In this Q&A you learn:
- How Strategyzer tools like the Business Model & Value Proposition Canvas, along with Lean Startup methods and Customer Discovery are aiding in Gore’s ability to create new value inside the organization.
- How Gore uses rapid testing through “Innovation Sprints” to gather evidence and reduce risk and uncertainty.
- How to effectively obtain leadership buy-in and participation for business model innovation.
- How to select a motivated and enthusiastic team for internal innovation sprints.
- How B2B organizations are busting the myth that business model innovation techniques are just for B2C or startup organizations.
Jump to a key section:
- Context
- Testing
- Using the Business Model Canvas to assess the current and desired business model
- Leadership buy-in and participation
- Tweaking the tools and concepts for your organization
- Key learnings and improvements
- Killer argument to other companies
Context
Kavi Guppta: What was happening at Gore at the time. What were you guys facing before you decided to take on this kind of innovation sprint or this approach to new business ideas?
David Liss: At Gore, we're looking to find ways to accelerate our growth. We have a lot of activity going on with what we call H3 or Horizon 3 Projects, where we’re looking at whole new ideas and whole new business models. For our Horizon 1 businesses, which are our existing businesses, we're testing the tools and practices around Business Model Canvas and Value Proposition Canvas by following the Strategyzer methodology. We’re learning to use these techniques and some of the lean-startup methodology in existing businesses to find new pathways to test and hopefully feed the growth.
KG: We hear very often that the B2B approach or doing this kind of work in B2B, is difficult or impossible. What's your take on that?
DL: What we found is the opposite of that. It's not impossible and actually, we’ve seen it as highly valuable. I’ve been involved in applying this to an existing business that we've been in for a few decades.
There are some changes going on in what has become a highly competitive business area. We're looking for a different angle to continue to drive our growth. We've been growing in that market for decades and want to see if we can accelerate that growth rate. What we found is that the customer discovery approach in particular, which is part of the methodology, is very applicable.
The customer discovery approach was very enabling for us, and refreshing for customers. That was a big surprise to many of those involved. Most folks expect that you can't do customer discovery with B2B businesses really effectively. We found that’s not true. In many cases, we got the interview sessions with higher level contacts in some of these organizations because we explained that we were doing customer discovery, and weren’t there to sell anything. We found it pretty exciting.
KG: Was this something initially that was difficult to encourage amongst the team?
DL: It's difficult to actually get the customer discovery calls scheduled. The whole approach and methodology made it clear that we had to do it. The question was how do you do it? How do you engage parts of our organization that may not have the types of contacts that we need to do effective customer discovery? How do you encourage them to help identify those contacts, get things scheduled and support the fact that we're talking to customers in a different way. In many cases, the individuals we needed to connect with were at a much higher level than we may have reached in the past through a sales or product focused approach.
KG: How was this entire experience different from what Gore usually did?
DL: We're a strong technology leadership company and we've always focused on having the best products out there--that really is at the core of our business. With that, we typically take a product oriented focus in a lot of areas.
Over the last few years, we've been looking to really supplement that. We're getting much better at understanding our customers’ needs and how the market is trending. That’s why we wanted to test the Strategyzer methodology. We learned it helps provide a very different perspective--how to create an integrated business model, as opposed to just a product based approach. We developed a lot of new ideas to test and we're now actively implementing some of the outcomes that came from the process. We developed a very different perspective than we had in the past.
Testing
KG: What kind of tests did you start running based on those interviews? What were some of the outcomes?
DL: So one of the things that was really valuable was stepping away from our product. So we're a technology leadership company, we typically lead with product, lead with technology, lead with science, lead with data. What we started to learn was, well, that's not the information that the customers really cared about. What they care about is how might we be able to help them improve their system performance.
Not just how our product performs, but how does our product relate to their system performance advantages. As we started learning about that, we didn't know how to measure and test against their system performance requirements. A lot of our discovery interviews helped us to really understand what system performance meant for the customer.
