capture ideas and
feed them to the engine
Copyright 2015-6 Andrew Breen
The engines validate with customers
(Lean is pervasive across both engines)
Avoid “hack-a-thons” and the like…they
only demoralize
Copyright 2015-6 Andrew Breen
How do you organize the engines?
Copyright 2015-6 Andrew Breen
Put people who are more product operational in
the 60% optimization engine and those open to
risk in the innovation engine
Lay out your top level product journeys as the
key organizing paradigm (for 60% and 30%)
Kill any notion of a web or mobile strategy
Find a place for the 10% (a lab?)
Copyright 2015-6 Andrew Breen
Make sure your functional organization is not
making teams operate waterfall
How about flipping the strong-weak axis to the
product team?
Product Team Design Team Engineering Team
Copyright 2015-6 Andrew Breen
Consider a “squad” model
P
P P P
D
D D D
E
E E E
Product Team Design Team Engineering Team
FunctionalModel
“Project” Team
SquadModel
P
D E
Product Squad A
P
D E
Product Squad B
P
D E
Product Squad C
Copyright 2015-6 Andrew Breen
Walter Isaacson explains, "The lesson of Bell
Labs is that most feats of sustained
innovation cannot and do not occur in an
iconic garage or the workshop of an
ingenious inventor. They occur when people
of diverse talents, mind-sets and expertise
are brought together, preferably in close
physical proximity where they can have
frequent meetings and serendipitous
encounters.”
Copyright 2015-6 Andrew Breen
In short, process begets innovation
(and large organizations are good at process, right?)
Copyright 2015-6 Andrew Breen
Experiment across iterative cycles
Prototype
Problem & concept
validation mostly
using qualitative
techniques
(e.g. 10-50 in-person
sessions)
Proof-of-Concept
Solution validation
using qualitative &
quantitative
techniques
(5,000-10,000 users
in controlled env)
Production
Scaled solution
validation using
mostly quantitative
measures
(released to full user
base)
Max 90 days Max 90 days Max 90 days
Copyright 2015-6 Andrew Breen
Make sure your performance review system is
driving the right behavior
Most corporate review systems are designed
as annual review of individual performance…
that’s a problem
Copyright 2015-6 Andrew Breen
Focus on group goals in short iterative cycles
Company goals + Product KPI = Personal OKRs
Espouse hypothesis testing and make it transparent and
part of reviews
Change employee evaluations from delivery to product
performance (and learnings)
Separate reviews from comp and promotional cycles
Copyright 2015-6 Andrew Breen
Let’s not forget the leverage a large
organization can provide
Copyright 2015-6 Andrew Breen
Resources: capital and support functions
Brand: ability to leverage an existing brand
(but also be bound by it)
Customers: millions of installed, active and
loyal customers to test with
Copyright 2015-6 Andrew Breen
Some things that help
A product and process you can give to
others
Real transparency and free flow of
communication
(no information hiding to preserve power)
Constantly reviewing, iterating and
adapting the process itself
Integrate your subject matter experts
and support roles into your process
A foil
Copyright 2015-6 Andrew Breen
Exec sponsorship & IT buy-in with strong
relationships across the organization
A like-minded tight team: they’ll face
many hurdles
(regularly read the Agile manifesto)
A challenging product problem the
company hasn’t been able to execute
against
And remember…
its better to beg for forgiveness than ask
for permission…
but don’t be a cowboy
Copyright 2015-6 Andrew Breen
A Lean innovation engine delivers
products and services that users need at
a fraction of the time, cost and risk
Copyright 2015-6 Andrew Breen
Are you responsive?
