The Driving Eureka! Podcast - Find, Filter and Fast Track Big Ideas to Innovate

Your Innovation Podcast. Episode 40. The end of season 1, the timing of season 2 and Doug's summer vacation. Listen to learn how to Find Filter and Fast Track Big Ideas.

[00:00:00] Driving Eureka! Podcast - Episode 40

Tripp: [00:00:00] In this episode of the Driving Eureka! podcast, we're talking about the end of Season 1 and the timeline for the beginning of Season 2.

Tripp: [00:00:14] The Driving Eureka! podcast with Doug Hall and Tripp Babbitt is sponsored by the Eureka Ranch. The ranch specializes in helping companies find filter and fast track big ideas.

Tripp: [00:00:31] Hi, I'm Tripp Babbitt and I'll be your host for this fortieth episode of the Driving Eureka! podcast. If you remember last time that I recorded an episode, I didn't know where Doug was, but he's been dropping clues on a consistent basis, so I probably should have known better. He had talked about taking a break during the summer and so that's what we're doing. Apparently Doug goes to his Prince Edward Island home and he has a boat there and takes a couple months off. So when Doug was talking about taking a break, he really meant taking a break. And in some of the episodes leading up to the break and actually record recorded five episodes back in late June to cover off the month of July. And now that we're into August, he's still vacationing and giving his mind a respite. The conclusion is Doug is not lost. He is giving his mind a break. And he was laughing at the lady. I think that had to take a nap before she got creative. But he takes two months off to get his mind right and be be able to be creative. But I just thought I'd take a couple minutes and kind of look at some of the things Doug has been doing. So I went to his Facebook page and he has been cooking mussels and tomatoes and it looks like he's doing something really weird with fish. Looks like salmon and it's in salt something. It's very different, at least for my person. Or maybe that is that. Yeah, it looks like salt anyway.

Tripp: [00:02:23] They then use pictures of him on his boat and there's pictures of him where he's given money to piping in Celtic and performing arts of Canada.

Tripp: [00:02:36] He's kayaking, he's lounging.

Tripp: [00:02:39] He's drinking whisk(e)y which we see. Oh, jeez, there's a picture of Doug in a Speedo. What the heck? All right. I can't unsee that. He's making pizza to raise funds for a fundraiser. He's by a fire. So it looks like he's having a pretty relaxing time at Prince Edward Island. So, anyway, I caught up with Maggie Nichols yesterday and she told me that. Yeah. This is kind of his thing he does every summer. I knew he went there. I just did know he went for two months. So he's there relaxing and enjoying his time. And like I said, this is actually a very good thing for innovation as to give your mind a break. So those people that aren't taking a vacation on a regular basis, they need to do so now. You don't necessary have to take two months off, but your mind needs a rest in order to for you be able to use your creativity. So that's what Doug is doing and enjoying it. I myself am going to be going to Gettysburg and in the fall I'd go to the Food and Wine Festival at Disney World. So those are kind of my breaks that I take anyway. They are planning on starting Season 2, so we'll consider this the conclusion of Season 1 of the podcast and season 2 will start sometime in September and we'll have probably a bit different format. I know Maggie's got some ideas. I'm sure Doug does. And we'll have more when he gets back. I'm anxious to see what direction that they want to take the podcast. I had some ideas. I threw some in the hat too. But we'll start season 2 again in September. If I find some interesting information on creativity or innovation for my other podcast, which is Mind Your Noodles, where I have been looking at innovations, part of building a brain friendly organization is to be able to innovate.

Tripp: [00:04:49] It gets people's minds engaged and they get excited about doing innovation. We will begin Season 2 in September. But if I find something worthy of posting in the interim, I will do so and so. I hope you all have a good vacation sometime. If you haven't already this summer. Between now and when we start up in September. So thank you for listening. And that's your latest update. And you might want not want to see the Speedo picture of Doug on his Facebook page. Doug. That's just wrong.

Tripp: [00:05:39] Thank you for listening to the Driving Eureka! podcast. This podcast is part of the Innovation Engineering Institute. Innovation Engineering is a new field of academic study and leadership science. Its mission is to change the world by enabling innovation by everyone everywhere, every day, resulting in increased speed and decreased risk.

Tripp: [00:06:03] To learn more about on campus, off campus, live and online courses, visit. Innovationengineering.org.

Your Innovation Podcast. This is the 39th episode of the Driving Eureka! Podcast. This week the latest research on neuroscience and Creativity. Subscribe to learn how to Find Filter and Fast Track Big Ideas.

[00:00:00] The Driving Eureka! podcast - Episode 39

[00:01:50] New Neuroscience Research on Creativity

[00:01:55] Study 1: Creativity and Your Brain Networks

[00:08:00] Research Study 2: Openness, Intelligence and Creativity

Tripp: [00:00:00] This is the Driving Eureka! podcast, episode 39 in this episode. Neuroscience, research and creativity are discussed.

Tripp: [00:00:14] The Driving Eureka! podcast with Doug Hall and Tripp Babbitt is sponsored by the Eureka Ranch. The Ranch specializes in helping companies find filter and fast track big ideas.

Tripp: [00:00:29] Hi, I'm Tripp Babbitt, and this week Doug Hall is decidedly off the grid, so I wanted to take this opportunity to talk about neuroscience and creativity and I wanted to hit upon this subject because I do a podcast called Mind Your Noodles, which is how do we apply neuroscience and some of the research and application that's going on that is really advanced over the last 10 years to build a brain friendly organization. And I thought, well, I could do one podcast episode and leverage it both for the Driving Eureka! podcast as well as my Mind Your Noodles podcast that I do.

Tripp: [00:01:19] And I wasn't sure what is going to do it on. I started with maybe criteria for coming up with what consulting firm you might use for innovation.

Tripp: [00:01:33] I looked at how culture affects an innovation and I finally decided that some of the research that's been done in neuroscience and creativity in the last 18 months.

Tripp: [00:01:50] So this is relatively new research was interesting enough to do an episode on.

Tripp: [00:01:55] So let's start there's a couple of research studies that have been done that I found fascinating and one of them involved a hundred and sixty three subjects and they were using what's called a Functional Magnetic Resonance Imaging system, which basically detects the changes in your blood flow in your brain.

Tripp: [00:02:26] And this has some flaws associated with an fMRI. But the advances and use of it have been improving as time goes by. And one of the things that they did in this research with these under sixty three subjects was they would give the subjects an object.

Tripp: [00:02:48] And it's an everyday thing, like a knife, a brick, a rope are three of the things that they used. And they would give the person 12 seconds to come up with a creative, creative idea for it.

Tripp: [00:03:04] And. The creative types they found.

Tripp: [00:03:11] Were engaging three distinct brain networks that are what they now say, our networks that are key to creative thinking.

Tripp: [00:03:22] So there is one called the default network, which is really no activity in your brain. Brainstorming and daydreaming. That type of thing where the neurons are firing very low. And that that particular network there is one called the executive control network, which has to do with focus, which is kind of the opposite of the default network. And then there is one called the salience network, which detects things. You know, what things are you going to notice and what things are you're not going to notice in the environment and also helps it in switching between this executive where you're really focused and this default network where your brain is just kind of inactive.

Tripp: [00:04:11] Normally, these three networks don't function together.

Tripp: [00:04:17] But for people who are very creative, they seem to work together fairly well, they that we're able to come up with more ideas in this 12 seconds of looking at a particular object and coming up with other uses for it.

Tripp: [00:04:34] So a creative person is able to engage these three different networks. Effectively and efficiently.

Tripp: [00:04:45] Now, here's an interesting thing. And if you all think that Doug whores a little nuts and you think it might be associated with the Whisk(e)y company has well hit, this additional study kind of describes Doug and some of the things.

Tripp: [00:05:05] So one of the things that they found in these studies of these three networks is that it's a combination of genetics and experience. But here's the thing I found pretty fascinating and Doug would probably laugh at this.

Tripp: [00:05:21] But people with bipolar or are schizophrenic or have other neuro psychiatric illnesses tend to be more creative.

Tripp: [00:05:33] So I thought that fits Doug to a T. The ability to move between these three networks has shown to be in the genetics now. Now here's some other findings about these three networks. Children can become more creative by just watching someone be creative, watching a fantasy film. Having unstructured play can give children new insights, analytical thinking and greater creativity. But this isn't just for children having habits like writing new ideas down, trying new things.

Tripp: [00:06:20] Regular study of unfamiliar subjects all can foster creativity and now in mind, minor noodles podcasts. I also talk about other things that affect the brain. So if you're getting enough sleep, that helps in your creativity. If you're spending time outdoors, the dog tucked in an earlier episode of the science of Innovation about light and of those types of things increasing creativity. So spending time outdoors in the sun, having all those types of things stimulates your ability to be creative.

Tripp: [00:06:59] And just having sessions on a regular basis for creating new ideas.

Tripp: [00:07:05] Now, interestingly, some of the conclusions from some of the researchers that creativity does require some effort and method, a way of going about doing that enhances your ability to be able to be more creative. And that's one of the things that with regards to the innovation engineering system and in the end system, it puts a method in for you to be able to be creative.

Tripp: [00:07:37] One other note that I made on some of the research was always having something to do actually reduces creativity. Creative types should welcome boredom and reduce multi tasking. This engages your your creative networks.

Tripp: [00:08:00] In another study, there were a hundred and eighty five participants and they were looking into two traits that are often looked at together and that is openness and intellect. So what are the things they look for?

Tripp: [00:08:15] Is the thickness of your cerebral cortex. Now, the cerebral cortex is this thin layer of the brain that basically covers the outer portions, about one and a half to five millimeters.

Tripp: [00:08:29] And it covers the cerebrum.

Tripp: [00:08:33] Now, the function of the cerebral cortex is basically a.

Tripp: [00:08:39] Determining intelligence, determine your personality, your motor function, planning an organization, touch sensation, processing sensory information and language processing, and the belief was that you would have a thick cerebral cortex if you were more open and intellectual.

Tripp: [00:09:02] But this research found when they looked at these separately that there was no court, no correlation between the cerebral cortex, thickness and intelligence. And with regards to openness, there was a negative correlation between the thickness of the cerebral cortex and. Openness, meaning it wasn't thicker.

Tripp: [00:09:31] So the results support a theory of creativity. Now we got to remember a theory that that doesn't mean theory is never proven. There are finding with some of the research that they're doing that it supports the theory of what's called cognitive dis inhibition. And that means basically creativity is a result of reduced control over your thoughts.

Tripp: [00:10:00] Now, this concept of cognitive dis innovation is something that it's kind of funny. We think of Donald Trump calling himself a stable genius.

Tripp: [00:10:15] Well, there is an article that I read by was researching this that basically said, if you think you're a genius, you're crazy. So it's oxymoron to be a stable genius.

Tripp: [00:10:28] But let's just take cognitive dis inhibition as. Having people with a screw loose or some degree of eccentricity now some people dispute this and they have to basically pieces of evidence that they they point to and that that a number of creative geniuses and the entire history of civilization is very large. And the second reason that they point to as evidence is that permanent inhabitants of mental asylums do not usually produce creative masterworks.

Tripp: [00:11:11] However, the research suggests that there is a connection between madness and creativity and creative genius. Or cognitive dis inhibition.

Tripp: [00:11:29] Is really the tendency to pay attention to things that normally should be ignored or filtered out by attention. Because they appear irrelevant and that operational definition came from a doctor s h Carson. So as I did this research, almost all of the research that I read and the people theoretically did say this, that, yes, there is some degree of genetics, there's some degree of experience that goes into being creative, but that it can be learned.

Tripp: [00:12:10] It's something that you can get better at. And so I have identified some things from my reading that can increase your creativity. And here's nine of them observation skills, getting better at observing what's going around in your environment. Changing your environment is number two. The third thing is by walking or doing some type of exercise, this improves your brain function and increases your creativity. Been more curious and been intentional about it. Number five, dream without limitations and said to set aside time to do it. Six customer in thinking.

Tripp: [00:13:02] So design thinking is one of those things where you have empathy for the customer, but just putting yourself in the place of someone else can stimulate your creativity. You can practice creating as number seven by doing it again intentionally. A reader watch fiction. I used to never read any fiction just because I thought it was kind of pointless. But reading or watching fiction can actually help improve your creativity. And then the ninth thing is something I did talk about with a lady by the name of Annie Lacroix in an episode where we were talking about stress and exercise and sleep. But is mindfulness and that's really a way to teach your brain to stay in the moment. And there's a whole series of toxic things that can happen in your brain when you're stuck in the past or may maybe spending too much time in the future. But it's a way to get you in the moment. So those are there's some research for being more creative.

Tripp: [00:14:18] Hopefully it's something useful to you. And we'll look to see if Doug comes out of hiding next week.

Tripp: [00:14:25] Thank you for listening.

Tripp: [00:14:32] Thank you for listening to the Driving Eureka! podcast. This podcast is part of the Innovation Engineering Institute. Innovation Engineering is a new field of academic study and leadership science. Its mission is to change the world by enabling innovation by everyone everywhere, every day, resulting in increased speed and decreased risk. To learn more about on campus, off campus, live and online courses, visit innovation engineering dot org.

Your Innovation Podcast. This is the third episode of the Driving Eureka! Podcast. The science of Innovation success: Impact of Environment; charts vs. words; and how many sales attempts. Subscribe to learn how to Find Filter and Fast Track Big Ideas.

[00:00:00] The Driving Eureka! Podcast - The Science of Innovation Success

[00:00:28] Episode 38

[00:00:57] Impact of Environment

[00:03:48] Charts vs. Words

[00:11:10] Make 3 Attempts to Make Sales

Tripp: [00:00:00] This is part five of The Science of Innovation Success series we'll discuss impact of environment charts versus words and how many sales attempts.

Tripp: [00:00:14] The Driving Eureka! podcast with Doug Hall and Tripp Babbitt is sponsored by the Eureka! Ranch the ranch specializes in helping companies find filter and fast track big ideas.

Tripp: [00:00:28] All right this is episode thirty eighth in our science of innovation success series. And this week our three topics are impact of environment charts versus words and how many sales attempts. And I'm noticing a trend here Doug as we've gotten deeper into this series the more cryptic are your three categories better at hiding them.

Doug: [00:00:55] So we're just having some fun.

Doug: [00:00:57] All right. So impact of environment.

Doug: [00:00:59] Ok so research finds that customers are three times more likely to purchase when they like the environment. So so the environment whether it's in your store whether it's the environment of being with you hanging out whatever it might be. University of British Columbia students were shown advertisements for products in one case they were played music that appealed to them. While the while they were looking at the ads in other cases they found annoying music and the professors have to do studies and they'll play different music and they'll ask them how much they like it or how annoying it is. And I'm not throwing people under the bus here. But Indian classical music was found to be the most annoying music that they could play in India.

Doug: [00:01:50] They're not getting it you know. So they did the viewing. They were then asked if they'd be likely to buy a small thing like a pan or you know they'll have a couple of different things and three times more but when they were in the environment where they liked the music they're not.

Doug: [00:02:06] So as Ben Franklin said if you would be loved love and be lovable. When you're making your pitch make the environment friendly and as likable as possible.

Doug: [00:02:18] You know I mean we just have to you know and I've seen this in a number of different studies. Tripp I've seen this in a number of different places where likeability you know somebody's playing like this. You know the other products are wonderful it's nice. I just don't like them. Mm hmm. Likability is a big thing and you know when you get into all of this power and intimidation I'll look at stuff and I'm not sure not sure.

Tripp: [00:02:47] Have you done a any studies. There's a book Bob saltiness or Robert Cialdini pre suasion and and I think one of the things that he covers off in there is smells can smell is it.

Tripp: [00:03:00] It's kind of funny. Your eyes when you see something and it kind of fills in the blanks. It's kind of scary actually because there's multiple parts of your brain that go into sight but but smell goes right to your basically goes right to your brain. There's a spot that it goes and so there's people there have been these studies like lavender supposedly is something that makes people have you run across any of that.

Doug: [00:03:25] I'm not I'm not I've not gotten into that kind of stuff.

Tripp: [00:03:29] Okay. Cause you pretty daily mostly and not exclusively but mostly with product services.

Doug: [00:03:36] Yeah. OK we'll do both and there are some sense and there are some things on that but. But you know. And there is some literature on some of this stuff but it's just not been an area that I've looked at.

Tripp: [00:03:48] Ok cool. All right and the second thing is charts versus words.

Doug: [00:03:55] So when presenting data to your customer you'll be most effective if a you provide a clear and simple chart or b you explain the data in clear and simple words. Do you think.

Tripp: [00:04:09] I would think I've seeing. I'm very visual so I would say the simple chart.

Doug: [00:04:16] The correct answer is B. And I should've known that you explain the data in clear and simple words. Yes we've talked about this before and and research comparing the use of a chart with numbers and percents versus simple words. The words were proven two times more effective when communicating the market's message and words were three times more effective at increasing purchase intent.

Doug: [00:04:39] So you got me can see the thing is is with the words the picture they've got to interpret it they've got to turn it into a thought. And if you want to get word of mouth if you want them to tell someone else about it. They're going to have some words to do it. And so if you can just in simple terms describe what it is that's gonna happen. You're going to have more effective. It's not gonna like it as much not like I like it because these are just let's just look at the pretty picture. I don't have to do anything and it's just like Mind Candy going by. You know I want them to think I want them to engage. I want them to do it whether it's emotional thinking rational thinking I don't care but I want to touch them. You can write me poetry you can write me facts. I don't care but I want to connect deeply.

Doug: [00:05:23] And if you're going to connect with them and you want to get them you're going to have to be able to articulate what it is.

Tripp: [00:05:31] Ok. All right. So you're really in the what's so. So let me ask you this Doug why would a graph with words is that even stronger than just words by themselves.

Doug: [00:05:42] Well sometimes we have to share data.

Tripp: [00:05:45] OK.

Doug: [00:05:46] And and so what I teach my folks is there will be no chart. Without a footer that explains it. It needs learning that we will not present a chart without a caption. And the caption captures the essence of what the thing is about. OK. All right. So that's so we'll do that. More more sharing data. But but so many times people will just you know leave the images and then do it and then do it. And part of it is because they don't know what to say. So they're not clear on it. And that gets them in trouble.

Tripp: [00:06:28] So it helps provide the clarity that you're looking for too. From your previous message about you know being simple and as far as the message goes and being able to write to that I think you said 11th grade or 11th grader eleven year old 11 year old eleven year old.

Doug: [00:06:47] Like a fifth grade fifth or sixth grade. Okay. All right. Yeah. That that's what you're trying to do so. But you got to get it to words. You got to give it to words. All right. And Tripp I think that's part of the challenge that we face is that are are you like with innovation engineering we have a communicate course.

Doug: [00:07:04] And it's really about communicating not spelling grammar dotting i's and crossing t's. And that gets missed sometimes it's not that you don't need the writing fundamentals you do. But what we really need to get the thing that's missing is the thinking you know so that we've got clarity in our thinking.

Tripp: [00:07:27] You know it's interesting in what one of many things that are interesting about you Doug but the you know whenever I've met an engineer and I know quite a few that went to Purdue you know because I'm from Indiana.

Tripp: [00:07:44] But they always for people that did not either enjoy English or were very good at it. So it's just something that you learned on your own or did you just kind of always have this or did you find out early that hey it heightened your awareness that this is the way you have to communicate. Therefore I got to become a better writer. How did you what was kind of your life

Doug: [00:08:07] What would happen to me was I I chemical engineer I worked for the Procter and Gamble the mahogany plant and then I went to brand management and I had a boss named Barb Thomas who had a Masters of Fine Arts in writing.

Tripp: [00:08:23] No.

Doug: [00:08:25] I mean I took engineering because at the least amount of writing classes and a thing you know I do the math and I never forget a week or two after I started. She called me in and she says you're a really horrible writer.

Doug: [00:08:42] And I was like well yeah yeah I know that you hired me. And I figured I'd see my life passed before they were going to Nalco chemical in Chicago and I'm going to become a chemical salesperson. I just was I I think that was my plan. And and she says so I I don't want you to I want you to stop writing. And I was like yes baby she says Doug not out No no no I.

Doug: [00:09:12] I read that she did the air quotes writing she says You're never gonna write but she says you're a very good thinker. I want you to think onto the page and changed my direction in my life. Now I'm on seven working on my eighth book of all things.

Tripp: [00:09:34] So how did that change. What was it.

Doug: [00:09:36] I just stopped trying to write. I just told my story I said with simple words and I just told it. That's why I love Hemingway you know simple and my books people say it sounds like you're talking to me. Doug. Yeah.

