Chief Customer Officer of Catalytic - an AI and Automation company providing Fortune 500 companies with the ability to rapidly reduce the cost of every day business activities while simultaneously increasing quality, employee satisfaction, and customer loyalty.
Sunday, November 01, 2015
Five Years May Be Too Long
If you were an architect designing a brand new commercial building in downtown Los Angeles, the city building code would require that you include in your plans one parking place for every 250 s.f. of floor space. An exception might allow you to reduce this to 1 parking place for every 400 s.f. of floor space (it depends on how the space will be used).
So how much thought should you give to the design of the parking floors? Its just parking, right?
But a building may last 100 years. Will we still own or drive cars in even 20 years? If I were an architect, I'd be thinking about how to design parking floors that could easily be converted into more commercial space if (I think when) autonomous vehicles radically transform our ideas about the need for parking.
But what about your own company and the plans you are making right now for the future? Are you making investments in new manufacturing capabilities that will be overtaken by automated or accretive manufacturing processes? Are you configuring office or retail space for the way people worked or shopped in the twentieth century instead of the twenty-first? Are you entering into partnerships and vendor relationships that are going to tie your hands if market trends or technologies disrupt your current business model? Are you defining a five year plan that will be invalid the first time something happens in your market that you didn't anticipate?
The problem with a traditional strategic planning approach in 2015 is that the we are living in a moment where our behaviors and expectations as customers and employees are rapidly changing, putting increasing pressure on companies to change. Business models, operating models, product and service definition, partner ecosystems -- we can expect all of these to change for every company.
As customers and employees we will quickly adapt to these changing markets and find the companies that we want to do business with because they are meeting our new needs. The decision for us as business people is whether we will be reactive to these new market demands or whether we will steer our companies into paths where we can be proactive -- anticipating disruption and being ready to take advantage as a first mover and not a follower.
The imperative is clear. In market after market companies that take the lead as a disruptor have had an enormous impact on slower moving competitors. Amazon has substantially disrupted retail and is now beginning to disrupt enterprise software. Uber has disrupted transportation and may begin to disrupt package delivery. AirBnB is disrupting hospitality. You've heard all of these stories before but you think, "not in my business..."
But think about this a little bit differently. If you are doing something of value to your customers (a reasonable premise if you are running a for-profit busines), and there is an opportunity to do what you do better -- faster, cheaper, higher quality -- the way markets work today makes it easy for the innovator to intervene in your market with their new product or service and put pressure on your existing business.
So don't look at the businesses that have already been disrupted as the model for how yours will be disrupted. Look at your own business and ask, what could possible happen to change the circumstances of my market and create that opportunity for someone to disrupt the way we do business today? I call this anticipating disruption and I believe that there is a process that you can manage in your business to help you anticipate disruption.
First of all, you need to establish that innovation is a crucial part of the way you run your business -- fund innovation, staff innovation with thought leaders, make sure that company leadership is rewarded for embracing innovation...
Second -- undestand that managing innovation is about managing process, not managing outcomes. Do not set out on a journey that says "we are going to make a widget that costs 50% less to produce" or any other specific goal. And do not decide that innovation has succeeded or failed because of the achievement of that specific goal. The only innovation methodology that matters is the one that is continous and routinely questions all aspects of the business looking for those opportunities to transform.
Third -- staff innovation with curious employees and partners (important to include partners!). Make sure that they have the right tools and expertise to cast a broad net across all aspects of your business and look at what the market, societal, technology, and competitive trends are that can suggest where change is likely to emerge and flourish.
Fourth -- be a scientist and experiment. Develop hypotheses, define experiments, run the test and learn from the successes and the failures in order to define the path forward.
The companies that will grow and prosper are the ones that embrace innovation and manage it as a core process -- continuous and incremental innovation that is constantly experimenting with and evolving the business. Not setting five year planning goals and trying to manage the outcomes. So what are you doing today to make sure this is true at your company?