Thought Leaders in Corporate Innovation: Steven Aldrich, Chief Product Officer of GoDaddy (Part 5)

Sramana Mitra: There’s an interesting question that comes up in that context. About a couple of years ago, Xerox PARC did several days of brainstorming with about 44 Fortune 500 Chief Innovation Officers. This point of hackathons versus business cases of innovative ideas came up. I did a half-day session with this group.

One of the questions that came up is, “Should you be developing stuff first or should you first be figuring out the business case for an idea?” Of course, there are multiple schools of thoughts on that. I happen to be of the opinion that you shouldn’t be developing stuff. You should first figure out whether there’s a business case or not and then develop. I’m curious what your thought is there.

Steven Aldrich: I’m probably somewhere in between. I think the business cases are often wrong. Part of my perspective on this is it’s very rare that you can predict precisely how the path of an idea will follow. So, it’s better to have a customer perspective on this, which is, “Here’s the problem we think we’re solving. Let’s put something in front of the customer and see if they care.” If they do care, then we’ll put more energy into it. It’s an iterative process where it starts with, “Hmm. That’s interesting. Let’s show it to the customer.”

Sramana Mitra: You believe that you need to develop a prototype to a customer to get customer feedback.

Steven Aldrich: I think it’s very hard for a customer to stop and react to a concept test in any realistic way. If you’re developing something new that a customer hasn’t seen before and you describe it to them, the reactions you’re going to get are all over the map. Sometimes, they’re very excited. I have been fortunate to have been leading strategy and innovation groups for a long time. I can tell you that the data that comes out of the concept testing can get you relative feedback. Whether or not the idea is going to be successful, especially if it’s a pretty new idea, you can’t tell from traditional concept testing.

Sramana Mitra: I will decisively disagree with you on this point. We have entrepreneurs who have done it the other way where they have gone and talked about their ideas with customers and then started developing. Particularly because the topic is controversial, I actually chose to explore this in developing our curriculum. There’s a company that started a while ago. They did customer support on the cloud.

Eventually, they sold to Oracle. They went public and later on, they were purchased by Oracle for about $1.3 billion. Greg Gianforte who founded RightNow had the idea. He figured out that all these companies are putting their phone numbers on the website or email addresses and then lots of customers start calling and sending them emails. Then what? They don’t have the organization to support that. They don’t have the software with which to harness all that interest and questions. They needed software to be able to process all those.

He started calling a bunch of companies that have their email addresses on their websites. He talked to 150 customers, understood what was going on in the back end, and went and developed the software. Almost every single one of the 150 people became their customers. They bootstrapped from zero to $6 million in revenue before they raised a penny of funding.

Steven Aldrich: He didn’t create a business case and then go out and try to sell that business case. He actually spent a ton of time with customers. I would imagine that as he’s describing it, he may have sketched something to that customer. What I’m saying is a very difficult way to innovate is, sit down, write a standard business case, and then attempt to write a prompt and show a description of a paragraph of value proposition to a customer.

Sramana Mitra: The point that we are both agreeing on is that customer immersion is the way you come up with good business ideas. You validate those business ideas through customer immersion. That’s 100% the policy we follow in our work. The reason it created so much discussion at the session that I was discussing is, I think you can have those conversations without writing a line of code.

Steven Aldrich: In today’s world, it’s so easy to create a prototype that you don’t actually need to write code. You can create a PowerPoint slide or a website.

This segment is part 5 in the series : Thought Leaders in Corporate Innovation: Steven Aldrich, Chief Product Officer of GoDaddy
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