Day One

I’ll never forget the call that evening. It was March 9th, 2015 and at the time I was an IT manager for the software engineering team responsible for building and maintaining the USAA mobile app for both Android and iOS users. On the phone, was my lead developer alongside in the transport van with two other team mates on their way back to the hotel from a business trip visiting our Guadalajara 3rd party development team for the week. Their voices were excited, giddy and ambitiously optimistic as they pitched me on the idea of releasing a brand spanking new USAA app for the upcoming release of the world’s first Apple Watch set to debut on April 24th, 2015. You have to understand that at the time, funding, creating, testing and releasing a brand-new product at USAA typically took an average of 6-12 months. However, here were these naïve, innovative, never take “no” for-an-answer developers who were ready to disregard the past way of doing things and boldly pursue something that has never been done before at USAA. The goal, release a brand-new product from idea to production within 35 days and be there on the Apple Watch 42mm face “Day One” for our membership. I still stand in awe of the courage and grit it took during that 35 days to deliver on the promise of “Day One”. The rest is history. We delivered the first USAA apple watch app with a feature set to allow members to view their banking account balances before all of the other big banks and financial institutions in 35 days and about a month later, my team was standing in front of an audience of 30,000 employees at our quarterly employee meeting getting recognized by our CEO for our ability to push our organization to try new things and being a trail blazer. Steve Jobs said it best. It doesn’t make sense to hire smart people and tell them what to do. We hire smart people, so they can tell us what to do.

Before I get into explaining what I think are the critical elements to innovation and new product creation, I have to tell parable. This one comes from the late David Foster Wallace, a literary genius and a beautiful mind. It goes like this. There are these two young fish swimming along, and they happen to meet an older fish swimming the other way, who nods at them and says, “Morning, boys, how’s the water?” And the two young fish swim on for a bit, and then eventually one of them looks over at the other and goes, “What the hell is water?”

Innovation requires us see the world differently than most people see it. We all have it in ourselves to innovate, however most of us swim in water with little to no knowledge that we are wet. Because of this, most of the time our minds can only see what’s in front of us. This short-sightedness leads to missing out on the hidden connections in the peripheral that lead us to innovation. I personally believe that innovation is an outcome, not necessarily a process. Many organizations, have created centralized functions of innovation within the walls of their corporation. While this can give focus and create momentum, true innovation and new customer value come from the ability for an organization to not only promote the creation of new ideas, but also foster an environment and technology infrastructure to allow them to delivery these new ideas and new products to market with speed. The speed part is extremely important because as mentioned, not all new products and ideas provide customer value. The sooner you can deliver these products and learn how the customer reacts and behaves to these new product offerings the sooner you will get to the point of value creation.

I believe there are several critical elements to innovation and new product creation and most importantly adding new customer value. I would distill them into three themes that oversee all activities which create an integrated approach to strategic innovation and product creation.

Talent (Hire smart people and get out of the way)

According to Harvard Business Review, the old adage of “People are your greatest asset” is simply not true. How you deploy and empower those people is a company’s greatest asset. It’s true, smart people find ways to add value. The greatest thing we can do as a company is to recognize this, hire servant leaders who know how to serve and lead smart people and then let them get to work. An environment where your engineers, product managers, analysts are empowered and allowed to take some form of risk is foundational to innovation and an organizations ability to foster the creation of new products. According to Forbes, most companies struggle with innovation because the risk taking and commitment to entrepreneurship and innovation is not part of the company culture. Organizations like Google, Amazon, etc started out as a tech start-up, so the entrepreneurial mindset is in their DNA. Companies that didn’t start out like this will need to be cognizant. So critical element number one, empower your smartest people and foster an environment of balanced risk taking with commitment to entrepreneurship and customer value.

