Posts Tagged ‘Competitiveness’

Uncertainty Isn’t All Bad

If you think you understand what your customers want, you don’t.

If you’re developing a new product for new customers, you know less.

If you’re developing a new technology for a new product for new customers, you know even less.

If you think you know how much growth a new product will deliver, you don’t.

If that new product will serve new customers, you know less.

If that new product will require a new technology, you know even less.

If you have to choose between project A and B, you’ll choose the one that’s most like what you did last time.

If project A will change the game and B will grow sales by 5%, you’ll play the game you played last time.

If project A and B will serve new customers, you’ll change one of them to serve existing customers and do that one.

If you think you know how the market will respond to a new product, it won’t make much of a difference.

If you don’t know how the market will respond, you may be onto something.

If you don’t know which market the product will serve, there’s a chance to create a whole new one.

If you know how the market will respond, do something else.

When we have a choice between certainty and upside, the choice is certain.

When we choose certainty over upside, we forget that the up-starts will choose differently.

When we have a lot to lose, we chose certainty.

And once it’s lost, we start over and choose uncertainty.

Image credit — Alexandra E Rust

 

Will your work make the world a better place?

As parents, our lives are centered around our children and their needs. In the shortest-term, it’s all about their foundational needs like food, water, and shelter. In the medium-term, it’s all about education and person-to-person interactions. And in the longest-term, it’s all about creating the causes and conditions to help them grow into kind, caring citizens that will do the right things after we’re gone. As parents, our focus on our children gives meaning to our lives.

Though work is not the same as our children, what if we took a similar short-medium-long view to our work? And, like with our children, what if we looked at our work as a source of meaning in our lives?

Short-term, our work must pay for our food and our mortgage. And if can’t cover these expenses, the job isn’t viable. In that way, it’s easy to tell if our job works at the month-to-month timescale. You may not know if the job is right for you in the long-term, but you know if it can support your lifestyle month-to-month. And even if it’s a job we love, we know we’ve got to find another job because this one doesn’t support our family.

Medium-term, our work should pay the bills, but it should be more than that. It should allow us to be our best selves and be an avenue for continued growth and development. If you have to pretend to be someone else, you need a new job. And if you’re doing the same thing year-on-year, you need a new job. But, where it’s easy to know that your job doesn’t allow you to pay for your food and rent, it’s more difficult to acknowledge that your job isn’t right because you’ve got to wear a mask and it’s a dead-end job where next year will be the same as last year.

Long-term, our work should pay the bills, should demand we be our best selves, should demand we grow, and should make the world a better place, even after we’re gone. And where it’s difficult to acknowledge you’re in the wrong job because you must wear a mask and do what you did last year, it’s almost impossible to acknowledge you’re in the wrong job because you’re not making the world a better place.

So, I ask you now to stop for a minute and ask yourself some difficult questions. How are you making the world a better place? How are you developing yourself so you can make the world a better place?
How are you growing the future leaders that will make the world a better place?

For many reasons, it’s difficult to allocate your energy in a way that makes the world a better place. But, to me, because the world changes so slowly, the number one reason is that it’s unlikely your work will change the world in your lifetime. But, as a parent, that shouldn’t matter.

As a parent, if your work won’t change the world in your lifetime but will change the world in your children’s lifetime, that’s reason enough to do the right work. And, if your work won’t change the world in your children’s lifetime but will change it in your grandchildren’s lifetime, that is also reason enough to do the right work.

Image credit – Niall Collins

Disruption – the work that makes the best things obsolete.

I think the word “disruption” doesn’t help us do the right work. Instead, I use “innovation.” But that word has also lost much of its usefulness. There are different flavors of innovation and the flavor that maps to disruption is the flavor that makes things obsolete. This flavor of new work doesn’t improve things, it displaces them. So, when you see “innovation” in my posts, think “work that makes the best things obsolete.”