It moved us away from the traditional performance measures of our product that we typically have highlighted. It required us to engage with potential test houses that our customer was confident would provide results directly relate to the customer's system. It may be a bit confusing since I can't go into the details of exactly what the product is, but we provide a component into a system. That system is designed to meet the need of the end user, yet we didn't always know how our product contributed to the end user benefits.
What we were able to do was to identify methods and partners that we could link up with, that would be able to measure that system performance and the real benefit to customers.
KG: Were those actual product tests or were they continued conversations?
DL: So it started with conversations but we're now moving forward. We're a few months past the end of the sprint timeline itself. We're now engaging with some of those partners to get testing underway that looks at system performance.
KG: How would you conduct such a test given the nature of the products and technologies that you have to create?
DL: One challenge is we often don't know exactly how the customer system is expected to perform. That’s highly controlled information, but our customer was able to help set us up with groups that do have the knowledge and ability to test the end system performance. Those groups understand what the system needs are. They can set up a test bed, insert our component into that test bed, and share the outcome of the system test with the customer.
KG: Were there any other types of tests that you might want to share?
DL: Yeah, another test was around customer segments. If you think about the Business Model Canvas, we've historically focused on a primary customer segment. What we learned through customer discovery is that we could have more success if we're able to sell the value proposition of our product to other downstream partners in the value chain.
Our customer is taking our component and putting it into a system. They're selling that system to an end user. We learned that if we could share how our product can benefit the end user, there’s a chance that we’d have more success in capturing the advantage of our product in the requirements that the end-user flowed to our customer.
For example, the end user says, "We need the system to do these things for our users." They translate that into requirements which get flowed down to our customer. Those requirements could include valued performance parameters that support the use of our component. So the end user wins because they get the greater performance that they desire, and we can win because the benefits of our product may be directly embodied in the proposals that we bid on.
So we defined some key hypotheses to test. One was whether we could indeed engage with that end user community and get some mutually beneficial interaction going with them. Based on what we learned, we've started doing that, and we're already seeing the value of the influence they can provide.
KG: Let's talk a bit about the actual team doing experimentation and testing that was in the sprint. That was very new. Can you talk to me a bit about that?
DL: We pulled together a tiger team or a small group that walked through the Strategyzer sprint process. The team included a few folks from our product management team, a market leader, an operations leader, and others that brought in functional excellence such as finance. We really set that team off to focus separately from the day-to-day work. There was an expectation these associates were freed up from their “day job” to spend 50 to 70% of the time on the Sprint project. We were expected to actively transfer work to other people for that period of three months or so, or put projects on hold. That was important, because it created the focus that we needed to be successful here. Having time and freedom to test is really important.
We also needed to set the stage with colleagues that were involved in running the existing business. They understood that our team’s focus was to try to come up with new avenues to growth. We weren't trying to “attack” the existing business models--we were trying to find ways to improve and extend the existing business model.
Through some good discussions, we showed how we were testing ideas “off on the side”, identifying new ideas, ideating around a business model and coming up with things that we could test with customers. Not all of the ideas we tested were destined to impact the existing business. We were experimenting off on the side, then considering which ideas looked like they could create new opportunities for growth. Of the “good” ones, we then considered how we might be able to integrate them and evolve the existing business model.
KG: Can you maybe walk me through some of those discussions? What were the conversations that were happening? What did you do to either persuade or dissuade people from certain types of thinking?
DL: It started with the way we framed this process, which we’re calling Business Model Innovation. We agreed that we need to be looking at how we can do things differently. We're going to come up with a whole bunch of ideas, some which may work out well, and some which may not. The only way we're going to know which ones could work is to test and learn quickly–to see if an idea is generally in the direction of a winner or generally in the direction of stuff that we should stop doing because it doesn't look like it's going to be helpful or successful.
