Adopt an ‘Invest to Test’ philosophy to quickly abandon, pivot, or continue…
To increase and deepen our discussion on digital disruption (see our last post around the idea of Future Surfing), let’s examine how you can leverage digital technologies and mind-sets to create start up business opportunities within highly complex environments.
We’re surviving in a so-called “VUCA world”: characterised by Volatility, Uncertainty, Complexity and Ambiguity. Across virtually all industries, we’re seeing product lifecycles shortening, technology change accelerating, and customers demanding ever-greater value from businesses.
In studying decision-making in VUCA environments, British organisational theorist Professor Ralph Stacey notes that with longer product cycles and little technological change, you can be rational and measured using their investments. We now have the time to construct comprehensive business cases, and run proof-of-concept and proof-of-value programmes, once we develop standardised services and products in fairly static markets. We are able to “prove” the work before we begin.
In VUCA environments, where product cycles are short and technological change is fast, having a traditional method of decision-making actually becomes a liability – potentially costing time, money and lost opportunity. Variables replace constants as our decision-making factors.
On this complex environment, decision-makers need to use Invest to check.
innovation strategy to try is really a dynamic approach… Focus on some well-founded assumptions, bear in mind that however confident you might be, these are still only assumptions. Invest the littlest viable quantity of resources (financial, human capital, intellectual etc) in building real-world prototypes and services that can reliably test these assumptions. Here you’re seeking to make variables “constant” (no less than for a time).
Let’s assume, for example, that your customers i would love you to quote competitor prices when presenting quotes for them. Don’t immediately dismiss this as irrational or unlike best-practice. Test the belief: create a prototype experience and provide it to 50 of your most loyal customers. Request their feedback… Can it be as useful since they believed it might be? Will it increase trust and loyalty in the brand? Will it improve the customer experience? Are they going to even be willing to purchase such a service?
It’s important to ask the right questions, to stress-test your assumptions and decide whether they’re valid.
Came from here, there are three options: to abandon the product or feature, to pivot it (re-cast it something slightly various and test again), or to continue with further incremental investments and cycles of user feedback.
The short response is ‘not necessarily’. In everything that your company does, we have to draw a sharp among two approaches:
Future-Proofing… fast-following the competition start by making sure you’re aware and prepared for industry change, positioned to quickly conform to new demands, although not being the catalyst for change.
Future-Surfing… as we introduced inside our last blog, this is about actively taking the battle to the competition and inventing entirely new ways to solve customer pain points.
Interestingly, in McKinsey’s ‘The case for digital reinvention’ report, the analyst firm demonstrated that fast-followers (future-proofers”) saw a typical 5.3% revenue uplift as compared to the competition. The actual disruptors (“future surfers”), however, enjoyed a 12.3% revenue improvement.
But the real goal is to blend both strategies in your organisation, using every one where it makes one of the most sense. For instance, you could apply future-surfing to your core regions of differentiation, and future-proofing for all those more commoditised locations where you’re not planning to differentiate yourself. Adopting both strategies, and executing them well, `could generate revenue uplifts of up to 18.6%, according to McKinsey.
For more details about business transformation webpage: this.
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