Doug: [00:09:55] Because I don't know how to write the great American novel and it's simple clear communication and so engineering is a powerful way and it's very common after they go through an innovation during course. It is very common that the engineers will write concepts of score better than the marketing people.

Doug: [00:10:17] And and my best hypothesis on it is it isn't that that they're necessarily smarter although they'll debate they've got higher IQ but they took a real degree you know which I'm not going to buy that because I graduate the bring something so I'm not in that school but I think what it is is that the product the technical people understand the product.

Doug: [00:10:40] So they make the product the hero of it or the service the hero of it. They know how the I.T. system works. They know how the system works where many times the marketing people end up using puffery because they don't have a deep knowledge of the science of what it is the organizations doing. So it's easier to take an engineer and get them to write things that appeal to the consumer by teaching them the rules than it is to take a marketing person and teach them physics and chemistry.

Tripp: [00:11:10] Interesting. Okay. Now that I was just curious I feel like I said a bit of people that I knew that went into engineering and they couldn't even spell their own name. I mean it was just so sudden they weren't interested in interesting story. Okay so the third area that we're talking about. How many sales attempts or what do you mean.

Doug: [00:11:34] So when attempting to make a sale. Research finds that the best return on your investment of time and money is to make three attempts to make three attempts. And again we're talking about something new. OK the first pitch you make should ignite. What the research says is curiosity.

Doug: [00:11:53] You're not trying to really close the sale. You're trying to get Curiosity to get them to think you want to try to get them to stop and think about here's their problem and here's a possible solution. Now the more weird the solution is as in the more different it is it's going to be harder for them to grasp. So our second pitch is going to be about understanding. So curiosity the first time and understanding the second. We're trying to get them to really understand how this thing works and how the promise made in the first pitch can be really realized. And then on the third pitch that's what we're going for a decision. They've got enough information we're going to take care of their key concerns. And that's where we're going to ask for the sale.

Doug: [00:12:37] But the challenges many people make one pitch or two pitches and give up. You know don't do this. Make three pitches to ignite the curiosity develop the understanding and get to a decision which is what you're looking for a positive decision.

Tripp: [00:12:56] So can you kind of play this out a little bit. Let's just let's just take the whisk(e)y stuff that you're working on. How you how this would apply to that particular setting if you were trying to get I don't know you're working with Windsor and Eaton and you know a number of different places. Well

Doug: [00:13:15] If I was if I was sign to the consumer. OK I my focus my first and foremost focus would be that everybody deserves around whisk(e)y.

Doug: [00:13:24] Ok. And I would say that now for the first time you can you can literally become a whisk(e)y maker and you can make your own bourbon And we're going to make you the whisk(e)y maker. And the way some are able to do this is because 70 percent of the flavor comes from the wood. And what we've done is we've developed a collection of bourbons with really different woods from European cheerio to American oak to 200 year to maple cherry and smoked 3 wood smoked. And you're able to blend these together just like the whiskey maker takes barrels from different parts of the rock house to make their whisk(e)y.

Doug: [00:14:04] Only in this case we're going to teach you how to do this and you're gonna make your own personal whisk(e)y.

Tripp: [00:14:11] Ok. And so was is that the Curiosity piece. Or is that.

Doug: [00:14:15] I'm gonna give the whole pitch. I'm going to give the whole pitch. But the first time around they're going gonna be it's a what.

Tripp: [00:14:22] Mm hmm.

Doug: [00:14:23] Then I'm going to come back down again and what I'm going to generally do with an understanding is this and sometimes this happens in the same event.

Doug: [00:14:31] You made the basic pitch. Now I'm going to take you through tasting these things. And you're gonna get the different tastes and and then this decision.

Doug: [00:14:42] Do you want a bottle or a case.

[00:14:45] A case or 10 cases. If I go to with you one of your previous suggestions. Once they decide to buy, sell more.

Doug: [00:14:55] That's right.

Tripp: [00:14:56] Okay.

Doug: [00:14:56] Well that's why I want a case instead of one. Well that's okay. It's when you go to twelve instead of one that's an order of magnitude you're moving a decimal point. That's good. We're good on that.

Tripp: [00:15:08] Okay very good. Any other comments with regards to these three things and again when you want to be I mean the folks stop selling stop selling just.

Doug: [00:15:24] Tell your story. Tell your story. Simple words be likable and and don't give up do it three times not because you're trying to harass them but because you believe in your heart and soul and how valuable it is what you're doing that you know it's gonna make a difference for people.

Doug: [00:15:44] Funny story. And this is gonna be a public service announcement. The you. Okay so I'm old. I had just turned 60 and as you get 60 you got to do tests right. And because you got to check things it's like the clock goes off and the doc says OK.

Doug: [00:16:05] Time for the colonoscopy. And so I go in. You're not here yet. This is wonderful experience. Now it's a horrific experience because it's like a day of prep to get ready for this thing and it's. The good news is I'm all good. MARGARET But what's interesting about it is is you know they're doing the chit chat. You know the nurses there who are just like it's a production line is it running them through one or the other. And I'm just joking and saying different things and they say What do you do. I say well you know I do. You know I've done some books and you know I kind of invent for people. They're like yeah whatever whatever whatever I said Yeah. And I make whisk(e)y.

Doug: [00:16:43] Oh you make whisk(e)y whisk(e)y. Yeah I do. Oh that's really neat. Oh oh oh. And they go. That's really nice. I mean can we get you whisk(e)y I said Well yeah. I mean you can buy it. Coming up but you know coming up you're going to be able to you know instead of buying my whisk(e)y You know I think everybody deserves own. You can make your own bourbon. You can do what. Oh yeah. You can make your own bourbon. Really. What's that web site again. Doctor Right.

Doug: [00:17:17] Ok. So. So we get into this next thing you know all the people the nursing station they're all talking about this bourbon thing OK. So then I go and you do that deal you come back out. You know you're in the recovery room or you come back to consciousness and and all of this stuff and the nurses are there.

Doug: [00:17:34] So see can we really make this better go. Yeah. In fact you can have your Christmas party if you want it over there. Oh really. Really.

Doug: [00:17:45] Would you tell the doc a doctor comes out to say you're healthy and all the rest of this stuff. And I said By the way Doc you know I get this thing. The staff here saying and I know I have to come back in five years so I wanna make sure they're happy with me. And all always says that's awesome here. Call him. Call my office manager I'd love to do that. That would be great. So here I sold a Christmas party.

Tripp: [00:18:15] That's funny.

Doug: [00:18:16] That's right. It's just being friendly. Telling the story I told the story multiple times. You know in a little different way each time. Nothing fancy no PowerPoint decks no anything just talking about it. Just talking about it and that's all you got to do. And so stop selling some of the selling stuff. It's trickery and you're just gonna get the boomerang effect later. Now just have a simple conversation with people about what you're going to do. And you know so this whole series is we're closing it up now the science of innovation success. A lot of it is you know blazingly obvious but somehow we've lost the obviousness we've got too much gimmicks and tricks. If I see one more Facebook lead generation gimmick thing I'm gonna I'm just going scream. Just be folks tell people what you're gonna do. Problem promise proof. You know some pretty basic stuff. That's all it takes. Help me help me and I'll be happy to give you money.

Tripp: [00:19:22] Very cool very cool. Very good. Good way to end the series.

Doug: [00:19:26] And if you want to learn more. One moment cheesy plug. I'll learn more about the science of innovation success the innovation engineering system the innovation energy system is detailed in the new book Driving Eureka. Please support independent booksellers and of course all online conglomerates.

Tripp: [00:19:47] Good. Thank you Doug.

Doug: [00:19:49] Thank you.

Tripp: [00:19:53] Thank you for listening to the Driving Eureka! podcast. This podcast is part of the innovation Engineering Institute. Innovation engineering is a new field of academic study and leadership science. Its mission is to change the world by enabling innovation by everyone everywhere every day. resulting in increased speed and decreased risk. To learn more about on campus off campus live and online courses visit. innovation engineering dot org.

Your Innovation Podcast. This is the 37th episode of the Driving Eureka! Podcast. The science of innovation success: reduce to expand product offerings; the value of doing less; and the value of breaks. Subscribe to learn how to Find Filter and Fast Track Big Ideas.

[00:00:00] The Driving Eureka! Podcast - The Science of Innovation Success Part 4

[00:00:51] Reduce to Expand Product Offerings

[00:01:15] Reduce to Expand Product Offerings - Cut Your Product Line!

[00:03:33] How doing less Can Help You Win More

[00:06:00] Taking Short Breaks to Improve Productivity

Tripp: [00:00:00] In Part 4 of The Science of Innovation Success we'll talk about how to reduce to expand product offerings. The value of doing less than the value of breaks.

Tripp: [00:00:12] The Driving Eureka! podcast with Doug Hall and Tripp Babbitt is sponsored by Eureka! Ranch the ranch specializes in helping companies find filter and fast track big ideas.

Tripp: [00:00:30] Episode 37 of the science of innovation success and the three topics we're going to cover this week are reduce to expand product offerings which I have no idea what that means of value of doing less and the value of breaks all very cryptic types of writings here Doug.

Tripp: [00:00:51] What do you mean reduce to expand product.

Doug: [00:00:56] I should give you the quiz. It's a quiz question.

Doug: [00:00:58] Oh no significant overall sales growth can be realized if A you cut your product line by as much as 50 percent or b you expand your product line to service all customers.

Doug: [00:01:12] Now is where we need the Jeopardy theme.

Tripp: [00:01:15] Well only because you said reduce to expand product offerings to go with A.

Doug: [00:01:23] That's right. Cut your product line and I've got a pile of stories on this one here.

Doug: [00:01:29] And this is a there's all kinds of research on this and we just we we don't do this we expand it we expand it we expand it and there was in one case it was an Internet retailer they cut the worst selling 54 percent of the products across 42 categories and they got an eleven percent overall growth in sales which is just absolutely amazing. And and I've I've seen this I was down in Mexico with a guy that makes kitchen tiles and he cut half of his inventory and sales grew.

Doug: [00:02:07] And and it seems counter intuitive but the fact of the matter is as most many times when we keep adding things they're cannibalizing and I'm just talking about sales. I'm not talking about the bottom line. The bottom line profits are even bigger. But what happens is is we cannibalize and cannibalizing cannibalize ourselves. And and so we end up with needless complexity as it's called you know bureaucracy and so forth.

Tripp: [00:02:34] You know it's interesting the first time I think I saw this was on a show called The Profit with a guy by the name of Marcus Lemonis AND I THINK HE HE'S LIKE THE CEO OF CAMPING WORLD BUT HE'S ON TV And one of the first things he does when he goes in to restaurants was where I saw it as they and I have these expansive menus you know up on the on a blackboard or a whiteboard in a restaurant. And it was always the first thing he noticed that was the first thing he said oh my gosh you know you got 60 different items on here. You know what. You do all 60 well now so. So he'd always cut cut down the size of the menu in order to get it. But that works across all businesses. But what you're saying from your.

Doug: [00:03:21] Yeah. And it's not just quality and productivity and profits. It's sales. You're confusing the bejesus out of customers.

Tripp: [00:03:31] That makes sense.

Doug: [00:03:33] That's and that takes us to our second and related finding this time how doing less can help you win more lose less and make more money with your business. And I call it. Do one thing great and this a famous study it was done in a California grocery store where customers were offered free tastes of 24 flavors of jam and another leg of the test. Only six flavors of jam were offered when they offered twenty four flavors that you haven't imagined. Twenty four flavors two percent of those walking by the display made a purchase. When they offered just six flavors twelve percent by. A 600 percent increase. So when you do less you're seen as an expert and you increase your odds of success. And and the same is true in your career in life. You know when you focus and have deep expertise in an area you're going to do more. And you know. So what are you going to be greater now.

Doug: [00:04:42] And and this is also part of this thing is you know this multitasking we talk about these days. Oh yeah I can watch the iPhone and the computer and 17 things at one time. It's not possible it's not working. No it's not working. No no the faster the University of Michigan found this that multitasking not only lowers efficiency and creates errors in the tasks perform but it also compromised memory causes back pain and give people the flu and indigestion even hurts teeth and gums. Recent studies show so you know focus focus focus. What are you going to be great at. What are you going to be great at.

Tripp: [00:05:22] You know it's interesting in some of the. A lot of there's a lot of things neuroscientists disagree about one thing that I found that they do agree about is this thing I'm multitasking the brain cannot do multiple things of once it it is not physically possible for your brain to focus on multiple things that it has to do one thing. There's a switching TIME BETWEEN THAT THING AND THE NEXT THING YOU THERE THE BRAIN just cannot process five things at once it's not possible they can't even you can't even do two things. I can do one thing that's interesting. Very good cool.

Doug: [00:06:00] And our last one for this week is you can improve your problem solving ability by taking even a very short break. So remember we talked about sleeping.

Tripp: [00:06:08] Oh yeah.

Doug: [00:06:09] Well a study in the creativity Research Journal finds that if when you're really stuck instead of going run run run.

Doug: [00:06:18] You let me drive my way through this thing step back and escape really jumpstart your your brain. One hundred four undergraduate students were randomly assigned to five groups. They were then told to compute the area of two German geometric figures found in a complex drawing. These are called an insight puzzle. As soon as they came to an impasse each group was given one of three break lines long short and none. Plus one or two levels of activity during the break either are demanding or a non demanding task. The results showed that any break produced an improved performance. Solving the problem. OK.

Doug: [00:06:58] Because you know oftentimes when we get in the middle of a problem we make a collection of assumptions. A plus B is connected to the you know the wrist bones connected to the ankle bone whatever it is. And when we take a break we come back and look at those things fresh again and we can find the flaws in our mistake is because some assumptions that we've built in are getting us to a mess.

Tripp: [00:07:22] So. So it's basically once you've had the break you you're stepping back and you're being able to see some of the mistakes you made.

Doug: [00:07:29] That's right.

Tripp: [00:07:30] Okay. That's interesting. So how does diversity fit into this this this does this crossover into that as far as Yeah I do a diverse group.

Doug: [00:07:40] Yeah. The diverse groups going to help you. I mean it's obviously going to help you if you're able to listen but still at the same time the group will come to a consensus and we'll now build a foundation that can be a faulty foundation. The deal is focus. Do one thing great. And when you do get caught in a thing. Take a break take a break and approach it fresh.

Tripp: [00:08:03] Makes sense.

Doug: [00:08:04] 'til next week.

Tripp: [00:08:07] And get your Driving Eureka! book where you can learn more fun facts and stories that can help you and your innovation journey.

Tripp: [00:08:17] Thank you for listening to the Driving Eureka! podcast. This podcast is part of the innovation Engineering Institute. Innovation engineering is a new field of academic study and leadership science. Its mission is to change the world by enabling innovation by everyone everywhere every day. resulting in increased speed and decreased risk. To learn more about on campus off campus live and online courses visit. innovation engineering dot org.

Your Innovation Podcast. This is the third episode of the Driving Eureka! Podcast. The science of innovation success - part 3: Why the customer is often wrong; pictures vs words; and how to grow loyalty. Subscribe to learn how to Find Filter and Fast Track Big Ideas.

[00:00:00] The Driving Eureka! Podcast - Episode 36

[00:00:31] The Science of Innovation - Part 3

[00:00:40] The Customer is Often Wrong

[00:04:38] Pictures vs Words

[00:07:59] Growing Loyalty

Tripp: [00:00:00] This is episode 36 of the Driving Eureka! podcast. In this episode, we'll discuss why the customer is often wrong pictures versus words and how to grow the loyalty.

Tripp: [00:00:14] The Driving Eureka! podcast with Doug Hall and Tripp Babbitt is sponsored by the Eureka! Ranch, the Ranch specializes in helping companies find filter and fast track big ideas.

Tripp: [00:00:29] OKay.

Tripp: [00:00:31] We're in to a third part of our series on the science of innovation, success and the three topics we're to talk about this summer.

Tripp: [00:00:40] Why the customer is often wrong. That's interesting. Pictures versus words and how to grow loyalty. So why the customer is often right. I thought the customer was always right. Doug.

Doug: [00:00:55] Well, as it turns out, and this is this is really interesting.

Doug: [00:01:00] And this is original research that the Eureka! Ranch team did and in is specifically associated with innovations. Okay.

Doug: [00:01:09] So it's taking something that's new to the world. I got this meeting cleaning thing that people don't have. And what we don't spend a lot of time thinking about is, is we have a sales force is used to selling the same old stuff. Then we bring them something new and they sell it like they're selling the same old stuff, which is they cut deals, which is like they're not helping the process here. And so they're going to take a different approach. But what was interesting is, is that we took a huge database. We had eight or eight times.

Doug: [00:01:37] We had customers that were shown innovations, things that were different. And we asked them if they were like how likely they would be to buy them. And then what I did is I called them back. And ask them, did they buy it or not? OK, so I mean, this is like a tracking site, so you got 800 people.

Doug: [00:01:57] Times people are looking at something and making a decision and then you call them back and see what happened. So what was interesting about it was we asked him how he likely would do in the six months and we followed up at six months. So real clean. And of the 250 or so who said they absolutely, positively, definitely, I'm gonna buy this thing.

Doug: [00:02:18] You are great. I love you. I love you. I love you. Only less than half the time. Forty five percent of the time do they actually do it. I mean, come on, baby. You told me you loved me and you didn't even bother us by it.

Doug: [00:02:36] No. I mean, how discouraging is that? So.

Tripp: [00:02:40] So what happened? D.D. did were able to dig in a little bit deeper as far as each of those.

Doug: [00:02:44] Oh, I've got a second thought. Are they they they find something pretty or something. Got distracted, you know, they got distracted on it. They thought it sounded like a good idea.

Doug: [00:02:55] But either they learn more or whatever happened, maybe they asked their friends and that was that. Mm hmm. So here's the good news. We asked we'd looked at the people who said they definitely weren't gonna do it. There was no chance. No chance they're going to do it. One in five, 20 percent actually did make a purchase. OK,.

Tripp: [00:03:17] OK.

Doug: [00:03:18] So just because somebody says no. And just because somebody says yes doesn't mean they're gonna do it. So we're gonna come back to this again in another episode. But when they say no.

Doug: [00:03:33] Maybe no. Don't give up, don't give up.

Doug: [00:03:39] And when they say, yes, close the sale as fast as possible, they can be ready to take the sale because it's gonna change.

Doug: [00:03:47] You gonna to lose less than half of them. So it's interesting and I think a lot of it has to do with the fact that these are new things that they've never seen before. And so they've got to do some processing of them.

Tripp: [00:03:59] I and that I may be the differentiator as far as that it is a meaningfully unique product that you ultimately made. Interesting. I I I wouldn't have expected that I would I would have thought that 20 percent at that. That seems awfully high. So. Okay.

Doug: [00:04:17] I hate you. Oh, not really. Yeah, 80 percent. That 20 percent might be OK. All right. All right.

Doug: [00:04:27] Those are the extremes, by the way, Tripp. Those are the extremes that also help people in the middle where you see the same distribution. And so the people say, I probably don't want a whole lot more of those go up, but I'm just talking the extremes here in this segment.

Tripp: [00:04:38] Ok. All right. Pictures versus words.

Doug: [00:04:42] Ok, so this is kind of controversial with people. You know, we've got a billboard world. People who like to show me the pictures.

Doug: [00:04:49] I like the pictures. I just like pictures. I don't like to read because it takes cognitive energy to read. But some studies were done with eye tracking research where an infrared signal tracks where the eye is looking as participants paged through a magazine. And it's over. Thirteen hundred ads, over 3000 consumers. And IT research found that when it came to getting customers to stop and take notice of an advertisement text, the words were twice as effective as pictures. And when it came to holding customer attention, texts was an incredible 15 times more effective. And so while, yes, you can have a pretty picture. The fact of the matter is news matters, ideas matter. And a picture may be worth a thousand words.

Doug: [00:05:41] The problem is, it's a whole thought, a thousand words, and it's a whole thousand different words where words tell a very specific message. So take fire up that word processor, get your pen and pencil and say specifically what is your meaning for uniqueness? What is the benefit promise you're making and why should I believe you? Tell me the story of why you're great.

Doug: [00:06:02] Because if you don't, you leave it up to the customer to try to figure it out.

Tripp: [00:06:09] Yeah, I would have I would have thought that the pictures would be maybe. Does that do the pictures provide an initial draw? And then that's the words that kind of know a little.

Doug: [00:06:18] I think, no, that's not what the research really the research said to get them to get their attention. You know, to get them to take notice. The text was twice effective. They've numbed out the images.

Doug: [00:06:33] I mean, for Christ sakes, 80 percent of them are stock images anyways.

Doug: [00:06:38] Give me a break.. There's nothing there.