Doing work that makes the best things obsolete requires new behavior. Here’s a post that gives some tips to help make it easy for new behaviors to come to be. Within the blog post, there is a link to a short podcast that’s worth a listen. One Good Way to Change Behavior

And here’s a follow-on post about what gets in the way of new behavior.  What’s in the way?

It’s difficult to define “disruption.” Instead of explaining what disruption is or isn’t, I like to use “no-to-yes.” Don’t improve the system by 3%, instead use no-to-yes to make the improved system do something the existing system cannot. Battle Success With No-to-Yes

Instead of “disruption” I like “compete with no one.” To compete with no one, you’ve got to make your services so fundamentally good that your competition doesn’t stand a chance.  Compete With No One

Disruption, as a word, is not actionable. But here’s what is actionable: Choose to solve new problems. Choose to solve problems that will make today’s processes and outcomes worthless. Before you solve a problem ask yourself “Will the solution displace what we have today?” Innovation In Three Words

Here’s a nice operational definition of how to do disruption – Obsolete your best work.

And if you’re not yet out of gas, here are some posts that describe what gets in the way of new behavior and how to create the right causes and conditions for new behaviors to emerge.

Make it Easy

The Most Powerful Question

Creating the Causes and Conditions for New Behavior to Grow

Seeing What Isn’t There

The only thing predictable about innovation is its unpredictability.

For innovation to flow, drive out fear.

Image credit — Thomas Wensing

Speed Through Better Decision Making

If you want to go faster there are three things to focus on: decisions, decisions, and decisions.

First things first – define the decision criteria before the work starts.  That’s right – before. This is unnatural and difficult because decision criteria are typically poorly defined, if not undefined, even when the work is almost complete. Don’t believe me? Try to find the agreed-upon decision criteria for an active project. If you can find them, they’ll be ambiguous and incomplete. If you can’t find them, well, there you go.

Decision criteria aren’t just categories -like sales revenue, speed, weight – they all must have a go-no-go threshold. Sales must be greater than X, speed must be greater than Y and weight must be less than Z.  A decision criterion is a category with a threshold value.

Second, before the work starts, define the actions you’ll take if the threshold values are achieved and if they are not.  If sales are greater than X, speed is greater than Y and weight is less than Z, we’ll invest A dollars a year for B years to scale the business. If one of X, Y or Z are less than their threshold value, we’ll scrap the project and distribute the team throughout the organization.

Lastly, before the work starts, define the decision-maker and how their decision will be documented and communicated.  In practice, there is usually just one decision-maker. So, strive to write down just one person’s name as the decision-maker. But that person will be reluctant to sign up as the decision-maker because they don’t want to be mapped the decision if things flop.  Instead, the real decision-maker will put together a committee to make the decision.

To tighten things down for the committee, define how the decision will be made. Will it be a simple majority vote, a supermajority, unanimous decision or the purposefully ambiguous consensus vote. My bet is on consensus, which allows the individual committee members to distance themselves from the decision if it goes badly. And, it allows the real decision-maker to influence the consensus and effectively make the decision without making it.

Formalizing the decision process creates speed.  The decision categories help the team avoid the wrong work and the threshold values eliminate the time-wasting is-it-good-enough arguments. When the follow-on actions are predefined, there’s no waiting there’s just action. And defining upfront the decision-maker and the mechanism eliminates the time-sucking ambiguity that delays decisions.

Transcending a Culture of Continuous Improvement

We’ve been too successful with continuous improvement. Year-on-year, we’ve improved productivity and costs.  We’ve improved on our existing products, making them slightly better and adding features.

Our recipe for success is the same as last year plus three percent. And because the customers liked the old one, they’ll like the new one just a bit more. And the sales can sell the new one because its sold the same way as the old one.  And the people that buy the new one are the same people that bought the old one.

