30 Questions
What is a characteristic of innovation projects using divergent experimentation?
A highly iterative process that may span weeks or months
What is the primary advantage of defining innovation in terms of a problem?
It forces you to take the customer's point of view
What is the purpose of defining a scope limit in an innovation project?
To provide helpful boundaries for the experiment
Why is diversity of team composition important in an innovation project?
It includes diverse skill sets and people from different backgrounds
What is the primary purpose of observation in an innovation project?
To inform and provide insights for the next stage of the problem
What is the recommended team size for an innovation project?
A 5 person team
What is the main limitation of finding new customers for a value proposition that is losing relevance in its existing market?
There are often limits to how many new customers can be found
What is required for a business to adapt its value proposition?
A willingness to depart from what has brought it success in the past
What is the primary benefit of adapting a value proposition?
Staying relevant to customers' changing needs
What is the likelihood of a mature business uncovering new markets for its same products and services in the digital age?
Low, as digitization has removed many barriers to entry
What strategy can every business apply, even when it appears to be doing well?
Value proposition adaptation
What is the primary benefit of rolling out an innovation in stages?
To validate initial findings and test how it is received by different customers or markets
What is the quote that emphasizes the importance of being prepared for change in a rapidly changing digital environment?
Only the paranoid survive
What is the characteristic of a polished launch?
Offering the innovation to all customers at once
What is the key to compensating for the fallibility of management's own judgment?
Instilling a culture of testing and learning
What is required for a business to embrace experimentation?
A recognition that we do not know what we think we do
What is the role of leadership in an experiment-driven organization?
Empowering employees to experiment and learn
What is the expectation for any new innovation after its launch?
It should be iterated and improved continuously
What is the first step in predicting the possible impact of a new disruptive business model?
Understanding the customer trajectory of the disruptor
Which type of disruptor appeals to customers who could not afford or access the traditional incumbent's services?
Outside-in disruptor
What is a characteristic of inside-out disruptors?
They sell to a segment of the incumbent's current customers
When identifying the customer trajectory of an outside-in disruptor, what question should you ask?
Who is currently most motivated but unable to afford or access your products or services?
What is the purpose of identifying the customer trajectory of a disruptor?
To predict the possible impact of a new disruptive business model
What do you need to ask when identifying the customer trajectory of an inside-out disruptor?
Who among your current customers would be most attracted to the disruptive offer?
What is the primary purpose of Step 3 in the innovation testing process?
To identify the population whose responses to test
What is the typical rule of thumb for sample size in each group being compared?
n = 100
What is the outcome of finding a desired improvement from an innovation test?
Further iteration and testing of additional ideas is necessary
What is the purpose of Step 7 in the innovation testing process?
To capture and share the learning of the experiment
When is the divergent experimental method particularly useful?
For innovations that are less defined from the outset
What is the benefit of having agreed on a definition of success in Step 1?
It pays off in making a decision based on the findings
Study Notes
Routes Out of a Shrinking Market Position
- Three routes to consider:
- Find new customers for the same offering
- Adapt the value proposition to stay relevant to customers' changing needs
- Offer new value to new customers
Adapting Value Proposition
- Adapting the value proposition requires a willingness to depart from past successes
- Ask "How can I become as valuable to my customers as I used to be?"
- Adapting the value proposition is essential for businesses facing decline
Innovation and Experimentation
- Divergent experimental method:
- Define the problem
- Set limits (time, money, scope)
- Pick a diverse team
- Observe and solve the problem
- Seven-step innovation testing process:
- Define success
- Randomize test and control groups
- Validate the sample
- Test and analyze
- Decide based on findings
- Share learning
- Tool: divergent experimental method
- Polished launch vs. iterative innovation
- Importance of building a test-and-learn culture
Organizational Challenges of Innovation
- Building a test-and-learn culture:
- Recognize the fallibility of management's judgment
- Empower employees to experiment and learn
- Leading without deciding:
- Rapid experimentation requires a different kind of leadership
- Leadership becomes less about making big decisions
Disruptive Business Models
- Understanding customer trajectory:
- Outside-in disruptors start with non-customers and move inward
- Inside-out disruptors start with a segment of the incumbent's customers and move outward
- Identifying early adopters:
- Who among current customers would be most attracted to the disruptor's offer?
- Who is most motivated but unable to afford or access the incumbent's products or services?
Learn how to design an experiment, from identifying a population to analyzing the data. This quiz covers the crucial steps of randomizing test and control groups, validating sample sizes, and testing hypotheses.
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