So with that, the ideation process got kicked off, and because we knew that the intention was to test a whole bunch of things and see what stuck, it drove a broader view during the ideation process. Then we looked to select what options or tests or hypotheses we would try first. We wanted to take the ones that we thought might be most impactful and test those with customers right away. The goal was, let's choose five or six, not just one. Let's not focus on one and use a serial process, let's try to do things in parallel.
We identified some initial hypotheses that looked interesting. As we started to hold customer discovery interviews, we made sure we weaved in aspects of multiple hypotheses, rather than try to take a serial process. We tried to manage them in parallel.
Using The Business Model & Value Proposition Canvas
KG: Can you walk me through the process of using the Business Model Canvas to assess your current state and then look toward the desired state? What was that like?
DL: There were two business groups that we were bringing together and merging into one. We developed a hypothetical current state that came from mapping the two business groups. We knew that there was a fair amount of overlap. So, we developed a current state, but it was a hypothetical current state. We then mapped out different layers that we tried to “stack” on top of current state model. Those were the test layers.
We thought of them as if they were Business Model Canvases that were drawn on tracing paper which could be laid over the existing model. Then we looked to see how some aspects of those new layers might integrate with key parts of the current business model or create new directions for growth.
KG: How did everybody respond to what was coming out of that activity or those activities?
DL: I think the team responded very well. We had few weeks of training on the tools and the techniques during the early weeks of the sprint. After the training phase, we began applying the tools. We built the current state model during that time. We learned that when you first start mapping the canvas, it’s easy to get carried away with too much detail. In practice, we quickly learned to capture on the Business Model Canvas those things that would make or break your business if they work or don't work. For example, rather than having every single resource or every single activity you do, highlight only the ones that are really “make-or-break”. I think that really helped bring clarity to the process and prevented us from having a messy, overly-complex canvas.
KG: How helpful was that entire process for alignment amongst everybody else?
I think that's probably one of the strongest benefits of the Business Model Canvas--you show everything on one page. It's like creating a painting that everyone can look at and understand how your business operates. In the past, we've used different types of business plans, although not the huge written business plan that everyone picks on these days. We often use Powerpoints or playbooks, but the Business Model Canvas is one way to get everyone on the same page, with common terminology and be able to present that picture of what the overall business looks like.
DL: How did this transform the way you thought about the frontstage and backstage of the business model? What did you learn there?
That frontstage and backstage concept was valuable. We found that we needed to improve on the “desirability” aspect by getting our value proposition more in line with system performance which addresses the clear customer need. In the past, the value proposition block of the canvas usually focused on product performance and attributes. We learned that we need to frame the value proposition much more from the customer view. We had another “desirability” improvement in the customer segment section as we began to look beyond our primary customer segment. In our case, that meant looking beyond our customers to their customers who drove the decisions on system-level requirements.
We took a very strong look at both the frontstage and backstage. On the back stage, we developed some new ideas compared to our typical manufacturing approach. We identified the need to create some new pathways running through our product platforms that would better meet the customer needs. One example was identifying a much faster path from order to delivery than we have in our current manufacturing model.
KG: How did this process help you better understand trends or themes or directions of the market?
DL: We started connecting directly to end users. Again, these were the folks that are specifying the systems that our customers are building. Getting a clear view from the end users on where they're going really helped us understand more about what systems would be required next, and what systems are actually in development. We also learned that we can add a lot of value to those end users by helping them understand some of the technical capabilities that are out there and maybe helping them to see where they can get more performance out of their systems.
Leadership buy-in
KG: Let's talk a bit about leadership now. How was leadership involved throughout this entire process?
DL: We have a strategy development team responsible for merging two different businesses. I am a part of that team and I also led the sprint process. Communication worked very well. We had regular communication with the strategy team, highlighting what was going on within the sprint process. The sprint team was given the freedom to go off and test a whole lot of things and take some risks in trying some things that we hadn't done before. The expectation was that we'd conduct the testing in such a way that it wouldn't impact or damage the existing business. We had a lot of freedom and support to push the boundaries and look at things from different perspectives than what we had before.
KG: Can you walk me through the process of then presenting that evidence to leadership? How did that happen and what was the reaction?
