Perhaps the greatest challenge business leaders in large organisations face today is how to stay competetive amid constant change and disruption. Many organisations that are facing a real threat or spotting a new opportunity try—and fail—to wedge in through some sort of digital transformation using methods and processes that worked in the past. But the old ways of designing and executing strategy are failing us.
Keeping up with the speed is hard because companies’ structures, processes and internal workflows are not longer effective in winning in this faster moving business world. The same time, pipeline of innovative ideas and effective execution is required to design and scale innovative ventures.
Executives that support innovation and disruption ideas, ensure there is a focus on exploring new ways of building business at their regular company or departments meetings. They apply an aggressive effort to build new opportunities based on the development of new services, products, structures, processes, etc.
My team at K2 Digital Transformation is very focused on designing and scaling innovative ventures together with large companies. Our customers range from local European companies to large, global organisations, all of whom have different requirements. While every one is unique they all share common challenges and goals – a desire for discovering, designing and scaling new products or services in order to stay competitive and win market battles.
After looking at many companies, we found few important elements that help managers execute innovative initiatives effectively. Let me share some of these findings and best practices.
- Customers wisdom helps. Most projects today are launched and maintained in silos and push to market afterwards. The push approach often means – we have data, we have assumptions, we have all the pieces internally so let’s build / launch a product. Then invest in marketing campaigns which make people buy it. It is no secret that companies going this way, are faced with decreased brand loyalty. Teaming up with customers to accelerate R&D has become an interesting course of action. An effect is that by getting feedback from consumers in the product development phase, companies are able to meet their expectations more precisely. By doing so, companies save the time and resources that would otherwise be spent on developing rarely or never used features. To do so, executives needs to encourage their teams to get out of the building and start asking proper questions. If you work for truck company, ask your team to spend 48 hours with truck drivers, if you work for pharmaceutical company, spend some time in their production plant. Ask questions. Validate your assumptions.
- Speed matters and should be your ally. In the early days of building product / service companies have to validate assumptions, build a prototype, set up project milestones, secure budget + 50 other elements which are essential for launching a product to the market. Why do speed matters here? Effectively and efficiently hitting your goals with high speed requires focus. And this is all you need. Speed defines focus. No unproductive meetings, no useless features, no nice to havediscussions. Laser focus guarantees engagement automatically.
- Team needs to be faster than its manager. We have always been fascinated by leadership and how to get the very best from teams. I am lucky to work with companies which perform this way, as well with those, which still are mastering their performance. Best performers care about making teams executing faster so managers are not acting like bottlenecks. First of all autonomous. Executives can achieve speed in execution of innovative projects when their teams have control of their own destiny, from idea to value, with minimum or no reliance on managers. Secondly, failure delivers value if tackled properly. Who remembers today iPad 3? It has been removed from Cupertino company’s product portfolio, based on poor revenue performance and misalignment with the iPad family. The same time it gave the opportunity to improve iPads and deliver even better products. Worst of all, being afraid of failing can suppress innovation or make it the sole domain of a few, risk-taking individuals. In fact having a culture that tolerates failure is one of the key ingredients for innovation. Smart executives define particular portion of budget and call it “failure money”. It helps to build a culture, where failure is welcome, but have the frames and takeaway lessons. Thirdly, small teams matter a lot. Large companies typically launch change programs as massive efforts. But the most successful introductions of agile usually start with small teams that undertake small steps. Startups culture provides 2 Pizza hint which is worthy of notice. If your team can’t be fed with 2 pizzas is definitely too big team. It’s just natural to believe that bigger teams means you’ll get more task marked as done. In fact, big teams blur transparency, responsibility fades away and feedback cycle is hard to maintain.
- Top Management support and role. The truth is, only CEO has the power to change things across entire enterprise and only CEO has the power to start transformation wave. To do that, CEOs need a holistic view of the digital threats and opportunities and a way to link them to a company vision for how digital is reshaping the competitive landscape. This brings a strong fundament for narrowing down priorities, encourages middle managers to focus on the most valuable changes and breaks silos between company’s departments and teams. There are three factors that should be seriously considered in executing innovation: define where digital change should happen, orchestrate the change, empower people. Define where digital change should happen shifts attention to those processes which provides the highest value in a value chain. Digital change should take the processes to the higher level and boost their effectiveness. CEO needs to clarify with teams where those processes are, and also CEO should clearly define which processes are not so important and their digitalisation will bring more costs than gainings. Orchestrate the change means executives should take a place in the centre of an action and not standing on the side. It is important to ensure that change sticks involves the hard work of defining new responsibilities, structuring new set of skills and adopting new ways of working. And it is CEO role to carefully orchestrate the change, defining who will lead (what sort of talent and role) the specific effort and how the steps and milestones will look like. The other factor I would like to mention is people. Digital transition requires risk-taking and mobilisation of frontline in including customers into the company’s value chain. This can’t happen without direct, short and frequent communication between executives and all employees across entire enterprise. People should be empowered directly. Only CEO can breakdown barriers, give teams strong permission to undertake risky initiatives and provide strategic framework to fortify the new order. CEO message can change a lot, without it people are less self-confident in taking risk, which can make digital transformation superficial.
- Customers should be included in innovating projects as quickly as possible. As a consequence, the resulting product/ service matches their needs more closely.
- Speed and innovation are the hallmarks of a successful company in the digital age. To get there, companies should consider building small, fast moving teams with a set of clear, measurable goals.
- Senior leaders should create a compelling vision of where the organization needs to go with its innovative effort and empower people to take the lead in designing and executing innovative projects.