Copyright 2015-6 Andrew Breen
The Product Commandments
Copyright 2015-6 Andrew Breen
1.  Empathize with and advocate for the user focusing on their need
2.  Know if you’re finding the user need or the solution for the need
3.  Don’t plan, establish a vision and build
4.  Define and drive toward your KPI
5.  Simplify everything: products and process
6.  Prioritize on user need, biz impact and constraints (in that order)
7.  De-risk your product by minimizing unknowns
8.  Validate don’t speculate (as early and often as you can)
9.  Iterate toward the vision but work on today...one thing at a time
10.  Show don’t tell
11.  Push, pivot or kill (no sacred cows)
12.  Launch it and love it...own it (release is a step not a goal)
13.  Organize by skills not roles and stay small
14.  Engage stakeholders for advice and action, early and often
15.  Communicate actively, passively and transparently
16.  Manage by supporting (don’t command)
Copyright 2015-6 Andrew Breen
Thank you
Andrew Breen
abreen@assert.com
@buckybanjo
linkedin.com/in/andrewbreen
Copyright 2015-6 Andrew Breen

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The Innovation Engine, Andrew Breen, American Express

  • 1. The Innovation Engine A framework for overcoming cultural and organizational impediments to innovation at scale Andrew Breen VP, Product Delivery American Express Copyright 2015-6 Andrew Breen
  • 2. Who am I? Studied CS, Human- Computer Interaction and Business Founder or early leader at 8 tech startups Spent 20+ years building tech products as an engineer and now leading product Five years at Palm Learning a lot building iterative software in a hardware process Currently at American Express Where I’ve been asked to build a lean startup inside the enterprise Professor (adjunct) @ NYU Stern Teaching technology product management and innovation using lean Advisor for VCs/startups as well as large orgs on innovation & product development Copyright 2015-6 Andrew Breen
  • 3. We’re in an age of constant disruption Copyright 2015-6 Andrew Breen
  • 4. Are you responsive? Copyright 2015-6 Andrew Breen
  • 5. Responsive organizations are built to learn and respond rapidly through the open flow of information Copyright 2015-6 Andrew Breen Courtesy: Responsive.org
  • 6. Responsive organizations encourage experimentation and learning in rapid cycles Copyright 2015-6 Andrew Breen Courtesy: Responsive.org
  • 7. Responsive organizations organize as a network of employees, customers, and partners motivated by shared purpose Copyright 2015-6 Andrew Breen Courtesy: Responsive.org
  • 8. Does that sound like your company? Or is yours more of a command and control organization? Copyright 2015-6 Andrew Breen
  • 9. Command and control was well suited for predictable environments Copyright 2015-6 Andrew Breen
  • 10. In the digital era, the environment is less predictable and controllable Copyright 2015-6 Andrew Breen
  • 11. Consumers are empowered Information has been democratized and made transparent Communication is instantaneous and ubiquitous The only constant is change Copyright 2015-6 Andrew Breen
  • 12. Many of our large organizations are vestiges of 20th century management thinking Copyright 2015-6 Andrew Breen
  • 13. 21st century responsive organizations are designed to thrive in less predictable environments Copyright 2015-6 Andrew Breen
  • 14. More Predictable <-> Less Predictable Courtesy: Responsive.org & ThoughtWorksCopyright 2015-6 Andrew Breen
  • 15. What are the cultural and organizational impediments to being responsive? Copyright 2015-6 Andrew Breen
  • 16. Ideas are currency because execution is difficult Siloed organizations lead to overlap or gaps in responsibilities Alignment is needed for nearly all decisions Middle management has no incentive to change and protects their fiefdoms “You want to test what?” Sales & marketing shields customers and the brand from experiments Copyright 2015-6 Andrew Breen
  • 17. IT is stuck in its ways and largely dependent on vendors Big regression risk means high analysis and testing overhead “Let’s all become Agile!” might not be the right decision Stack ranking or similar performance systems punish risk taking and drive self interested behaviors The culture does not accept failure Copyright 2015-6 Andrew Breen
  • 18. None of this supports innovation Copyright 2015-6 Andrew Breen
  • 19. If you do have an R&D team, they tend to focus solely on tech innovation… …most innovation comes via biz model, customer experience or product Copyright 2015-6 Andrew Breen
  • 20. How do you continue to evolve the existing business while exploring new ones? Copyright 2015-6 Andrew Breen
  • 21. Copyright 2015-6 Andrew Breen Start a lab? Put in the middle of existing ops? Is there another way? Can you be ambidextrous?
  • 22. Copyright 2015-6 Andrew Breen Optimization Engine Known needs & solutions Predictable Big bets with plans Enhance Improve Innovation Engine Unknown needs & solutions Non-linear Small bets with hypotheses Develop Invent
  • 23. Copyright 2015-6 Andrew Breen Optimization Engine Known needs & solutions Predictable Big bets with plans Enhance Improve Innovation Engine Unknown needs & solutions Non-linear Small bets with hypotheses Develop Invent 60% 30% 10% Low risk, operate Iterate existing products Existing customers with known needs Medium risk New solutions for existing needs under existing model High risk Disruptive New needs & models Lab? Existing Product Journeys Goals Experimentation, leverage, purpose, new KPIEfficiency, optimization, CSat, company KPI Focus