Enterprise Agility (Be Agile vs. Doing Agile)

As mentioned in TedEx discussion called “Our Approach To Innovation Is Dead Wrong”, the greatest tragedy of product creation is that you can execute perfectly on a flawed plan and not know about it until it’s too late to recover. I have always loved the Mike Tyson’s quote “everyone has a plan until you get punched in the face”. Large organizations who intend to instill innovation and new product development must develop the super power of enterprise agility. There are numerous methodologies for project management and product development. However, most large companies are riddled with layers of bureaucratic mass that has a gravitational pull on the way work is funded, prioritized and executed. According to an article from LinkedIn, most companies who move to an agile way of working for their software development activities form agile teams and workloads, however keep the traditional way of funding IT based projects. This important miss drives behavior counter intuitive to an organization that is trying to embrace agility over predictability. One of the key ingredients of allowing your smart people to innovate is to be nimble in decision making throughout the organization. This requires an agile mindset in everything we do. Can we fund work quickly to respond to market forces and competition? Can we prioritize work so that we deploy our resources to the right thing that will add value? Even as a large organization, can we mimic the behavior of a small nimble start-up? These questions must be answered and embraced by the larger organization and leadership at the highest level. If an organization does not have pivoting skills, then amazing and powerful new ideas products will be lost in a purgatory of red tape. Even more tragically, the market will not wait and an organizations ability to lead in their respective industry will continue to be eroded with each new product missed opportunity.

Delivery platform (Faster Feedback cycles)

The last critical element to innovation and new product development is technology. Organizations need to embrace and embed the idea of fostering a technology mindset in everything we do. If we hire the right people, become nimble in our decision making, we also must create the delivery mechanism of putting new products and services into the hands of the customer quickly to gain feedback and iterate and improve. According to McKinnsey, the creative use of technology infrastructure has provided value by allowing companies to be more efficient, redefine their business models and have a customer centric focus. Features such as real-time data collection, large-scale analytics, speed to market, employee productivity and developer productivity enable a business to transform. Without the ability to delivery, companies will be stuck with a lot of good ideas and no feedback mechanism. The role of technology in innovation cannot be underestimated. Organizations with decades old large monolithic infrastructure must invest in the same technology that start-ups use and mimic their ability to be nimble in their technology infrastructure as well as their business processes. A strategic technology delivery platform can allow new digital products and features to be delivered quickly and safely to customers while at the same time exposing feedback loops to capture real-time data analytics that get feedback into product development to improve the product.

After the first month of the USAA Apple Watch app being release, we had a unremarkable total of 12k users against a 6M daily active users on the mobile app. Even as Apple Watch adoption increased over the next year, we had relatively incremental new users. Wild success from a customer value perspective? Maybe not, however the value the story brought to the organization was something that has been a north star for USAA as we continue to transform the way we work as a large financial services organization. It gave us a real-life instance where we did something that hadn’t been done before and understood what the world of possibly could be if we were able to scale this way of working across the organization. Our ability to foster an environment of innovation and risk-taking has spurred new product development wins across the organization.

References :

Rafati, Shahrzad. (2015, June 9). What Steve Jobs Taught Executives About Hiring

http://fortune.com/2015/06/09/shahrzad-rafati-keeping-your-best-employees/

Wallace, David Foster. This Is Water

http://www.metastatic.org/text/This%20is%20Water.pdf

Kander, Diana. (2014, August 27). Our Approach To Innovation Is Dead Wrong

Our approach to innovation is dead wrong | Diana Kander | TEDxKC

Bradley, Anthony J., McDonald, Mark P. (2011, December 06). People Are Not Your Greatest Asset

https://hbr.org/2011/12/people-are-not-your-greatest-a

Deeb, George. (2014, January 8). The 5 Reasons Big Companies Struggle with Innovation

https://www.forbes.com/sites/georgedeeb/2014/01/08/the-five-reasons-big-companies-struggle-with-innovation/#5b942d462958

Connolly, Michael. (2016, June 13). Moving From Project To Team Based Funding In Agile