The AVID Methodology (Video)
Create Customer Demand For New Products and Services
Your company’s organic growth is powered by two engines. The first engine is value enhancement, which improves and extends your existing products and services as needed to maintain best value over competitive solutions. In the Demand Creation System, this engine is the Value Lift methodology. The second engine of growth is value innovation, which creates new products and services that customers want. In the Demand Creation System, this engine is the AVID methodology. Once introduced, new offerings become existing offerings which are then propelled value enhancement to maximize their profitable revenue potential. But this virtuous cycle of prosperity can only be maintained if your company can innovate new offerings that customers want. Let’s take a closer look at this second engine of growth called AVID.
AVID is an acronym that stands for Agile Value Innovation Discovery. AVID is a methodology for structuring what we call the discovery phase of a value innovation effort, which is also referred to as the “fuzzy front end” of innovation.
The discovery phase is “fuzzy” because there is high uncertainty around what we call value targets. Namely, who the customers are and their job priorities, a product-service design that will be more valuable to customers than competing solutions, and a business model that can generate the desired amount of profitable revenue.
It’s the uncertainty around value targets that distinguishes value innovation from value enhancement efforts. When you’re improving and/or extending an existing product or service, value targets can be ascertained from the existing value platform.
By contrast, when developing a new job solution, there is no existing value platform from which to derive the value targets. And without clear value targets, we tend to substitute assumptions for knowledge. And it is these assumptions that drive up innovation risks, causing innovation efforts to go off track.
For this reason, value innovation efforts require a different approach in which value targets are “discovered” through exploratory activities that engage customers, non-customers, employees, and partners in search of new ways to generate and capture value. AVID’s agile structure systematically resolves the uncertainties associated with value innovation through spiral iteration until value targets are clear. Assumptions are empirically tested along the way to determine their validity before they’re accepted. Further, the direction of value innovation can change throughout the discovery phase as new knowledge is acquired.
The agile approach is “iterative” because teams cycle back to previous steps to challenge flawed assumptions when they fail the reality test. The agile approach is also “incremental” because stages provide the structure that moves an innovation effort forward.
AVID structures the discovery phase into eleven action steps across four stages of development. The critical outputs for each stage are represented by the four circular arrows situated between the stages. These serve as “go forward” or “go back” decision gates based on whether the critical outputs of each stage meet the criteria to pass to the next stage.
The input into AVID is a high potential opportunity from the Entrepreneurial Insight Generator. Thus, AVID begins with an opportunity, not ideas, as is the case with conventional development methodologies. The output of AVID is a validated opportunity and execution strategies that are passed to the execution phase.
Stage 1 verifies the high potential opportunity. Opportunities that cannot be verified at this stage are abandoned, sparing your company from spending its limited resources on fruitless innovation efforts.
Stage 2 and part Stage 3 focuses on designing a new job solution that that has sufficiently greater differential value than competing solutions. If differential value falls below this threshold, it’s unlikely the solution will succeed.
The other side of Stage 3 is validating that the value innovation opportunity can generate the required profitable revenue to support the company’s growth goal. The critical output and decision gate is validation that the offering is the best value out of competing solutions.
Stage 4 focuses on how to successfully exploit the validated opportunity. First, you will need to resolve any dependency issues in the larger business ecosystem that can constrain demand creation.
Second, you need to blueprint how the customer experiences offered by the new solution will integrate into your company’s processes. Lastly, a demand creation plan is developed that pulls it all together to hand-off to execution teams.
The best way to increase the odds of successful value innovation is to use a methodology well suited for the purpose. The alternative to AVID is often piecemeal methods and tools that do not address all the critical aspects of the discovery phase. Such an ad hoc approach can lead to the selection of fictitious or marginal innovation opportunities. The AVID methodology will enable your company to consistently create new products and services that customers want in less time, with less risk, and less cost. Remember, don’t just innovate. Create customer demand!