As we discussed in the last few posts, the biggest mistake CIOs can make is trying to manage risk to zero, because you’ll simultaneously manage opportunity to zero.
According to Jim Vaselopulos, in his talk called, “Driving Innovation by Balancing Risk & Opportunity,” CIOs tend to focus only on the risks. You have to evaluate the opportunity WITH the risk. We need to evaluate the opportunity because you can’t properly assess the risk. Risk is only half the equation!
Instead, learn how to evaluate opportunity. How do you do this? By building assets. So you want to evaluate the asset.
Jim shared five key concepts to learn so you can measure assets, and thus opportunity. Jim shared a lot of information on how to do this – too much for me to try to summarize here. Instead I’ll list the five key concepts with highlights for each. If you want more information, then you can watch the full presentation here.
Jim listed four steps in identifying value:
1. Know how to find and identify the asset.
2. How to interpret and identify the asset.
3. Is it scarce, expensive to obtain or a catalyst?
4. Finally, when is it most valuable?
As an example, gold is pretty easy to describe, but data is tougher to describe and can either have great value or low value. Is it easy to obtain or difficult? Is it an obscure data set that requires licensing or public? Is it accurate? Does it require scrubbing? As an example, a target customer list has value, but a scrubbed target list that has all of the target customers that are exactly your customer profile is worth more. For the catalyst example, time stamps on data allows you to perform statistical analysis and makes it more valuable.
Jim covered the other issues (scarcity, etc.) with a number of great examples.
Creation of technology, programs and products is what we LIKE to do, but Jim’s comment was to not confuse the use of new technology (like agile) with the process you need to implement to create valuable assets. The technologies don’t solve the problems, the change in process and innovation is what creates the change.
As an example of what not to do, Jim highlighted the story of one of his clients, a very successful niche consulting company. They had built up technical debt over the years with their offering and hired a “hot, trendy” agile company to make them more current by offering their solution as a SAAS model. This project failed because it didn’t solve the real problem. Once Jim and his team helped the firm look at their overall business process, they identified that the problem wasn’t the use of agile – the problem was that they weren’t identifying the real requirements from their clients as they made the shift from being a custom development company to a company that had SAAS products. Once this issue was identified, they were able to solve their problem.
Jim encourages his clients to become a student of monetization and also make their teams understand this concept. Here’s a few key concepts:
Know the difference between what you sell and what you transact on! Jim tells the story of how he worked with a CEO of a plastics company. Jim stressed that they don’t sell printed plastic. The CEO said, “Of course we do!” Jim said, no, we sell the experience of having people in Wisconsin who are all about serving their customers’ needs and provide the best customer service to get our plastic. That’s why people really buy from us.
People pay for what you SELL, not for what you transact on. There are many different types of models. Jim provided a number of models for data. Here are three:
1. Google – Sells eyeballs (views);
2. Waze – Sells eyeballs and participatory value. You give your location data to get the value of the information.
3. Low Cost Insurance – these companies use a quid pro quo model. Give them data about you and you get a cheaper price. For example, if you are a good driver, an app in your cell phone will give them your driving data.
Here’s the main point in this section Jim stressed. “A good business model with an average product is more powerful than a bad business model with a great product!”
You have to allow for failure. We’ve all heard the quote, “Fail Fast.” You can’t eliminate failure and you don’t want to, because you’ll eliminate success in doing so! But you don’t have to like it or stay with it.
Jim believes that many organizations and leaders don’t deal with failure well at all. They yell and scream and it doesn’t work. Remember, “Risk Elimination is worse than failure.” Jim stresses that the military handles failure very well and in his leadership podcasts he interviews many of these leaders. (www.theleadershippodcast.com)
Jim’s favorite quote on failure was from Reggie Jackson, “… the most important requirement in success is learning to overcome failure. You must learn to tolerate it, but never accept it.
True innovation is rarely complex. We like to make it complex, but true innovation doesn’t always work that way. For illustration, Jim highlighted some key concepts from the Lean Startup method. He emphasized that this is a great book for both corporate leaders and entrepreneurs alike. In the lean startup process, you come up with the minimum viable product first, then iterate on it. What’s the minimum viable product? The product people will pay for
Leadership: Growth Mindset and 7 steps to lead your team towards innovation.
I’ll conclude with some great insights Jim gave us on having a Growth Mindset and provide a link to get the seven steps he gave us to lead your team towards innovation.
Jim studies leaders and one of his military associates shared this story with him. When the Navy Seals get a new recruit in boot camp, they ask him/her, “How many pull ups can you do?” They typically get two types of answers. 1. I can do 100; or 2. I can do at least 50.
Which is the better answer? The latter. If you cap it at 100, you’ll reach a wall. If you don’t cap out your performance, you have a growth mindset! That’s what you want.
Finally, Jim gave us seven awesome tips for building a culture of risk-taking, opportunity seizing and tolerance for failure.
Step one is to Talk to your team! And explain the risk-reward!
Want the rest of the steps? I highly recommend you watch Jim’s entire presentation. The seven steps are toward the end and this is worth watching for serious students!
We’ve made it available to our readers here.