Continuous improvement is a tried-and-true approach that has generated the profits and made us successful. And everyone knows how to do it.  Start with the old one and make it a little better. Do what you did last time (and what you did the time before). The trouble is that continuous improvement runs out of gas at some point. Each year it gets harder to squeeze out a little more and each year the return on investment diminishes. And at some point, the same old improvements don’t come. And if they do, customers don’t care because the product was already better than good enough.

But a bigger problem is that the company forgets to do innovative work. Though there’s recognition it’s time to do something different, the organization doesn’t have the muscles to pull it off. At every turn, the organization will revert to what it did last time.

It’s no small feat to inject new work into a company that has been successful with continuous improvement.  A company gets hooked on the predictable results of continuous which grows into an unnatural aversion to all things different.

To start turning the innovation flywheel, many things must change. To start, a team is created and separated from the continuously improving core.  Metrics are changed, leadership is changed and the projects are changed. In short, the people, processes, and tools must be built to deal with the inherent uncertainty that comes with new work.

Where continuous improvement is about the predictability of improving what is, innovation is about the uncertainty of creating what is yet to be. And the best way I know to battle uncertainty is to become a learning organization.  And the best way to start that journey is to create formal learning objectives.

Define what you want to learn but make sure you’re not trying to learn the same old things. Learn how to create new value  for customers; learn how to deliver that value to new customers; learn how to deliver that new value in new ways (new business models.)

If you’re learning the same old things in the same old way, you’re not doing innovation.

Don’t change culture. Change behavior.

There’s always lots of talk about culture and how to change it.  There is culture dial to turn or culture level to pull. Culture isn’t a thing in itself, it’s a sentiment that’s generated by behavioral themes.  Culture is what we use to describe our worn paths of behavior.  If you want to change culture, change behavior.

At the highest level, you can make the biggest cultural change when you change how you spend your resources. Want to change culture? Say yes to projects that are different than last year’s and say no to the ones that rehash old themes.  And to provide guidance on how to choose those new projects create, formalize new ways you want to deliver new value to new customers.  When you change the criteria people use to choose projects you change the projects.  And when you change the projects people’s behaviors change. And when behavior changes, culture changes.

The other important class of resources is people.  When you change who runs the project, they change what work is done.  And when they prioritize a different task, they prioritize different behavior of the teams.  They ask for new work and get new behavior. And when those project leaders get to choose new people to do the work, they choose in a way that changes how the work is done.  New project leaders change the high-level behaviors of the project and the people doing the work change the day-to-day behavior within the projects.

Change how projects are chosen and culture changes. Change who runs the projects and culture changes. Change who does the project work and culture changes.

Image credit – Eric Sonstroem

Before solving, learn more about the problem.

Ideas are cheap, but converting them into a saleable product and building the engine to make it all happen is expensive.  Before spending the big money, spend more time than you think reasonable to answer these three questions.

Is the problem big enough? There’s no sense spending the time and money to solve a problem unless you have a good idea the payback is worth the cost. Before spending the money to create the solution, spend the time to assess the benefits that will come from solving the problem.

Before you can decide if the problem is big enough, you have to define the problem and know who has it.  One of the best ways to do this is to define how things are done today.  Draw a block diagram that defines the steps potential customers follow or draw a picture of how they do things today. Define the products/services they use today and ask them what it would mean if you solved their problem. What’s particularly difficult at this point is they may not know they have a problem.

But before moving on, formalize who has the problem.  Define the attributes of the potential customers and figure out how many have the same attributes and, possibly, the same problem. Define the segments narrowly to make sure each segment does, in fact, have the same problem.  There will be a tendency to paint with broad strokes to increase the addressable market, but stay narrow and maintain focus on a tight group of potential customers.

Estimate the value of the solution based on how it compares to the existing alternative.  And the only ones who can give you this information are the potential customers. And the only way they can give you the information is if you interview them and watch them work. And with this detailed knowledge, figure out the number of potential customers who have the problem.  Do all this BEFORE any solving.

