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Three lessons that will make you rethink innovation at startups

Three lessons that will make you rethink Innovation for startups

How should startups and founders think about innovation? Is there a framework or a checklist that we could follow? Is innovation within reach of young teams? Is there a path that leads to it?  Here are six key words that describe what I have learnt about innovation after spending 18 years in startup mode – Cycles, failure tolerance, reach. Curiosity, empathy and experimentation.  

Innovation lessons for startups

How can innovation help you throw faster, higher and better?

Let’s start with a preamble. The innovation context for startups is different. We are always in a race to not run out of cash. Our launch and survival runways tends to be short. Our distraction index – the number of fires we are fighting at any given time – is high. Our probability of survival (forget success) low.

In fire fighting mode we don’t have time to think about innovation.

There are always exceptions. The lucky PhD candidate or graduate student with a patent or a product that breaks new ground and encounters incredible customer buy in. This note is not focused on the lucky ones. It is focused on the rest of us who are neither going public nor getting featured on the front page of the Wall Street Journal, Financial Times or Chicago Tribune.

We, startups and founders, don’t do too well with innovation linked to basic research. Basic research here implies research that focuses on fundamental of a given scientific subject. Exploring gravitational waves, black holes, material sciences or longevity. As a startup any of these areas would be the kiss of death with the exception of bio-medical research with a established design objective and funding base. We however do exceedingly well when commercializing applied research – reusable rockets, low cost solar panels, some day even time travel and/or interstellar exploration,  products promoting or linked to longevity – as exotic as oxygen enrichment environment (hyperbaric chambers) and as basic as fitness trackers.

The challenge with basic research linked innovation is that commercialization takes decades. Research on transistors started somewhere after the second world war (late 40’s but the first paper was actually written in early 1900’s), initial products utilizing transistors began to show up in the 50’s (radios), the first integrated circuity (IC) demonstrated in 60’s, the first commercial applications of IC’s (calculators) appeared in early 70’s, the PC industry late 70’s, critical mass in the form of desktop computers in early 80’s, triggering the personal computing revolution a few years later.

What does that teach us about innovation as founders?

Lesson number one – cycles. The cycle that links research to innovation to commercialization runs in waves but even a single wave takes a decade or more. That is about 9 years more than our operating tolerance as founders. One could identify a wave and begin to ride it in the 9th year but that requires a combination of luck and timing. Most founders (in real life) are short on both.

Lesson number two – tolerance. There must be a direct link between innovation and your ability to pay the bills in your startup. If the innovation you are working on doesn’t contribute within a 3 to 6 month time horizon, you can’t afford it. Innovation can contribute by reducing costs and turnaround times, improving build quality and making products more attractive for markets and customers.

Lesson number three – reach. Innovation is not always linked to basic research, quantum physics, rocket science, Nobel prizes, Fields medals or decades of patience. While it can be based on insights that results from years of intense, iterative, immersive experimentation, sometimes the impact of simple changes in how we do things has far reaching impact. The simplest of tweaks can change the world. For a startup the best bet is stacking up marginal innovations till they reach a critical mass and turn into something compelling and powerful.

Does this mean innovation is out of reach of ordinary founders and startups?

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Perceptions and innovation in the startup world

I see two recurring themes when I mentor startup teams. The first is the miss-perception that innovation is always linked to your ability to spend significant research dollars. If you don’t have research dollars you can’t innovate. The second is linked to market appreciation and monetization. We built something ground breaking and the market didn’t buy it. There wasn’t any demand for our innovative solution. I believe both perceptions are wrong and need to be addressed.

First, let’s think about the research process. We identify a problem or a challenge. We formulate a thesis. We run an experiment. We investigate the result and/or the data set and we repeat the process.  At each iteration the thesis-experiment-investigate cycle gets refined marginally and we come that much closer to an insight with commercial application.

Curiosity, experimentation, insight and patience.  That is all there is to it – not research dollars. A desire to improve and get better combined with a high tolerance for repeated small failures. As long as you can build that in your work process – take a step back, take a moment to examine why things break or don’t work and keep on trying alternates that help you improve whatever you do on a marginal basis – you will find insights. With insights comes innovation.

Second, the appreciation issue. For the market to buy your innovation you must demonstrate value. It is not enough to just innovate. Transformative innovation creates real impact. Impact that is visible, reproducible and credible. Without impact there is no value. Without value no dollars.

So if you are unable to live off your innovation there are two possible reasons.

  1. You can’t demonstrate impact or value.
  2. That may be because there is no impact or you don’t know how to sell.

The market does not owe you a living just because you think you are innovative. Markets respond to empathy and value. Which then implies that you need both to succeed. Value and empathy? We know that value comes from impact but where does empathy comes in?