Doug: [00:06:43] And they just don't do it. But that's it. See, this is the difference. When we measured teams, we measured thousands of teams at the ranch in the act of creating and we asked likability, how much did you like what you're doing? How much fun was it? And we caught looked at that against the number of ideas created, we found no relationship between liking and fun with effectiveness. But we said, how effective was this team coming up with ideas against the objective? We've got a very strong relationship. So there's a difference between play and work. There's a difference between entertainment and selling. That's, you know. And I think we've got a lot of art directors who think they're Cecil B de Mille or something, you know, entertain people as opposed to telling me.

Doug: [00:07:29] I mean, how many commercials do you see there? I have no idea what the heck that was about. Oh, yeah. Especially to doubt it. Not that is not a good idea. Let me let me tell you what. Listen to this. Ready? OK. That's the sound of wasted money. What it does. One more time. See here again.

Doug: [00:07:48] Nothing. Okay.

Tripp: [00:07:54] All right. Well, that's something new, I had not run into that.

Tripp: [00:07:59] Okay. Next one is how to grow loyalty.

Doug: [00:08:02] So a couple of weeks back, I asked you the question, is it better to get new customers or to sell more to existing customers? And the answer, there was new customers.

Doug: [00:08:15] Now, that said, we have to walk and chew gum at the same time because a leaky bucket is, Dr. Franklin says. Never gets filled so he can't be losing existing customers.

Doug: [00:08:26] So what I did is I took the data nine thousand eight hundred four businesses and I looked at of existing customers.

Doug: [00:08:36] What happened when we increased the number of times they bought. Versus the amount they bought when they purchased. OK. OK.

Doug: [00:08:49] So the question is, is it better to get them to buy more frequently or to buy more when they're buying? And what the research found was the increasing dollars per purchase was three point eight times more important than the number of times customers purchased.

Tripp: [00:09:08] Ok, OK.

Doug: [00:09:09] So we think we'll just get them to buy on a frequent basis. But the reality is each time they come up to the aisle or go on to the Internet or go into the Amazon jungle, you know, and they type in that search thing, they keep giving other suggestions. And you own a certain part of the roulette wheel, if you would.

Doug: [00:09:30] And the people are just as likely to say, oh, yes, I always buy Zico. But now there's bingo. I think I'll try bingo this time.

Doug: [00:09:41] And so if you want to get your business to grow that supersize thing they do with the fast food places. It really works. It really works. Get them to buy more when they're buying. Package up your stuff so that they can buy. How can you get more of their share requirements? How can you get more them to do it? That's what it does.

Tripp: [00:10:01] Okay, so. So a related question to this I've always wondered about is when you're because you're inventing new products all the time or, you know, from new ideas and doing as I say things, do you. Is it easier to sell to your existing customer, to new customers? How would you answer that? Usually it's not as simple of a question.

Doug: [00:10:29] Ok. Because if the question is, is to get a dollar from them, you can get a dollar from the existing customers. The problem is, is instead of buying the thing that they did before, they now buy your new one. Right. So it's all cannibalization. And so the net growth of what you've got is can be sometimes pretty tiny when it comes to getting additional sales. It is far easier to get additional sales by getting new customers to buy than it is to get existing customers with an innovation. Now, that said. You've got to have a loyalty program. And the biggest on the loyalty program is the more you can get them into where you get a higher share of what they buy by getting them to stock up to get him to do it. And there's some variation bike industry, obviously, but as a general rule, you are retrying every time they buy because it's not a static world. We have this mindset in our head that once a customer spot us, they can't see anything else in the world except us. Well, that's just not the way the world works. There's other cheese balls sitting in a room creating ideas to try to take you out, you know, and I've had the opportunity having done this for 40 years. There's some industries where I've worked with four of the five biggest players. And it's hilarious. You know, we have to keep quiet from a security standpoint, but it's hilarious to hear them talking about these other companies.

Doug: [00:11:57] Like they have no clue what's going on, other companies or how they're thinking about what's just stupid.

Doug: [00:12:04] They can't make that work and they don't understand. They've got a different business model across. I have to say, I shut up. I don't say anything because that's just in our industry. You don't stay in the innovation business a long time if you have loose lips, as they say.

Tripp: [00:12:19] And that's what the things I find interesting, guys. Very rare. You talk about existing clients. It's hard to get information for you on that.

Doug: [00:12:29] Interestingly, I was up I was up at a I was talking to a vendor because we're doing a big project for a client and we have these sort of black ops projects will do.

Tripp: [00:12:40] Oh, yeah.

Doug: [00:12:41] Corporations. We've done a bunch of them over the years and four major, major companies where they'll hire us to go do something to explore something that maybe then they don't want their competitor to know that they're looking at it. And so they don't want to be associated with it. So they use us to do it and we'll file trademarks and patents and different things and then assign them to them and do them with them. And and so in this case here, there's a vendor that's going to be very important for us. They're going to run clinical studies. It's a medical thing. And I purposely went and I had dinner with them. And then I spent the day with them and drank wine in Whisk(e)y. And I asked questions and I asked questions about different things from 17 different directions. And they didn't tell me anything about who they were working with or what they were doing.

Doug: [00:13:32] And I went back to the client and said, their good, you know, because the minute anybody talks, you know, if you ask that, well, tell us what you did for them. And they talk about it, then just remember, they're going to do the same about your stuff, you know, and people get mad at us about it.

Doug: [00:13:53] It's a thing it's a founding principle of what we do now. We do talk about some things because a lot of clients have talked about it. We do talk about things when our names are on patterns because it's public record. Right. And clients have been very kind and given us permission to do it. But unless we have they've made a disclosure. We really, really don't don't talk much at all at all. I mean, it's it's incredibly I mean, I think in 40 years, there was one case where something was talked about. And interestingly, it was bizarre. It was one division in another division found out about what another division was doing.

Doug: [00:14:33] And it was the same company. And they were upset about it. And it was an inadvertent slip.

Doug: [00:14:38] And, you know, we thought same company. No, no, we're competitors.

Tripp: [00:14:46] Isn't that awful corporate guides,.

Doug: [00:14:48] But we compete. So this to be no disclosure across silos. And it was early on in the history of the Ranch. And oh, man, I was I learned a lesson on that one.

Tripp: [00:15:00] Wow. Now that's. So so Doug, when they when people hire the Ranch, are they usually looking for new products then for for new customers? Is that kind of the mindset? Do they not even go into it with that type of mindset? It's come out later.

Doug: [00:15:16] It's less specific than that generally. I mean, because we everything we do is code development with them. OK. And, you know, we work with them. And generally it's if I was to break it down, come up with a way for us to make more money, OK? And they're agnostic. I mean, they'll say a bunch of stuff that put a bunch of stuff, but they're looking for a way to generate growth. OK.

Doug: [00:15:41] You know, they're going down the lifecycle curve. They need growth. And so they're generally I we need some fresh ideas and we need to spark some of the growth, sometimes very specific. There's a growing market.

Doug: [00:15:54] There's a competitor. And they want to leapfrog a competitor in those things. But at the end of the day, it's how can we grow more and profitably grow? And the other. They can be profitable growth, you have to innovate, obviously. Otherwise, it's just a commodity game and you can't make any money.

Tripp: [00:16:06] So. All right. Well, that's a good way, I think, to in the science of innovation success. Part 3.

Doug: [00:16:15] Yeah. It's about giving up. The power of words and supersize.

Doug: [00:16:23] If you want to learn more. The book on innovation engineering called Driving Eureka! has got more of these fun facts.

Tripp: [00:16:31] Thank you for listening to the Driving Eureka! podcast. This podcast is part of the Innovation Engineering Institute. Innovation Engineering is a new field of academic study and leadership science. Its mission is to change the world by enabling innovation by everyone everywhere, every day, resulting in increased speed and decreased risk. To learn more about on campus, off campus, live and online courses, visit innovation engineering dot org.

Your Innovation Podcast. This is the 35th episode of the Driving Eureka! Podcast. Doug and Tripp will talk about the importance of sunlight, exercise and sleep on creativity. Subscribe to learn how to Find Filter and Fast Track Big Ideas.

[00:00:00] The Driving Eureka! podcast - Episode 35

[00:00:30] Part 2 - The Science of Innovation Success

[00:01:22] Sunlight and Creativity

[00:05:25] Exercise and Your Body

[00:09:08] Sleep to Big Ideas

Tripp: [00:00:00] This is episode 35 of the Driving Eureka! podcast we will discuss the impact of sunlight. exercise and sleep. On creativity.

Tripp: [00:00:14] Driving Eureka! podcast with Doug Hall and TRIPP It is sponsored by Eureka! Ranch the ranch specializes in helping companies find filter and fast track big ideas.

Tripp: [00:00:30] This is part two of the science of innovation success.

Doug: [00:00:35] So yeah yeah yeah that cool. So let's see. See now I've got it into your whole life. See this is really gonna give you stuff to talk about this weekend okay. Because we're going to go right at life.

Doug: [00:00:47] I just thought I'd put together a set of kind of like the the human condition on an on sort of the environmental. We'll talk about environment more and some of these other episodes but but this idea of the environment and what we're doing and do it. And so these are all scientific facts based on data come out of the Driving Eureka! book that can kind of open up your minds to thinking about just little things you can do it can move things in the right direction.

Tripp: [00:01:19] And Walt Disney is involved in sunlight.

Doug: [00:01:22] Yeah. The first one is how sunlight can help you think quicker smarter and more creatively. And the new research confirms this. And Walt Disney really believed in this. And the study was the research study was really monstrous involves 750 classrooms and over 21000 students.

Doug: [00:01:45] And it found that students in classrooms with the most daylight learned 20 to 26 percent faster than students with the least daylight even standardized test results in math and reading increased significantly.

Doug: [00:01:58] I mean this is huge. This is huge.

Doug: [00:02:01] And Walt Disney believed in it so strong. He designed the studios to leverage natural life light. In fact I had had the opportunity I've worked with Disney a number times and to visit some of the original studios he had he always had him on a south facing wall so they could get really good light really light. But you know sadly we spend a lot of time in kinda inside away from the light and I don't know what it is if it's the full spectrum of what it is. But you know let's open him up okay Get up get out and let the sunshine. I mean let's start doing some work outside let's do some work outside. Let's meet outside. Let's talk outside. Let's stimulate those synapses.

Tripp: [00:02:45] So so Doug when you built the Ranch did you already know about this information because the ranch is very got lots of picture windows and you know there's a lot of natural light that comes in here.

Doug: [00:02:58] Exactly. Oh yeah. And it has it has a gargantuan wall which to HVAC he is quite upset about oh you know I'm going to have to put a lot of cooling in. What do you mean what if we put some shades on that. I said he put no shades. But that is exactly what it's about. And what's funny is this even skylights on top. Yeah. And people sit there in the sun will be coming in and they go the sun's in my eyes.

Doug: [00:03:24] And so so they want us to cover it. I say maybe you should just move like three feet.

Tripp: [00:03:31] Say okay. I never knew that I just what you know is this an observation at the ranch is very you know open when you have your classes there and I thought well I wonder if Doug knew about that ahead of time. So is it is it facing south stuff.

Doug: [00:03:46] I only talk about stuff.

Doug: [00:03:48] One of my standards whenever I talk about research is truth beyond a reasonable doubt. And what that means is I don't care about how big the study is or how small a study is. If I see the study and the mechanism and how the study was done and how the research was done or even in our own work. The question is beyond a reasonable doubt means you would apply that to your life without further consideration. You would just that you absolutely believe that that's the case. In fact I'm I'm on my way after this to visit with a client and we've got some small base data but it's a bunch it's the real data on real projects we're checking the product of the system to improve increased speed of their product development system. And while the data is small it is the complete sample of their projects. So it's not there's no sampling error because we got a hundred percent of the sample and so that's an example where I have a lot of credibility to this data because this is what they've really done as opposed to peace. And so you know with things like sunlight yes the ranch is absolutely built their absolute built like that cool.

Tripp: [00:04:53] I was just curious and it makes sense. So I know it does. Does the Ranch face south. I don't know. I kind of does act.

Doug: [00:05:01] Yes it does.

Tripp: [00:05:03] It does. OK. All right. Well you would like to work a full route.

Doug: [00:05:05] Well it would set that way. It was that I had been doing this research for a long time not like a podcast you know. I'm actually old. You know I miss her a lot.

Tripp: [00:05:18] All right. Very good. So the second thing you have here is exercising your body and helps. And I've got tons of information on this.

Doug: [00:05:25] I've been reading so much on Brain Rules one by John Madina but once you go through what you have on on exercise a professor at Ball State University in your state of Indiana did a study of over 300 small business owners regarding their exercise their sales and the rewards the profits that they made. That's an entrepreneur and quite simply those that worked out more regularly had more successful businesses and digging in even deeper which the site thought was kind of interesting that runners people that do a rollback exercise saw better sales results the weightlifters both had more personal satisfaction than those couch potatoes but only the runners had better company performance and sedentary people. And I have seen this a lot in this other studies on this that show it. And if you don't have to run what you have to do is a I'm going to get a little bit voodoo here OK.

Doug: [00:06:24] So we go from science to theory now so that we're separating them. But you have to do something rhythmic and so it can be biking it can be cross-country skiing it can be swimming but something rhythmic and there is a belief that this creates a bit of a meditative state and that from this ideas come because the mind is slowed down when you get into that rhythmic exercising thing that you're doing. And I myself I am pretty vigorous on it. I mean I I do some sort of aerobics thing you know five to seven times a week. And I have found that when I have a lot to do if I stop and exercise I get more done because I solve ideas I get answers. And I do it. And so you know I can fully understand that those people that do this are getting again some. Just like the sunlight. Now the best of all is do it outside. See you do it together.

Tripp: [00:07:30] So that's why your weight room has it has windows too.

Doug: [00:07:33] That's right.

Tripp: [00:07:34] And that's in the ranch.

Doug: [00:07:36] The ranch has a one point four mile paved path around the lake outback for that exact reason.

Tripp: [00:07:47] Very good. What I have in this book I've been reading because this really has captivated my attention. But with regard to the exercise if you can do aerobics and I think you use the word rhythmic but aerobics two to three times a week for 30 minutes and like you said be bicycling it could be walking you know faster running or whatever you want to do but if you also added in a strengthening regimen that you had increased cognitive benefit with the combination of the two and then there's other benefits. So you would decrease Alzheimer's and add all types of good stuff there associated with it. But one of the interesting facts that I pulled from Medina's book was that the brain consumes 20 percent of your body's energy and yet the brain is 2 percent of your total weight which is what's kind of interesting. But the exercise provides access better or greater access to oxygen and food by virtue of the fact that kind of makes sense with all the stuff that you're saying that you know you can come up with better ideas because your brain is being able to to to filled up so very good. I I I I like the idea of exercise I exercise regularly. I still not at my ideal weight but I do run so OK. The next one is sleep.

Doug: [00:09:08] So sunshine. Aerobic exercise. And now we're going to sleep our way to big ideas. Now there's always been there's been a lot of thought that the the brain given time to incubate that ideas come to you. You take a nap or you go to sleep you wake up in the middle of night and you're already gone. You got it right. Well scientists at a university in Germany have validated that for the first time that our sleeping brains continue to work on problems. Volunteers were three times more likely than sleep deprived participants to successfully solve a series of math problems you know. And so that what they found is that sleep helps us consolidate memories sharpen thoughts. It's like it's like we start to go into a computer routine and start to go through it I think. And and this is finding that the mind when we sleep and there's a famous writer poet an artist named Sark essay R.K. who's is a good friend and her telling me she says she was writing a book and she was on deadline. So what are you doing. She says I'm napping more often because she says when I nap I get the answers.

Doug: [00:10:28] And so she came to the Ranch and had to have a nap before working with clients. And she needed to have a nap room so she would just walk away taken.

Tripp: [00:10:36] But you know Doug it's true. And this did some of the research that but I pulled out a Medina's guide research or that that he's pulled into his book Brain Rules says the same thing. A 30 minute nap. It does unbelievably good things for you as far as you know your energy level your awareness level all those types of things. It's amazing what 30. And it sounds bizarre but you know you you've seen the internship you know with with at Google you know they have that nap pods you know you go out and you take a nap and you know refreshes the brain and does all those types of things. So it's really it's really cool. And one of the pieces of data that's kind of interesting too is that sleep deprivation costs U.S. businesses. They estimate about one hundred billion dollars a year. So not only does it create good ideas but there's good reasons to avoid the costs associated with it.

Doug: [00:11:35] And I think I've got a Yeah I mean I'm sure this bunch of these things. Yes tons of these things but I've got this power nap app.

Tripp: [00:11:43] Oh really.

Doug: [00:11:44] That I'll use. And you can save more bring it up here now and you can set up a power nap 20 minutes 45 minutes and then a full sleep cycle.

Doug: [00:11:54] So the idea is is that it wakes you before you get into a deep sleep cycle. Now clearly the deep sleep cycle is going to help you more. But you know we don't always have time to do a full 90 to 120 minute deep sleep cycle. So I find that useful.

Tripp: [00:12:12] Yeah. I think so. I agree. I didn't know about the innovation portion of that which is it's cool. I like that. All right. Doug. Well that concludes this week's Science of innovation success menu.

Doug: [00:12:27] If you want to get more of these get the book Driving Eureka! available at your independent bookseller and all Internet sellers. It's got many more of these things on the science of innovation success. See you next week. All right.

Tripp: [00:12:45] Thank you for listening to the Driving Eureka! podcast. This podcast is part of the innovation Engineering Institute. Innovation engineering is a new field of academic study and leadership science. Its mission is to change the world by enabling innovation by everyone everywhere every day. resulting in increased speed and decreased risk. To learn more about on campus off campus live and online courses visit. innovation engineering dot org.

Your Innovation Podcast. This is the 34th episode of the Driving Eureka! Podcast. This is Part 1 of the Science of Innovation Success. How to grow sales, evaluate big ideas and a writing lesson from Hemingway.

[00:00:00] The Driving Eureka! Podcast - How to Grow Sales and Pick Big Ideas, Plus a Writing Lesson from Hemingway

[00:01:48] How to Grow Sales

[00:05:58] How to Evaluate Big Ideas

[00:08:24] Hemingway and Writing

Tripp: [00:00:00] This is episode 34 of the Driving Eureka! podcast. This episode will cover how to grow sales. how to pick big ideas and a writing lesson from Ernest Hemingway.

Tripp: [00:00:14] Driving Eureka! podcast with Doug Hall and Tripp Babbitt is sponsored by Eureka! Ranch the ranch specializes in helping companies find filter and fast track big ideas.

Tripp: [00:00:28] A new series called The Science of Innovation Success over the next five episodes or so why don't you share some of the thinking behind this particular series. Yeah

Doug: [00:00:46] Yeah. So my thought was as we get into the summer months to to give people some things to make them stop and think so. At the least what we're gonna do is I'm gonna give you stuff to talk about when you have yourself a fine whisk(e)y cocktail when you're sitting with friends on the beach or whatever. So we try to fill your brain with some stuff.

Doug: [00:01:10] So whether you're on your treadmill in your car or wherever you're listening to this I'm gonna give you some bite sized pieces and they're all gonna be driven on the science of innovation success it's going to be a five part series where each time we cover three programs that are based on data which is obviously the fundamentals to the whole Innovation Engineering curriculum and the movement is that it's data driven and that it's focused on data and so that's we're going to begin to three each week.

Tripp: [00:01:39] Okay. And these are the three this week are how to grow sales how to pick big ideas and writing lesson from Ernest Hemingway.

Doug: [00:01:48] Yeah. So the first one is about growing sales. Okay I'm gonna start off with a quiz for you. Here you go. Now know the smartest way to significantly grow sales is a build loyalty or b find new customers.

Tripp: [00:02:02] Okay. Well I mean my background basically tells me that you want to get your future customers from your existing customers.

Doug: [00:02:10] I'm going to say build loyalty and that's what about 70 percent of people say. And that would be wrong. Okay. And it's actually been well researched. Lots of research is called the double jeopardy effect and there's a whole pile of studies to do it that that showed this. People think it's gonna be easier to get another dollar from an existing customer rather than get new customers. Now I should put probably an asterisk with that. Okay. If you're selling the same old stuff as everybody else calls it that's a different issue. But if you're meaningfully unique. If you want to grow your business you really need to get new customers. Because in the new customers you get you're gonna get some highly loyal ones and some others are going to be a distribution. It's not possible. I'm only going to get customers that are super loyal. I'm just gonna market for super loyal people. They become super loyal. You can't market to create super look. And in fact the biggest study of this. We had nine thousand eight hundred four businesses and the ranch team did this. And we found that a number of customers was 2.8 times more important in driving the total sales than the amount bought per customer. Now that's not to say that it's not important to maintain loyalty as Ben Franklin said hey you know a leaky bucket never gets full. However the best way to build loyalty is with a meaningfully unique product or service and in order to be able to get new customers and in fact we did this study again with public radio stations I had data from of the fund raising from all the public radio stations and I looked at the number of donors they had and the amount given per donor.