Will they pay for it? The only way to know if potential customers will pay for your solution is to show them an offering – a description of your value proposition and how it differs from the existing alternatives, a demo (a mockup of a solution and not a functional prototype) and pricing.  (See LEANSTACK for more on an offering.)  There will be a tendency to wait until the solution is ready, but don’t wait. And there will be a reluctance attach a price to the solution, but that’s the only way you’ll know how much they value your solution. And there will be difficulty defining a tight value proposition because that requires you to narrowly define what the solution does for the potential customer.  And that’s scary because the value proposition will be clear and understandable and the potential customer will understand it well enough to decide they if they like it or not.

If you don’t assign a price and ask them to buy it, you’ll never know if they’ll buy it in real life.

Can you deliver it? List all the elements that must come together. Can you make it? Can you sell it? Can you ship it? Can you service it? Are your partners capable and committed? Do you have the money do put everything in place?

Like with a chain, it takes one bad link to make the whole thing fall apart. Figure out if any of your links are broken or missing. And don’t commit resources until they’re all in place and ready to go.

Image credit — Matthias Ripp

Growth Isn’t The Answer

Most companies have growth objectives – make more, sell more and generate more profits. Increase profit margin, sell into new markets and twist our products into new revenue. Good news for the stock price, good news for annual raises and plenty of money to buy the things that will help us grow next year. But it’s not good for the people that do the work.

To increase sales the same sales folks will have to drive more, call more and do more demos. Ten percent more work for three percent more compensation. Who really benefits here? The worker who delivers ten percent more or the company that pays them only three percent more?  Pretty clear to me it’s all about the company and not about the people.

To increase the number of units made implies that there can be no increase in the number of people required to make them.  To increase throughput without increasing headcount, the production floor will have less time for lunch, less time for improving their skills and less time to go to the bathroom. Sure, they can do Lean projects to eliminate waste, as long as they don’t miss their daily quota. And sure, they can help with Six Sigma projects to reduce variation, as long as they don’t miss TAKT time. Who benefits more – the people or the company?

Increased profit margin (or profit percentage) is the worst offender.  There are only two ways to improve the metric – sell it for more or make it for less. And even better than that is to sell it for more AND make it for less. No one can escape this metric. The sales team must meet with more customers; the marketing team must work doubly hard to define and communicate the value proposition; the engineering staff must reduce the time to launch the product and make it perform better than their best work; and everyone else must do more with less or face the chopping block.

In truth, corporate growth is the fundamental behind global warming, reduced life expectancy in the US and the ridiculous increase in the cost of healthcare. Growth requires more products and more products require more material mined, pumped or clear-cut from the planet. Growth puts immense pressure on the people doing the work and increases their stress level. And when they can’t deliver, their deep sense of helplessness and inadequacy causes them to kill themselves. And healthcare costs increase because the companies within (and insuring) the system need to make more profit.  Who benefits here?  The people in our community? The people doing the work? The planet? Or the companies?

What if we decided that companies could not grow? What if instead companies paid dividends to the people do the work based on the profit the company makes? With constant output wouldn’t everyone benefit year-on-year?

What if we decided output couldn’t grow? What if instead, as productivity increased, companies required people to work fewer hours? What if everyone could make the same number of products in seven hours and went home an hour early, working seven and getting paid for eight? Would everyone be better off? Wouldn’t the planet be better off?

What if we decided the objective of companies was to employ more people and give them a sense of purpose and give meaning to their lives? What if we used the profit created by productivity improvements to employ more people? Wouldn’t our communities benefit when more people have good jobs? Wouldn’t people be happier because they can make a contribution to their community? Wouldn’t there be less stress and fewer suicides when parents have enough money to feed their kids and buy them clothes? Wouldn’t everyone benefit? Wouldn’t the planet benefit?

Year-on-year growth is a fallacy. Year-on-year growth stresses the planet and the people doing the work.  Year-on-year growth is good for no one except the companies demanding year-on-year growth.

