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Lessons from Innovating in a Large Organization

This post is based on an interview with Steven Sinofsky, former president of the Windows division at Microsoft and now a board partner at Andreessen Horowitz.

You’ve probably seen that company politics can compromise productivity and quality in big companies. Politics might sound negative, but in fact politics is just about people. The root of politics is politikos, from the greek “of citizens.” So whenever you have people there will be politics, the interactions of people. Yes, those can go haywire too.

Nevertheless, despite the challenges of size and age, some large organizations manage to launch breakthrough products. It’s not magic: an old company can learn new tricks. Drawing on the creation of Outlook, One Note and SharePoint we distill key lessons for how to launch breakthrough products inside a large organization.

Understand key political motivations in order to beat them

The distinguishing feature of a big company is its size and the scale it operates. Nothing that is big and global happens easily or without interactions among people with different perspectives, agendas, and metrics. At large companies, workplace interactions tend to dominate. These interactions and their style, both of which influence what gets done, can, sometimes by design, put obstacles in the way of innovation depending on perspective. Steven Sinofsky uses a few memorable personas to help us understand the most critical political obstacles to overcome.

VP of “No”

“Almost always the most common problem in a big company is that the default answer for new or extra work is – ‘We don’t want to or can’t do it’. There’s the vice president of we don’t want to do anything new or don’t have time to do it.

In large organizations every engineer always has yet more to do. Every group is over-committed and the default response to doing anything new is usually a negative reaction—the cost of doing something new is not only the cost of the work, but the cost of not doing what and when was already committed work. These “VPs” essentially make a resourcing and budgeting argument. To have any chance of making it past the VP of No, the proposed work has to be something strategic and have a reasonably sized scope. The trouble is the determination of scope and priority is typically subjective and defaults to the organizational hierarchy.

VP of “This conflicts with our strategy”

“There’s this vice president who says we’ve already got a strategy for dealing with this and it’s over here called X.”

Even if you finally get a budget and some resources allocated to your project, you face a second challenge of making sure people do not think you are stepping on their toes or duplicating something they are already doing. A big established company naturally has an entire ecosystem into which your project has to fit, or not fit.

It’s an all-too-common scenario: two projects, one old but successful and the other new and shiny here to solve all the problems, might look nothing alike to the team hoping to launch a new product, but the team with the older project team thinks there is a troubling overlap and dismisses the newly proposed product as redundant. Sinofsky shares an interesting nugget about the first version of Office which shipped in 1988 already having a mail feature:

“It was a different mail program than anything anyone has today, but mail has been part of Office from the very beginning. Then along comes not one but two new mail programs to replace it.”

Perhaps predictably, when Outlook was initially being discussed and developed, the Office team had to figure out how this new mail fit with Office and which of the two new mail programs. Sinofsky recalls:

“We’re building this new mail server for the Data Center called Exchange, which is part of Office 365 today, and the team that built that also built a mail client. The challenge was this was a pretty spartan mail client, designed more to showcase the server, than to integrate with Office and highlight the ease of use that defined Office. At the same time, another group outside of Office was designing an entirely new mail program, which would become Outlook. The Exchange team felt a sense of competition with that one.

Sinofsky goes on to recount how the standards required to integrate mail with Office actually led to building a lot of Outlook’s unique features:

“We had to go figure out how to build not just mail but integrated mail with calendaring, tasks, contacts, as well as the rest of Office [so] the value proposition was unique: that had never been done before.

How to break through

The challenges are real, and understandable. So how do you sell a new product idea to management given these obstacles? You probably think you need to answer this question: “What will be the ROI of this project?”
The truth is that you don’t know. Typically, you don’t have the data you need just lying around. And this makes it extremely easy for the VPs of “No” and “Conflicting Strategy” to shut projects down. So you ask a better question: How does the world differ when this product exists versus when it does not?
Now you’re emphasizing vision as much as data. And there are powerful techniques for communicating a vision.

Tell a story

Tell a compelling story about the experience. Imagine you’re the product person arguing for the first online movie ticket system, and you’re focusing on how much additional revenue will be driven by the convenience of ordering online to see the premier of a new film like Avengers. You produce really impressive Excel sheets and insightful projections to try to convince executives. At the onset of the internet, such inferences would have been extremely hard to draw and the VPs of rejection would have an easy case to make.

Now imagine you’re the product manager looking to launch OneNote. Microsoft Office customers have been using Word and email for note taking for years, working around the limitations they have for the task (such as how many Word files do you end up creating to represent a notebook?). In this situation it’s not easy to be as data driven as you’d like. The absence of a note taking product might mean the decline in usage of Word for a note taking use case that has no clear baseline. Such a decline might be very slow and would not be a very efficient way of discovering this new need.

Sinofsky compares this situation with the plight of the movie tickets product manager.