Doug: [00:04:00] And sure enough in this case and this was really good data we had hundreds of stations and what we found we looked at it year after year after year and we found the same thing. And in this case it wasn't just 2.8. It was actually nine and a half times more important. And so you've got to grow your base. You've got to get new customers. I mean you're going to hit a max. I mean it's the diffusion of innovations all over again. I mean there's only a certain amount. And so you've got to be reaching out to new customers to grow the base and to do this you kind of have to something this mean cleaning.

Tripp: [00:04:35] Ok. Well that makes sense. I mean it just it kind of goes to my head. I mean there. There is so much money spent on industries like sales training and things of that sort where they're trying to find new ways to sell kind of old products if you will. And and that's one of the things that really attracted me about innovation engineering is new stuff.

Doug: [00:04:55] Well and the thing that happens is is they try to take the exact same stuff and push it into their current customers thinking that that's going to be easier. But the reality is is yeah it is easier to get those customers after you drop the price. OK. And and in fact the profitability of existing customers is usually far less. The profit margin you make than our new customers because we're desperate to hold onto them. So we give them deal after deal after deal. So it's a whole slippery slope.

Doug: [00:05:27] But to see this takes a mindset of growth it requires a different mindset then most people come to business when they're in a protection put walls around it rather than grow it.

Tripp: [00:05:42] Yeah it's switching from sort of putting lipstick lipstick on a pig to maybe getting a new pig or something else to do something about something.

Tripp: [00:05:54] Okay. Very good. So that the second thing here.

Doug: [00:05:58] Three moves the second thing is the three most important questions to ask when you're evaluating an innovation or new product business or whatever it might be. And we looked at over 10000 marketing message and what we found was that when evaluating these the important questions in customers minds are why should I care what's in it for me and why should I believe you. And why should I care. Is basically the news the meaningful uniqueness the wow. What's the thing that's gonna make a difference in my life. In other words why should I even bother to think about you. I'm happy with what I've got now and what have you got that's going to disrupt. Me in such a way that I feel like maybe I should change. So it starts with that meaningful uniqueness. Second is what's in it for me. And this is really about the benefit promise. What is that promise. What is that overt blunt direct promise. I want what are you gonna do for me. I'm going to make you healthier faster smarter more comfortable live longer. What are you going to do. What's the benefit you're going to give me. And then the third is why should I believe you. Okay so you got my attention and you telling me what's in it for me. Now I want to know is this too good to be true or not. And we got a world where lying is a bit epidemic especially on the Twitter and other Internet sources and consumers and customers are right not to believe. So you're going to have to go overboard here and most importantly you've got to be as honest and real about the real reason you can promise what others can't promise.

Tripp: [00:07:40] Ok so we talked about you talked about data driven and I remember from an earlier episode we talked about meaningful uniqueness we're able to measure that. How are we measuring what's in it for me and why should I believe you.

Doug: [00:07:53] So what we did is we did content analysis of 10000 marketing messages we could check the benefit promise numeric promise a lot of the things we talk about on podcasts. Did it provide credibility to to provide a reason to believe. Did it explain why they're able to do this. And when we scored all of those things what we found was a significant relationship on all three. And when we did factor analysis it came down to these are the key drivers that make this work in fact there's even a matrix that shows the permutations of these different things.

Tripp: [00:08:24] Ok cool. All right. And so how how did Hemingway's conversation.

Doug: [00:08:32] Ok. So I'm kind of a fan. Ok. And his book The Old Man and the sea might well be the most powerful inspiration for great business writing.

Tripp: [00:08:46] Ok.

Doug: [00:08:47] Because it features small words short sentences. And what we found is we did research on the writing. We scored the writing gets called the Flesh Kincaid's scale. It tells you what level of writing this is at third grade fifth grade seventh grade ninth grade 10th 12th twenty fifth grade or whatever. For nine hundred and one new products and we found that when the messages were simple and easy to understand there were 70 percent more likely to be successful and to be specific messages so that a eleven year old could understand realize the greatest success. Now it's not that people don't have can't read although a quarter of the American population is basically functionally illiterate. But now it's because they have no time to process as what we believe. And so that you've got to make it easy for them to get and you can do this. You can check this with your word processor and what this is not about is making it such that you've simplified it into saying nothing. It's saying a lot like Hemingway says in the old man and the sea richness of tapestry and thinking and emotions and feelings but with short sentences simple words interesting.

Tripp: [00:10:09] And this is almost like writing copy then for four for a message. Is that kind of.

Doug: [00:10:17] No it's for writing everything for writing everything OK. In an email if we want to get people to get it. Got to write it in a simple and clear way. I mean like I write. I've written a lot of books or in several books I'm amazed now. And you know sometimes when I write in the morning if I can write you know one really good paragraph. It's a great day. You know that is where you've taken all the complexity and it takes great skill to take complexity and to make it very simple.

Tripp: [00:10:50] Ok. Well that makes sense. All right. Well there's three things.

Doug: [00:10:56] That's right. And if you want to get more you know the innovation enduring book Driving Eureka! it's filled with these fun facts.

Tripp: [00:11:05] Ok well we'll have everybody pick up a Driving Eureka! book then.

Doug: [00:11:10] There we go. OK. So next week.

Tripp: [00:11:14] Thanks Doug.

Tripp: [00:11:18] Thank you for listening to the Driving Eureka! podcast. This podcast is part of the innovation Engineering Institute. Innovation engineering is a new field of academic study and leadership science. Its mission is to change the world by enabling innovation by everyone everywhere every day. resulting in increased speed and decreased risk. To learn more about on campus off campus live and online courses visit. innovation engineering dot org.

Your Innovation Podcast. This is the 33rd episode of the Driving Eureka! Podcast. We are going deep on topics and will no longer have three segments. Subscribe to learn how to Find Filter and Fast Track Big Ideas.

[00:00:00] Driving Eureka! - Episode 33

[00:00:30] Format Change

[00:00:47] We are Going Deep

[00:07:12] The Data from the Department of Commerce - Training = 400% Increase in Value and Certified 4800% Increase

[00:09:30] 500 Companies in Survey

[00:09:51] 4 Ways to Make Innovation Education Stick

[00:11:14] The Factual Data

[00:13:57] Innovation Courses Need Data and Don't Have It

[00:14:28] Final 3 All About Emotion

[00:15:47] 2. Cycles to Mastery

[00:18:13] How It Works

[00:20:21] Is Your Innovation Education Accredited?

[00:22:15] #3 - Teach and Do in the Same Course

[00:24:33] VIO vs Sphere of Influence Real Life Projects

[00:28:18] Lean and Six Sigma to Innovation Engineering

[00:29:24] #4 Provide Documentation and Tools

[00:35:07] Innovation Engineering Changes Culture

[00:35:54] Eureka! Inventing and Innovation Engineering

Tripp: [00:00:00] This is episode 33 of the Driving Eureka! podcast where we'll talk about a format change to the podcast and for ways to make innovation stick.

Tripp: [00:00:14] The Driving Eureka! podcast with Doug Hall and Tripp Babbitt is sponsored by Eureka! Ranch the ranch specializes in helping companies find filter and fast track big ideas.

Tripp: [00:00:30] And in this episode we're gonna make some changes with the way that we go about putting the podcast together and this helps us think so Doug wants to share a little bit about some of the thinking that we've been talking about with regards to these changes and some of the writing projects you have in all of that stuff.

Doug: [00:00:47] Yeah. So the you know the Internet is a world where that tends to be lots of soundbites lots of short pieces you know short quick things you know and other forget being with a senior vice president at a major corporate global corporation.

Doug: [00:01:09] And when we walked in and we started talking about innovation he says. So what's it take to change my culture. I said Well it's hard. I'm just telling you. And it's gonna take a lot of work. And I start to go through it. And he stopped me and he said Excuse me. I said yes. He says thank you. I know what you mean. Thank you. He

Doug: [00:01:27] Says thank you for not trying to make me believe that I'm an idiot that it's just a simple little thing and if I do this magical thing everything's perfect. I know it's hard. Would somebody please admit the fact that these things are hard.

Doug: [00:01:40] So I was thinking of recently because he's since retired and and thinking about him and thinking about some projects I'm doing for a new journal that's going to come out an anthology of everything to do about innovation and persuasion and that I'm writing a chapter four and some other projects I've got I I thought you know maybe we should just go our own way here. Maybe we should try something different. And so we've been doing the Driving Eureka! We've had a number of different articles in it. Talking about whisk(e)y talking about books talking about big things and I thought what if we just really focus this and it's around the for profit nonprofit which is the innovation Engineering Institute and the work we do there which is about teaching the innovation entering system for enabling innovation by everyone everywhere everyday. And instead of skipping over the surface. Go deep. Go deep on one subject each week one subject. And that's I have recognized that this could be some people who who who like to have it shallow kept putting it by bias as a guy writes real books you know not the 40 page books or the hundred and twenty page books but the you know 300 400 page books. I mean that writes real I mean let's go deep on some issues each week let's talk deeply about it and package it up the way we teach with innovation engineering around problem promise and then the method slash the proof on how to do it.

Tripp: [00:03:12] Okay. So this will be the kind of the format of it if you will as this problem promise proof portion. This interface will be something we'll see in every episode.

Doug: [00:03:22] Well that's that's a gross statement.

Tripp: [00:03:25] Okay.

Doug: [00:03:26] Which is you know consistency. Hob guy.

Tripp: [00:03:30] I am talking with Doug Hall.

Doug: [00:03:31] I'm talking to you that could be this forever. I know you love back. But that's not in a general sense.

Doug: [00:03:39] I'm going to set up a problem make a promise and then take you through the proof in the method by which to do it. Of which 80 percent 90 percent of it's going to be about how. Okay. Because I mean that's that's the real challenge. And so this will be a general structure and we'll play with it for a while and then we'll innovate and we'll find something else. But I'm hoping that you know basically as we run over the next three months sort of through the times when the days are long and the nights are short that we can do this and then come fall then it's time for something different. Okay.

Tripp: [00:04:17] Very good. Well let's start with the the 33  episode but the first episode episode of a new format and a new way of going about the way we've put together this podcast.

Doug: [00:04:29] So let's think of it as thinking deeper.

Tripp: [00:04:31] Thinking deeper okay a new way of thinking deeper. So we say Okay so four ways to make innovation education stick four times to 28 times more. That's the subject. All right.

Doug: [00:04:48] Yeah. Keep this wide acceptance of the need for innovation organizations and in support of enabling innovation there are countless courses in classes endless courses and classes that companies can provide to their employees. But sadly the vast majority of the time it doesn't seem to make a difference when employees come back to their organization. They quickly revert to their previous non innovative mindset. They just get caught up in it. I mean is this a problem you've seen.

Tripp: [00:05:20] Oh sure. Because as most systems and most habits that I've seen once an organization starts to do something that's a it's like a speeding ship. You know you can't just turn it all of a sudden and turn it around like the Titanic. You know it just keeps moving forward so people have got habits and when you go back it's very easy for organizations to fall back into old thinking.

Doug: [00:05:44] I am reminded of a time we were doing an event there were probably 400 people from around the world it was a global meeting of one of the mega car companies up in the city of Detroit and they were committed to innovation. We're going to innovate. We're going to innovate. Bob odds are we're teaching and we're having them do stuff and I just wandered around and I got around the back of the room while they were working on something. I said What do you think. There are a couple of guys sitting there and they said they took a sip of coffee and they said I don't mean to be disrespectful but I kind of heard it before. You know this new guy. This is this thing. We'll just be calm. He'll be gone and then we'll be on to the next one. I mean they're not being mean and they're being truthful totally truthful absolutely truthful. So clearly this is a big problem something we need to think deeply about. OK. So that's why I began to do this. All right. So the promise I'm going to make to you is to ignite and sustain employee engagement in innovation resulting in a 4 x to 28 X greater impact. So I'm not talking about 5 percent or 10 percent I'm talking 400 to 28 hundred percent increase. OK. So big promise. OK. So I got your attention. Absolutely. So now the proof. How am I gonna do this.

Doug: [00:07:12] Well first off I'm going to give you the numbers right up front because I got data on this one as you would figure. And then I'm going to show you the four ways for doing it. The data comes from a study that was conducted as part of a Department of Commerce n'est MEP project with U.S. manufacturing companies. They trained a whole lot of people using the methods you hear. I'm going to talk about and they found that versus people that did basic training they just attended the training those that were trained but not certified who who went into a deeper training literally where they tracked the projects they did and the value of the projects to the company they did 400 percent more not USDA you know four times nothing is not much but there was actually something with the basic training it was just very very small. OK. Then they looked at people at certified who went through the full training so went through partial training you know basic training a little bit more staff training and then did the full thing 28 times more. So that's like a big number no matter how you think about it. OK. So the question is how do you get that lid off. How do you get that lid off. Well four things. OK. So before I go into that. OK. Thoughts on that. Thoughts on that data.

Tripp: [00:08:29] No. Those those are impressive. And I'm thinking you're talking about the innovation engineering training not just any training when you're talking about the 4X or the four times what's going out there where somebody is gone through let's say a two or two and a half day program and then there's the broader application and that's what I'm talking about now.

Doug: [00:08:52] In both cases. Yeah. Both cases it's innovation engineering training. OK. Cases with a 4 x 28 X is innovation and job training it's just a matter of the degree of training that they were given. Casey sometimes do training is kind of like a drive by shooting you know just drive by hope a miracle occurs you know. You know and so there's different levels of the program. And so that's what we're talking about.

Tripp: [00:09:16] Okay. So so can you. Is there is there any more you can share as far as the the Department of Commerce study. I mean did they look at 50 companies they look at 100 companies and how did how did you conclude the kind of the four times 28 times.

Doug: [00:09:30] So it was closer to 500 companies. Oh wow. OK. And and we could track it because we had they were given innovation engineering labs and we could track the value of the projects that started in the company. OK. So we could actually track the real tangible projects. So this is this is really grounded in like real data.

Tripp: [00:09:51] Ok. Great. OK. Well now I want to know about the four things.

Doug: [00:09:55] Ok. So the first one is give rational proof. For the emotional transformation required to innovate. OK so our mindset change for humans is tough. Among other things when they when they adopt a mindset of innovation they need to accept the uncertainty of the scientific method. You know where you say I like the scientific method. Well the scientific method means you come up with some hypothesis that has no certainty to it that you're going to go run it's an experiment. And this can be hard because people want to know the answer before they start.

Tripp: [00:10:31] Yes.

Doug: [00:10:32] And related to this is they need to accept the fact that they are going to fail. You cannot adopt innovation and be right all the time. You got to get over yourself. It's not going to happen. And this is really hard for many people they have to be right. Well OK we're not talking talk about the school system's screwed up. We'll do a deeper thinking about education coming up. But on them the mindset of education. But fundamentally they've got to be willing to accept uncertainty. They've got it. We'll be willing to accept Phil and this is really hard and these challenges create fear and that fear is both rational and emotional. And I'm gonna start with the rational because I find unless you.

Doug: [00:11:14] Dissolve the rational you can't get to the emotional which is actually the bigger challenge. But it's like the first thing is you've got gotta get over the rational part. And the challenge we've got is the most. I mean in fact I would think everything except for innovation engineering and I'm I'm not boasting. Show me I'm wrong. Somebody show me I'm wrong. Most of these programs are based on war stories or Apple Google Facebook legends a book of something but there's no factual data. I mean we've got 22 binders big a four inch three ring binders of academic data and proprietary studies that have been done on over 25000 innovation successes and failures hundreds thousands of men every 17 billion active innovations we've got real data behind the methods that we teach with this and and. And if you if you're going to try to get people change make sure the programs grounded in data not. Oh it's popular it's hip it's Bobby. Well you know there's a lot of things that are popular that doesn't make them great. Gangs are popular. That doesn't make them great. We have to have some data behind this. If you're going to make the rational transformation. OK so. So why do you think rational proof as a starting place.

Tripp: [00:12:33] Yeah. There is there. There's a big tug on me on this so there's no rational giving me data giving me a scientific method which you know both of our backgrounds are from the Deming philosophy so. So we really get into those things. But I also know that emotional is how people make decisions ultimately. You know that that push comes to shove and I'm not denying any of the data that you have here but there's this emotional aspect of people buying into something that's why we have such bad decisions today. Is somebody emotionally gets involved with an idea and spends money on it and until it's dead or maybe they get lucky and it moves forward.

Doug: [00:13:21] So I won't say it but it's about and not or.

Tripp: [00:13:26] Yes.

Doug: [00:13:27] It's about a not or and see. And therein lies the challenge. So their defense the defense of those people teaching courses that are all feel good sing Kumbayah all this corn feeling is it's all emotional baby. Let's just feel it. But the problem is is that three quarters of the brains out there have a logical rational mindset whether we like it or not. And it's not good enough to do do the rational. It's not enough to do the emotional we have to do both.

Tripp: [00:13:56] I agree.

Doug: [00:13:57] But the starting place is you've got to have some rational proof in the thing that's missing from ninety nine point nine percent of innovation courses is there is no data to back up any of it there's no data there's no data as well. My cousin does this or or I've done this for a whole bunch of time. Yeah. Did it stick. No it didn't stick. That's the issue we're talking about stick factor here folks and to get stick you got to be have your feet grounded in data.

Doug: [00:14:28] And that's the place where we start now and move. And frankly the next three are all about emotion. OK. All about emotion. But you got to have the data. No math no stick. OK. Because otherwise it's a random dice roll and there will be too much variance in it. Little exists. And because it is what's interesting is the minute we talk about innovation with innovation engineering we do testing quantitative testing we do sales forecasting and innovation people do. You're ruining the spirit of it. Well get over yourself. Okay. And then you whine that when you get into the system the accountants kill you. Well guess what. Get over yourself. Do you want to just have a feel good playground or do you want to ship baby ship and make money. That's the difference that we're talking about so it starts with the rational brain which is totally contradictory to all the other trainings of feely ethnography and in the feeling of the design and and and the spirit of collaboration and yes those things are all wonderful.

Doug: [00:15:32] But we have to have our feet grounded solid because eventually you're going to have real world adults. We're going to have to evaluate the stuff.

Tripp: [00:15:39] Ok. All right so so let's get to these two three and four that you say are more tied into two to the emotional.

Doug: [00:15:47] So the first the second thing is cycles to mastery. OK. You've got to design the course to understand the diffusion of innovation challenge. Everett Rogers wrote the book diffusion of innovations fifth edition now. Any any really does an amazing job and back to supported with data why I like Kim explains how and why new ideas spread across the culture where that's a culture of your customers or whether it's a culture across your company. And in simple terms innovations move from innovators which are two and a half percent of our population to early adopters which are 13 1/2. They're actually the second group. The innovators they'll do anything. Early adopters and come next an early majority 34 percent late majority 34. And then the laggards 16 percent in basically each group holds back on adoption till they observed the group before them has made the switch. Now for efficiency companies like to apply training to everyone at the same time. Basically spread it like peanut butter across to everybody. And the result is you get a mixed collection. You get those people who are for it and those are against it. And and this creates a conflict. You get tribes start to develop okay which doesn't create momentum now to soften these differences. We found that part of what's happening with Everett Rogers is there's a repetition that happens. The innovators and the early adopters they'll grab on pretty quickly. The early majority have to see it a number of times the late majority a lot more times before they're going to start to buy in. And so what we've learned is that instead of a one in Doug class where you teach a subject and then what you've learned in. And you have to now adopt it. That's only going to happen with the crazy people the innovators. I love them but they crazy. OK. And what we have to do is we have to take them on a journey of dozens if not hundreds of cycles of learning. Till they master and adopt the new mindset.

Tripp: [00:17:49] Ok so one quick question I have for you. Doug. When you're starting this then you've kind of laid out kind of this innovator's early adopters early majority those types of things. Who. Who are you taking then and kind of the first series if it's a if it's a smaller tribe or you're trying to take one from each group or are you just focusing in on the innovators and the early adopters.

