We’re back after a weird hiatus. The moral of the story: don’t give me access to anything because I tend to find ways to break things.
This week we’re talking about something I’ve been thinking about for a bit.
I love new toys. I love new products or services.
I love being an early adopter.
But it all comes at a cost.
What bargains do we make with ourselves when we innovate?
But first our sponsor.
A MESSAGE FROM Olly Richards’ Newsletter
GROWING AN ONLINE EDUCATION BUSINESS?
Today’s issue is brought to you by Olly Richards, who writes a newsletter about scaling 7+ figure online education businesses.
He’s written a free 117-page case study about how he grew a $10MM course business from scratch — essential reading if you’re an educator, creator, coach or expert.
Join his newsletter today and download the case study FREE!
Want to advertise to 40,000 small business owners and leaders? Go here.
THE INNOVATION BARGAIN
Sometimes I look at where we are in the world today and wonder if we’re actually better off.
I’m not some anti-tech person. I’m actually quite the opposite.
I love trying new tech solutions and being innovative, as I’m always looking to optimize.
But as I started my business over the last 6 months, this march of one tech thing after another has led to the feeling of a never-ending merry-go-round.
I’m going in circles and circles and circles adopting one piece of new tech after another. I think each circle will get me closer to the end, but all it does is get me deeper into the never-ending abyss of tools and tricks and hacks.
We’re promised each tool or software or innovation will solve our problem and make our lives better.
But is this always the case? Absolutely not. In a desire to improve, you can lose focus that made you a winner in the past and “mess up” your cash cow.
And I think that’s the crux of the problem: with each new innovation or initiative, we’re making trade-offs.
And in making these trade-offs, we can unintentionally change the business permanently.
Consider COVID-19 and work from home. 2 years ago it seemed like work from home was going to take over. 88% of remote-eligible businesses encouraged or required workers to work from home during the pandemic and initial returns were good: productivity was up! If your business didn’t offer it, you might be irrelevant soon.
But not so fast my friend.
Today 64% of CEOs said they expected to be back to fully in the office within the next 3 years, with even 65% of workers saying they preferred a hybrid model over fully remote.
During each phase of these transitions, evangelists for each side have taken victory laps. Despite the still uncertain future, the impact is non-negotiable. Workforce availability has been reduced by 2.6% and 80% of workers are either not engaged or actively disengaged at work.
No matter the ultimate outcome… work from home, hybrid, or fully in the office, the workforce is forever changed. Even if everyone ends up back in an office (which isn’t going to happen), culture has changed which means your relationship with your employees, vendors, and customers has changed.
All this got me thinking: did we truly understand the trade-offs that we were making?
The Bargains We’ve Made
I’d argue that we didn’t and often don’t understand these trade-offs when change happens and specifically, when innovation is happening.
You need examples? Sure…
Cell phones & email:
- Ideal: “You’ll be able to communicate with anyone instantly and while on the move, so you’ll no longer have to wait for someone to get home or send letters.”
- Reality: “Yes, you’re able to communicate instantly, but you’ll have to deal with constant notifications and the expectation of being always available.”
Streaming services:
- Ideal: “You’ll be able to watch any show or movie anytime, so you’ll no longer have to have dreadful cable, schedule your time around TV broadcasts, go to video rental stores.”
- Reality: “Yes, you’re able to watch anything at any time, but now your favorites will be on different services and you’ll have to navigate through multiple streaming subscriptions and interfaces.”
E-commerce:
- Ideal: “You’ll be able to shop online from the comfort of your home, so you’ll no longer have to go to physical stores.”
- Reality: “Yes, you’re able to shop online easily, but you’ll have mountains of boxes all around the house and have a worse in-store experience because of lower staffing.”
Social Media:
- Ideal: “You’ll be able to connect with friends and family worldwide, so you’ll no longer have to feel distant or out of touch.”
- Reality: “Yes, you’re able to connect globally, but you’ll no longer have as many deep, face-to-face interactions and could face issues like cyberbullying or data privacy concerns.”
When we get caught up in the cycle of innovation, while good things come, so do the bad.
So how do we do a better job of evaluating both ends of the spectrum before adopting a new solution or offering a new service?
I like to assess this with two tools: a framework and reflection questions.
Frameworks to try
In some ways, trying to use a framework is a bit of a trick. While many will get you numbers you need, there are two major problems:
- Outcomes are influenced by your biases
- They often ignore the intangibles
With this acknowledged, let’s briefly overview some good frameworks for analyzing innovation.
- Cost-Benefit Analysis (CBA): This is a systematic approach to estimating the strengths and weaknesses of alternatives where you list the potential benefits and costs associated with an option. Ideally, you incorporate both tangible and intangible elements.
- SWOT Analysis: SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. This framework is often used in evaluating businesses or markets. Strengths and Weaknesses are looked at through an internal lens and Opportunities and Threats looking out externally to the market. If you want to learn more, I spoke about this in guide to strategic planning last October.
- Scenario Planning: This takes into account different options or scenarios for the future. Good scenario planning takes into account “no change,” as well as different incremental changes. In scenarios, you consider the trade-offs of each, as well as long-term and short-term impacts.
- Weighted Decision Matrix: Criteria are established, given a weight, then ranked. A total score is calculated which theoretically gives you a concrete answer about which is best. A good matrix will take into account tangible and intangible elements and have appropriate weighting criteria to not overweight inconsequential elements. If you want to see this in action, I talked about this type of analysis in my guide to picking spend software last year.
Questions to ask
I find that frameworks or rating systems alone rarely get you all the information you need. To get over the finish line, I like to establish a few reflection questions that force me to step back out of the cloud of the decision and attempt to get some clarity.
What are the potential negative impacts on users or consumers?
By reflecting on this, we can assess the impacts such as increased complexity, feature or user experience changes, or workflow changes, just to name a few. Taking time to ask each impacted party what negative impacts they see can help you fill out the list and determine what should be addressed and what shouldn’t be.
What dependencies does this technology create?
Any software or service change creates dependencies on platforms, vendors, or resources. Understanding how these dependencies are changing and what that means for the larger business is key to assessing the full impact.
How reversible is this change?
The only thing more painful than a bad implementation is trying to reverse it without a plan. Assess how easy it would be to revert or modify the innovation if negative impacts become apparent or if better solutions emerge.
What are the costs of maintenance and updates?
There are typically stated (and understood) maintenance costs and those that are hidden. We’re not worried about the understood cost, but the hidden ones. It’s important to consider if these costs are sustainable in the long term.
How will this innovation affect human relationships and interactions?
Big changes can impact the relationship between employees, customers, and vendors. When going to work from home, businesses didn’t do a good job adjusting to these changes, which hurt the viability of the solution. Assessing the impact on how people communicate, socialize, and build relationships is key, especially if the technology significantly alters traditional modes of interaction.
Wrapping Up
My intent is not to create doom and gloom. Innovation is something to get excited about and strive for.
But not acknowledging the cost in time and money associated can “snatch defeat from the jaws of victory.”
The goal with this evaluation tool is to surface any potential issues that could arise so we can make the appropriate value determinations.
I’d love to hear from you: how have you balanced being innovative with not going too far? Reply and let me know.