The planet’s resources are finite; people’s ability to do work is finite; and the stress level people can tolerate is finite. Why not recognize these realities?

And why not figure out how to structure companies in a way that benefits the owners of the company, the people doing the work, the community where the work is done and the planet?

Image credit – Ryan

Important Questions for Innovation

Here are some important questions for innovation.

What’s the Distinctive Value Proposition? The new offering must help the customer make progress. How does the customer benefit? How is their life made easier? How does this compare to the existing offerings? Summarize the difference on one page. If the innovation doesn’t help the customer make progress, it’s not an innovation.

Is it too big or too small?  If the project could deliver sales growth that would dwarf the existing sales numbers for the company, the endeavor is likely too big.  The company mindset and philosophy would have to be destroyed.  Are you sure you’re up to the challenge? If the project could deliver only a small increase in sales, it’s likely not worth the time and expense.  Think return on investment.  There’s no right answer, but it’s important to ask the question and set the limits for too big and too small.  If it could grow to 10% of today’s sales numbers, that’s probably about right.

Why us? There’s got to be a reason why you’re the right company to do this new work.  List the company’s strengths that make the work possible. If you have several strengths that give you an advantage, that’s great.  And if one of your weaknesses gives you an advantage, that works too. Step on the accelerator.  If none of your strengths give you an advantage, choose another project.

How do we increase our learning rate? First thing, define Learning Objectives (LOs). And once defined, create a plan to achieve them quickly.  Here’s a hint. Define what it takes to satisfy the LOs. Here’s another hind. Don’t build a physical prototype. Instead, create a website that describes the potential offering and its value proposition and ask people if they want to buy it. Collect the data and refine the offering based on your learning. Or, create a one-page sales tool and show it to ten potential customers. Define your learning and use the learning to decide what to do next.

Then what? If the first phase of the work is successful, there must be a then what. There must be an approved plan (funding, resources) for the second phase before the first phase starts.  And the same thing goes for the follow-on phases. The easiest way to improve innovation effectiveness is avoid starting phase one of projects when their phase two is unfunded. The fastest innovation project is the wrong one that never starts.

How do we start? Define how much money you want to spend. Formalize your business objectives.  Choose projects that could meet your business objectives. Free up your best people. Learn as quickly as you can.

Image credit — Alexander Henning Drachmann

The Slow No

When there’s too much to do and too few to do it, the natural state of the system is fuller than full.  And in today’s world we run all our systems this way, including our people systems.

A funny thing happens when people’s plates are full – when a new task is added an existing one hits the floor.  This isn’t negligence, it’s not the result of a bad attitude and it’s not about being a team player.  This is an inherent property of full plates – they cannot support a new task without another sliding off.  And drinking glasses have this same interesting property – when full, adding more water just gets the floor wet.

But for some reason we think people are different.  We think we can add tasks without asking about free capacity and still expect the tasks to get done.  What’s even more strange – when our people tell us they cannot get the work done because they already have too much, we don’t behave like we believe them.  We say things like “Can you do more things in parallel?” and “Projects have natural slow phases, maybe you can do this new project during the slow times.”  Let’s be clear with each other – we’re all overloaded, there are no slow times.

For a long time now, we’ve told people we don’t want to hear no.  And now, they no longer tell us.  They still know they can’t get the work done, but they know not to use the word “no.”  And that’s why the Slow No was invented.

The Slow No is when we put a new project on the three year road map knowing full-well we’ll never get to it.  It’s not a no right now, it’s a no three years from now.  It’s elegant in its simplicity.  We’ll put it on the list; we’ll put it in the queue; we’ll put it on the road map.  The trick is to follow normal practices to avoid raising concerns or drawing attention.  The key to the Slow No is to use our existing planning mechanisms in perfectly acceptable ways.