Doug: [00:18:13] I'm no I mean you if you leave it to its own what'll happen is it'll be the innovators and early adopters that will self select to go do it. But the fact is it takes a long time then to go through the organization. So I'm just going to take whoever the company wants to have do it. OK. OK. Yeah I'm just gonna play the hand I've been dealt. I'm an engineer. The factory has to run. But what I'm gonna do is with innovation engineering we're gonna do take a cycles to mastery approach where we're gonna give them a digital class a short seven minute video that presents a theory of a sub skill or skill. Then we're gonna give them a lab class that builds their capability. So where they get to see it feel it touch it OK and it's broken down into small parts. OK then we can talk more about this and then point them three there we're going to do an application class that creates confidence and that's the biggest longest class.

Doug: [00:19:04] In other words rather than teach them and then drive by and say Good luck folks. Hope you have a good day. You've taken the class. Good luck with that. And then they go back go What the hell am I doing. Instead we're going to work with them to help them make it real and and then finally we're going to do a reflection class which we can actually do a number of times to get them to connect the dots and the theory to the reality in the workplace. And so what we're doing is enabling diffusion to happen inside that person. And what you find is that some people the innovators and early adopters are watching digital class. I got it. This is awesome.

Doug: [00:19:39] Some the light bulb will go off during the lab class. I mean when we're doing three and five day things because he goes through this journey you know sometimes it's day four and they go. I get it I get it now. And so it's allowing this to happen at their own pace.

Doug: [00:19:55] But giving him those repetitions to start to build it. Now you're only going to do this if you really believe that it's going to be important for your organization to get a nimbleness and ability to innovate and change if you don't believe it's important then just whatever you know. But if you want to make it work this will make it work. And importantly is that instead of being punitive.

Doug: [00:20:21] Ok. Because you know we we unlike other courses and in fact I think I think you should challange people is do you have college accredited courses. You know to be college accredited you have to go through peer review you've got an accreditation. I mean you have to meet some standards. Most courses that you're sort of Joe flow beats is instant creativity class or innovation guru class or I did something lucky once at Starbucks and so here I am now a genius. And so you know learn from me whatever you know. But there's no real substance behind it you know. And so because we do real classes certified on can't you know accredited on campus and we're gonna go through that process we have to give grades. And but even with the grades you need to make sure if you're doing a certification or a grade that the learning is not punitive. Instead of pass/fail what we do is we give students coaching feedback on assignments and they are encouraged to resubmit until they reach success. So you know just like you can't walk out. OK here let me show you the tennis racket. That's how it works. Ok. Dude you're ready. Wimbledon you're up. You know instead you're going to hit some serves. And they're going to be bad. And the coaches say you're a loser loser. No they're going to give you coaching and you can do it again. They're gonna give you coaching and you can do again. That's how it works folks. OK.

Doug: [00:21:48] Some are getting it quickly some will take longer. But everybody has the means to reach the new mindset. We're not going to have the cool innovation kids and the dorks. We're going to have one. One culture.

Tripp: [00:22:00] Got it. So. So if I've done the digital class you know I do the other lab class these four things the application class and then the reflection class. Is this what gets me my 28 X my 28 times the elements. Yes.

Doug: [00:22:15] Ok. OK. And the key component to this is number three which is teach and do in the same session in the same course start the application. So to get emotional in it's critical that the innovation training be made real and as part of the course not the course.

Doug: [00:22:34] And now do it. And so many people that do training they don't like to get their hands icky with the real world. You know they like where they are.

Doug: [00:22:43] I just do the theory with my case studies because I'm comfortable in my case studies because they're bullet proof. No. And they start asking questions well how does this work. And this you know ah. Oh obviously it's obvious. No it's not obvious because see if you look inside the mind if you peer inside the mind of students in an innovation course especially if they're not the innovators they're thinking continuously does this make sense for me. How can I use this. When I go back to work how does this fit. How does this fit. How does this fit. And the challenge is that when you have generic case studies it can be harder and harder for you to see the connection that you have because what you've got to do is you've got to use some creativity to make the transition.

Doug: [00:23:35] And those people that are maybe not going to get it as quickly because they're lower they're not going to have that leap of faith. OK. To make that difference. OK. And so it's going to be harder and harder to see you've got to make this absolutely real to them.

Tripp: [00:23:52] Okay. So you're so. So you've you've taken the training you've done some things during the course of the training that are outside of really what their work is so they can kind of learn and understand and now really in step 3 we're starting to. How does this apply to my setting and at my where I work.

Doug: [00:24:15] That's right. So we're going to do it. We're gonna do real work and learn and do learning do. I mean even my lecture events I'm moving all of my lecture events from the talking head that I've been doing. You know we've been doing it for years and I finally just got fed up with it and I've decided everything I do is gonna be learn and do learn and do.

Doug: [00:24:33] Because that creates the stick factor much bigger. Now there's two ways to do this. One is is the company may have a very important opportunity we call it a VIO. OK. It's some big challenge that the company faces it could be a system it can be product could be anything. OK. Something at. And that group the training is a group that's going to address this very important opportunity as part of a project. OK. So they're going to work on a big project to get a proof of concept that this new mindset and that they can do great things.

Doug: [00:25:03] The other way to do it is to have those attending the course work on applying the learning to a project that is within their sphere of influence. Basically something that they have control over something that they think they can manage. It could be a problem a frustration somebody face in their day to day work.

Doug: [00:25:21] It doesn't have to be huge it's just needs to be something that needs some fresh ideas. And interestingly we're finding that a combination of these methods is the right approach to really transforming a culture. The the big V.A. projects create big value for your organization. However the only apply to a small subset of employees that would be working on. The sphere of influence projects create depth of engagement across the culture. And in fact this whole thing is so important. This application it's 70 percent of the time required to become certified as an innovation Engineering blue belt or black belt. The higher level is spent on application of the learning now. And I understand it's just like Six Sigma when in the beginning not today but in the beginning it was a lot more time spent on application and it costs more to do this. But the stick factor is a four digit ROI. I mean it's it's just it's amazing what happens here.

Tripp: [00:26:21] So Doug is there a when you look at these two these two different types of projects here. Your very important opportunity or the sphere of influence type of of project. Is there one that you kind of suggest people move towards it as a as a start or is it really up to the organization.

Doug: [00:26:43] Do both.

Tripp: [00:26:44] Do both.

Doug: [00:26:45] You both do both. It's not linear now but do both at the same time because you're going to need those people in the engine room to help the thing go because otherwise see if you just take the cool kids off site to do their cool thing and then they hit the regular organization crash you know so you've got to get the mindset. I was with a company up in Canada recently and interestingly they had kept everything in sort of the marketing and product development group and now finance procurement are all seeking training and engagement in it because they have systems that they want to innovate on to work faster smarter run. And so we need to get those people that do it if you want to truly create a culture versus a tribe of people that do it.

Tripp: [00:27:31] One one question I have if I'm if I'm an organization out there and let's say I'm doing lean which I guess would fall under kind of your spear of influence projects you have other people working on things. What's the difference between. And this gets kind of to your comment at the beginning where the person that's involved in an organization is going OK. Here's the next thing. How does that fit in. What's what's the difference between let's say the two.

Doug: [00:27:59] You mean between lean and innovation engineering.

Tripp: [00:28:01] Yeah.

Doug: [00:28:02] Well I mean there. I mean lean is is is a tool box which is fine and it's and it's fine for the tools that it provides. You know what we're providing here is a way within lean. They'll talk about creating ideas.

Doug: [00:28:18] You know the job map out the set the flow and the value chain. Right. And and and then you have to create ideas but they they just say brainstorm. This explodes that element to it. And it does not only that with regards to systems but it provides really industrial strength tools so lean is a great stepping stone to an innovation engineering engagement in fact many of our top practitioners are lean in Six Sigma people.

Tripp: [00:28:47] So you kind of had that mindset where you're giving is this this explosion of ideas as opposed to taking the already existing tools that are in a toolkit and trying to apply them and then use brainstorming.

Doug: [00:29:02] That's right. I mean they find the tools to find that what we're talking about here is find filter and fast track its acceleration of ideas it's bigger ideas. It's enabling people to think faster and smarter.

Tripp: [00:29:14] Ok. All right. I just want to get some clarification. I know a lot of especially large organizations which I know you guys work a lot with. Have a lean or a Six Sigma type of program or both.

Doug: [00:29:24] That's right. And that's. And in particular you know this adds value to that in the factory the Lean Six Sigma has had a very difficult time getting to strategy and innovation. We obviously help with those things as well. OK. Different thing. They're all based off of Deming that's just a different different. We're cousins. If you would the last of the four things. So we've gone through improved for the give rational proof understand the diffusion of innovation application application teach and do. And then the last thing is more tactical which is provide documentation and tools to make innovation education real see. So the problem is is many of these courses teach theory and abstract methods. But when employees go back to try to use them there isn't really an implementation. And so everybody implements in a different way. We found that it's critical to provide documented systems. That's step by step. Written methods that provide freedom within a framework through implementation. So we've put in thousands of hours creating and continuously updating operations manuals in over 100 short videos on how to apply the learning step by step. See you've got to reduce it to practice. That's what we're talking about. OK. And in that it is like a level that needs to go on if you're going to do it because otherwise they come back and they just get frustrated. And worse than that we've observed that often the existing tools whether it's for project management problem solving math patents collaboration research anything are designed to prevent mistakes. And this is fine we're working on projects and problems with law uncertainty but would imply employees try to use their new innovation mindset with old world tools. They get frustrated and soon go back to their old way of thinking what we need is tools to increase speed while decreased risk. And when the tool bat box matches the mindset. That employees engaged in momentum to innovate builds. It's not enough to give the education you need to provide the tools that enable employees to adapt and sustain the new way of thinking.

Tripp: [00:31:37] So. So as far as the new tools I mean there has to be some flexibility than associated with it because you know when you think of when whenever I hear the word tool I immediately think of of lean because you know it is a to me a very limited tool box. And what innovation engineering offers is a much broader mindset of creativity.

Doug: [00:32:02] While it's just a right but it's different it's just different it's apples and oranges. OK. But they supplement each other. And when we're talking tools we're not talking about just Venn diagrams for Christ sake. They drive me crazy. No I'm talking about digital tools that enable you to do you know five year Monte Carlo risk adjusted forecasting tools that allow you to write a patent in about an hour. You know I'm talking about serious industrial strength tools that allow you to do things you can't do it. You know you can look at any other way research that you can do at 5 percent of the time and cost. Artificial intelligence systems that read your idea give you ideas and advice for making it better. I mean you know serious tools that Amplify the education. I mean the goal of the tools is to amplify the education.

Tripp: [00:32:54] So. So would you look at organization. There is always the fear of when you're going deep like you have in this particular episode that people are sitting back. It could be the CEO of an organization or a senior executive organization going. My people would never be able to do this. This is just too hard for you know my organization to be able to apply this. I mean you're talking about Monte Carlo. You know I'm just trying to get them to come to work on time.

Doug: [00:33:27] Yeah I understand. So you got a bunch of idiots to just fire all the bastards and get a bunch of new ones. Yeah I guess that's it.

Doug: [00:33:34] Yeah that sounds like a reasonable thing to me. Just fire them all get a bunch of idiots and go get yourself a Steve Jobs. That's what you need. Yeah. Come on have to be honest with you guys. I think people I know people. So you're either going to do it and you're gonna take that employee who comes in with a mindset and you're gonna just leave in the way they are or do you want them to do it. I would require employees to get continuous education. I want them to keep getting smarter. Otherwise if you don't get smarter in today's world you're getting dumber. See either walk the talk and you believe in your people and you get a better return on investment for their minds.

Doug: [00:34:14] Or you don't. Now if you don't. OK whatever. You know success is not guaranteed. Failure is an option. Death of an organization is what happens. Companies die. They go through the life cycle they die. School.

Doug: [00:34:32] Okay so you don't buy into the philosophy of philosophy of change the people or change the people. I mean that's the. Yeah. I mean if they're unwilling to learn that's a different story. OK.

Doug: [00:34:45] But you know Deming was right. Ninety four percent of the problem is the system 6 percent to worker and that system includes their thinking system and the methods. If you say well we are you got this okay Show me your operations manual for how you created this. Okay I'm waiting. What do you mean. Well well what's your what's your system that you teach your boys. Well we don't have one. Oh so ideas aren't that important.

Doug: [00:35:07] Well no no they're critical. I said So what is it a random dice roll. I mean when you do this mindset it's a game changing impact on a culture. It creates reward for employees and never ending growth of the company. I mean but it's not as simple as just assign somebody higher rent to goo or send them all to a class. It takes more than that. So and this more than this. By the way this leadership role organization signed rewards systems that's beyond the scope of this will cover that and another another episode. But you know there's some fundamental things that you either get serious about this or you don't. And if you don't I'm OK. Death. Death is an option. I know you got three years to retirement. So give it up baby. I mean who cares.

Tripp: [00:35:54] So when one last question I want to ask on this is you know when you look at the Yreka ranch you've got Eureka! Inventing and then you have this training portion. When would someone decide to put needs something from a Eureka and venting where you guys basically come in and do stuff for them versus a training type of format here. How did how did they play together.

Doug: [00:36:18] Well most of the time they do both. Okay. Thank you both concurrently. In other words they train the people and have us lead the session the first time through because that accelerates it makes it go faster because you get pressures on the CEO and you get pressures on divisions for innovation pipeline and I respect that and I have no troubles with that the first time through will lead it second time through they'll believe it's getting the third time through. You know they start to take over leadership and that's a pretty common method. But there are also times when I've got an emergency as a business leader I got to have something and I need it fast and I don't have time for my people to learn and then so call it a proof of concept that the method. Because by the way you're reconvening it's nothing different than innovation engineering led by people who've got a lot of experience in it. I mean there's no other magic Wiffle dust. You know it is the same thing. We just have people that got a lot of experience she got old farts like me helping with ideas and you know people have seen a lot done a lot you know and they've got confidence. But if the methods are exactly the same. And so you know it depends on your business situation and you really have to be respectful for the situation as it is not try to say well that's fine but you really need to do this. No no. Play the hand you've been dealt. Get over it. That's what engineers do we deal with what we've got. We don't talk theory we get going.

Tripp: [00:37:37] Ok. All right. Well this has been as you said he was going to be a very in-depth discussion about some of the things that you can do as far as innovation goes. Any final comments you make about today's episode.

Doug: [00:37:54] No I can tell you that I liked writing the the blog post on this and I like talking because I think what the world needs is more depth. So we need more depth. We need depth.

Doug: [00:38:13] And so I think I think this is going to be a wonderful you know innovation for us with the Driving Eureka! as we seek to teach the innovation and sharing system for enabling innovation by everyone everywhere every day. How do we get everybody engaged. And that's not just a slogan. It is the truth. It is the mission is our purpose is what gets us up in the morning it's what it's what reason why I'm doing this and not just drinking whisk(e)y on my sailboat although that's a fun thing to do to it. It is it is the driving dimension and thinking deeper is what we're gonna do. And I like it. I think there's going to be fun. It's going to challenge me to think harder. The popcorn things define. But it's just skipping over the surface. When you have to think deeper about it. I don't know it's just more engaging to me.

Tripp: [00:39:04] Ok. All right. Well those are great closing comments and I think that's a great lead in for future episodes too.

Doug: [00:39:10] Thank you Tripp.

Tripp: [00:39:11] Thanks.

Tripp: [00:39:15] Thank you for listening to the Driving Eureka! podcast. This podcast is part of the innovation Engineering Institute. Innovation engineering is a new field of academic study and leadership science. Its mission is to change the world by enabling innovation by everyone everywhere every day. resulting in increased speed and decreased risk. To learn more about on campus off campus live and online courses visit. Innovation engineering. Dot org.

Your Innovation Podcast. This is the 32nd episode of the Driving Eureka! Podcast. The Driving Eureka! Feature Story: What's Next After the Magic Show; Enabling Innovation Segment: 3 Innovation Secrets Revealed; Whisk(e)y Academy Segment: How Brain Brew Whisk(e)y makes sure their products are really GREAT!. Subscribe to learn how to Find Filter and Fast Track Big Ideas.

[00:00:12] Driving Eureka! - Episode 32

[00:01:55] Executives Love Magic

[00:02:10] Merwynn the Magician!

[00:03:36] Magic Isn't the Key

[00:04:40] The Real Research

[00:05:46] Innovation Engineering Instead of the Magic Show

[00:07:10] Companies Don't Know What They Don't Know

[00:09:00] Innovation Engineering Provides Fast and Less Expensive

[00:10:21] Need for Infrastructure to Innovate

[00:11:14] Segment 2- Enabling Innovation

[00:12:30] Magician Reveals the Secret

[00:13:24] 3 Areas to Look for BIG IDEAS

[00:13:39] Wisdom Mining - Academic Journals

[00:15:06] 2nd Way to Find BIG IDEAS - Flea Market Patents

[00:16:53] 3rd Way to BIG IDEAS - TRIZ

[00:20:22] Whisk(e)y Academy

[00:20:48] How to Make Sure Your Products are Really Great

[00:21:06] OK is a No Go

[00:23:26] You Must Live with It

[00:24:18] Insights from Living with It

[00:26:10] Whisk(e)ys are NOT All the Same

[00:29:20] Need Quantitative Data

Doug: [00:00:00] I think what management of most companies want is magic. As in they say they want something to happen and magically it happens.

Tripp: [00:00:12] That's Doug Hall talking about the Driving Eureka! feature story. What's next after the innovation magic show. The Driving Eureka! feature story is brought to you by the Eureka! Ranch. The ranch specializes in helping companies find filter and fast track big ideas. To learn more about our new Eureka hackathon methodology the fastest way on earth to create and problem solve business challenges. Visit Eurekaranch.com. This is Episode 32 and I'm Tripp Babbitt. All right. Doug. So this week what's next. After the innovation magic show what's the magic show.

Doug: [00:01:03] So I had an opportunity I was just down in Houston and I met with a guy who was very wise. OK so we were in a bar OK.

Tripp: [00:01:16] Everybody gets wise after a couple of drinks. Yeah.

Doug: [00:01:20] So now I a friend of a friend connected me to him and we we just got together and had a little whisk(e)y and we were talking and one of the things he said to me was he said I think what management of most companies want is magic.

Doug: [00:01:38] As in they say they want something to happen and magically it happens.

Doug: [00:01:46] Now forget about the fact that a whole lot of people may have had to go pull all nighters and do all kinds of work arounds and all kinds of craziness.

Doug: [00:01:55] But they senior executives love magic and it got me to thinking. That when it comes to innovation people really think of it as magic as in you know the magician comes in.

Doug: [00:02:10] Look there's this magical new idea that happens and you know as you know Tripp I've spent a lot of time over the years doing magic in fact almost 50 years ago I performed as Merwin the magician and did magic shows started out with you know working with the ACLU kids birthday parties I turned pro for the same price that Springsteen turned pro I just learned this the other day. He turned pro and I turned pro for the same price I got five dollars just like he did. And I thought I was rich baby. I was rich. And I went on to do county fairs and festivals and summer theaters and all kinds of stuff and to help pay for college which was wonderful. But in many ways what I have done over the last two many years is the same thing which clients would come and they had a big problem and they needed a big idea and I would basically say to them it would look like it was magical that I would do that. Now some of the methods that we use of course are set front end of innovation which is that engagement of listening to consumers. Qualitative discovery thinking of designs you know fast and rough prototypes you know stuff that pretty common at the front end and nowadays that's oftentimes done as Lean Startup and design thinking and all that kind of stuff and that's all fine.

Doug: [00:03:36] But what I have learned over the years is that that magic at the front that magic show if you would this experience that you go through that's not the key to making big ideas happen. The key is what happens after the innovation magic show.

Doug: [00:03:57] You know after that feel good cool experience brainstorming you know ethnography What do whatever the heck you call it but the front end that gets done. Then you have to do like real work. You have to make it. And so that's why about 10 years ago I started to build this Innovation Engineering system and this is a new field of academic study and an innovation lead management which is built around you know bringing in some more substance. To the front end and most importantly giving a method of operating through development to the market.

Doug: [00:04:34] Ok OK. And this is not you know this is not magic.

Doug: [00:04:40] This is real work. OK but there are some tools that can help you. I mean you wait you what you do is this that you use your qualitative. That's nice qualitative research. Kind of how people are feeling.

Doug: [00:04:53] But then we use data quantitative data so to make real decisions on it. We also do quantitative sales forecasting five year risk adjusted forecasting. And you say well why should I do that. Well because you're going to have to take a lot of time and energy to make your thing. Don't you want to at least know what the price is worth at the other end. You know it's a pretty good motivator. Strategic alignment for innovations.

Doug: [00:05:21] Cassie you know with innovation you need to have freedom but focus. You know you need this sort of this because you don't really know it. It's not like you can say strategically do this. Now you've got to have a little bit of flexibility so we built a system for doing that. A system for doing project management. And it goes on and on. Whether it's patents customer persuasion systems employee education there's all kinds of different things to do.

