"Why Iteration is not Innovation"

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How to minimize risk in software development

Innovation and risk go hand in hand. Whenever you’re innovating (or trying to), you’re by definition trying to change something about the way you do business. Whether it’s changing a process, expanding into a new market, whatever, you’re taking a risk. The risk could be time, it could be money, it could be possibly upsetting current customers… There’s risk everywhere you turn. So how do you minimize that risk? You and I both know you can’t stay competitive or achieve a market advantage without innovating, but you also can’t throw time and money at a problem and just hope you’ll achieve “innovation” by accident.

So, I rounded up some of our time-tested strategies we’ve used to help 200+ clients innovate without taking on crippling risk.

The Full Story

If you want to see the full picture of how to minimize risk while innovating, we recorded a webinar you can find here:

For the tl;dr, keep reading:

It’s the user, stupid

Reduced-risk innovation starts with a clear focus on the end goal. It’s crucial to think about what you’re trying to achieve and why. Much like James Carville won the presidency for Bill Clinton with the adage, “It’s the economy, stupid”, the same is true of software development — “It’s the user, stupid.”

That’s your starting point. Focus relentlessly on what problem you’re solving for your target user. What value are you actually going to provide with the solution you’re envisioning?

Too often, product development focuses on features — what’s the thing going to do. The real question is what problem will this solve? If you nail that, then you’re off to the races.

Should we actually build this?

Before you invest your time and money, ask yourself — and answer it brutally honestly — if the project makes economic sense. What’s a realistic expected ROI? How big is the market? How big of a problem would you actually be solving? How much is solving that problem actually worth to your target market?

These considerations will help you determine whether the project is worth pursuing. You have to be honest with yourself and avoid the sunk cost fallacy.

Define What Success Looks Like

Clear definitions of success are vital. If we fast-forward to the end of the project, what does success look like? What must be true for us to consider this a win? Setting these benchmarks early on helps guide the development process and aligns your team on common goals.

Embrace Experimentation

Experimentation is key to innovation. It might not be feasible to build out a full flow and functionality to A/B test… but you can jumpstart an A/B test through design prototypes that you put in the hands of potential customers for feedback. Which version elicits a strong preference from your potential target users? Gather feedback early and often to help guide your efforts; that way, you’re wasting far less time and effort on a feature or development path that your audience doesn’t even want. This iterative approach helps refine the product continuously before a full-scale launch.

Minimum Effort for Maximum Validation

I don’t need to tell you what a hackathon is, but they can be super helpful in validating potential innovations… when done correctly. In my experience, developers and product stakeholders love to flex their creativity. Instead of taking directions like “build this in that way,” they can try out hunches, build out features, test products they think might be valuable… But it shouldn’t be a free-for-all. You want to constrain the hackathon to specific features, functionalities or problems you need to solve for your target audience. Let them have space and be creative, but toward something that provides valuable insight to stakeholders.

When doing these, the mindset I like to encourage is “up or out.” If you give an idea, a feature, a function a real good-faith effort during a hackathon, you should be able to say at the end of it — “that shows promise, move it up the priority list” or “this didn’t show the promise we wanted, ax it.”

Too often ideas or initiatives hang around a company for years and never get tested or discarded. You need to know whether these things are worth pursuing, or if you should free up that brain space and resources to pursue something else more worthwhile — hackathons can be a shortcut to that up or out decision.

The other point of note — a lot of companies just do hackathons to check a box. “Look how innovative we are! We worked through the weekend on something!” … that’s not useful. Have a goal, make sure it aligns with the business case you’re trying to build (or discard), and commit to getting to an “up or out” point.

Observe and Learn from Adjacencies

Look at successful innovations in adjacent markets. What can you learn from them? How can their successes be adapted to your context? What are your competitors doing? What are proven winners in completely different fields doing that’s similar to what you want to be doing?

I’m not saying outright steal from others… but you also don’t need to reinvent the wheel all the time. Innovation isn’t all moonshots; it’s more often a slow process of iterating on a hypothesis until you make a real change in the fortunes of your business. So, look around. See what’s working, and take some insights from those observations so you don’t have to learn the hard way yourself.

Develop a Structured Innovation Process

A structured innovation process is essential for reducing risks and maximizing the impact of new initiatives. At ENO8, we’ve developed a robust framework that guides our innovation efforts from conception through to execution. This process includes consistent evaluation methods, involving the same people or teams, which helps in maintaining a uniform approach across different projects.

We utilize what we call our Innovation Lab, which is designed to vet ideas systematically before they progress too far. This not only ensures that our clients are investing in the most promising projects but also allows us to refine our innovation approach based on real-time feedback and results. Our labs use a combination of market analysis, user feedback, and rapid prototyping to test the viability of concepts at an early stage.

By reapplying these methods across various projects, we’ve seen significant improvements in efficiency and effectiveness. Our deliverables have become more standardized and impactful, allowing for clearer communication with stakeholders and faster decision-making. This feedback loop, where we continually integrate lessons learned back into the process, has been critical in refining our strategy and outputs.

This approach not only builds confidence among stakeholders but also ensures that each innovation effort is aligned with our broader business objectives, making the process more predictable and successful.

Whether or not you want to partner with us to conduct an Innovation Lab, you can still take insights from the concept — if you have a repeatable, systematized process for vetting new initiatives, it builds a ton of credibility with decision makers. You’re not just dropping some ad hoc Google search or spreadsheet, you’re showing your work in how you came to your conclusion. That not only increases your legitimacy in the eyes of stakeholders, but also… you guessed it… lowers the overall risk of undertaking what you’re proposing.

Final Thoughts

Remember that minimizing risk in innovation doesn’t mean avoiding it altogether. It means managing it wisely with a strategic approach that balances creativity with practicality. By embedding these principles into your innovation process, you can innovate while keeping risks under control.

If you’re interested in test-driving an innovation or hypothesis yourself, give us a shout. We always love to talk shop!


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Jeff Francis

Jeff Francis is a veteran entrepreneur and founder of Dallas-based digital product studio ENO8. Jeff founded ENO8 to empower companies of all sizes to design, develop and deliver innovative, impactful digital products. With more than 18 years working with early-stage startups, Jeff has a passion for creating and growing new businesses from the ground up, and has honed a unique ability to assist companies with aligning their technology product initiatives with real business outcomes.

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