DL: Along the way, probably every three or four weeks, we’d have a quick update session like, "Hey, here's what we're working on. Here's what we're learning." Pretty brief updates to the leadership team. At the end of the sprint, we had an extensive presentation highlighting what we learned and what what we proposed as a path forward. It was about a two-hour presentation. There were a lot of question throughout the presentation.
How we drafted and delivered that final presentation was important. It was very different than our traditional business update presentations. It was very visual. It was completely oriented from a customer perspective, not a product perspective. We created personas for the new segments that we had identified as well as the persona for the existing segment that we sell to today. Carrying that theme of the customer all the way through was really powerful. We shared a whole bunch of quotes taken from our customer discovery interviews. Having the customer's words--what their jobs to be done were, what their pain and gains were--and then overlaying our proposals on top of that was really powerful.
The greatest excitement came from the true customer input, so regularly using quotes was important. During our customer discovery interviews we were trying to capture verbatim notes as much as possible--particularly quotes and specific words that were important to the customer. The vocabulary became really critical. We needed to use the customers' vocabulary, not our vocabulary.
When we had updates with our leadership team, we would use quotes and share insights. We actually shared some of the specific quotes--who it was said by, and why that was valuable, and how it helped shape our learning. There was a much high degree of customer integration.
Much of the learning came from customer discovery when we weren’t trying to sell our product--we were trying to understand their needs. So when we presented, "This is what the customer is telling us without prompting them, without trying to frame it around our product," colleagues got excited. They began to see where some of our hypotheses came from and which ones were starting to gain traction with customers. They could also appreciate the ones that didn't, which we stopped testing along the way.
KG: What questions did leadership have that allowed you to think further based on the evidence that you had so far?
DL: So I don't know if this is a best practice, but the way it evolved with our team was that we didn't go into a whole lot of detail with the leadership team during the sprint. We had mostly informal updates every two weeks or so. We didn't have separate meetings, these were part of a leadership meeting that was already taking place.
We gave some level of insight but didn’t lay out all the details of the plan, because the plan changed regularly. It could change on a weekly basis where we ruled out a hypothesis and then moved on to the next. So, we weren't trying to keep the leadership team completely up to speed with everything that was happening, more just on the direction and a sense of the learning along the way.
The customer perspective was the central part of all those communications. Again, that's very different from the way we've communicated in the past. When we did use slides, we had quotes, we had pictures and images from the market, as opposed to blocks of text like many of our typical internal communications.
KG: Why was that so important? All of that that you did with leaders?
DL: Because you need to have support and buy-in. We're really looking at changing our business. The intent of this was achieving new levels of growth, in different ways than we've done before. If you don't have the ability to gain buy-in to implement some of these changes, it's probably not a valuable use of time. If you're really willing to look at things from a different perspective, to test, and then to move towards implementation, you've got to have the support from the leadership team to do that.
Tweaking the tools & concepts
KG: You folks created your own processes and methods for some of the methodology in order to tweak it, and to be more helpful for your culture or situation. What were some of those tweaks and how did they help you?
DL: All organizations have different tools that they use today. The Business Model Canvas and Value Proposition Canvas can be seen as either new tools, or they can be seen as just different representations of the information that you're often displaying in other ways. We, as a company, are starting to move towards the use of Business Model Canvas as a primary tool. We have shown the alignment between it and some of our existing tools. We created some overlays showing, "Hey, the canvas isn't all that different than these two tools put together." That was helpful.
We’ve also been doing ongoing training within Gore and providing exposure to these tools. Associates are beginning to see the tools as an important part of our business discussions. We’ll need to continue to build broader awareness.
KG: What are some of those other tools that you guys use?
DL: We use some internal tools in developing and testing ideas. They help us define what the product is, define what the expectations of success are, define what our customers are looking for. An important tool is the Product Concept Worksheet--it captures things like the technology we utilize, the form of our product, the customer needs, and a “product concept statement” which is similar to a value proposition.
