Your small business may not need the equivalent of a portal to collect employees’ ideas, but the process is good advice for companies of every size. Here are Cook’s tips for creating a culture of innovation:
1. Communicate your vision. A culture of experimentation starts with the leader’s vision. In Cook’s case, the vision is to change peoples’ financial lives so profoundly that they can’t imagine going back to the old way. A great corporate vision helps recruit the right people and points them in the right direction.
2. Look to the data. Cook believes it’s essential to enable people to make data-based decisions. As such, he encourages employees to conduct experiments and collect data on customer behavior. That way, the company evaluates new product pitches based on objective evidence and not subjective factors, such as how well an employee is liked by management.
3. Examine leap-of-faith assumptions. Citing Eric Ries, Cook encourages employees to identify the two or three key assumptions that must be true for the idea to succeed—but might not be. Then they must find a way to test those assumptions with customers at a low cost in a very short time frame.
4. Use a numeric hypothesis. Next, Cook wants employees to come up with an estimate of, say, the number of customers that will order the new product. Quantifying customers forces employees to “get real” about whether the market opportunity justifies the investment of their effort.
5. Put it to the test. Again, the employees run experiments, this time testing whether or not that numeric hypothesis is right.
6. Find the inconsistencies. At this point, employees should analyze the gap between the hypothesis and the actual results and dig deep to find the reason for that gap.
7. Celebrate surprises. Cook is adamant that employees not try to bury surprises to keep from being embarrassed but rather savor them. Unexpected results may expose a market signal that has not yet been detected.
8. Make a decision. Here’s where you, the business owner, comes in. Don’t ask your employees to go through the work of testing ideas unless you’re ready to act on the results. Make a firm decision on whether or not to pursue the idea, or pivot to something else.