How To Take Measured Risks In Research And Innovation

The author will be present “How Contextual Intelligence Will Shape How We Predict Human Behavior” at Converge, December 10-11 in Los Angeles.

A while back I wrote a piece on a term my business partner and I coined called MMT (Middle Management Thinking). It referred to the mindset that a lot of insights and innovation professionals box themselves into, where they take few chances and prefer not to stir the pot as much as possible. The net result of course is that the world around them moves at a much faster pace than they do, eventually leading to underperformance and increased stress.

We often encounter MMT when we’re talking to prospects and trying to convince them to push themselves outside their comfort zone. In one such recent encounter, the prospect (now a client) asked me how they could overcome the stress of taking a chance on something “new” that would impact 10% of their research budget for the year. Before getting into the answer, let me provide some context. The prospect here runs insights and innovation at a mid-size company (well funded, successful startup in the personal finance business). She doesn’t enjoy the same size of budget that many of our large blue chip clients do, which means, the stress of trying something new weighs heavier on her mind.

Interestingly, as much as MMT can be a roadblock to innovation, I’ve rarely met someone who doesn’t want to rise above it. They just need the push and the guidance to do so. To help this prospect do the same, my team presented a simple framework for analysis.

We call it the Bottom X Percent Frame.

Whenever faced with a situation where the risk of trying something new seems to weigh heavily on your mind, begin by first analyzing the least performing assets in your annual spend. For example, if the “new thing” you want to try will make up 3% of your budget, then begin by first finding the least performing part of your spend that amounts to 3% or more of your budget. Once you’ve identified the bottom X% of your spend, you’ll then need to figure out if the net asset you’re looking to acquire can easily replace that least performing asset (i.e. do better what the least performing asset barely does for you currently). If the answer is YES, you’ve solved your problem. You’ve not only lowered the financial barrier to innovation, but most importantly, you’ve reduced or even cut out the mental roadblock (MMT mindset) that typically prevents you from pushing the envelope.

Interestingly, prospects that have been open to running the Bottom X Percent Analysis with us have invariably found a way to innovate. It hasn’t always resulted in business for us — sometimes what they need to replace the least performing asset isn’t something we can do or offer. Which is more than okay because the ultimate win is the fact that we’ve helped someone rise above MMT and reap the benefits offered by many innovative solutions out there.

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