To sell your innovation you need to connect. To connect you need to understand, put yourself in someone else shoes, feel their pain, own their perspective and point of view. When you want a customer to be the first to try something new you need to understand that his biggest fear is not that you will disappoint him, but that he will look like a fool for trusting you. To over come that fear, to build that relationship of trust you need to address that pain and fix it. You need to figure out a way to reduce the implied and realized cost of  trial. Hence your new best friend, empathy.

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I am going to take a step back and look outside the technology industry for examples of empathy. There is one field that has no shortage of empathy – the field of medicine.  Meet Dr. Ali Asghar.

A Peadriatrics Nephrology specialist at SIUT.

Dr. Ali Asghar Lanewala is a 45 year old Associate Professor of Peadiatric Nephrology (kidney disease in children, teenagers and adolescents) at Sindh Institute of Urology and Transplantation or SIUT for short. SIUT is Pakistan’s largest kidney disease hospital that provides high quality care and treatment to a million patients a year for free.  Think about that for a second.

That is eighty thousand patients a month, 2,700 patients a day. Since SIUT is a specialist public hospital that treats a common ailment in the country for free, outpatient clinics at the hospital are always overwhelmed with patients. SIUT also has a culture of care, service and empathy ingrained over 50 years by its founder Dr. Adeebul Hassan Rizvi.

Ali’s challenge given his schedule as a physician and Peadiatrics specialist at the hospital was that he could only run the outpatient clinics for 2 – 3 hours on the days OPD clinics ran. Patients, children and their parents, from outside the city would travel in buses, sleep in the streets outside the hospital and wait for their turn. It would break his heart to turn them away or ask them to wait for another day for their turn.  In his fifteen years at the hospital, together with his team of residents, consultants and physicians, SIUT and Ali have managed to increase the number of children they treat in OPD clinics for Peadiatric Nephrology to over 200 a day. Doesn’t sound like much till you remember that this group of physicians reviews 200 living breathing cases in less than four hours. That is 50-60 patients an hour – roughly a patient a minute.

We are not talking about processing paper or documents – we are taking about taking patient history, measuring health parameters, reviewing patient profiles, diagnosing and confirming disease, selecting a treatment protocol and confirmation of treatment by the consulting physician.  Peadiatric Nephrology is a specialized field and SIUT doesn’t have an army of specialists at its disposal but the department has managed to grow this figure every year. Not because they charge or make money of these patients (public hospital, free treatment) but because of empathy. Caring enough for the plight of patients to come up with ways that they can use to turn things around faster.

Even more impressive when you consider that Ali is one physician who runs one department at SIUT. SIUT has more than a dozen groups that are doing equally impressive work. Impressive in their ability to create impact with their limited resources.

One could make a case that SIUT’s operational innovations are not specific enough. Yes they create tremendous value to society and deliver equally impressive impact but optimizing patient flow and throughput problem is not rocket science.

Thank you very much that is exactly my point – innovation is not rocket science. It is within reach. Iterative immersive experimentation, curiosity and empathy. That is all you need. You don’t need hundreds of thousands of dollars to deliver value and impact by tweaking the way things work. You just need to care enough to experiment with an alternate way of doing things. If you fail, be persistent and try again.

I am afraid I am going to keep on repeating myself till we believe in the “it doesn’t need to be rocket science” mantra.

Sometimes the simplest of insights have the biggest impact. Meet Dr. Nawal Salahuddin. Another physician who thought about reducing the rates of Ventilator-Associated Pneumonia (VAP) in ICU patients. When a patient comes to ICU or is put on a ventilator his health situation is already compromised.  They don’t need the added complication of acquired pneumonia. Like Ali at SIUT, Nawal had no shortage of empathy. She used a staff education program to reduce VAP rates in ICU patients by 51%. Not rocket science just training ordinary nurses and paramedic staff on techniques that could be used to reduce the infection rate in patients they were providing care to.

Like Ali, Nawal is also a specialist. Her specialization is tertiary care (acute intensive care), internal medicine and pulmonology (lung disease). The VAP case study didn’t occur or happen overnight. Nawal spent a great deal of time in critical care units and the years of iterative immersive experimentation lead to insights that reduced VAP infection rates.  Remember the innovation that Nawal used was not linked to science in her field – it was the insight that nurses and paramedical staff spend the most time with patients and once we enable them with the right knowledge and tools they could do a far better job of controlling infection rates than physicians. The minor tweak with the big impact – change the angle of incline of patient’s bed slightly and dramatically reduce infection rates.

To be fair in both these instances, the innovators (Ali and Nawal) are also the first customers of the innovation. Nawal and Ali both had some level of control and influence in the functions they ran that allowed them to experiment and push through the changes required to create impact. They also had decades of experience, influence and expertise in the field. Startup tend to have neither of these advantages. So what should we do as founders and startups?

