Taking A Discovery Driven Approach To Internal Projects

RITA MCGRATH

TAKING A DISCOVERY DRIVEN APPROACH TO INTERNAL PROJECTS Thought Sparks

OVERVIEW The first step of discovery driven planning lies in specifying what success looks like. For for-profit projects, this usually takes the form of a level of growth or enhanced profitability. But there are many kinds of projects that don’t have such a clearly defined outcome – this article addresses those.

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WHERE TO START: WHAT WOULD SUCCESS LOOK LIKE? As with a for-profit project, you want to be clear about what outcome your investment in an internal capability would drive. Shortening time from customer order to purchase, achieving a higher level of sell-through on your web site, getting greater penetration into your customers’ budget because they can meet more of their needs by working with you are all examples of the desired outcome of your internal project.

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NEXT, TESTS AND EXPERIMENTS BEFORE FULLSCALE ROLL OUT

With your hypothesized measure of success in hand, now consider what the minimum amount of investment would be required to start you on the path to a solution. At German metals-distributor Kloeckner, for instance, their CEO had a vision that the company could create a full-scale digital platform to make ordering products super-easy for the customer. They did not, however, move to build that platform overnight. Instead, they looked at what simpler, smaller problems they could solve with relatively low levels of investment.

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MANAGE THE PROGRAM THROUGH KEY CHECKPOINTS

Just as with a discovery driven plan for a for-profit venture, you want to release funding for your internally focused projects on a checkpoint basis. Develop a hypothesis, test the assumptions, and then move on to the next set of processes.

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MEASURING OVERALL IMPACT: RETURN ON TIME INVESTED A very broad way of measuring the impact of capability-building investments is through a metric we call “return on time invested.” To calculate it, take the revenues created by your firm and divide it by the number of people required to generate that revenue. As your investments in internal capabilities start to pay off, you should see that you are able to generate more revenue per person over time than you were previously able to do.

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REMEMBER THE ‘PRICE’ OF NOT TAKING ACTION

When assessing investments, people often commit what is sometimes called the Parmenides fallacy. It means that they compare what is today with some uncertain future. Unfortunately, the right comparison is what will a future be like when we don’t make essential investments with the future when we do. If competitors stay ahead of you on technology and you don’t invest, eventually that will show up in your becoming uncompetitive

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