Doug: [00:05:46] And the net result of all of this is by taking innovation engineering after the magic show that creates the idea we end up with ideas to market up to five times faster and with up to 80 percent less risk. So it's you know when we talk innovation we talk Big Idea Hunt that is just the idea. That's not what it that's fine. It's good good fun. But now we have to get to the real work and that's where we have to bring in the data we have to bring in the discipline. All this stuff we've talked about on the podcast and we talk in particular about we talk about the brain brew segment on whisk(e)y. That's the grind. And. And when I say grind you can look at that as a negative or you can go. That's where we're getting real stuff done. You know we are tired but it's a good tired cause you're figuring stuff out. You're making stuff go.

Tripp: [00:06:40] So Doug when you we've talked about this in kind of different perspectives before and I don't know whether is something I'm missing or in general but I think you're trying to drive this point home because the other people know how to say it. The other innovation methods of lack this rigor or companies in general lack this rigor as that kind of the impetus behind in this together.

Doug: [00:07:10] Well it's they I don't think they even understand it. They don't understand it. I mean the other methods are fine. I mean they're fine for what. For what they do. That's fine. But the challenge is that's not where the problem is. And unless you've done this unless you've taken a dozen ideas from idea all the way through the process you can't even understand what I'm talking about. People think when you put it into development magically it comes out the other end. The reality is is that's not what happens. OK. And unless you've got some discipline in it unless you've got alignment unless you've got really good math as you go through this thing then you run into all the problems and the net result is a 95 percent failure rate especially from large companies.

Doug: [00:07:55] I mean this is crazy. And so I want to put a spotlight that after the innovation magic show where we we get this glorious idea and everybody celebrates they get this cool idea.

Doug: [00:08:07] Now the real work begins. And that's the place where you have to invest the time energy and money. That's the place that's the most important part. That's where management's needed. That's where everybody needs to be thinking and engaged. And we need to problem solve to make ourselves to make this idea become real.

Tripp: [00:08:25] One last question on this. I've got to ask this and that is when you go as you go into organizations and again we've talked about some of the previous episodes but you're seeing that they're lacking this full end to end system.

Tripp: [00:08:42] Are there specific things that they just aren't going to have that you have that you could that you can mention in other words whether it's the forecasting or some type of you know and again he the word magic. But magic in the quantitative research because some of the things you have. What's the differentiator here.

Doug: [00:09:00] Yeah yeah. The key is you've got to be able to do the rat research fast and cheap quantitative research on the product or the service. I mean because the longer it takes to do that the less bold you're going to be because you're gonna play it safe. So you need to be able to do it. And in our case we cut the cost by about 94 percent 95 percent. We cut the cost time and cost because of some of the digital tools. But it's also a mindset that has to be educated into the people. OK. And sadly we take our engineers we take our finance people we take our procurement people and we don't think their job is necessarily to be created. We have those marketing people do that creative stuff. But the fact is is to make the idea real we're going to need innovation and creative thinking by all of those people. All of those people all the way to market. And that's the part that we just don't. It doesn't sound flashy. Let's teach engineers accountants and purchasing agents and lawyers and regulatory people how to think innovatively. You know that's just that's not hip you know. But that's the key. That's the people that make you know that the thing go.

Doug: [00:10:17] This is the engine room. This this these are the people that make the boat go.

Doug: [00:10:21] I mean it you need to have that infrastructure and that's the focus of my life today is to help teach those people so that they can have the wonders of figuring out how to problem solve because Tripp I've got it over and over again. I got people saying I got this great idea. They have this great idea. How the heck are you going to make that they go Well that's what our needs for. And I'm like Yeah. There's irony and then there's just plain ridiculous. I mean you break Newton's laws of physics here. OK. I mean come on people. Well now you're just not being open. I said I'm being open but you're you. You have no concept of what's it take what the chemistry is or the mechanics or the electronics or the software or or what. You know you're not connected to reality here.

Tripp: [00:11:11] OK very good.

Tripp: [00:11:14] The enabling innovation segment is provided by the innovation Engineering Institute. Innovation engineering is a new field of academic study and leadership science. Its mission is to change the world by enabling innovation by everyone everywhere every day resulting in increased speed and decreased risks. To learn more about on campus off campus live and online courses visit innovationengineering.org

Tripp: [00:11:49] Well we have a new name for our second segment which is the enabling innovation segment. And this is where you do the big reveal of three of your innovation Magic magicians secrets and I still got a picture in my head when you were talking in the first segment. Doug about you being in a clown suit doing magic or something and scaring young children.

Tripp: [00:12:13] I still got that in my head. So hopefully you can you can move me away from that.

Doug: [00:12:18] Yeah. Well you should because I was Merlin the Magician I had the cape and the top hat. My brother was BooBoo with the clown. He was the one in the clown.

Tripp: [00:12:27] Of course it was the brother.

Doug: [00:12:28] Merwynn and BooBoo

Doug: [00:12:30] So for over 40 years I've been doing this innovation magic and they think you know people think I'm a genius because they do it. The reality is is not I've actually learned I was taught and I've discovered some some secrets. So this is the magicians reveal of the secrets. Take us. The week after next. I'm doing a weekend venting session an accelerator session with a Fortune 500 corporation that has a real high urgency they got to get some ideas for this problem that they've got they really need and they want big ideas big big ideas. And in preparation for the session there's a lot of talk about you know the SWOT analysis strengths weaknesses you know all that kind of stuff and about the competitive offerings in their customers and all of this stuff. And I'm basically staying out all those conversations. I'm just I'm just staying out of it.

Doug: [00:13:24] My preparation is in three areas and I'm going to tell you that if you really need a big big idea these are the three things that I do to prepare. OK.

Doug: [00:13:39] So number one I'm going to do what we call wisdom mining or I'm going to look in academic journals. I'm going to look in these journals for insights into human behavior related to the clients challenges because they give me see the journals are peer reviewed so they give me insight with some validation.

Doug: [00:14:00] Then they take me out of the here and now and they get me to think at a higher level. What is the human dynamics that are going on. A lot of great psychology journals where they've done research studies with people to see about switching from one brand to another one product to another are changing behaviors. Some really good stuff. And that opens up my mind to looking at this from a much bigger thing because otherwise everybody gets in the weeds.

Doug: [00:14:23] They get into the weeds so I'm going to use academic journals and from these I'll get myself probably a half dozen it'll inspire about a half dozen ideas and I'll be like rabid Cliff Clavin on Cheers.

Tripp: [00:14:35] Oh, Sure.

Doug: [00:14:35] You know that you know how he could explain everything you know at one point I'll say an idea NSA and you know there was a study that was done at the University of California. That's Rob.

Doug: [00:14:46] Rob you know I know thought and go oh so wise so wise. Now forget all of that crap because that does matter. What matters is I will take them to a new place by looking at it by using this academic journals as my inspiration. Okay so that's the first thing I'm reading.

Doug: [00:15:06] Second thing I'm going to do is free. And what we call flea market pants now there's millions of patents that are in the public domain because they've gone out and there's about 250000 a year that we call flea market patents that you can buy oftentimes very cheap because they pay the maintenance fees and they've pretty much given up on them.

Doug: [00:15:26] And I really like patents as inspiration for something because they're basically blueprints of how to do amazing things because you know when the patent was granted it was not obvious to people with or near skill. It was a true breakthrough. And I'm going to combine past patents into a new and amazing inventions that can be patented. So even though they're free I can take those parts I can put them together in different ways add some other stuff to it and to have something cool and these give me a real leverage point because I'm going after real experts thoughts associated with this stuff. And they're just incredibly powerful and I'll have it again I'll have another half dozen ideas that will be very disruptive oftentimes from patents in different categories. Then what the clients looking at. Where I will break so is like our whisk(e)y we took paper making heat and pressure to remove the ligaments to make paper applied it to whisk(e)y where heat is used to take the alcohol into the wood and then it comes out with the ligaments creating the flavor. And I took pulp and paper and applied it to whisk(e)y making and you know got amazing whisk(e)y. And so that borrowing brilliance from other categories can be quite powerful.

Doug: [00:16:53] And then the third one is TRIZ and this came out of Russia and it's a technique of structure problem solving that was based on patents.

Doug: [00:17:06] This guy Ricky over in. That's what we nicknamed it over in Russia studied all of the patents the output of invention and he found patterns that the same problem was solved in different in different categories. They solve the same problem and he put together this incredible system which can be very complex with books and you have to go through pages and the teams put together a cool automated version of this but you can do this you can look it up and you can find it and it is an amazing thinking system. In many ways it's analogies using like a turbo charged analogy machine and it always works. It disrupts the thinking of your brain and gets you to fresh places. And as you probably guessed these three methods whether it's academic journals patents or trees are all built into our courses for innovation and during both on and off campus and they're built into the software platform to automate. But you can do them by yourself. I mean you can look them up. And so there it is. Yeah it is. It's not magic but there's some methods that allow me to shake my brain up and get it thinking from different directions.

Tripp: [00:18:23] You know when I when I went through the classes at the Ranch some of the things I was familiar with but I found it very helpful to kind of get some guidance on what to look for in academic journals from the class. I had never read a patent up until the time that I that I took the class. So I had no idea what I was looking at in it.

Tripp: [00:18:47] Unless you're an engineer or somebody I mean you can you can suffer and sort through it if you want. But I found it very helpful in the class from my perspective to get professional guidance in kind of being able to pick the things out.

Doug: [00:19:04] Yeah. Yes. Coaching helps me. It absolutely helps. It absolutely helps but blunder forward. Yeah. Just go. Just get started is my advice to people is to just get out there and get started with some of this stuff because that's what you need to do to make these things work. Just get out and try things. Just get out and try it. And but but looking at things unexpected all the obvious places everybody else is looking. You know if you want to find something different you gotta look somewhere else. And and that's what I like about all of this stuff here is that you know whether it's academic literature. I mean this is an original contribution to the art whether it's patents has to be non obvious whether it's Tripp which is an examination of it. I mean you know there's a pattern here. This was this is original thinking that you're looking at you're looking at the original thoughts of some people and that's kind of amazing. You know I'm just I'm just blown away. I mean these are where I'm reading the work of pioneers. You know that there were the first and if you want to pioneer. It's nice to go back to that original source. Absolutely.

Tripp: [00:20:22] Brain Brew Custom Whisk(e)y is proud to present the whisk(e)y Academy. It's an informal conversation from the front lines of craft distilling in the USA UK and Canada to learn more about how you can have your own custom whisk(e)y go to brain Brew whisk(e)y dot com.

Doug: [00:20:48] What's move far Brain Brew Whisk(e)y Academy how you make sure your products are really great. Well we and we talked about a number of things before. You know with regards to you know doing taste tests and things of that sort. So what do you what do you got for us here today.

Doug: [00:21:06] Well this was inspired by. Number of trips recently where I've tasted quite a number of craft spirits and some of which were amazing and some of which were maybe not as amazing. Reznor all categories obviously and and I was thinking about why is it that guys tend to do pretty good. You know maybe better than pretty good. Very good. OK. And I realized that there was a pattern and it wasn't we didn't set out to do it this way. But it's what's evolved and I thought it might be helpful for people if you're making whisk(e)y but also in other areas which is how do you make sure your product really good because you know it's not as simple as you try it and you like it or you do a test. I mean you've got to triangulate it in from a number of different areas so the first thing we do as a general rule is the three of us that are the whisk(e)y makers who who crafted Joe's the head whisk(e)y maker and then Philip and I also will craft whisk(e)y and the first thing we do is we'll taste it and somebody in the three of us has to love it.

Doug: [00:22:20] If we all say it's OK then we're dead because OK isn't good enough. But if one person if Phillips says it's awesome and I think it's just not it's just not there. I know enough to know that I don't know everything. And if he sees it as something that could be really hot as long as one person sees it is as awesome. Then we go for it. If nobody sees it is awesome and I'll say I've made them myself and and have the guy's face and I go out and it's OK but I wouldn't say it's awesome. And you know it you just it we're done. Start all over again. OK you just start all over again.

Doug: [00:23:00] In the event then the next thing we do is we quantitatively test it with a representative sample of the customers that this products can be marketed for.

Doug: [00:23:08] And we see how people react to it. And and then we find the truth because the numbers don't lie. I mean they they tell us like it is. And OK so say we're OK there and let sometimes we do that four or five times sometimes ten times sometimes 20 times it takes a while sometimes and then.

Doug: [00:23:26] The third thing is is we live with it. And this one has it's been surprisingly because you need to taste test that kind of stuff. That's one thing but. When you live with it. Your attitudes change your attitude change.

Doug: [00:23:44] This is like drinking it in different occasions in different ways in cocktails over ice neat with different people. Last night we had a at a barbecue and had a little fire afterwards and we're sitting there were some chocolates and and and I went down to the whisk(e)y cellar and brought out a number of different bottles and ours and others and you know we did a little tasting of some of the different ones there. And it's like you just start to see it in different occasions and it takes on three dimensions to you.

Doug: [00:24:18] And from this we'll get new insights that will inspire changes or. Totally new products will happen and so it's very much an iterative process of creating testing pivoting. And while many people do number one you know the whisk(e)y makers taste it their friends the number that really quantitatively test it and the people that you know drew out a sample bottle and have people live with it. There are very small very small. And that's why that's why we we've got a. Getting people to live that way. So you really see it in multiple dimensions is real important.

Tripp: [00:25:03] Yeah. You know it's interesting to me and especially now engaged in this psychotic thing of trying to to put this distillery together in Indiana. But you know I find myself listening to videos and podcasts and different things on on whisk(e)y and it just seems so overwhelming to me at this point that you know it would seem I have such an individual taste that and you know you have three three people that in your group that have to have tried all of these things. It just seems like it's so difficult to kind of find the sweet spot of not only what you three would agree to but what consumers would like like you do in the second step.

Tripp: [00:25:49] I mean it just seems very overwhelming to me that you would be able to find something that an entire market would like. And so do you have any insights into that any helpful hints as to.

Doug: [00:26:01] Yeah you got it. You've got to do it you've got to do it. You got it. You got it.

Doug: [00:26:10] I just had a conversation with a guy who's starting a distillery and he's like you know they're all pretty much the same. I'm like dude you get it. He's like by the time you add ice and water.

Doug: [00:26:23] They all taste the same. I said no they don't. I said here I can make you for cocktails with four of our whisk(e)y. You told me those cocktail stays the same. They don't.

Doug: [00:26:31] But see but that doesn't do it. You got to get into it. You got to get into it and there are nuances and there are differences. And now in some cases if it's the same mash Bill and all new American oak it's going to be pretty much the same.

Doug: [00:26:45] If the climate's about the same there's not a lot of difference. But when you start using different woods like we do radically different with maple cherry 200 year European Japanese American. You get totally different dimensions of taste. And then when you start to put those wood finishes together you're gonna get even more unique tastes. I mean that's where the magic is. And then they all react to cocktails in different ways. Is the whole thing.

Doug: [00:27:14] So you know this is all very doable but you're going to have to get some experience and we run for 500 600 quantitative taste tests. So you know I got a lot of data now but we didn't start that way. We started ignorant and stupid just like everybody else.

Tripp: [00:27:33] So. So. So it's really kind of finding the sweet spot by going and doing this and then getting Nic's experience of knowing kind of what consumers go to and then as you as you've talked about in previous episodes talked about then pushing the limits of you know finding whole new categories of things too.

Doug: [00:27:52] Yeah. Well and it's not just. Sweet spot it's sweet spots with an S.. And it's not just the customer it's coz you know which customers right. So do I want millennials to do I want whisk(e)y lovers. Do I want old baby boomers hit. And I'm one so I can say it you know. Or do I want women you know do I want trendsetters. Do I want foodies to be into this thing. Do I want to be heavily cocktail focused or do I want to be you know drinking it neat like John Wayne you know.

Doug: [00:28:29] You know what do I want to try to make this thing into. And that's that's something that just takes some time and you have to put it together. They're it. It's kind of a giant puzzle. You know let's you know cause you know. So you know we've got four whisk(e)y in our riverboat series. And you know to be perfectly honest you know I haven't found anybody yet who likes all four. I know people little like the first two people that like the second two and I know somehow that you know we'd like the third and the first and you know. But you know they're different and they apply. They apply to different people.

Tripp: [00:29:09] So you really get into finding breaking it down. You know I've heard that saying the rich riches are in the niches or niches which is.

Doug: [00:29:20] Yeah. Well I mean it's. Yeah well. And these aren't niches. I mean women is over half the population and it's a growing group. So you know. So they're good sized markets. I mean there were we're talking about here but it does take it takes the hard data. You can't do this qualitatively you have to get quantitative data because you can't see these differences.

Doug: [00:29:41] You know you can get a lot of false positives and false negatives so you really have to get you to do the data which is why you're testing which is why. I mean we've got somebody coming in next week. He wants to create his own whisk(e)y and we're going to make a whisk(e)y for him and he's a he's out west and we're gonna make a first distillery and we'll take him through We'll coach him through it we'll run the testing for him because we can do it very quick and easy. You know again just like we've said oftentimes say coaching matters you know it really can help you. That's what we're here to do. You know that's what brainpower is about is making custom whisk(e)y. So as we say because everybody deserves their own whisk(e)y.

Tripp: [00:30:20] That's a way a great way to end the segment too. Thank you Doug.

Doug: [00:30:24] Thank you. Tripp.

Tripp: [00:30:30] Thank you for listening to the Driving Eureka! podcast. Go to Eureka ranch dot com to learn more about how to find filter and fast track big ideas. To learn more about brain brew custom whisk(e)y go to brain Brew whisk(e)y dot com.

[00:00:01] Driving Eureka! Podcast

[00:00:33] Episode 31 - Overview

[00:01:55] The Investment Decision

[00:03:04] To Fund or Not to Fund

[00:04:23] Talk to Investors on Your Product

[00:05:53] Advice of Investors Invaluable

[00:06:40] Business Plans are Worthless for New Products - A Better Way

[00:07:41] Initial Investors - Series A - These are the Visionaries

[00:08:29] Series B Help You Grow

[00:08:56] Series C - Get Little Return - No Risk, No Reward

[00:09:52] You are Fooling Yourself if You Think You are Going to Know All the Numbers

[00:12:59] You Can Not Hire Someone to Do a Valuation

[00:16:42] Set Up a Series A

[00:18:53] Investment as a System

[00:19:40] Shark Tank is Predatory and NOT Real

[00:21:53] Find People Who Have Done It

[00:24:20] Be Honest About the Investment

[00:26:20] Certified Investors

[00:27:15] Crowdfunding

[00:28:57] Selling to Investors

[00:31:45] Triple What You Think You Need

[00:31:50] Learn from the Conversations

[00:36:11] The Patent

[00:38:35] Brand and Awards

[00:41:43] Why Investors Invested

[00:43:00] Ignore the Skeptics

[00:46:38] Communicate with Investors

[00:52:14] Pricing

[00:55:47] Summary

Tripp: [00:00:01] Welcome to the Driving Eureka! podcast. We share ideas and advice for helping you find filter and fast track big ideas.

Tripp: [00:00:14] Hi I'm Tripp Babbitt advisor to global organizations on the Deming philosophy and host of the Deming Institute podcast.

Doug: [00:00:22] And I'm Doug Hall inventor speaker teacher and whisk(e)y maker. I'm also the founder of the Eureka! Ranch and author of the Driving Eureka! book.

Tripp: [00:00:33] This is episode thirty one of the Driving Eureka! podcast and Doug and I are in the middle of a special series on how to start a business and in this case a whisk(e)y business and then the first part. We discussed a lot about the purpose what's going to sustain us or sustain me as I move forward and developing a whisk(e)y business. What are the motivators that I have that will sustain me through to building this business. And part two we talked about the storyline we talked up also about ways to develop a storyline. We talked about a local hero potentially for brand names and we also talked about doing the research in order to come up with ideas and Doug outlined some stimulus that we could use in order to develop our storyline.

Tripp: [00:01:36] So part 3 Doug is ideas and advice for how to build a craft distillery. We're going to get into the math. We're going to get to a number of other things that I'm really not familiar with so I'll let you kind of take the lead on this and share what is it that we need to do.

