This document discusses how iterative prototyping can help reduce business risk for new product development. It describes prototyping as a form of "decision insurance" that allows companies to validate ideas before fully committing to them. The document cautions against the risks of not innovating and being disrupted by competitors. It advocates for self-disruption through developing disruptive innovations. The author shares a cautionary tale of prototyping efforts that were shut down due to cultural and communication barriers at a past company. The document provides advice on developing a formal prototyping process and gaining executive buy-in to make prototyping a regular part of innovation strategy. It includes the author's open-source rapid contextual innovation model and assigns the reader

1. Decision(Insurance:(
Itera/ve(Prototyping(To(Reduce(Business(Risk(
(
xxxxx(|(Day(xxxx(Paul%Sherman%
ShermanUX%
%
UX%Strategies%Summit%2015%

2. Decision(Insurance?%
Me in 2005:
2
Product VP:
UX is blah blah contextual
inquiry usability heuristic
evaluation yadda yadda
etc.

3. Decision(Insurance?%
Me in 2005:
3
Product VP:
Oh. You mean you’re my
decision insurance. You
confirm whether we’ve made
the right decision. Or not.
UX is blah blah contextual
inquiry usability heuristic
evaluation yadda yadda
etc.

4. Decision(Insurance?%
Me in 2005:
4
Product VP:
Oh. You mean you’re my
decision insurance. You
confirm whether we’ve made
the right decision. Or not.
Um…yes.
Yes we are!

5. In(This(Talk%
Biz speak
Risk
Disruption
Innovation
Prototyping
A cautionary tale
Prototyping as part of innovation strategy
Your homework assignment
5

6. Biz Speak
6

7. Risk(In(Business%
There’s a metric crapton* of different risk types in the business literature…
7* 1,000 craptons = 1 kilocrapton

8. New(Product(Development(Risk%
We’re talking about the risks
associated with new product
development (NPD).
Some fundamental points:
Businesses don’t take risks
without the possibility of
reward.
New product development risk
can never be completely
quantified.
It is inherently uncertain.
8

9. Perceived(Versus(Actual(Risk%
We are biased.
9http://en.wikipedia.org/wiki/Risk_perception
http://www.susannahertrich.com/risk.php
PerceivedRisk
ActualRisk
http://http://www.psandman.com/

10. Bias(In(Percep/on(of(New(Product(Development(Risk%
Perceptions of NPD risk are
affected by:
Organizational culture
Institutional barriers to innovation
Perverse incentive structures
Incumbency complacency
And so on…
10

11. The(Biggest(Risk(Of(All…%
Time and again, it’s been shown that the greatest risk of all is not acting.
Peachtree vs. QuickBooks
iRiver & Creative vs. iPod
11

12. The(Biggest(Risk(Of(All…%
WordStar & WordPerfect vs. Office
BlackBerry vs. iOS & Android
12

13. Disrup/on:(It’s(Happening(Every(Day%
13
Today
Tomorrow

14. Disrup/on:(Just(One(Type(Of(Innova/on%
14
Term
Definition
Innovation
New products and services that succeed in
the market. They meet customers needs or
address their pain points.
Sustaining
innovation
An innovation that improves an existing
product or service. It sustains the current
business model or revenue stream.
Disruptive
innovation
An innovation that enters a market and
disturbs the prevailing order of things, taking
share from the market incumbents.
The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (1997). Clayton M. Christensen. Harvard Business School Press.

15. Sustaining(Versus(Disrup/ve(Innova/ons%
15
Existing
New
New
Existing
Product
Market
Disruptive
New product
Existing market
Disruptive
New product
New market
Sustaining
Existing product
Existing market
Disruptive
Existing product
New market
The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (1997). Clayton M. Christensen. Harvard Business School Press.

16. Innova/on%
“Innovation” is one of those
terms that everyone thinks they
know…but do we all share the
same understanding?
Innovation means creating new
products or services that
succeed in the market.
Q: If it doesn’t succeed, is it an
innovation?
A: Nope.
16

17. An(Innova/on(Fills(A(“Job(To(Be(Done”%
People "hire" a product to handle a "job”…
Innovation is the process of solving for the job.
What is the job? It could be anything…either functional or emotional.
17
Finding the Right Job For Your Product. (2007, Spring). Clayton M. Christensen, Scott D. Anthony, Gerald Berstell & Denise Nitterhouse. MIT Sloan Management Review.
http://sloanreview.mit.edu/article/finding-the-right-job-for-your-product/

18. Avoiding(Disrup/on(Is(Easy((In(Theory)%
The solution is self-disruption.
18

19. SelfRDisrup/on%
Identifying a new basis of
competition – a dimension of
customer value – and
orienting your efforts to this
new world.
Entering a market you’re
already in with a low-end,
high-convenience disruptive
innovation.
Letting your mature product’s
profits decline naturally while
the new product takes off.
19Blue Ocean Strategy: How To Create Uncontested Market Space And Make The Competition Irrelevant. (2005). W. Chan Kim & Renée Mauborgne. Harvard Business Review Press.

20. What(Have(We(Learned?%
The greatest risk is in not attempting to innovate.
Failing to act leaves you open to disruption.
Self-disruption is an effective way to maintain market position.
20

21. Prototyping
21

22. 22

23. Prototype(Versus(Mockup%
Prototypes are tested in the field. Mockups aren’t.
If you test your mockup in the field, it magically becomes a prototype.
23

24. Typical(Prototype(Tes/ng(Session%
24

25. A Cautionary Tale
25

26. We(SpoVed(An(Opportunity%
At a former company, product
management asked the UX team
to conduct field research with
small businesses.
We identified an opportunity for
an accounting product that
served new value dimensions.
That’s awesome! Woo!
26

27. Product management began writing
up a business case.
We created personas and goals…
And mocked up workflows and views.
We started testing the mockups…
27

28. Product management began writing
up a business case.
We created personas and goals…
And mocked up workflows and views.
We started testing the mockups…
And senior management promptly
went batshit crazy.
28

29. What went wrong?
29
Org Culture
New products “just
weren’t done here.”
Growth by acquisition.
Executives had no
incentives to create new
products.
In fact they had strong
disincentives.

