How do you Innovate?
A former colleague of mine recently asked me how I would calculate ROI for a new product/service they are planning to build and launch in their organization.
I enthusiastically provided some measures that I had used to calculate ROI in my prior life after successfully building and deploying a financial services adapter at a past employer.
It seems like my colleague’s team while working on the vision of a new product and were also asked to calculate the potential ROI. A recent progress report showed that the product was still far from being viable and one of the key improvement was to conduct mini proof of concepts to let the architecture emerge.
Reading that, I was quickly reminded of the LEAN Enterprise book by Jez Humble, Joanne Molesky and Barry O’Reilly and the MVP (Minimum Viable Product) vs Product Vision post by Marty Cagan.
According to Cagan, vision and MVP are related but not the same. Vision provides the roadmap (type of service and customer) and an innovative organization should be prepared to create many MVPs as we need to get to the final product.
Building MVPs allows us to focus on the right thing to build and provides valuable information on how to evolve, adapt, and pivot to meet customer needs that are discovered through experimentation.
So how do you measure?
ROI and customer churn are lagging metrics that measure output after the fact. Scott Cook, founder of Intuit suggests to use “love metrics” after every the delivery of every MVP- how much people loved the product or how often they come back and how delighted they are in the early stages. If these metrics do not indicate high activity then its time to pivot and experiment again. Agile 101?
Would love to get your thoughts and feedback…