Welcome ladies and gentlemen, I'm Ed Hesse. I'm a colleague of Jeanne Liedtka, professor Liedtka and you've just spent a wonderful time with her on the design thinking. And as a result of your design thinking course, you've learned lots of ways to come up with new business ideas. and I've got 15 minutes to basically explain to you a concept of, what do you do with those ideas. And if you look at our first slide you'll see it's called Learning Launches, what comes next? And all those light bulbs. These light bulbs, thi is not a discussion of electrical engineering. Each one of those, light bulbs is an idea. So what do you do? Well if you're in the business world, your immediate reaction is, I got an idea. I got an idea, I must need a business plan. That's your traditional approach, and quite frankly A business plan is not the right thing to do. Why? When you go do a business plan, you do a lot of work making up financials, making up assumptions, and many ideas are new to you. And you don't know what's out there. You're going into the unknown. When you go into no, unknown, how do you make financial projections? Oh, you tell me. You make up assumptions, well what are the assumptions based on? You're saying, my best judgement. Poppycock, they're guesses, they're guesses. So you make guesses, to create assumptions, to create financial projections. And what happens when financial projections doesn't meet your business' return rate? Whether it's a return on investment, return on assets, irr, all those formulas that got an r in it are return, what if it doesn't make that return rate? What do you do? Oh, my second most favorite word in the business world, you tweak' em. You tweak your assumptions. And you keep tweaking 'em until what? Until you hit the rate. I think that process is a waste of time, it's complete idiocy, there's a better way. Now those of you not in the business world, what do you think that better way is? Oh, lets see, flip a coin. Nope, that's not a good way either. You got to go do an experiment. How many of you have ever taken a science class where you did experiments? What's the purpose of an experiment? To test a hypothesis. What is a hypothesis? It's an assertion. It's an idea in a specific form. And the key here is, is to do experiments that are fast and cheap. Because you want to do lots of experiments. If they took a long time you wouldn't ever get to a good idea. You would not ever get to a new product that goes to market. If it was real expensive because you did lots of long experiments, you'd run out of money before you found a new source of revenue. So this learning launch, and I like that picture, at learning launch you are launching out there into the unknown. And there's a process, is to how to do it. And that process involves coming up with, what are my key customer execution and defensibility assumptions. Because most learning launches involve figuring out what customer need is so burning that someone is going to buy your answer to that need. And most learning launches involve getting out there and talking to customers, very, very quickly. And I'm going to go a little quickly til I get up to the, to the process to show you. Alright, what is the learning launch process? The first thing you need is a hypothesis. You don't have to be a scientist. It's easy to create a hypothesis. You've got an idea, so the idea has got to relate to a specific group of customers. Whether it's a person or group of persons, you hope there's lots of customers that have this specific problem. So you have a specific group of customers, and see that frown? They got a pain, a customer pain that your going to try and solve. They've got that specific need that's causing the pain, and you've got an idea that meets that need or solves that need better than the competition. That's what you think. So the hypothesis is, Jims and Janes have a specific need, they want to be able to do this. My idea meets that need better than the current alternatives because, whatever fill in the blank is. That allows you to start unpacking, peeling an onion. What I call peeling the artichoke and getting to the heart of what's that burning need. What must be true for your idea to be a good one? Because see, an experimental learning launch is a search for the truth. The purpose of a learning launch is not to prove you're smart. The purpose of a learning launch is not to prove you've got a good idea. The purpose of a learning launch is to get the truth and then the truth either confirms or dis-confirms your assumptions. See the truth is so important because in most cases the truth saves you money. Saves you time, cause in most cases, you can adapt or amend your idea. So that you can solve the truth, so what must be true and I call those, must be trues, or there's assumptions. What must be true for me to have this urgent need to solve this problem. Then, I've got to go get data. Data, I'm looking for data, I'm not looking for opinions, I'm not looking for someone's unfounded guess. And the problem is you got an idea. And you know who thinks that's a great idea, you. You are a problem, you are a risk to be managed. Because, you have what we call confirmation bias. You will, subconsciously look for data that confirms your idea. And we'll talk about how you solve that problem in a minute. There's a, a motive in all, in most of you out there. Back when I was growing up, there was a tv program, a detective called Dragnet. Sargent Friday was the lead detective, and he'd go out and he'd investigate, searching for the facts. And he would say, just the facts, sir, just the facts, ma'am. Just give me the facts. That's what you're looking for. Corning Glass, a very, very innovative company, calls this search the search for the big lie. What's out there that could surprise us? We want to find that disconfirming fact. Confirming facts are facts which basically give you some confidence. That the idea's worth continuing with. Disconfirming facts are facts which says the idea is not that good. Now how do you look for this confirming facts? How do you think? Take a second. Yeah, I hear you thinkin, I hear your brains workin. You think about, okay, why will the