Consulting Frameworks for Innovation
Do you have what you need to confidently guide any client through the innovation process? With the right frameworks and mental models, you can use logic to guide any client regardless of specifics. In this framework, we review key problem-solving models like Minto's Pyramid Principle, Blue Ocean Strategy, Accelerating Diffusion of Innovation, McKinsey's Three Horizons, and SIPOC New Product Introduction Process, which you can download and customize to your needs.
This collection of consulting frameworks uses logic and time-tested frameworks geared towards business and product innovation. These tools can be used for all kinds of consulting scenarios outside of strict "innovation" but its highly tailored to help consultants guide their clients through this highly tumultuous time.
Minto's pyramid principle
One area you might not expect to find consultants is in charitable giving. However, when billionaire McKenzie Scott gave away $8 billion in 11 months, she worked with a consultant firm called Bridgespan Group. Formed by three former Bain & Co. consultants, Bridgespan advises the Bill and Melinda Gates, Ford, and Rockefeller Foundation on where to donate their billions. Unlike those organizations, McKenzie Scott had some $60 billion in Amazon stock and no organization to spend it. SHe didn't even have a website to solicit requests for donations. With an urgency to give away as much as possible as soon as possible, she needed solid recommendations on where to give and fast.
For a situation like Bridgespan's, Minto's Pyramid Principle is a tool consultants can use to frame their solutions in the form of a single thought. This framework was created by Barbara Minto, known for her creation of the most commonly used frameworks called MECE. Since consultants often use groupings to simplify problems, Minto developed the Pyramid Principle with a top-down thinking structure to share ideas across teams and organizations more clearly and enable consultants to more easily convince execs that their solutions are strong.(Slide 4)
Since top execs (and billionaires) often start with a conclusion and use smaller ideas to support their main argument, Minto's Pyramid begins with a big answer to the question you're trying to solve for them, and then breaks it down into supporting arguments. Ideally, you want to make three strong recommendations to support your conclusion, each recommendation supported by three supporting facts. This helps the recipient to focus on what they are most invested in.
This pyramid structure is helpful for both working consultants and those interviewing for consulting positions.
Blue ocean strategy
Once you've won your client over and want to guide them through new challenges and stay competitive, what tool do you use?
Among ed-tech platforms that work in online education, Masterclass is unique in that it created its own dimension of innovation with cinematic quality and top-tier talent. Instead of competing directly with universities, it created, packaged and sold "Edutainment", using inspiration and credibility to market itself. As the writer Adam Keesling estimated, the company has been very successful, doubling revenue every year from $70 million in 2017 to something like $200 million in 2020.
In MasterClass' case, its credibility is the marketing tool, coupled with cinematic quality ads that draw you in. Compared to rivals Coursera and Udemy, which use individual instructors from actual universities, MasterClass is in a league of its own - a blue ocean, if you will.
Blue Ocean Strategy compares conventional logic to what's referred to here as value innovation logic. Consultants can use Blue Ocean Strategy to advise clients to use similar tactics to MasterClass and invent their own markets instead of being swept away in a bloody red ocean of competition.
In this visualization, consultants can sort the conventional logic against innovative ideas by strategic dimensions like industry assumptions. Then, they can compare where the business is now, assuming that industry conditions are given, versus what they could do instead if they take a Blue Ocean mindset — that conditions can actually be shaped. (Slide 38)
So when your client assumes that competitive advantages need to be built to beat the competition, you can advise them to pursue a quantum leap in value instead and dominate the market in a different way.
You can then take your comparisons to a canvas visualization to compare potential value propositions against the competition and see which strengths pose the greatest opportunity for blue ocean moves.(Slide 39)
Accelerating diffusion of innovation
So how do you guide your clients as they navigate the innovation landscape? Eventually, they'll be a victim of their own success if they aren't prepared for what comes after they've achieved their initial adoption stage.
There is a chasm between early adopters and the early majority, even though both are earlier on in an innovation's adoption. Even though they both sound "early" they have very different expectations. For a product or company to capture the early majority (after the "true visionaries") there's still a big gulf. Because of this, the strategies have to be drastically different.