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Stacking up marginal innovations

You do what we did when we first setup a technology product development shop in Karachi. Find inspiration from within your industry and your space. Look at what the best firms (not necessarily the leaders or the big boys) are doing.

Learning from others in your space is not the same things as stealing. I am not asking you to copy or ape behavior blindly, steal ideas or imitate product features or concepts. That would be counterproductive – in the short and the long run. Focus on figuring out how others who walked this path before cracked the problem you are facing now. The spirit is to improve not imitate.

Fifteen years ago we were a fresh team (no employees) with limited exposure and experience in the field and zero credibility. One man, a desk and a small room.  Not much to look at. Our first product ran immediately into quality and stability issues. The search for a solution led us to book Microsoft Secrets by Micahael Cusumano at MIT that gave us the practice of daily builds. Cusumano wrote about daily builds as a best practice at Microsoft in 1996; we implemented it in 2005. To this mix we added automated regression testing, another practice I had picked up while working at AnnuityNet a few years before. While I had read about it I had never seen it implemented. At AnnuityNet I saw the impact it had on release schedules, build quality and real time live production environments and became a believer.

Because of our non existent track record conventional talent wouldn’t even consider applying to our shop. We started hiring part time working mothers with computer science degrees who couldn’t find a job with the big guys. They drove productivity metrics in our shop through the roof because they came with a laser sharp focus on work. We took that focus and applied to an exotic space in the banking industry that no one understood. And then came the real insight – rather than hiring actuaries and finance professionals and teaching them computer science, we hired computer scientists and taught them actuarial science and finance. I would love to call it insight – but it wasn’t. It was an act of desperation because nothing else worked. Trust me we tried.

Combining the five practices (marginal innovations) gave us a stable product development and management platform that launched 4 new products in less than three years with over 1.2 million lines of code.  It took us two years to get there. Two of the four products we built did things that no one had been able to do till then. I wouldn’t say that we were innovative but we were certainly cutting edge – cutting edge enough that some of the work that we did ten years ago has still not been understood or duplicated by our competition.  With 55 man years and a budget of less than half a million dollars we built and shipped products that established incumbent players in our field couldn’t manage with resource pools that were ten times our size. We created and delivered value that customers were willing to pay for. And we did that standing on the shoulder of giants who crafted a clear path before us.

None of these ideas – the five marginal innovations – were original. That is the point. We did not steal, we did not imitate, we improved, marginally, month after every month. We mixed and matched best practices till we found something that clicked and made us one of the most talked about places to work in our city.

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As a startup and a founder the best thing you can do is turn into a selective sponge. You decide what filters work for you, what you want to let in and what you would ignore. There is a lot of free advise out there.

I spend a great deal of time every morning on medium searching and scrapping information and experience I can use to improve my products.  Open your eyes and follow up on what others are doing that you can put to work in your shop that can make a difference.

In the absence of iterative, immersive experimentation that leads to insight and innovation, build up on foundation laid by others before you.  Connect. Listen. Learn. Sometimes building a bridge across two disconnected domains is sufficient to spark a creative cognitive leap that can leave the competition behind.  To build a bridge you need to make the effort to understand enough of the two domains to help – you don’t have to master them. That comes later.

First you have to step outside your shoes and change your point of view. Stop being an engineer, a maker, a builder; be your own customer. Before you know it you will have your own insights – insights gleaned from your own years of iterative immersive experimentation.

Time to summarize and wrap up. Remember:

  1. Curiosity. Empathy. Experimentation. These are the pillars that lead to insights that lead to innovation. Build your organization’s culture around them. Encourage experimentation, don’t punish it.
  2. It is not rocket science, it is within reach. It doesn’t have to be your idea or your insight. Build up on prior work. Build bridges. Connect disconnected domains. Give credit where credit is due.
  3. Don’t try and shoot the elephant. Focus on small marginal improvements that stack up over time.
  4. Customer are only willing to pay for innovation when you deliver credible value and impact. If they are not buying you are not doing a good job of demonstrating value. It is not about what you have done. It is about what they get out of it.
  5. Reduce the cost of trial. Remove the risk of customers looking stupid in front of their peers if or when you disappoint them.
  6. Transformative innovation touches and changes lives. That is the only innovation you should care about. The next time you think you have done something innovative, ask yourself a simple question – how many lives is this going to touch and change. As many as Ali and Nawal?
  7. Go forth and change lives. Don’t settle for anything less.

From the transcript of my session at the PASHA – NEST.io Innovation breakfast discussion on 22 Jul 2017. The theme was Innovation desi style – rules for innovative thinking with a local context.  

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