That's been used for a long time in Gore, and it's been a really helpful tool to make sure that our development efforts are on track. That directly translates and overlays with the Business Model Canvas and Value Proposition Canvas. A lot of the customer input--the 'customer needs' part of that document--fits in with the Customer Profile portion of the Value Proposition Canvas. The ‘product form’ part of our tool fits in with Business Model Canvas--the value proposition and some of the key activities and resources we use to create value in the product. That one translates really well.
There's another tool that we use called the Product Strategy Model, which highlights the base technologies we leverage, the expertise and know-how that we've developed as a company, the core materials that we use. Also, it shows the strategic and enabling technologies that we use to bring the product together. That overlays really well with the Business Model Canvas.
Part of the messaging that we've used internally is these aren't new tools that are creating new information. They help to coordinate the information from many of the internal tools that we will still use. It's not changing things, it's not another add-on tool, it's a way to pull a lot of things together and look at a complete business model view on one sheet. It’s like a painting of your business at a point in time.
KG: Were there any other elements with testing or customer discovery where you had to tweak it slightly to fit your needs?
DL: Yeah, the biggest challenge we had was just dealing with the volume of information that we start to collect. We had a six-person team and typically three or four folks were doing customer discovery interviews. The amount of information coming back from those interviews was immense and we had to find a way to code that information to be usable by the team. We had to translate and share it with the team. Then, we had to use that info to update and progress our Value Proposition Canvases and Business Model Canvases. We had to develop some spreadsheets and a very simple database to try to manage that information. We didn’t have something out there that we could just pick up off the shelf to use and manage that content.
KG: There must have been a lot of iterations of hypotheses and assumptions that need to be validated. Our audience often wants to know what's the magic number where you just stop doing that. What's your response to that?
DL: I don't think it ever stops, but we saw the iteration intensity change during the sprint. You start with a very divergent approach and you're testing a whole bunch of things in attempting to validate some of your key hypotheses. Then you converge and the amount of time refining and focusing on a hypothesis is longer. The customer discovery part of the sprint was about eight-weeks long.
We went through 36 customer discovery interviews over that eight weeks. We made many modifications to our Business Model Canvas. I think it was 315 changes. We had six pivots along the way--changes in the direction that we were investigating. There was a lot of testing over that period and I think having the constraints on time was important. It drove us get out to customers quickly and maintain a fast pace. We're still testing things today. Even as we're moving further in assessment and even into some implementation, there are new questions and ideas that we're testing. Testing becomes more of a methodology of approach as opposed to a milestone that you reach.
Key learnings & improvements
KG: What can the team do now that it couldn't do before? Or maybe can do better?
DL: I think the biggest thing was learning how we can engage different customer segments to help influence our ability to win on a program. From a B2B perspective, beyond just improving how we serve our immediate customer, we learned that by engaging with others in the value chain, we can gain valuable insight and even help influence our ability to win.
Internally, it's helping us frame how we go-to-market. Our go-to market strategy is starting to look different. We're starting to add some new roles and bolster some resources that we didn't have before. They are focused on supporting some of the new segments that we want to engage. On the back stage, we’re exploring a manufacturing model based on some of the key learnings that came out of this process. We learned more about how our customers want to be served. They want to be served differently than our current offering is providing. There's a whole bunch of work underway in testing a new manufacturing approach, and we’ll still need to validate aspects of that. We have to make sure that we're still on track with what customers are valuing. The change in how the organization is looking at this business and breadth of opportunity is really exciting.
KG: How difficult were the methods to apply in a B2B context? We often hear that many of these experimental elements like customer discovery in a lean startup is so B2C. So startup. This is something that existing businesses can also participate in, right?
DL: Absolutely. Within Gore, there were three teams that went through the first sprint process. We had one more business team soon after that. And next week we're kicking off another round with three different businesses. So that will be seven sprints over a period of 8 or 9 months. Nearly all of those sprints were with B2B based teams. I can say it’s definitely been effective with B2B and many of us are excited to use it more and more. I'll be coaching a team that will be part of the next series of sprints.
