The Three E’s of Business Evolution

Fish in formationI recently attended Futurescope, my first start-up conference in Ireland. Some words from one of the speakers really struck me. “I don’t view the current innovation environment as a battle between incumbents and disruptors but a battle between those doing Customer experience properly and those not.”

This really aligns with my view. Consider companies as animals within an ecosystem, continuously evolving to survive. Who will succeed? The biggest? Remember the dinosaurs. The fastest? The strongest?

It will be the most adaptable – the most agile.

Liken large slow enterprises to whales. Whales gobble up the smaller fish. Read fintechs and start-ups. The whale survives and buys time. But does the enterprise become more agile, more nimble? Can it change direction any quicker?

Now take a shoal of fish. Highly aligned but autonomous. All in tune. Highly agile and adaptable – capable of changing direction quickly.

How do you define and measure innovation? It is not only the number and quality of ideas that solve real customer problems but also near-perfect execution with an agile (adaptable) and truly customer-centric focus. That is, soliciting, actually listening and then acting on customer feedback.

Innovation has 3 enablers.

Essentialism – the discipline to default to no before over saying yes to everything – against our human nature. Organisations word-smith a grand vision that encompasses everything for fear of missing out. The result may be debilitating – everything needs to be done. This demonstrates a lack of real vision and leadership. Essentialism is hard. It means saying no – a lot. But essentialism makes it clear what we do and what we don’t. This empowers staff to make decisions. This devolves decision-making and increases speed.

Effectiveness – the holistic cross-organisation prioritisation within what is essential. By focussing only on efficiency, it’s possible to build bad products really fast. Effectiveness is truly listening to customer feedback and acting on it in balance with business strategy. Economic Prioritisation of ideas at the intersection of customer desirable, business viable and feasible maximises your bang-for-buck. The result is a product to truly meet customer needs and solve their pain points.

“Don’t find customers for your products, find products for your customers.” – Seth Godin

Organisations claim to be customer-centric but behaviour may demonstrate otherwise. Business cases laden with assumptions that may not be validated with customers. Customer research ignored because we don’t like what it tells us. Does your organisation spend as much time talking with customers as it does talking with internal stakeholders?

Embrace truly listening to customers, measure in frequent cycles and value learning as well as revenue benefits by using validated learning metrics as well as revenue indicators.

Effectiveness done properly may look like increased efficiency or speed because you invest in the right things. Focus only on efficiency and risk building the wrong thing quickly.

Efficiency is flow, minimising the cycle time for feature or product from concept to market. Pushing through a lot of features simultaneously – to maximise resource utilisation – does not always provide higher customer value. Flow is aided by minimising work-in-progress. Essentialism contributes to efficiency. Avoiding the real cost of multi-tasking enables speed and sustainability. We know this and yet we often exhibit the opposite behaviour. Work piled upon people through the back door – with two major repercussions.

The team doing the work is overloaded, multi-tasks and performance drops, reducing efficiency.

Work skips front-door prioritisation and trade-off reducing effectiveness as higher value work could be displaced.

Back to evolution – what is the best measure of the agility required to survive?

Organisations who shorten the Build-Measure-Learn cycle will thrive – assuming that learning is incorporated into future build cycles. Organisations tend to focus on the ideas only. This is important. Customers won’t always tell you what they need. But only those ideas that resolve a validated customer problem matter.

Have an idea? Take a scientific approach to validate it. State your hypothesis, build a minimum viable product, measure and learn.

Invest not only in ideas that enhance a customer’s value chain. Examine the enterprise delivery value chain and invest to optimise it. Reduce your own build-measure-learn cycle. This is hard. It means investing in, for example, DevOps, test automation and truly supporting delivery teams to deliver – investments with benefits that are more difficult to measure.

Can you simplify the build process to be faster at delivery? What are your bottlenecks in that area? Legacy systems, complex architecture? Can you improve your ability to measure customer behaviour? Do you even do this? Can you improve the turnaround time from learning to implementing the necessary ‘pivots’? Do you listen to feedback and act on it?

Essentialism is visionary and is about making hard decisions and saying no sometimes.

Effectiveness is about truly listening, prioritising economically based on customer needs and business vision.

Efficiency is about flow, productivity – simplification, automation of delivery processes, supporting teams.

These are three elements critical to evolution of a business which embraces an innovation culture and relentless change.

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