Innovation 101 - Part 1 of the "How to Launch New Products" Series

This is part 1 of 3 in the "How to Launch New Products" Series.
You can find an introduction and overview here; part 2 is here and part 3 here.

Part 1: Innovation 101

Many successful companies have an “innovation department”, or some variation thereof. For tech companies this is especially important, as disruption and disruptive innovation takes place at a much greater pace than it does in more traditional industries. And as Clayton Christensen famously argues in the Innovators’ Dilemma, and later the Innovator’s Solution, the best way to avoid being disrupted by challengers is to become the disruptive innovator yourself.

At Cloudflare this disruptive department is called Product Strategy. It effectively exists in a vacuum, in parallel to the core organisation. The downside of this setup is that there will by definition be a lot of duplication, as the team is just doing “its own thing”, ignoring the processes and structures put in place by the core org. The upside however is that this smaller team is much more nimble and can release and iterate on new products faster, without needing to deal with the bureaucracy that is the inevitable result of becoming a large and established business. In short, it’s a startup within a (former) startup.

Importantly, this type of idea factory is designed not to operate at scale and most of its creations are typically not something a company should go all in on. The department’s intrinsic value lies in churning out an idea, briefly validating it, and moving on to the next one. This is illustrated perfectly by Google X, which describes itself as a “moonshot factory” and openly acknowledges that most of its projects will fail and blow up on the (hopefully) proverbial launchpad. They are the idea factory of Alphabet, one of the most valuable companies on the planet, but despite Alphabet’s seemingly infinite resources it is still too risky for them to bet all their chips on one ‘moonshot idea’, no matter how promising it might seem.

Cloudflare’s core org, in contrast to Product Strategy, is designed to operate at scale. However for a company to remain successful, figuring out how to innovate is not enough - it must be able to scale that innovation the way a disruptor would eventually do it. Consequently the main options boil down to either transforming the idea factory into a second, large and rigid organisation and spinning it off, or figuring out how to transfer a product from Product Strategy to the core org.

If we follow the analogy of Product Strategy being like a startup, the two aforementioned paths re-emerge: once an idea is validated, the startup’s team can either keep working on it and attempt to scale it up on their own, or they can be acquired by a larger company to be integrated into the acquirer’s pre-existing infrastructure. However while acquisition allows ideas or products to scale much faster than organic growth can, the inevitable integration process with the acquirer is everything but trivial. And the same applies to handing over a product from an internal idea factory to the core org. Taking a prototype, as good and validated as it may be, and trying to scale it by plugging it into a pre-existing, finely tuned and calibrated machine, is hard. Solving this problem and guiding this transition is why our team was created.

Creating an entirely new role, or joining a team in its infancy, is risky. The opportunity costs are potentially high - the company might waste resources, the individual might impair their career prospects - and worse, one may end up exacerbating the prevalence of bullshit jobs. However when considering the dilemma outlined above it became clear to Cloudflare’s leadership that  there was a missing link. Somehow products needed to move from one silo to another and, in hindsight somewhat unsurprisingly, it turned out that “plugging new ideas into the machine” wouldn’t just happen by itself. The solution was to create that link. Initially it wasn’t clear what exactly that meant, but the objective was clear: make sure that the things coming out of the idea factory become successful. Thus the New Product Go-To-Market (NPGTM) team was born.

Thanks for reading part 1 of 3 in the "How to Launch New Products" Series.
The next part (#2) is here.

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