idea, under what circumstances will the idea be a bad idea? Under what circumstances will the idea, the product, the service not sell? Why will someone not buy? And you make a list of this, of disconfirming facts and you go out, yes you do, and you ask questions to illicit. Whether those disconfirming facts are out there, okay? You search for them either in conversation or by observing. And you, and you learn from professor Litka. That observation is a key way to learn. Go walk in the shoes of your potential customer, okay? Now another thing that's key is we all are very biased, okay? People with different functional specialties, marketing, sales, operations, engineering, bring different knowledge to the process. If you and I, any one of you, Bob, you out there, Jane, you out there. If the three of us are a team, and we go out, and we see and observe something, you will see something different than me. Because my cognitive processes will prevent me from seeing things which I don't believe or know, and yours will do the same to you. And the reason I want a small, diverse team is my cognitive blindness is different than yours. So we'll all see different things, and therefore we've got to share and collaborate. And my favorite person on the team is a skeptic. Why's a skeptic so important? The skeptic is how we protect ourselves, protect ourselves From confirmation bias, and what did I say confirmation bias is? I have a subconscious need to find evidence that my idea was a good one because it was my idea. That's human nature, you can't change it. So you might as well figure out how to mitigate it. We've talked about confirmation bias. How much data do I need, and what's the quality of the data? Well before you go out, it's best to have a conversation with your team. How many customers, potential customers do we need to talk to? I've worked on learning launches with big companies. They're basically, they, they deem the learning launch a success when they got one person to say what they wanted to hear. Blew my mind. And as you can imagine, I sent them back out in the field. I learned my lesson. This was years ago. You set a minimum number, a percentage of the people you talk to, because you need a big enough sample of data and you need the right quality of data. If you ask someone, Bob, do you think Jane has this problem? That's not good data. What should you do? Jane, what is your key problem? You don't ask Jane if she has that problem. What is your key problem? Do you have a problem with your computer? Do you have a problem with your toaster? Do you have a problem with your car? And you begin a conversation Group think. That's why you have diverse teams. So, you don't have group think. If the assumptions you go out and you do your learning launch, and you gather facts. If they're more likely to be true, notice I said that, more likely, cause you don't have enough data to know if it's true or not. In fact, you'll never know if it's true. If it's more, notice I didn't say highly, more likely to be true, you move onto the second phase of a learning launch. If they're not likely to be true, you have two choices, okay? You come to that fork in the road and you take it. Very famous academic said that, Yogi Berra. Alright, I'm making a joke, he's a, was a catcher for the New York Yankees. You pivot, which means you change your idea, you amend it and keep going. Or you put the idea in a trash can, while it's not a real trash can, it's a make believe because you put it on the shelf, because years later it may be valuable. Corning found that out with the glass that they made called Gorilla glass. It was invented years ago. It made it big when Apple wanted it. It was on the shelf for years. Isn't that a beautiful picture? Yep, Kyle my cameraman sees himself on that beach right now. All ideas are not good. A learning launch is not a failure so long as you learn something, okay. Ideas are like sand on the beach: plentiful. Don't get wed to an idea. You are not the idea. There will always be more ideas. Takes a lot of ideas to produce a few good growth initiatives to result in one big needle mover. I learned the word, needle-mover from a CEO I worked with. He kept telling me; Ed, I need needle movers, and he would move his arm like that. Needle movers, that's a needle mover, innovation is a probability games, best practices use entrepreneurial learn as you go processes. Make failure cheap and personally cheap. If a learning launch doesn't work, so long as you're learning, it's not a failure, it's not a mistake. It should not hurt your career, and you shouldn't feel bad. You have learned something, keep going. Create small diverse teams to do the experiments. Mitigate confirmation bias. Fret over the quantity and quality of data. Love that word, fret. Permission to speak freely. All members of the team can speak up. Best innovation practices, constantly ask, what do I know, what do I not know? What do we need to know and how do we learn it? And as you go through your business life or your life in any organization. As you go through life in general, the most important question you can ask yourself is, what do I not know? Because then you can figure out what you need to learn to accomplish your objective. Here's the process, put your idea into hypothesis, figure out your key assumptions. Customer, execution. This is customer. Execution, defensibility, and I didn't talk about scalability because I always do that to the, at the last of the test. Prioritize your key assumptions. Design the test, like we talked about. Do the test, confirming data you continue development. Disconfirming, you pivot or you put it on the shelf. Each key assumption you figure out, who's the responsible person, who's on the team. How are you going to go figure out that fact whether it exists or not? How long's it going to take and what it's going to cost? Most learning launches can be quickly and cheaply. That in a nutshell, ladies and gentlemen, in the 15 minutes I've been given is an introduction to what do I do with this idea? I test it, I test it. Go do lots of tests, life is a test. I, Innovation comes from tests. Go do test and learn. Thank you very much.