Doug: [00:01:55] Okay. So see you've got your purpose. We got that clear we've got our storyline for what our line of products is going to be. And so now you know we've got some prototypes maybe we've even got some math. We've done a little bit of testing work with somebody so we can show that we've got an idea. That's cool idea. Now you got to put the rest of it together because it costs money to do this to do anything like this. And you've got to make an investment decision. So in this segment we're going to talk about just a high level going to talk about your your plan for getting money whether it's you're going to sell fund etc. how to put together your game plan pitch and then selling investors so that you know now we've got a business. So we're gonna go from the theory to reality here and the starting place is in this investment decision you've got to decide are you going to sell fund it. Are you going to get a second mortgage on your house to fund it or are you going to bring in investors. And so this is a this is an experience that you've got to spend some time with.

Doug: [00:02:56] It's not like you can go and look at the chart and say Oh yeah well that's obviously what I'm going to do because there's a lot of emotional dimensions into this.

Doug: [00:03:04] In my case I've almost 40 years now I've had my own business doing different things and you know I've funded them myself you know use cash flow from one business to help fund the next one and do that. And on the whisk(e)y business I was doing it that way it starting and did that way for. For a number of years. And then I get to the point where I say well if I really want to take this bigger and in my case that meant not just the U.S. but global if I really wanted to be a global company then I'm I can't do a pay as you go thing where you make money and then you reinvest it you make some money and you reinvest and make money and reinvested which works by the way I need to go bigger.

Doug: [00:03:44] And that means I need investors. And I took about three months coming to the conclusion if I wanted to do it or not because this responsibilities when you have investors you know Tripp when it's your money you can be as dumb as you want to be doesn't matter. You know you could go go for it. It's like whatever it's my money if I'm stupid I'm stupid when it's other people's moneys. It's different. I mean and forget the legal ramifications. There's a there's a responsibility that you have to people. And so it was a long it took me some time. It took me some time to come to that conclusion.

Doug: [00:04:23] And in the end I decided to take investors and end even if you're going to fund it yourself my recommendation to you is follow the steps that we're talking about here and go out and have some conversations with investors not asking them for money. But saying not pitching them but just looking for ideas and advice on your plan because you can get really smart people.

Doug: [00:04:51] To give you free at his house you know cause you know rich people like to tell people what they think you know. And and it's just a wonderful way to learn.

Doug: [00:05:04] And even if at the end of the day you decide because I would around to them I say I don't know if I'm going to take investors not love to get your ideas and advice I might do it I might not but would you be willing to you know get together for lunch and look at what I'm talking about. And everybody was like yes loved you loved it. And then I got to a point where I had to make and my wife and I sat down and I said Okay we're gonna make this decision. And she was actually more bullish than I was she said yeah let's just do this. She says this will be a cool new adventure and it's something fun to do.

Doug: [00:05:32] You can get investors for money but the real win is when you get investors not only for money but they bring a skill set a knowledge base contacts they bring something other than just money. And so that's the choice that I made was to get the people.

Doug: [00:05:53] Yes for their money but also for their ideas and advice. And as it turned out it's been about nine months since we closed the deal. The advice has been worth as much as their money. I mean it's just been invaluable.

Tripp: [00:06:05] So Doug what is that. And I'm sure we'll get into some of this. And if it's something you want me to hold off on that's fine. But you know we talked about your model that you give to investors said the prototype. The the the math the patent that you know those types of things were kind of the primary things that you took to investors. Did you know most people are familiar with putting the you know plan together and kind of.

Doug: [00:06:37] No they're not they're not. No.

Tripp: [00:06:39] Oh really.

Doug: [00:06:40] Wrong plan. OK. I'm going to talk to you about how to put together a game plan. Don't write a frickin business plan. They're worthless. OK. OK. OK.

Doug: [00:06:49] I'm going to change that conversation because most of those plans you put together are mind numbingly boring to write and boring to read. There's no excitement there's no energy in the thing. OK so we're going to change that.

Tripp: [00:07:00] All right.

Doug: [00:07:01] OK because if you write the classic business plan one is it's like a root canal without no vacation there. They're horrible to write and they're in my mind useless. Okay. They just don't help you. So we're gonna change that.

Tripp: [00:07:15] So that was an A. That wasn't a barrier then for you where somebody says when you call them up on the phone or got in contact with somebody where they said we'll do some of your business plan over because that's what they expected. That didn't happen.

Doug: [00:07:27] No. And and by the way if somebody is that meticulous that that's what they want to know because they want to know the future down to the third cent you know in the second year or the fourth year then I've already got my answer you're not going to be helpful to me.

Tripp: [00:07:40] Got it.

Doug: [00:07:41] Ok there's different types of investors okay. There are investors that have vision and imagination. Who are these initial investors you're going to get. They're going to be your Series A people. They're the people that can see the vision they're buying in early. They're enabling this to go. OK then you've got your Series B people in the series B people are the ones that have to see the track record of the business and they're good for funding to expand even bigger. But there's a proven math. The first group does nothing. It's a dream and and a product. And that's why we're going to push product and prototypes. They can taste it with their own lips. They can see the business they can see the facility they can see the thing and these are the people the vision. Those are the only people you want. In the beginning you set series a group.

Doug: [00:08:29] The series B group are people who are ready to invest to scale up. OK I need this much money for another warehouse. I got to buy a million dollars worth whisk(e)y. I need to roll out into ten more states. And and they look at this as a transaction. OK revenue of this return of this and they don't get the same growth they buy in at a later state and the company is worth more so they don't see the top side but their risk has been reduced.

Doug: [00:08:56] And then the series C are the people who now the things wildly successful and they have the imagination of a gnat and they come in at that point and you know they're just throwing on the thing and they get a very tiny return. But they're now joining the thing as it's literally already done. So to me there's a b and c of investors and it has to do with their vision their risk tolerance and cause. And by the way. So what happens is is in this process I met with people in Chicago and Florida and different things like that because you get connected to p once you get this out it travels quickly and and a number of them were Series B or Series C and some of them were huge funds that had a lot of money and they were like the deal's too small for what I was looking for. But when you want to scale up big come to us because you know we can put in 20 million to 30 million 50 million to help you.

Doug: [00:09:52] So I kept relations with them. But you know it's a different conversation. It's a different conversation. And the mistake people make is they'll go through things trying to prove to Series B in Series C their cash flow numbers and all the stuff which are all garbage it's all garbage it's theory that we don't even know anything about we don't know anything about it. We just don't know anything about it. Okay. And if you try to get those people happy you can never get them happy. Never. Never gonna happen. You need the dreamers the doers the entrepreneurs the retired people that have a bunch of money and are bored with their investments and they want to have something more fun that they're part of. People that can lose everything and it just isn't going to impact their lifestyle. And with a whisk(e)y distillery you're the entertainment more fun. I'm just telling you straight up you're more fun. You know you can own all your blue chips and you can own all of your you know fast growth companies. They're boring. I mean you can't sit in the den and drink them. Oh and there is a cool factor that comes with investing in a craft distillery and being able to share with your buddies your cool whisk(e)y. I mean if there's a hip factor there's no way around it.

Tripp: [00:11:18] So Doug as just as you started into this and I kind of believe this plays out in Italy at least in your head and I know for sure that people are more like me that have not done something like this before with a product are of the mindset of geez you know if I get investors and and given up ownership and you know and again and I don't want to beat this to death but you know when you watch Shark Tank or the Prophet or you know different shows like that it's been kind of drummed into our head. OK. They're going to it's going to take you know 50 percent of my company. Those types of things. What's kind of the mindset.

Doug: [00:11:53] Well first up let's be clear those are fake right. I do right. I got that. Those shows are fake. I've got the shows. They're not reality. Most of those deals never go.

Doug: [00:12:02] It's just it's made for TV drama. It's like a fictional story. That's not the way real negotiations go. That's not how real stuff goes. Okay. So first off let's forget those that is not a class that's the entertainment division. Mm hmm.

Doug: [00:12:15] And and and so let's throw that aside the reality is is that when you're sitting there you have to make some decisions and the things that influence what terms you get because that's what we're talking about and it's possible to make these very complex. And so you'll get into things and I'm not an investor guru. So this is going to get beyond my scope. It Real quickly but you'll have things like I want to repayable loan and that they give you a loan and you're paying interest but you don't pay it but it stays in there and then they get in this. And I said no to all of those things I said no it's really simple. You put money in you're in. That's it. And we're in this together and that's the way it's gonna be.

Doug: [00:12:59] And if you want to do that then don't do it but that's how we can do it. And I set the terms and said these are the terms on what it is. Here's my valuation which I did three or four ways which is all just you know it's Fermi estimating because there's no way to do it. You can't hire someone. Let me be clear. You cannot hire someone to do evaluation of your thing. It's all worthless. I had three different high end valuations people come in and I sat with them at the bar at the ranch and I'm pouring whisk(e)y and I said and I showed them what I'd done. And one lady she's fessed up. She says I'm Doug. I said What would you do different than what I did here because I had done pretty decent math. She said I would do exactly what you did here charge you two hundred thousand dollars. And I won't stand behind my estimate because there's no way to really know. And I said you know that's why I thought you were tell me. And she says that's the truth. And I had another group that they say Oh yeah well we can do all this. I said Well how do you do this. How do you predict the future when it doesn't exist. And they could give me no answer except they would have their name on it and spend a lot of money. And so I just said I'm just going to use common sense.

Doug: [00:14:12] Here's what it is. Here's our margin. Here's what we can make. Here's the advantages we've got in your case it might be I've got an old fire station I've got an option to the lease lease to buy this cool fire station and that'll be a cool venue to do it. You know it would be a thing that might happen or I've got this killer brand. We've run some testing it wins. I've got a major aircraft a chain of craft restaurants. They want to be part of it. They're going to take a share in it. They're going to help us push the staffers you know to the level that you can do that legally. You know here's my storyline of what I got is why I'm doing it in his words or it could even be you know this town really needs this. You know I've got a developer who wants to develop this old part of town. He's willing to give us some space just to bring us in there because it'll help drive it and it's going to help the town. So give us the money so you can help the town. That's a reasonable reason to invest you know. But that's part of that story. That's part of again the purpose and the storyline. Again go back to Episode 1 and 2 of this series because now you're gonna get to this point you're gonna have to go back to episodes 1 and 2 to adjust that until you make that line work because you're looking for people to invest if they want 20 percent everday growth blah blah blah blah blah. That ain't going to be a startup. You need people that are doing this as much for their head and you have to give them a rational story. But it's as much the emotional dream that they want to have fun. They want to have fun and only a whisk(e)y company is really fun.

Tripp: [00:15:46] So so Doug as you went through this and you were talking about at least when you went through and this was what I went to get some clarity on as you said we'll give you a repayable loan. And you said no if you give me the money then you're in. When you say that. Is that is that a recommendation for all people or is that or is that just for Doug an in his situation.

Doug: [00:16:09] Well to me you know I like the idea of everybody being treated the same. It's simplicity on it. And so you know we set aside I set aside at the beginning Series A funding for the initial funding. I gave them the benefit of when dividends are paid they get accelerated payment until they get their investment back. If there are ever dividends. I also gave them the guarantee and is gonna get a little complex for people but just walk me through this.

Doug: [00:16:42] One of the things that happens to those Series A is is as you bring in other investors they get deluded. So say they own 20 percent. You bring in more money olives than the 20 percent becomes 10 percent. Because this new shares issued. So so what I did is I said here's the deal. At the start I own 100 percent. I'm gonna bring you in for x percent. I'm going to set up. That Series A. I'm going to set up Series B at the start but not issue it. And I'm also going to set up stock appreciation rights for employees. And what I'm going to do for you is when you come in. The shares you get when I issue series B. And when I issue stock appreciation rights I will fund them from me.

Doug: [00:17:36] So no dilution. So. When I bring in extra money they don't get deluded. I protect them. When I give stock appreciation rights I pay for them. They don't get diluted. That's a huge deal for them. OK. Now if we do Series C then we all get diluted. But and that was very appealing to them because.

Doug: [00:18:03] And I said the reason I'm doing it is because when we're making a decision to give stock appreciation rights or I'm making a decision to take in more money I don't want I want your opinions on this where it doesn't influence you personally. Because your your ownership doesn't get diluted.

Doug: [00:18:24] And and so what's been great is we ended up doing a sort of a series A two we had because of just an opportunity that came up and it was a unique opportunity. And I was able to go to them and make changes but because I was funding all of it. They could have an open conversation about it and you didn't have one investor saying no I don't want to do that or I don't want to give that employee that because that's coming out of me.

Doug: [00:18:51] Do you understand what I'm saying.

Tripp: [00:18:52] I got it so so but.

Doug: [00:18:53] But but that's an Tripp that's looking at the investment as a complete system. Sure as opposed to a funding round and and and and the lawyers that you use which you got to use lawyers and it costs money is they wanted to do the Series A and then we'll figure out Series B and then we'll figure out stock reshapes rights.

Doug: [00:19:11] I said No I'm going to do the whole thing at one time and I was able to get better terms. They were happier with it and the company has been managed better because we didn't have them saying Well jeez you know I don't know if you know Freddy there is worth that. I don't want to give Freddie that there's none of that conversation because it's an allocation and I'm paying for it. So it's my money and they say I'll give you my advice Doug but at the end of the day it's your money.

Doug: [00:19:40] Is what they say and I go. Well actually it's all of ours because you know that's doing it but it's just a much more productive conversation. Interesting. Okay. Shark Tank. I got to get this shark tank. So the system is set up for obnoxious investors that are predatory that are one step up from a loan shark. OK that's not what you're going to do that that's funding of last resort. We're not going to do that. We're gonna do a friendly thing which is designed to win. And and and to work together where they're going to be engaged and it's going to be family friends friends of friends friends of friends of friends. It's gonna be a small network of people. You might have one big one and a bunch of small you might break it into a whole lot of smaller ones. These are all things you can think through but to me I want them as part of my team. I don't want an adversary relationship. I want a positive relationship and things like no dilution for Series A Series B and for employees created a very positive relationship.

Tripp: [00:20:40] That makes sense. Yeah now that makes perfect sense. For how you put that together. I see a lot of positives associated with that especially the getting employees involved in getting interest in the company too. That's one thing I think that's been missing for a long time from businesses is you know having skin in the game so to speak because you know just it's an intrinsic motivation thing a part of this company and I want to do right by it.

Tripp: [00:21:12] And this just kind of solidifies that in an employee's mind. So I like the whole setup of what you said. I'm just not as familiar obviously as you are. I was familiar with series A you kind of gave me an operational definition for A B and C that I hadn't heard kind of in those terms before but understands certainly that it's a system and in doing that and being open and upfront about how you're gonna go about that gives clarity and it gives confidence in people and investing in it.

Doug: [00:21:43] Yeah. And so a couple of other things. A lot of these places that you can go to get help on business plans and his pitch competitions.

Doug: [00:21:53] I just shudder at them. I will participate with them I won't have any do it because you get people doing stuff we've never done it. And if you're talking to somebody ask them how many times did you raise money and start a company. How many times have you done that. And you ran it. And if they've never done it stop listening to them. Because unless you've been there done that. I mean the people who advised me were people who had done it and they gave me a lot of. And they become actually really good friends because the first thing I went around to a bunch of entrepreneurs you know and I said you know should I take funding and they all said no. I said OK I get that. But let me explain this and we went through it and they gave me advice on it and they were very helpful. But if you haven't been there and done that don't tell me the theory and investors can't help you. You need to talk to people that have been on the other side of this equation and the paperwork is very predatory against you. So you have to you have to you have to fight through that paperwork to make that paperwork so that it's reasonable so that you can win. And one of the things I set up is when you get into these things people will have expectations.

Doug: [00:22:56] They say OK. Going to make this saying and you're gonna be like High West selling for 170 million dollars and oh my God we're gonna be rich. It's gonna be great. And I told them I said let me just be clear I'm not promising you you're gonna make any money we might lose it all. That's so let's be clear. If you're not willing to accept that don't don't bother because I'm not going to tell you otherwise. I hope not to because I'm going to waste a whole lot of my time on this. But if that's the case but we're going on an adventure and I said and I'm going to tell you this I'm going to run the company like we're gonna run it for the rest of our lives forever and create an annuity. And if we do that then we will probably get opportunities to sell it but we're not going to run it to sell it. We're going to run it as smart as we can so that we can have a long term profitable business because that's what I've learned is when I've done this over the years with Acupoll and other things I ran it like a business and sure enough people showed up. There was a bidding war and I sold it. I said we may sell it we may not. I think probably it's a hot market. I think we can probably make it such that it's attractive and we'll think of that. But our primary focus is to make a profitable business. And that was so refreshing for investors.

Doug: [00:24:11] To not have somebody coming in and saying we're gonna make billions and billions of dollars and.

Tripp: [00:24:17] We only need 1 percent of the whole market in order to do that.

Doug: [00:24:20] Yeah yeah yeah. That's right. Yeah yeah. Yeah you get zero and it really helped. It really helped. Being honest about that and and just knowing the math and the beautiful thing about is art with our compression aging. This math works instantly instantly. Because if you do the math for mash tanks stills Rick houses you know a thousand barrels in the Rec House to get to any capacity that you're going to have. The math does not work. It does not work. It just doesn't work. And so this idea that I'm going to make gin and vodka while my whisk(e)y you're not going to put enough whiskey away remember that's all capitalized. You can't expense that. And so it just doesn't work. Where with compression aging you can make money in the first year. You know if you keep your overheads down it just it's a difference and by the way this is not something new. Pre prohibition. This is how all of the whisk(e)y was done. It was all done like this.

Doug: [00:25:23] There were blenders who were whisk(e)y makers as opposed to there was only a few distillers and everybody was a whiskey maker who used different woods and blending and stuff like that to do it. So This is not this is the majority of whisk(e)y over time has been done this way it's just we're coming back to it.

Tripp: [00:25:40] You get my my brain going in about 50 different directions with everything you said there but I that this is literally the thing where you need to sleep pocket square where you're kind of your brain.

Tripp: [00:25:49] Yeah. That's what it's like everything that you're you're you're sane. It makes perfect sense.

Doug: [00:25:55] Well I'm gonna go through that plan and yeah and I want to say one other thing for us before we go into it because what I'm going to ask you to do is to make a crappy plan just go talk to some people which is what we're gonna do. But the one thing I want to bring out aside is there is another thing called crowdfunding and crowdfunding is another option. It actually it costs quite a bit legally to set it up but it is a vehicle that is now legal that you can do.

Doug: [00:26:20] And the other legal thing I need to talk to you about is something called certified investors. So we're doing a you're doing a stock offering which to do a stock offering to anybody. You have to get registered and this whole lot of stuff because the government protects people from having being fleeced. But there is a thing called a certified investor who you can just look it up. You have to have a certain income or a certain amount of money. I mean there's some rules. Yep. And the only people you can sell this to a certified investor so you're on over there. Who wants to put in ten thousand dollars is not an option. They can't do it. I mean it's just it's. I mean she can give you a loan. You can do a personal loan but she can't be a shareholder unless they are a certified investor.

Doug: [00:27:06] You can meet the criteria. That's right. Unless you meet a certified investor so we're using the certified investor program to do this in the States at least.

Doug: [00:27:15] Or the other thing you can do where you can. You don't have to be that is where the crowdfunding and the some expenses associate with that. There's a company in the U.K. called BrewDog. They're now in Columbus Ohio. They've gotten masterful at raising lots of money with crowdfunding. We're thinking of it in the U.K. we might do it. It's kind of a little bit more advanced there than it is here. People are used to doing it. But you kind of got to have a brand and you got to be out there to do that. So it is an option. And if you are partnering with somebody that had a huge e-mail list and said now we're doing this or a celebrity or something you might be able to do crowdfunding but you're gonna need to have a whole bunch email lists to be able to do that. I think in my mind. And so. So what we're gonna do is this.

Doug: [00:28:04] We've got some things to do we don't even know what we don't know. We're gonna network to people that have raised money in the community because they'll give you some census kind of goods and bad and ugly of it. Ideally you've got some prototype product that's made so you sit with them and you have a drink while you do it but that's the nice thing about this business. You know we've worked with you we made a product legally allowed you to get it by law which we can do. And so you've got this and you can just share with this this prototype point with people and then you're gonna put together a pitch and we're gonna use this as a learning experience and we're going to basically follow the persuasive selling format that we teach in innovation engineering. It's outlined in the Driving Eureka! book. It's the way Xerox sells. It's a way Procter Gamble sells when they're selling something really new to the world.

