Monday, June 13, 2016

Four Differentiating Capabilities of Great Innovation Leaders

Entrepreneurship involves searching for a viable business model for an idea or IP.  As discussed in previous posts, this startup search process is iterative and requires us to make and test assumptions, learn from mistakes, and refine or pivot quickly en route to a viable business model.  Eric Ries, author of The Lean Startup,  has pointed out that the only way to win is to learn faster than anyone else.

So how do we lead this search process to learn and adapt better and faster than our competitors?  It requires a lean startup mindset and tool set along with the right skill set. As I pointed out in my previous post, entrepreneurs seldom are lone geniuses who have all the answers.  Instead, they have to be effective innovation leaders who connect, engage and collaborate with others who have strength and expertise in areas they don’t. The MIT Leadership Center has identified four capabilities that distinguish the best leaders from the rest, especially in situations of uncertainty.  And entrepreneurship is, by definition, a process of translating uncertainty and initial assumptions into vision, clarity, and a path forward.  Let’s briefly explore the MIT Four Capabilities Model and it’s relevance to innovation leadership. 
MIT Four Capabilities Leadership Model from “Leading in an Age of Uncertainty” 
by Deborah Ancona.
First, note that all four capabilities are characterized as being verbs.  This suggests they are not actions per se, but rather a state of being.  In an uncertain world, leaders must constantly BE relating, sensemaking, visioning, and inventing.  Let’s briefly explore each of these four capabilities and their critical role in entrepreneurship.

The first critical capability is RELATING.  This involves identifying key stakeholders and developing inclusive, credible and trusting connections to understand each others’ purposes, interests and concerns and find common ground. If a stakeholder perceives that you are unaware or disrespectful of his or her purposes, concerns and circumstances, he or she will consider you a threat.  He or she will likely avoid, resist, and undermine any perceived threat.  This creates waste.  By contrast, when someone perceives that you are aware and respectful of his or her purposes, concerns, and circumstances, he or she will join you in conversation.  He or she will share information, co-invent solutions, and move into action. This creates value.   

To be successful, entrepreneurs must relate early and often with target customers to understand the job(s) the customers are trying to get done and their current pains and desired gains.  Because there often are multiple “buying influences” that can make or break the sale of a product or service, entrepreneurs must relate to each of these stakeholders and search for common ground as well as understand potential “show stopper” issues that could sabotage success of a venture.  Additional stakeholders may include technical experts, regulatory officials, investors, and development team members.  Entrepreneurs must relate with each of these stakeholders effectively to (1) find common ground, (2) sustain trust, and (3) gain commitment versus mere compliance or resistance.  This is why Steve Blank reminds us often to “get out of the building” and talk to customers.  Additionally, we need to connect early and often with all other critical stakeholders to sustain learning and commitment.  Without committed stakeholders even brilliant ideas are dead on arrival.

In the process of relating with key stakeholders, entrepreneurs are constantly SENSEMAKING—learning about needs, desires, concerns, constraints, legal requirements and other factors that will make or break the success of a venture. 
Sensemaking can be broken down into the five discovery skills identified as "The Innovator's DNA" in research by Jeff Dyer, Hal Gergerson, and Clay Christensen:
Observing, networking, questioning, associating, and experimenting.  It is through relating iteratively with key stakeholders and making sense of their sometimes conflicting purposes, interests and concerns that the entrepreneur is able to learn and adapt—identify patterns and common ground, connect important dots, test assumptions, and pivot as needed.  This learning and adapting is the key to success in the search for a viable business model. 

As a result of relating and sensemaking with key stakeholders, entrepreneurs are able to translate their initial vision of the idea and the business model into a shared vision that is credible and compelling to all critical stakeholders.  This iterative process of VISIONING adapts the initial vision into a validated shared vision or “product-market fit”—a value proposition that resonates with each critical customer segment and buying influence based on a validated set of functional, social and/or emotional benefits it delivers.

Through the iterative process of relating, sensemaking, and visioning, the entrepreneur is able to start INVENTING a validated business model and path forward.   Some new ventures are relatively straightforward to implement once the business model has been defined and needed resources have been obtained.  Others, like medical and healthcare technologies that require clinical trials and regulatory approval have a more complex and lengthy path to success.  In all cases, however, entrepreneurs must invent a business model and a path forward while learning and adapting along the way.

Leading yourself and your key stakeholders along the path from idea to impact—while you are continuously reinventing the path--is fraught with trials and tribulations, fits and starts, and a myriad of emotions.  

Almost none of us can “go it alone” and come out a winner.  By BEING a leader who is constantly relating, sensesmaking, visioning and inventing, the odds of winning are significantly improved.