  • 24. Copyright 2015-6 Andrew Breen Optimization Engine Known needs & solutions Predictable Big bets with plans Enhance Improve Innovation Engine Unknown needs & solutions Non-linear Small bets with hypotheses Develop Invent 60% 30% 10% Low risk, operate Iterate existing products Existing customers with known needs Medium risk New solutions for existing needs under existing model High risk Disruptive New needs & models Lab? Existing Product Journeys Goals Experimentation, leverage, purpose, new KPIEfficiency, optimization, CSat, company KPI Focus Key coordination point
  • 25. Resentment is created when innovation teams put up walls, believe they are the ideas people and stop listening to ideas (ironically, including from users) Copyright 2015-6 Andrew Breen
  • 26. The innovation engine is NOT the ideas team They are builders… …just like the optimization engine Copyright 2015-6 Andrew Breen
  • 27. However, its a unique skill and mindset as 2/3rds+ of your hypotheses are never going to be realized Innovation engine people have to be highly collaborative and willing to take on risk Copyright 2015-6 Andrew Breen
  • 28. Setup a process to capture ideas and feed them to the engine Copyright 2015-6 Andrew Breen
  • 29. The engines validate with customers (Lean is pervasive across both engines) Avoid “hack-a-thons” and the like…they only demoralize Copyright 2015-6 Andrew Breen
  • 30. How do you organize the engines? Copyright 2015-6 Andrew Breen
  • 31. Put people who are more product operational in the 60% optimization engine and those open to risk in the innovation engine Lay out your top level product journeys as the key organizing paradigm (for 60% and 30%) Kill any notion of a web or mobile strategy Find a place for the 10% (a lab?) Copyright 2015-6 Andrew Breen
  • 32. Make sure your functional organization is not making teams operate waterfall How about flipping the strong-weak axis to the product team? Product Team Design Team Engineering Team Copyright 2015-6 Andrew Breen
  • 33. Consider a “squad” model P P P P D D D D E E E E Product Team Design Team Engineering Team FunctionalModel “Project” Team SquadModel P D E Product Squad A P D E Product Squad B P D E Product Squad C Copyright 2015-6 Andrew Breen
  • 34. Walter Isaacson explains, "The lesson of Bell Labs is that most feats of sustained innovation cannot and do not occur in an iconic garage or the workshop of an ingenious inventor. They occur when people of diverse talents, mind-sets and expertise are brought together, preferably in close physical proximity where they can have frequent meetings and serendipitous encounters.” Copyright 2015-6 Andrew Breen
  • 35. In short, process begets innovation (and large organizations are good at process, right?) Copyright 2015-6 Andrew Breen
  • 36. Experiment across iterative cycles Prototype Problem & concept validation mostly using qualitative techniques (e.g. 10-50 in-person sessions) Proof-of-Concept Solution validation using qualitative & quantitative techniques (5,000-10,000 users in controlled env) Production Scaled solution validation using mostly quantitative measures (released to full user base) Max 90 days Max 90 days Max 90 days Copyright 2015-6 Andrew Breen
  • 37. Make sure your performance review system is driving the right behavior Most corporate review systems are designed as annual review of individual performance… that’s a problem Copyright 2015-6 Andrew Breen
  • 38. Focus on group goals in short iterative cycles Company goals + Product KPI = Personal OKRs Espouse hypothesis testing and make it transparent and part of reviews Change employee evaluations from delivery to product performance (and learnings) Separate reviews from comp and promotional cycles Copyright 2015-6 Andrew Breen
  • 39. Let’s not forget the leverage a large organization can provide Copyright 2015-6 Andrew Breen
  • 40. Resources: capital and support functions Brand: ability to leverage an existing brand (but also be bound by it) Customers: millions of installed, active and loyal customers to test with Copyright 2015-6 Andrew Breen
  • 41. Some things that help A product and process you can give to others Real transparency and free flow of communication (no information hiding to preserve power) Constantly reviewing, iterating and adapting the process itself Integrate your subject matter experts and support roles into your process A foil Copyright 2015-6 Andrew Breen Exec sponsorship & IT buy-in with strong relationships across the organization A like-minded tight team: they’ll face many hurdles (regularly read the Agile manifesto) A challenging product problem the company hasn’t been able to execute against
  • 42. And remember… its better to beg for forgiveness than ask for permission… but don’t be a cowboy Copyright 2015-6 Andrew Breen
  • 43. A Lean innovation engine delivers products and services that users need at a fraction of the time, cost and risk Copyright 2015-6 Andrew Breen
  • 44. Are you responsive? Copyright 2015-6 Andrew Breen
  • 45. The Product Commandments Copyright 2015-6 Andrew Breen
  • 46. 1.  Empathize with and advocate for the user focusing on their need 2.  Know if you’re finding the user need or the solution for the need 3.  Don’t plan, establish a vision and build 4.  Define and drive toward your KPI 5.  Simplify everything: products and process 6.  Prioritize on user need, biz impact and constraints (in that order) 7.  De-risk your product by minimizing unknowns 8.  Validate don’t speculate (as early and often as you can) 9.  Iterate toward the vision but work on today...one thing at a time 10.  Show don’t tell 11.  Push, pivot or kill (no sacred cows) 12.  Launch it and love it...own it (release is a step not a goal) 13.  Organize by skills not roles and stay small 14.  Engage stakeholders for advice and action, early and often 15.  Communicate actively, passively and transparently 16.  Manage by supporting (don’t command) Copyright 2015-6 Andrew Breen