There’s a big downside to the Slow No – it helps us think we’ve got things under control when we don’t.  We see a full hopper of ideas and think our future products will have sizzle.  We see a full road map and think we’re going to have a huge competitive advantage over our competitors. In both situations, we feel good and in both situations, we shouldn’t.  And that’s the problem. The Slow No helps us see things as we want them and blocks us from seeing them as they are.

The Slow No is bad for business, and we should do everything we can to get rid of it.  But, it’s engrained behavior and will be with us for the near future.  We need some tools to battle the dark art of the Slow No.

The Slow No gives too much value to projects that are on the list but inactive.  We’ve got to elevate the importance of active, fully-staffed projects and devalue all inactive projects.  Think – no partial credit.  If a project is active and fully-staffed, it gets full credit.  If it’s inactive (on a list, in the queue, or on the road map) it gets zero credit.  None.  As a project, it does not exist.

To see things as they are, make a list of the active, fully-staffed projects. Look at the list and feel what you feel, but these are the only projects that matter.  And for the road map, don’t bother with it.  Instead, think about how to finish the projects you have.  And when you finish one, start a new one.

The most difficult element of the approach is the valuation of active but partially-staffed projects.  To break the vice grip of the Slow No, think no partial credit. The project is either fully-staffed or it isn’t   And if it’s not fully-staffed, give the project zero value.  None.  I know this sounds outlandish, but the partially-staffed project is the slippery slope that gives the Slow No its power.

For every fully-staffed project on your list, define the next project you’ll start once the current one is finished.  Three active projects, three next projects.  That’s it.  If you feel the need to create a road map, go for it.  Then, for each active project, use the road map to choose the next projects.  Again, three active projects, three next projects.  And, once the next projects are selected, there’s no need to look at the road map until the next projects are almost complete.

The only projects that truly matter are the ones you are working on.

Image credit – DaPuglet

For top line growth, think no-to-yes.

Bottom line growth is good, but top line growth is better.  But if you want to grow the bottom line, ignore labor costs and reduce material costs. Labor cost is only 5-10% of product cost. Stop chasing it, and, instead, teach your design community to simplify the product so it uses fewer parts and design out the highest cost elements.

Where the factory creates bottom line growth, top line growth is generated in the market/customer domain. The best way I know to grow the top line is to broaden the applicability of your products and services. But, before you can broaden applicability, you’ve got to define applicability as it is.  Define the limits of what your product can do – how much it can lift, how fast it can run a calculation and where it can be used.  And for your service, define who can use it, where it can be used and what elements without customer involvement. And with the limits defined, you know where top line growth won’t come from.

Radical top line growth comes only when your products and services can be used in new applications.  Sure, you can train your sales force to sell more of what you already have, but that runs out of gas soon enough. But, real top line growth comes when your services serve new customers in new ways.  By definition, if you’re not trying to make your product work in new ways, you’re not going to achieve meaningful top line growth.  And by definition, if you’re not creating new functionality for your services, you might as well be focusing on bottom line growth.

If your product couldn’t do it and now it can, you’re doing it right. If your service couldn’t be used by people that speak Chinese and now it can, you’re on your way.  If your product couldn’t be used in applications without electricity and now it can, you’re on to something.  If your service couldn’t run on a smartphone and now it can, well, you get the idea.

For the acid test, think no-to-yes.

If your product can’t work in application A, you can’t sell it to people who do that work. If your service can’t be used by visually impaired people, you’re not delivering value to them and they won’t buy it. Turning can’t into can is a big deal. But you’ve got to define can’t before you can turn it into can. If you want top line growth, take the time to define the limits of applicability.

No-to-yes is powerful because it creates clarity. It’s easy to know when a project will create no-to-yes functionality and when it won’t.  And that makes it easy to stop projects that don’t deliver no-to-yes value and start projects that do.

No-to-yes is the key element of a compete-with-no-one approach to business.

image credit – liebeslakritze

Mike Shipulski Mike Shipulski
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