30. What went wrong?
30
Org Culture
New products “just
weren’t done here.”
Growth by acquisition.
Executives had no
incentives to create new
products.
In fact they had strong
disincentives.
Institutional
The organization had very
few people who had ever
worked on new products.
There was no institutional
memory or process.

31. What went wrong?
31
Org Culture
New products “just
weren’t done here.”
Growth by acquisition.
Executives had no
incentives to create new
products.
In fact they had strong
disincentives.
Institutional
The organization had very
few people who had ever
worked on new products.
There was no institutional
memory or process.
PM & UX Mistakes
We had the data, but we
failed to communicate the
pressing need effectively.
We failed to build
awareness and
alignment.

32. What went wrong?
32
Org Culture
New products “just
weren’t done here.”
Growth by acquisition.
Executives had no
incentives to create new
products.
In fact they had strong
disincentives.
Institutional
The organization had very
few people who had ever
worked on new products.
There was no institutional
memory or process.
PM & UX Mistakes
We had the data, but we
failed to communicate the
pressing need effectively.
We failed to build
awareness and
alignment.
Once we started
showing the prototype,
it was perceived as
insubordinate and
threatening.

33. We got shut down within a
couple weeks of the first
prototype tests.
33

34. But organizational cultures are mutable.
You can change an organization’s culture!
So I gave it a shot…
34

35. Prototyping As Part
Of Innovation Strategy
35

36. Picking(Up(The(Pieces%
Executives like process. They really like
repeatable processes.
So I created a business process for
catalyzing innovation at the company.
It included:
Field research (not just surveys) to
discover new value dimensions.
Rapid prototyping and design
iteration.
Cross-disciplinary involvement:
product, design, development.
And a whole lot more.
36

37. It(Even(Had(Snazzy(Names%
Rapid contextual innovation – RCI
The 3-3-1 process
3people
3weeks
1viable opportunity
37

38. 38

39. Win!%
Prototyping and iteration based on
customer feedback became part of:
Initial value discovery
New product development
Business strategy
39
UX
UX

40. Benefits(For(The(UX(Team…(And(The(Business%
We moved UX up the value
creation chain.
We utilized our skills at the front
end of the process…
On an equal footing with product
management and development.
40

41. Win?%
Of course it got shut down with the next reorg and change in management.
And we never did get our executives’ incentives changed so their
compensation was tied to new product development.
41
I never had any illusions of winning that battle.

42. I(Made(Something(For(You%
I’ve kept working on the process.
I completely rewrote it and
removed references to the prior
company.
It’s available under the Creative
Commons license.
Support open culture!
Get it here:
http://shermanux.com/
resource_rci.php
Or http://bit.ly/1I0xz7Y
42

43. What(It(Covers%
The rapid contextual innovation
model and the 3-3-1 process.
How to get executive buy-in for
observation research, rapid iterative
prototyping, and opportunity
assessment.
How to make it an ongoing program,
not a one-time deal.
43

44. What(It(Doesn’t(Cover%
It doesn’t cover prototyping
tools or techniques.
It doesn’t go into detail about
how to run the discovery and
prototyping sessions.
Those are topics for another
day.
I’ll be providing more
resources going forward.
44

45. What(Else(You(Need(To(Implement(A(Program%
More details for how the
team works together.
Training on how to spot
opportunities.
A rapid collaborative
prototyping process.
A template for pitching
the opportunity.
The validation and
iteration process.
45

46. The(Takeaways%
Field observation and iterative
prototyping are a powerful combination
for discovering customer value.
Take a strategic approach!
Make the process yours.
Create alignment across disciplines…
And up the chain of command.
46
This leads to UX
success!

47. Your
Homework Assignment
47

48. Make(a(30R60R90(Plan%
48
30 Days
Learn about your
organization.
Where are the obvious
and hidden barriers?
Assess your / your
team’s field observation &
prototyping skills.
Get current on
prototyping tools and
techniques.
0
90

49. Make(a(30R60R90(Plan%
49
30 Days
Learn about your
organization.
Where are the obvious
and hidden barriers?
Assess your / your
team’s field observation &
prototyping skills.
Get current on
prototyping tools and
techniques.
60 Days
Start the conversation
with the power brokers.
Make it clear you want to
be a service to product
management, not
supplant them.
Build your process model
and ask to present it.
Set realistic expectations:
• No home runs the first
time out.
• It’s a learning process.
0
90

50. Make(a(30R60R90(Plan%
50
30 Days
Learn about your
organization.
Where are the obvious
and hidden barriers?
Assess your / your
team’s field observation &
prototyping skills.
Get current on
prototyping tools and
techniques.
60 Days
Start the conversation
with the power brokers.
Make it clear you want to
be a service to product
management, not
supplant them.
Build your process model
and ask to present it.
Set realistic expectations:
• No home runs the first
time out.
• It’s a learning process.
90 Days
Ask to pilot it.
Ask for contributor
nominations from
product, dev, and any
other organizations.
Go to the field.
Run it like an agile
project.
Report the results in
terms of client value AND
of culture change.
0
90

51. Bonus!%
If you pull this off, you’ll
have a major stake in your
organization’s future growth.
That’s pretty neat!
51

52. Discussion%
52

53. Paul%Sherman%
paul@shermanux.com%
+1.512.917.1942%
QUESTIONS(AND(CONTACT(