“For the Avengers example – the old school theater can’t measure how many people aren’t going to the movie because you don’t have an app. That’s what was sort of going on with Word. We didn’t know how many people were using Word to take notes, and we certainly didn’t know if there were people out there who the only reason they might ever used Word was to take notes because they were never going to write a memo are meeting agenda or resume or job description or a letter, and so without knowing that there’s no baseline. It is very difficult to know how many customers you don’t have for a feature of your product you didn’t build.”

So you tell a compelling story.

“You have to make the argument like, We just know that people are doing something different and that over time that adds up … The only thing we know for sure is once you bought an Avengers ticket online two weeks before the premiere, you just never want to do it the old way again. You will quickly only go to theaters that have reservations and an app that takes the pain out of going to new films.”

We know that the experience of buying the Avengers ticket via an app is an unmatched one for both the customer and the theater, and so we focus on telling the story of that experience in a way that is so compelling that it is hard to imagine a world without it.

Paint a picture

Conveying a vision can mean painting a picture. Consider the example of Outlook and fully integrated mail.

“And so we also painted a picture of ‘look at the future’- literally a picture with a design. ‘It’s not just mail anymore. It’s mail and calendar contacts – all the stuff in one place, and they’re all related’ and so it really was a broader vision. It seems commonplace now, but like any successful innovation people forget that there was a time it didn’t exist.”

In many cases, simply talking about the differences between products is not enough to clearly drive home a vision. We now know that Outlook or Gmail are completely different experiences from Office or Google Docs. The value of a prototype goes beyond validating with customers. The more important function of a demo or a cheap prototype might be its use as a tool for pulling forward a bold 5-year vision and crisply communicating why what you are building towards is a complementary universe to the existing one.

Address the cannibalization question: The example of OneNote

A very common argument the VP of “this conflicts with my strategy” will use to kill your product is that it will cannibalize the usage of his product and that such an outcome is terrible for the business. Part of articulating a clear narrative is addressing this issue head on.

Start by clearly communicating that users often fill the same need in multiple ways and via very different form factors.

“There’s a big difference between talking to friends at dinner and saying, hey, we all want to go see The Avengers next week, let’s buy tickets [versus] hey, we all want to go to see The Avengers next week who is going to go and launch a browser on their PC when they get home and order tickets? Those are two very different tools yet they both go after the same problem. And if you don’t have both of them you are in real trouble.”

Making it clear that the natural way people want to do something is not supported in the current product then allows you to address the cannibalization argument in two ways. First, assume customers will decide for themselves and understand what tool works best and when.

“Initially we thought, wow, that’s going to be really hard because if people already using email and Word to take notes and we introduce a new product to do notes…won’t customers be confused over which one to use and all that? …that’s like asking if when people go in to the office supply store, they get really confused over which paper to buy. The one with the grids or the blank one. But it turns out people can figure out different kinds of paper. Humans are very good at tools and figuring out when to use them, when to change, when something works or doesn’t.”

Second, because users are fulfilling their unsupported need outside any one product, asking about the cannibalization of any product is the wrong question. We need to build a product that meets the customers where they want to be. Otherwise someone else will and then we will have bigger problems. Companies with successful products can get very caught up thinking about the customers they have or might lose, when they might benefit from thinking about the customers they don’t even have.

“The big challenge was that a lot of people in the organization were really worried that this was going to confuse the Office customer and potentially cause people to use Word less. And so we were very much faced with this classic cannibalization problem. However, if people are going to use Word less because meetings need to be recorded and notes need to be taken, they’re going to use Word less whether we provide the tool or someone else does. We felt we might as well be the ones providing the new tool, rather than another company or worse rather than needs going unmet altogether.”

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Being able to convey a vision of how the world will be different with your product in it is the key to breaking through the obstacles that big companies put in the way of innovation. But a good story won’t get the job done if you don’t also understand your corporate culture.

Part of that is understanding the roles people in the company actually play. Leaders are key. You need a champion who has weight in the corporate hierarchy. But the good news is that a strong story can attract a strong leader as champion for your initiative. Ultimately, getting a strong champion for your initiative could even plant seeds for broader cultural change.

Another cultural insight has to do with minimizing the “us” vs “them” mentality often inherent in company organizations by not allowing “innovation” to be isolated from the core business. Your story will be much less powerful inside an organization that has innovation silos as it won’t be taken seriously by the groups who run the core products. Reach across those boundaries: they aren’t actual walls, they are just bad habits.

In a world brimming with data, it is still very much true that organizations are made of people and that truly new products deliver an experience that is so radically different from the past that there aren’t tidy data points to draw a straight line through. To win, we need to be situationally aware, understand the political motivations of the resistance we face, and tell a compelling story about the future we envision.

Debo Olaosebikan
As Gigster’s technology sentinel, Debo anticipates software-driven transformation and connects Gigster’s data and insights to a framework for repeatedly achieving high impact outcomes for our customers. He co-founded Gigster while on leave from Cornell for a PhD in Physics.

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