4. Process Innovation

Process Innovation

Authors: Bill Nazzaro

The Process Innovation component of the framework looks at the processes companies use to deliver innovation. Are there processes in place that assist in idea generation and review, to help in deciding which features to develop? What development process is used, and what impact does that have on innovation? These two large questions frame our findings.

Peter Levinson of LifeLock gave us three principles that should guide innovation:

  1. Innovation must be focused on the customer. If you are innovating for the sake of a new technology or process that does not impact the customer, then you are doing it for the wrong reasons. A quote from Peter Drucker in The Practice of Management, that he shared was, “The purpose of a company is to create a customer.” If you are not focused on the customer, your innovation attempts will not be as successful as they could be.
  2. It must occur with constraints. Your innovation initiative must be done within some constraints. These can be time, cost, or scope constraints, but they must exist. Without them, a company may never deliver, always working toward something, but never getting it out in front of customers. One example is the Yahoo! WOO initiative. A corporate initiative to change search, but something that never delivered a product to market.
  3. There must be a timeline and internal milestones to prove it works. Related to number 2, and to the WOO example, timelines and metrics must be agreed upon before an innovative idea is worked on. There must be a hypothesis about why you are building this feature and what it intends to do, and within what timeframe.



If there is a three-step process for delivering innovation, it is this: know your customer; focus on your product; and study user behavior. This is displayed in the graphic above. While the idea of this process was not researched, as we spoke to companies in Silicon Valley, these steps were referenced several times. An innovative company could start at any point in the model and move as needed, though the general thought is to move around the model clockwise from your starting point. In parenthesis, we reference some commonly discussed terms related to the points in the model. Knowing your customer means understanding the Problem you are trying to solve. Focusing on your product relates to the Solution to that problem. Testing (or studying user behavior) is about Idea generation. We don’t want to get into too much detail around this model, as it is really more of a hypothesis around innovation than it is an outcome of our research. Below, we describe each node and how our research in Silicon Valley supports this model, so that future research could use this model as a starting point.

The easiest to understand is the customer. Know your customer and understand the problem you are trying to solve. When we spoke with Remind Co-Founder David Kopf, he told us the story of the company’s founding. While he was learning how to write code, his brother and Co-Founder Brett was talking to teachers and students. He was trying to understand their needs, and the company is still focused on this. Everyone in the company spends one hour per week talking to teachers. Kopf said, “Talk to your users, solve their problems.” Quotient Technologies knows their customers and environments well. CEO Steven R. Boal told us about the first use of smartphones in the grocery industry. There were apps from other companies for a BlackBerry device. However grocery scanners could not read a barcode on the device. As their users adopted smartphones, Quotient did as well, and one of their innovations is digital coupons integrated with a shopping app that allows you to plan your store visit, include coupons for products you plan to buy, and see specials throughout the store based on your location. When asked about home delivery, it was apparent they were aware of the trend, but not yet concerned, since it was still a small portion of shoppers experiences. “If it doubles, it will be 6%,” Boal said, showing that emerging trends are on their radar, and they will be able to look at innovation in those areas if it gets big enough to be a successful venture, just as they are currently doing with digital coupons and shopping apps.

This focus on the customer extends into incremental innovations that come from users and customers. At Handshake, “most feedback comes internally by listening to customers and users.” The support team meets with the Product team weekly to discuss issues that have come up, to allow the development cycle quick feedback from customers on needs and desires from the product. Support at a company may be one of the few departments who are constantly talking with users. And it’s not just learning what is broken. A support call may turn out to be a training issue, which could be an opportunity to improve the interface. It could be a process issue, where the user is trying to do something the app wasn’t designed to do, which could be an area for future enhancement.

The Solution node in the model about focusing on your product. At Handshake, CTO and Co-Founder Scott Ringwelski was asked what would happen if he took a new innovative idea to his investors. He responded that they would probably wonder why he lost focus. Whether a product is successful or not depends on the people working with the problem to be focused on delivering that product. Innovation does not come from people sitting around getting lots of different ideas. It comes from having one idea and then delivering it to market to see if people want to use it. Then taking that learning and improving the product until it is a success. At Google, Adel El-Atawy mentioned Google X, a division of Google that tries to solve big problems–a moonshot factory is how they describe themselves. Failing fast is a concept that was reiterated several times. Silicon Valley investors don’t mind failure, they just want to know an idea won’t work quickly. A successful company can fund many smaller failed start-ups. What they don’t want is a founder who doesn’t focus on answering the question, will this idea work? There is no success if you are easily distracted from your products mission. That is why we often heard that when a company is hiring, they look for people who are enthusiastic about the space the company works, whether that was Gogobot and travel, Remind and education, or Handshake and employing recent college graduates.