Doug: [00:28:57] You summarize the situation. State the idea. Explain how it works. Reinforce the key benefits and then give them an easy next step. OK so let me go back through those. Summarizing the situation we're gonna give on just we're gonna do slides that you can print out and just flip through sitting at a table with somebody the background on the opportunity. As to what's there. And if you go to the craft spirit ACSA or HDI American craft spirits Association American Distilling Institute I think it is you can become a member of those. They've got tons of information that you can download API has a huge video portal that you can watch tons of stuff that you can get educated so you and you put together simple deal that says here's the opportunity here's the situation. You know craft beer is going like this craft spirits are going like this. They're behind it. They've got an opportunity blah blah blah. Then you state the idea. And what you're gonna do is you're gonna do one slide that basically defines that purpose that we talked about the blue card. What what what is it you're doing this and why are you doing this. And then one slide that gives a storyline. Here's some rough prototypes of what the product could be. We're going to do. And then whine on how we're gonna make money. You know we can sell these bottles for this and it's gonna sell to this and we're going do. Or however it is. If you're gonna be a retail thing we're gonna make a margin of this and you're just some rough numbers.

Doug: [00:30:38] And and then here's basically the kind of investment that we're looking for. And here's kind of what you'll get from it. And you just make up something and then. So that's given the idea. Now we explain how it works. Okay we're going to do this in three phases. The first phase is we're gonna get money for this to do these things and we're gonna take this to this point and ideally that's where you can show him some taste test results which we can do for you.

Doug: [00:31:06] You can work with local craft guy to get those done. Here's our concept and here's how it does. And here's what's gonna happen over this first 12 to 18 months. And here's kind of the key staff members. And then we put in about innovation and that we're going to be built around rapid cycles of learning and. And and that's it. That's all we've got.

Doug: [00:31:32] And then so then the benefits and the next step is as I'm talking to a bunch of people do you know any other people that I could talk to is this something of interest or what other advice do you have to make it better. And even in the investment thing I would put in I think we're gonna need about this amount of money.

Doug: [00:31:45] So whatever money you think you need triple it OK.

Doug: [00:31:50] Because that's where it's gonna be. I'm just just telling you. Figure out the math and then say times three this is what I want to raise and I'm going to give some percent for this. And I don't know what that is. You're getting put a question mark and this we're going to have conversations with people and you're going to change it. Change it. Change change change it every time we do it. It's wonderful to do. It was it's so much fun. I find it a lot of fun to do this because you've got these people listening and you know really successful people who will sit there and spend time and they'll connect you to the next person and the next person. And that's going to take you three or four months. Did you that.

Doug: [00:32:28] Realistically and then once you get that together now you've gone through these cycles. You've gotten it together. Then you turn around and you have to make the decision. You can take the money or not.

Doug: [00:32:41] And how much you can take. How much are you going to put in how much they're going to put in what's going to happen and that will evolve through that pitching process. And now you put together a what's usually called a term sheet where you say OK. This is what I've decided I'm going to give this for this and these things like when I said series A Series B Series C non diluted terms by Loverboy on a couple of pages I basically write his the terms I actually did it on like two slides and I said okay this week I'm I'm look now I've had loose conversations with probably a couple dozen people. I mean sometimes it was not really different groups it was like the husband and the wife together. But there's maybe a couple dozen people that are in conversation about this thing and I've kind of got a sense as to what people I don't really know how much they're going to come in for and I ended up getting surprised. I kind of knew I put a minimum that you had to have a minimum investment of one hundred thousand dollars. Just because I didn't want to do smaller.

Doug: [00:33:41] I've got a friend who's doing a brewery. He did as low as 5000 dollars. You know he's got a huge number of investors I've got a smaller pool. But it was just that was just the way we were thinking about it and in some cases what people did is I allowed them to come in as a company and they might have had like one person did three hundred thousand but they've got a couple of fifty thousand they created an LLC that invested in and I had to give them permission for doing that. But they all had to be certified investors in order to make it work. Again I'm probably going beyond on some people's heads but just don't stress about it. If you get into that far this people that can help you with this your call me and I'll help you with the. And so then I turn right I said OK I'm taking money and I set aside X amount of money and I don't want to give it the specifics because there's no need to but I set aside a certain amount of money and suddenly I had one hundred and fifty percent of the money. People wanted to put in.

Doug: [00:34:42] And now it's it's loose. They haven't signed a term sheet but but they're saying I'm thinking this I'm thinking this.

Doug: [00:34:49] And and I was like OK do I sell more and take more money. Do I need that amount of money and I went back and forth on it. In the end I took 10 percent more. So I took you know that extra 40 percent and I said I'm sorry we're out. We'll do another round. I'll talk to you about it and the people were cool about it because they understood and being overfunded is great.

Doug: [00:35:12] You know. You know but I had sold more people than I needed money. And you really want to do that because then when you're putting to the terms people know if somebody really has a problem with it you know you've got a backup you can go to.

Doug: [00:35:27] And I know this is not the shit they don't teach you this stuff.

Tripp: [00:35:30] Yeah. No no no. This is this is I mean this is really really good good stuff here with some of the questions Doug if I can interject at this point that I have is in a lot of it still goes back to kind of the ownership piece how you know you said you've funded know one hundred and forty percent over 110 percent from what you thought that maybe you needed that was offered to you and you actually had to turn down investor efforts obviously is a very good thing.

Doug: [00:36:00] You know week on week one really all came together because because I'd nurtured it along. And I said OK here's the deal. And within five days we had 150 percent.

Tripp: [00:36:11] That's amazing. OK. Yeah. So now I look at your situation and I sitting there saying OK you've got you check all the boxes because I know you you did the concept prototype of functional prototype. You went through the math plan as best you could you know with the estimating that you do and then the third thing that you have is kind of the question that I have which is the patent you're part patent is for this you know methodology that you have in order to make whisk(e)y faster an age it or replicate how how whisk(e)y is age. What's my patent. What would be my patent for.

Doug: [00:36:53] It's going to be a trademark. I'm going to be the venue that you've got. It's going to be if you're a local. Again remember that sun set boundaries. Yep. We're gonna be local. I set up to be an international company. Yes. So my valuation is probably 10x yours maybe 20 x. I'm just I'm just being guess. Yeah. No thanks I'm not throwing stones but I was setting up a vision of being an international company. OK. So as an international company the standards that I and so I had double gold medals. I mean I had I went for a big valuation and was able to get it. But I was going in. Remember I've been doing this for a long time and and so I went in. Going in to be big. OK. If you're a local craft person you don't have that same standards against what you've got. And that's where the name the trademarks the if you're gonna be local the venue the cool firehouse or this cool space or we're gonna be in this like the guys doing the breweries is going into a space where behind it there's gonna be a whole pile of condominiums are about to be built. And those people are going to be able to stumble. I mean walk down the hill you know and then walk back. And so he's got a ready customer base.

Doug: [00:38:10] That means he's just gonna make money fine because all those condos are gonna be right beside it. And so I get it. He's got it. He's gonna have a captive audience right there that he can do. And so there is you know on that scale it's trademark its product it's they can taste it and it's good. It's getting medals you know submitting to competitions.

Doug: [00:38:35] I mean you could do a funding of a series A that the Series A is an exploratory thing that for a year we're going to work on the brand and we're gonna submit to competitions to get awards.

Doug: [00:38:44] And with us just using our permit to file awards. Right. You know it would be a thing to do but. And then you can go bigger. So I mean it really it depends upon what it is. But it's generally going to be something around product packaging trademarks venue storyline something of that nature.

Tripp: [00:39:07] Ok. But that gets me a better ision associated with that. And if I can can ask what what is the. When you got to these investors in this kind of series A scenario is at least what I've got in my head maybe with something a little bit more. Beyond that from from the start. But if it was a Series A and it's a certified investor Am I getting the deal. How much ownership are you giving up at that point that's still in my head.

Doug: [00:39:40] No you can't you can't. You can't even have that conversation until you can answer the other questions. Show me the product show me the cards right. Show me the business and then figure out that OK you can't even have this conversation. I mean people go into these conversation I'm yourself. That's ridiculous. You got to show me the rest of your pitch. Show me the situation state the idea and explain how it works and then I can tell you what's reasonable and what's reasonable.

Doug: [00:40:07] Ok but there's a lot of latitude on that. There's a lot of latitude on that. And I mean I've seen it all over it's all over the map. I mean you start to ask around to people they'll tell you that it really depends on how good you put the rest of it together. OK. I mean in my case you know I have this deal with Edrington to manufacture a product that we don't own a large percentage but we own a percentage of it that added to my valuation.

Doug: [00:40:32] You know having a product that's very successful in the marketplace Edrington dramatically improved my valuation. Having patents dramatically improves my valuation. Just that's just the nature. But until you have that whole package together it's an arbitrary conversation.

Tripp: [00:40:50] Okay. All right starting. The picture is becoming clearer for me as far as how you.

Doug: [00:40:57] Can tell you go back to not worry about is how much I'm selling. Just don't even worry about that right now. Figure out again go back to Episode 1 of this here. Hey what is the purpose. What's the purpose of this why are we doing this we're doing it to revise this town. We're doing this to make a difference. We're doing this to create an inspiration we're doing this to bring cocktails to people with whatever it is we're doing it to raise money for the piping plover I don't care. And then what's the storyline of our idea. What's this thing that we're doing.

Doug: [00:41:27] And and what is it. Now let me taste it. OK. In my case what happened is I talked to the investors afterwards you know and I said OK. So. So you gave me money. And I boy I appreciate it. And I'm a good steward of it. I mean you think about it.

Doug: [00:41:43] I said why. And they all said first and foremost you have outstanding outstanding product. And while an outstanding product doesn't guarantee success. Without one guarantees failure. And so the good news for you is you come down to the distillery here will make an outstanding product. Right. You know take some wood from Indiana. We'll use that Woods. We are local you know tell our story and we'll make a cool product. Having an outstanding product is what's the first and foremost reason. The second reason that they did it was they were buying into to to the whole model that we had which was to accelerate this stuff and to do this thing that we would approaching it differently. Rather than building in fact I talked to some investors they said if you were telling me that you were gonna get the money to buy it still and to go do that. He says I'm sure you three cases where the companies were 20 percent of what it was upon the release just because that math doesn't work. It just doesn't work. So the economic model worked. And then the third thing they did which makes you feel bad but it is reality is I'm betting on you. You know I'm just betting on you.

Doug: [00:43:00] And that that that's why I'm doing it. And that will you know and it pretty much you know those early investors that the dreamers the people with a vision. They're buying into a product they're buying into a different approach to doing the business. In other words if you have to explain well I don't know this does not seem proper a need. Old barrels. It just doesn't seem right to do this. We'll just move on.

Tripp: [00:43:25] You're right. There's other investors that are interested in something forward looking.

Doug: [00:43:29] My folks love the rebel nature of what we're doing. I mean they like the fact that we're messin with the industry. They think it's hilarious. OK. And so you're either into that or you're not. And then the third thing is is that they think you're a reasonable person and that they believe in you. And you know what you can sell is the same thing we saw which is a different mindset. We're gonna approach this with a different mindset.

Tripp: [00:43:54] This has helped bring a lot of clarity to questions I have. I'm sure there's a lot of gray area still in there for me. But I at least have got an outline to kind of work on and ask additional questions too. So what's the so. So we've gone through kind of the investor plan we've gone through the pitch we've gone through a little bit as far as the the distillery game plan. And then you've got in your outline here getting the permits and building the distillery what what have I missed here as far.

Doug: [00:44:27] Yes. Okay. So just in a big picture we've we've put together a game plan.

Doug: [00:44:32] We've had some learning conversations. We then make a decision what we're gonna do. We close the investors and you spend a bunch of money on lawyers to get the legal documents done. Okay. And now once you've got that. Now get excited about the joy of waiting because now you've got to get you know you've got to apply to the TDB the stay and blah blah blah blah blah blah blah blah blah. And so it's the grind. And what I do with my investors and so that's a process and that's a whole journey which we cover separately what I've done did with my investors which has been epically helpful is every single Saturday except for Christmas. The only time they get a note from me every single weekend on what what what I've learned and what's happening. Every single week I write every single Saturday. Saturday morning I get up and I write them a newsletter and they know coming they know what's going on. What we're going through The Good The Bad And The Ugly we're having troubles with this. We've got things with this.

Doug: [00:45:44] Usually they don't comment because it just they're so blown away because it's like we actually know stuff. But they love it. They absolutely love reading them. And every now and then somebody'll say geez I got an idea for you what if you go to this. What if you try this. I mean they've got a thought or something for me and I just keep a very good conversation. They're part of my team. They're part of my team and I set up at the beginning you're part of my team and we're here to learn together and and I what I always will say to them is I said you know they see the ups and the downs. I mean it and it gets you have good days and you have crappy times and I mean stuff happens and. And I always were forced I say haven't fun yet. All of them said they did this in large part because they wanted something that was a fun investment. And they say yeah I'm having a ball. They said this is so much fun.

Tripp: [00:46:31] That's cool. So how often do you physically meet with them. Are they spread out so far so much of the world that is simple.

Doug: [00:46:38] I do. I set up a I don't. Under Ohio law. You can have what's called a close corporation which means there is no board of directors I'm the board of directors. OK. Which was a negotiated point. Some will like it some or not. I was able to sell it to them because it was the right thing and I truly believe it's the right thing for us in our situation the. So I have an advisory board that I meet with four times a year which is not every investor but it was basically investors over a certain size plus a couple that I added for my purpose and in fact we just had just a couple days ago we had our quarterly meeting where I take them through kind of what we're doing and where we're going. They generally want to know a couple of things they want to know first. What have you done with my money. So you know and so I'm very clear at the front. We've taken your capital and we've invested it in these things you know. And I took them out to the distillery and said See this Your money's in this. See that right there. See those barrels. That's your money is and I joke about it but I think they like the fact that we're doing that. And so I tell them where the money's gone and what we're going to do with it which is respectful. And then the second thing is as I get them focused on the future where are we going. And basically not looking in the rearview mirror. I don't spend a lot of time on that I'm focusing on where we're going. Longer term and short medium and long. And so that's what I'm talking about. So at this meeting I talked about Kate. This is our focus for the next twelve months.

Doug: [00:48:20] We're doing now as Tripp has gotten a much more complex. We're opening up in England. We basically making an acquisition over there we're bringing in additional investors to do it. I mean we've got you know it's it's become a pretty complex business pretty quickly. And so my job was just to keep that complexity in the big picture but simplify down and say okay. This is the short term things we're doing we're doing these things right now. And with these things done. We're now going to then move to this medium term and this longer term so that they can see where we're going because as long as I got them looking towards the future.

Doug: [00:49:02] They're happy because you know they know where we're going. That's all so.

Tripp: [00:49:08] So as you've gone through this Doug and because you pitch off the Blue Card as one of your slides is as I go through some of things that you just talked about how much if you change that blue card since you started since since they actually put the money out has it changed much or is it pretty much stayed the same constantly.

Doug: [00:49:28] The aim of this has not changed. I admit this has not changed. I mean part of it is is we have a slogan some call us The Crazy Ones and we're OK with that. Yeah which is a riff off the Jobs the Apple commercial. And at the end of the day that's still what we're doing is we're nut cases making whisk(e)y really fast by replicating seasons of barrel aging and now we're doing ultra luxury products made ridiculously high end luxury product.

Doug: [00:49:53] Hundred dollar two hundred dollar products we're making. Okay. That's crazy. Okay. And and so that fundamental dimension of disrupting this industry and really doing amazing products so that consumers are able to get We're democratizing it. So you pay thirty five dollars for our product you getting 75 dollar product for 35 bucks you pay 75 you're getting 150 dollar product for 75 bucks. You know it's Tito's. That's all we're doing okay. Much better product at a lower price. That's what we're doing. We're disrupting it because we have a whole different way working just like Tito's does. OK. That basic premise is still there and having a lot of fun while we're doing it. OK. That's still there. The yellow cards how those ideas have changed regularly. OK they've changed regularly now. They are however after about nine months. We are now at a point where I just said at this meeting I said I think now we are ready to lock and load. This is what cause we've experimented with things I said.

Doug: [00:50:56] I'm feeling really good that this is exactly what we're going to go do in his he is our exact plans and for the first time I said and this is what we want to sell in this thing. This is how we're doing this and it's a very clear vision of what we're doing.

Doug: [00:51:07] And so they're starting to get locked down for the short term longer term. There's about a half dozen things out there that may or may not become something we just don't know. We just don't know. But I forced them to think about those and I say but we're not working on them the team's not working on them.

Doug: [00:51:25] I call them my after school projects. I've got some little experiments here and there. I did a call yesterday on one of them. We could get five million dollars to do this thing. Which would be wicked. But it's a long shot. It's pushing the technology maybe maybe not. Don't need the team distracted but me as the leader I should be looking at those deals. Looking at those joint ventures looking at those partnerships you know that's my job is to be the leader's job is to look forward to lead. And you can't lead by looking backwards.

Tripp: [00:51:59] Got it. OK. What. What other things do we need to cover off for this part 3.

Doug: [00:52:08] Well there is one little point that I want to make to you.

Doug: [00:52:14] Pricing.

Doug: [00:52:17] The decision you make I can Masaki the famous mac evangelist and author I interviewed him for one of my books early on. We've interviewed each other back and forth is he said pricing makes a statement if you price at the same price as other people that says you're just as good if you price higher that means you think you're better.

Doug: [00:52:38] You may may not be. In the whisk(e)y business you've gotta kind of. Twenty dollars twenty five dollar twenty nine dollar you got a super premium in the thirty to thirty nine. Then you start to move into ultra luxury and luxury. We can make products profitably and all of those price points. Okay. A real decision that you have to make in the beginning is where you're gonna be on price and that's related to how great your product is and what's the storyline of your product is your storyline. A luxury storyline is that working man storyline you know where you're going. And so the price is not just some people take the writing and so I guess this is what it sells for. I like to start with the price is gonna be this. And now how do I make that a WOW. And in our case what we're looking for is a big wow from our price. But that price is a major strategic decision of what kind of company you gonna be in the problem in most craft companies right now is they're selling at 50 dollars a product that should sell for 30 dollars. And that's not going to get repeat. It's too high. It's just too high. And so you got to think about and Tripp even worked with us. You know you told me I want a sixty five dollar product or a fifty dollar product I can give you that I can make that quality of a product that's worth more than that. You want to be a super premium thirty five. I can do that. You want to be at the twenty fives. It's tougher but I can do that too. But you're gonna have restrictions on what you can have restrictions on Nashville because we're going to keep the cost down. You know we can hit any of those price points all of those price points are doable with this technology. So that is a thing that you need to think about. OK so what year.

Tripp: [00:54:29] Yeah so. So I mean a lot of questions that come out associate with that. So you wouldn't necessarily have a would say a whisk(e)y at a 20. You know it could the vision be all five. You know could it be. I want to be I have a low price one and I want to have a you know a higher higher priced one and a premium one and those types things for you can do that brand.

Doug: [00:54:54] Now you got to make sure now you have the sales capacity. And the cash capacity to buy the bottles the labels the inventory.

Tripp: [00:55:03] Ah OK.

Doug: [00:55:04] And the complexity that happens. To do that. Okay. But the answer is yes you can. Right. But then if you're gonna turn around and have three items in premium three and super premium three and ultra I got nine SKUs use. You damn well better show me a team.

Doug: [00:55:23] And a distribution team in that they can manage that. I see him saying Yep. I mean it's it's it is whack a mole. You just because you can doesn't mean you should. And so you've got to just figure out what you can put together. All right.

Tripp: [00:55:42] All right. Any parting other parting comments for this third part.

Doug: [00:55:47] No just in summary on this thing folks. Those first two episodes when you start to get into this math stuff you're going to want to go back to those and you're gonna make changes and when I was doing my rough pitches I went back and kept changing those. OK so after I took the money the Blue Card hasn't changed but before it took the money the book had changed. The purpose of why we're there. But when you get your purpose right and you get your storyline right. Then the business plan comes out of that. Don't start from the business plan and go backwards. Start with your purpose. Move to the storyline and then write the others. That is the progression and end if you have to do this three or four times. That's OK if you find it's not working. Go back to the beginning and start again. OK.

Doug: [00:56:36] That that's that's that's my advice to you. And I will tell you enjoy this journey and be really thoughtful as you go through it because you're going to end up living with this for a long time. You're going to end up living with some long time. Make it so that you love it. You absolutely love it. And if you love it This is so worthwhile. It's ridiculous. This is so much fun. I am having more fun. It's amazing how much fun this is to do this. It's worth it. But you got to love it. Our riverboat series. I frickin love that riverboat series so much. It is so cool. I know below product is ridiculously cool relativity with the funky flask. I just love it. We don't set ship crappy products. I love them. That's the problem is is we have to go through a lot of pivots because I won't put them out unless I love them right.

Tripp: [00:57:33] Ok. Cool. All right. Well we've gone through quite a bit and three sessions will keep people updated on our progress as we go.

Doug: [00:57:43] Excellent.