Solution Focus Meets Builder Mindset There is much written about the fact that entrepreneurs, intrapreneurs, and innovators of all kinds can become too focused on, even enamored with, their solution to the detriment of their idea. There is a great reason for that. It is extremely common, and it can kill great ideas and opportunities. In fact, you will find reference to this in other sections of this chapter because it impacts incubating ideas in so many ways. We will focus on a very specific manifestation of it in this section. That is, the intersection of solution infatuation with the builder mindset. Lets face it, innovators instinctively love to build things. Its less instinctive for them to love figuring out whether they are building the right things. As a result, once they believe they are on the right trackoften once they get the smallest semblance of a signal their idea resonates with someonethey double down on building and stop customer sensing. We also found another, quite different, manifestation of this.

Teams ideating in established businesses tended to analyze customer needs and markets only after they designed, or sometimes developed, a solution. Because of this, they did not proactively explore new and emerging customer needs and markets. This, of course, severely constrained their thinking and ideation and either reinforced, or led them straight into, many of the other constraints and traps we discuss in this chapter such as unconscious business model bias, customer myopia, or building things that nobody wants.

Emphasizing Revenue Too Early The performance of mature businesses is typically measured by things such as revenue, gross margin, and market share. Business leaders in established organizations have these measures imprinted in their DNA. We found that they can have a hard time thinking about other measures. We have been in new idea pitch meetings in mature organizations where leaders repeatedly asked for three-year revenue projections only moments after being reminded that the pitches were in the early stages of ideation and that kind of measure would not be available. This way of thinking is a very hard habit to break. In their formative years, new business ideas have no chance hitting the kind of revenue and margin measures leaders come to expect from mature businesses. Expecting millions of dollars of revenue in the first year of the life of a product that does not yet exist is irrational, yet we saw that expectation time and again. In fairness, it was not as much an expectation of the new product as it was a habitual comparison with mature products and newly introduced product features and extensions. We encountered countless stories of businesses being shuttered way too early in their life because they had not made their revenue targets. (Those works of fiction found in the business cases we referred to earlier.) We have even seen cases where other companies later brought the same solution to market and drove a strong, profitable business. In addition to resulting in premature shutdowns, this laser focus on revenue while ignoring other measures can result in perpetuating businesses that should not survive. For example, we have seen reports of outstanding revenue growth from incubating businesses. Triple-digit growth. Impressive, right? Except when you dig deeper and learn that the business grew from $100 of monthly revenue to $200. The growth itself is not a bad thing, nor is the total revenue, depending on the stage a business is in. In these cases it was the use of growth percentage only to give the impression the business had begun to achieve its market fit that was the issue.

Failure to Consider the True Cost of New Businesses Mature businesses often have common services that are not always directly charged back to their consumers. Sometimes those costs are allocated to a parent unit, or spread across an organization based on headcount or the amount in a specific budget line. When this was the case, the true costs of incubating businesses were not always included in their expense reporting. Furthermore, services of this nature were often disproportionately consumed by incubating businesses. The net result was that the incubating businesses appeared to be performing better than they were actually performing. Sometimes significantly better. This led to decisions to continue businesses that would otherwise be declared not viable. Perpetuating a bad idea is just as bad as shuttering a viable one. Doing so takes focus and resources from other initiatives. When something like this is discovered, it can cast a shadow on any incubation program where the business is a member. We found it could also have a demoralizing effect on other potential intrapreneurs, especially those waiting for funding. Resource Constraints Ironically, allocation of common services, as described in the previous section, can have the opposite impact on a new incubation. When allocation of common services and expertise is based on a business total budget or revenue projection, new incubations are so small they often receive none of these services. Sometimes these allocations include services that a new business may actually require even more of than a mature business (e.g., marketing). When this happens, new businesses can be starved for essential resources and their progress can be severely impacted, while some of the most mature businesses may receive an abundance of resources they do not require. (e.g., A product at the end of its life does not really need marketing resources.)

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