KG: What was so effective out of the entire experience?
DL: From my team’s experience, having a time constraint helped to improve our effectiveness. There was a set of expectations--what you'd achieve at the end of each week. Having that pace, that tic-tock of the clock and the urgency to get things tested, get feedback back from customers and actually boil that back into our model and assessment, that I think was what was most important for us.
The support from the leadership team was extremely helpful. Again, not day-to-day oversight or micromanagement, but the support from the leadership team to say, "Yeah, we recognize we need to do things differently. Please go off and do that and have the freedom to test and look at our business from a different perspective.”
KG: How did you guys pick what projects you're going to work on in terms of the business units? Was that something that was pre-determined or something that came out of the actual exercises themselves?
DL: Initially, it came down to volunteers. The opportunity was put out there to test this sprint approach. We had a couple of businesses that were excited about the concept. Some had been exposed to the tools to some degree and were willing to give it a shot. A key thing was making sure there was strong commitment from the team going through the sprint. It was a pretty empowering process and a great team experience. The team camaraderie that was built and the excitement about how this really can change the growth potential for this business was amazing.
KG: What was the criteria you set out that if you're going to volunteer for this, this is what you need to be bringing to the table?
DL: The biggest thing--and we're experiencing that right now because we're starting our next round of sprints--is around time commitment. The sprint process is really intense. Ten to twelve weeks. For it to be most effective, you have to be focused on that as your primary role.
In trying to get buy-in from participants, we’ve been asking them to commit to spending 50% of their time in this project effort. We’re specifically pushing so that it's not just saying, "Oh, I'm going to find a way to squeeze the time in to do this project." We’re expecting them to actually remove some of their activities, some of the work, some of the commitments that are on their plate today. Assuming you can absorb that extra commitment in your day-to-day work just isn't real.
So we specifically set the expectation that they would find someone to cover work for them, or that they put things on hold for the 10-12 weeks of the sprint. In the end, I think we did get just about 50% of team members’ mind-space and time. Also, recognizing the time needed for documentation and travel to visit customers and all that stuff, some provided even more.
The second important factor is having team members that are attuned to doing things in a different way. Willing to try new ideas. What we have found ourselves and heard from other groups is that some folks aren't comfortable with highly divergent thinking and quickly testing things. They may be much more comfortable with incremental change. They may struggle with an intense sprint-like process.
Doing a screen on potential team members is valuable--are they willing to move at a really fast pace and be open to doing a lot of parallel processing and divergent thinking? Having team members willing to make the time commitment is probably the biggest measure of success for teams.
KG: How did you guys then decide about future projects?
DL: There's been momentum and excitement building as more associates learn about the outcomes from the sprint teams. There's a group internally that's starting to organize the efforts on how we apply these tools more broadly to our H1 or existing businesses. There’s discussion and promotion that we’re going to be starting the next round of sprint efforts soon. Businesses are considering: “Who wants to be in? Where's the best opportunity? Where do we think we can learn the most and have the biggest impact on growth?” So far, all of the sprint slots have been filled by teams that volunteer to participate
Killer Arguments For Adoption
KG: What's your killer argument to the organizations that are hesitant about these new approaches?
DL: I think that the killer argument is this approach provides deep insight into what customers are looking for and how you can evolve your business model to serve your customers better. It provides a very objective and expansive view to new ways to address those needs and create value. In our case, we identified new approaches that we will implement to increase our growth potential.
The energy that comes from doing this type of effort is just amazing. I worked with a great team. The team was empowered and excited about what we learned and how we can apply it to increase the growth rate of our business. I’ve seen a number of the team members taking this new way of thinking and sharing it with other associates and using it with other projects.
Create growth just like Gore
The Strategyzer Innovation Sprint helps you address the challenges of a fast-changing business environment, increased competition, and demanding customers in only 10 weeks with dedicated coaching and weekly check-ins.
