Norwegian businesses are currently facing a number of emerging challenges and issues in order to remain competitive. They must deal with new trends and industry shifts, face uncertainty and competition from abroad, as well as new requirements for sustainability and circular business models.
At the same time, they must find new ways to reach out to customers, find new revenue streams and create new products and services that provide customer value. There is no small or easy. task. In that transition, more companies must dare to challenge themselves, explore many opportunities in parallel and, not least, "kill" the ideas that do not yield results. before it costs them dearly.
"What's your kill ratio?"
"What's your kill ratio?" is one of the most important questions the renowned innovation guru Alexander Osterwalder asks companies that are in the middle of a major innovation process. Roughly simplified, the message is the following; To find the one idea you can monetize, you have to "kill" 90 percent of the ideas through a structured filtering process. Osterwalder argues that an organization that has too low a "kill ratio" is characterized by a fear of failure and that it is this fear that stifles the pace of innovation.
Working this way is not necessarily about rejecting it. the business is already good and making money from it. Sometimes it is just right to capitalize on what you already have, but this should not be an incentive not to explore completely new business areas. In order to work in a more structured way with innovation, you must dare to explore and challenge your own core business on where growth and new revenue streams will come from in the future, while at the same time continuing to capitalize on the the products or services that are already creating value. A good balance is therefore key.
In this process of exploration, more companies must dare to stop the nine ideas that are wrong and instead cultivate the one with potential. This is done by working in a structured way with hypotheses, testing and validation in a long-term perspective.
Most people who currently work in roles with an innovation responsibility are well acquainted with Osterwalder's methodology and message. But very few people live up to the principle of a high "kill ratio". Not because there is a lack of knowledge about the methodology, but because it can be perceived as unnecessary and not least unpleasant to shelve a new product or service you have really fallen in love with. and which you have spent a long time and considerable resources developing.
Freeing yourself from this approach can be challenging. Working in a structured way with innovation and new development requires both time and capital investment – it is not something that can be solved in a workshop or in a design sprint alone.
A necessary process
For many, it may seem unnecessary to spend a lot of time, money and resources working with innovation in this way. However, it is an absolutely necessary process. The fall of resting on your laurels (especially in good times) When the business side seems to be running smoothly is great, as you are not equipped for new disruptive forces, new competition and changing demands in the market.
We all know the most thinly worn examples such as Kodak, Blockbuster and Myspace. They experienced painfully the consequences of the lack of cannibalization and good innovation processes. Their fate, however, is not an indication that disruption is beyond the company's control.
Innovation is largely about about navigating this uncertainty and, not least, constantly reinventing one's own business. By working in a structured way with hypotheses, testing and validation – at an early enough stage in the innovation process – you get to know how to make sure that you are able to make a difference. Overcome with uncertainty. This is how you ensure that the service, business model or concept has the right to live." What's your kill ratio?" is our return question to managers and sp; decision-makers who want to work smarter and more structured with innovation.