Another example of the importance of focus was something we heard at LinkedIn. Alik Eliashberg, Director of Engineering in the Learning division told us that acquisitions are often not about the software that another company has developed, but to incorporate people into the company who have spent years thinking about the problem. It is not great software they are trying to acquire, it is the focused people who have spent time on the problem that adds value.

The Idea/Test node is probably the hardest place to start. If you have a product and customer, testing your ideas with them is straightforward. If all you have is an idea, not yet a product, and you don’t yet know your customer, all you can do is test the ideas with people to see if you find a match between your idea, and a problem and solution. We consider this node both testing and idea generation, because here you are both starting and ending the loop. If you testing a developed solution, you are verifying that it solves the problem you set out to solve. From that testing you may find other problems, or the developed solution may not work as intended. That learning is then added back into the loop where you try to determine whether you need to move back to the product to make changes, or do you need to work more closely with your customer to determine what went wrong.

Often, idea generation is not the problem. Travis Katz at Gogobot said, ‘you will always have 50 ideas, the question is, which ones should you work on.” Ringwelski at Handshake mentioned a “holding bin” of new product features. When the company started, they would work with a college or university on site for a few days. They would work to understand the school’s pain points, build a prototype overnight and the next day show the school how they could solve the problem. Getting this type of one on one attention is not uncommon for early adopters, when a start-up is offering a new product that may be untested, but the customer has the ability to drive the direction of the product through quick feedback loops and high iteration rates.

A company that knows and is talking with their customers and focused on their product will build testing into their development process, to understand user behavior and test ideas. Some companies meet with users to test behavior. Others incorporate new features into the application and perform split testing (or A/B testing). When there is an idea on how to drive user behavior—whether that is to drive revenue, decrease costs, improve adoption, engaged user sessions, mau (monthly average users) or dau (daily average users) or some other metric—the feature is released to a small percentage of users, to see if it does what it was designed to do.


The companies we met with all have different processes for how the improve their products. It seems the larger the company, the more likely they are to use many different processes, depending on the team. Google and Microsoft are so large, their development processes most likely span the gamut of possibilities. Since we could not interview every team, there was no answer to, “what process do you follow?” There is no Google development process. Each team at Microsoft is free to use whatever process works for them. At the scale of these companies, employees are empowered to do what they need to get their work done. These is seen in the working hours in Silicon Valley. Because of traffic concerns, some companies don’t expect their employees in until 10AM, to try and miss the morning rush hour. There is such competition for talented software engineers, companies do what they can to keep people happy.

Most of the companies employ some type of agile methodology. They have scrums that last 2-4 weeks depending on the product. Web products had the most frequent releases, infrastructure was at the other end of the spectrum. For a web product, a feature may be released turned-off, according to Google and LinkedIn. First, this makes sure the new feature doesn’t interfere with the system in production. Second, it ensures that the feature can be turned off. Then canary testing of the feature, where a small percentage of users are introduced to the feature. This both ensures the stability of the feature and allows testing to determine if the feature affects user behavior.

The CEO and Co-Founder of Gogobot, Katz, said he believes in the power of small teams, especially when it comes to innovation. The mobile development teams are only three people, without a testing role. He said this made the engineers more accountable for their quality. The mobile sprints for Gogobot were one week longer than the web sprints, because it can take days to get a new version of an app on the Apple App Store, so quality is important when you can’t make changes quickly. This reality drove their development process. At Microsoft, we spoke with Rajesh Agadi, who was a team of one, working on IoT (internet of Things) hardware in his lab.

Both HERE and LifeLock spoke of the importance of diversity in innovation. There are different types of innovation occurring at a company, seemingly broken into three categories. The Harvard Business Review article “The Ambidextrous Organization” describes them as Incremental, Architectural, and Discontinuous. At LinkedIn, it was described as Core, Strategic, and Venture. At LifeLock, they have rotating teams who focus on different types of programs, so no one gets stuck with always working in one area without the opportunity to do more forward thinking work. This does two things, it ensures that ideas can come from anyone in the company, because everyone gets a chance to be involved in these different types of programs. Second, no one group becomes the “favorite child” who gets all the cool projects. Dr. Jane Macfarlane of HERE described it as the “Cool Kid Club,” one group that always gets the new projects. She broke the three types of innovation into near, mid and long term thinking. “Allow others to also be involved in the different types of innovative projects, which brings new voices into the innovation conversation.” She said, “Looking for innovation involves crossing disciplines and looking for analogies in other areas.” “Innovation comes from breaking down barriers,” and being willing to “steal shamelessly from other places.” Build research teams of different people, who can bring different perspectives into the equation. Support training and new learning.