Diffusion of innovation theory is the "oldest social science" theory outside of business. It states that persona types who adopt an innovation early have different characteristics from others. This means that as your client promotes a new innovation, it's important to promote the characteristics that will help or hinder adoption for each unique psychographic group.
In this visualization, you can see each category broken down by adoption profile and psychographic. The chasm is the tipping point between early success and wide-scale adoption. Once you have reached 16% adoption of any innovation, you must change your messaging and media strategy from one based on scarcity to one based on social proof, in order to accelerate through the chasm to the tipping point.(Slide 25)
As an example of how you might change your messaging: For the visionaries, let's say you're Tesla ten years ago. The messaging was "you could be one of the first to drive a battery-powered car. Be the change." But after Tesla's rapid rise and continued success, now the messaging should be: join the five million people who already have a Tesla. This is the social proof argument: so many people have test-driven and validated it, so what are you waiting for?
Mckinsey's three horizons
As companies mature, they often face declining growth. In order to focus on consistent growth, they need to look out for areas to grow into in the future to make themselves better.
For example, traditional banks across the world have been slow to innovate in digital banking even though they've been aware of it for years. Many banks even neglected to grow their online offerings for a long time despite the fact that online-only banks have become popular with younger people. Part of the reason they ignored pursuing something like Robinhood was that young people don't have as much money. It wasn't financially viable for these banks to pursue them since they made the bulk of their money with asset management for older adults. However, as those young customers get older, their wealth will increase, so for banks that did invest in digital banking offerings early on, they could win younger customers that five, ten, fifteen or twenty years later could be part of their biggest demographic.
The McKinsey three horizon structure allows consultants to guide clients through this same thought process so companies can assess potential areas to grow without overlooking present performance:
Horizon one represents the core businesses associated with the company's business, the bread and butter, the highest profit margin to defend and expand this current business through continuous improvements, optimize operations and maximize culture benefit and profit. Horizon two, which takes place over 2 to five years, represents an emerging market to explore but will require hefty investments Horizon three is more experimental, explorative, and potentially transformational and takes place over five to ten years.(Slide 29)
To help put this into context, think of Amazon: Horizon one was its "everything store" marketplace which took a long time to get its third-party seller system to work. While it started selling books, the goal was always to grow to sell everything you could imagine. Horizon two could have been its Kindle e-reader, and later Echo devices as well as its prime subscription service
Lastly, Horizon 3 is the more transformational bet, as first there was AWS, which was exploratory and experimental. A new horizon 3 for them is healthcare, like Amazon's newly announced deal to offer its Amazon Care virtual healthcare service to the Hilton hotel and resort group. Years in the making, the company sees an opportunity to transform the healthcare industry the same way it transformed cloud computing, though whether it's able to fully realize this goal remains to be seen - which is why it's experimental with a much longer horizon.
Sipoc new product introduction process
Say you have a great idea but logistically it doesn't make sense. This new product could even sacrifice what you're doing well. How do you launch new products without disturbing current workflows and processes? Is this product the right fit? Will it ever fit? How can you ensure operations are stable?
Tata Motors of India is an example of how collaboration created an affordable innovation that fills a real need. The car company worked with other countries like Germany, Italy, Japan, and the United States to create a $2,000 Nano car. Each country contributed cost-effective components that reflected their particular area of expertise. The result of this collaborative effort is a quality-built, more affordable car — and one that worked based on feasibility as opposed to what we usually think of as "innovation."
SIPOC is a visual tool to document business processes from beginning to end prior to implementation. Often used to define the whole process before the work begins, SIPOC is especially useful for project management, especially with LEAN. SIPOC stands for Supplier, Input, Process, Output and Customer, and is a framework to guide how your client can carry an idea out instead of defining what the product is.(Slide 24)
For instance, how will your client make this happen? What do they want, what is the opportunity size, what is the demand? Itemize task dimensions below each column across various business components like suppliers, input, process, output and customer realities. Use this checklist during innovation launches to ensure you have the process in place to actually fulfill the task, which SIPOC helps you lay out.
To learn more about process and project management and download additional tools, make sure to check out our library.
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