Competition is all around us. It is nature’s catalyst for growth, progress, and evolution. Each year, businesses self-reflect to see if they are playing the smart game – the game in which they can win, prosper and create further success-momentum. Most likely, the strategic and tactical decisions your company makes are rooted in some combination of the incentives of the stakeholders driving the short-term, the middle-term and long-term prospects of your business. Therefore, it’s entirely understandable why choosing an optimal business strategy is difficult. We already know the best companies are nimble and adapt as competitive market forces change.
The motivation for business transformation transpires from the need to keep up with exponential technological innovation, changing customer trends, threat of new entrants, and/or regulatory pressures. Unfortunately, Research at McKinsey, has found that approximately 70% of transformation programs don’t reach their goals.
2019 is yet another blank canvas opportunity. So, as your business units and executive teams take a moment to think about the game you want to play in this next year and beyond, here are a few areas of caution to consider as you commit your focus, your resources, and most importantly, your time.
1. Fail to Rapid Prototype, Test, and Course-Correct
Yes, business transformation is a buzz word. It is not one event or action that results in a new way of operating, of being. It is a series of specific, measurable, actionable, relevant, and timely (SMART) actions across a multivariate set of factors that ultimately influence the broader, dynamic set of processes, tools, and resources that coalesce into something meaningful.
The best leaders of business transformation are able to understand the complex patterns of inputs and visualize the processes that achieve desired outputs. Being good takes time, experience, and lots and lots of failure. Failure is a great competitive force, as long as lessons are learned, embedded into the organizations, and acted upon in a fruitful way. Failing is success! The true answers on how to succeed come from the actual experiences of failure, as each business fails differently, in different micro and macro environments. By reading up on patterns of previous failures, you will have some insight on how to course- correct effectively, so that you don’t make the same mistakes as businesses have in the past.
For 2019, see if you can set up more test and learn projects. As long as you time-box their results, and don’t over invest if there’s no traction, take it as a great opportunity to fail – to learn. There are countless companies out there that will prototype ideas for you at a reasonable cost and have your best interests in mind. The more of these Proof of Concepts you do, the higher the chances your company will have at meeting your business transformation goals.
2. Miss the Purpose – Climb Up the Wrong Ladder and Transform What Does Not Need to Be Transformed
Has your company firmly decided on the North Star of your business transformation initiatives? Are the managers that are executing towards that North Star wholeheartedly aligned and empowered in their day-to-day? The concept of “purpose” can be a misleading subject as often environments change, incentives change, and our actions change as we try to stay in tune. Leaving the tenants of the “philosophy of purpose” to another article, we will assume that the purpose of your business transformation initiatives is to improve upon the businesses conditions today, whether that be through changing processes, tools, resources, products, frameworks, or governance structures.
When Sears spearheaded transforming how it approaches analytics, they failed to measure the ROI in the short term. They were so focused on jumping on the bandwagon of what other companies were doing at the time, that they didn’t quite grasp the true sense of how analytics would actually empower their success. According to 1,000 American and Western European companies surveyed, “In the last 3 years, 50.4% of companies report that technology disruption has had a positive impact on their business, while 30.7% report that the impact of technology disruption had a negative impact on their business. 18.9% reported no noticeable change.” “Inadequate budgets and company culture are the two most common obstacles to effective digital transformation.” (Futurum May 2018 Digital Transformation Index Report)
One way to ensure you’re headed in the right direction is to plan transformation in shorter value- driven stage gates, where you can evaluate progress towards a goal frequently. Doing so, helps your business stay on track, effectively allocating its resources toward initiatives that bring real value to your organization. This is an opportunity to judge what the acceptable level of realized value is – so that you can reinvest wisely.
3. Miss Critical Customer Feedback
The more you can predict about current and prospective customers, the more scalable your growth will be. For 2019, here are some questions to think about: how can you create even more narrow customer profiles, so you can empathize with one individual at a time? How can you get to know your current customers better? How has their behavior changed since purchasing your product or service? Have you asked for their feedback recently? How can you make each existing customer, not just a loyal user, but an advocate for your product or service in 2019? What’s the safest way to up-sell your current customers without tarnishing trust and loyalty? How can you increase customer loyalty and retention without sacrificing the profit margins?
Then for prospective customers: Can you attend more targeted events to get to know the people who haven’t yet switched to your product or service? How can you best educate the market on what you are offering? Are you asking the right questions about where your business should be, testing how you are presenting yourself to the outside world, and using the feedback to course-correct?
Obviously, these are questions that don’t always have clear answers in the context of your business. And while they do set a benchmark of ideas to think about, they aren’t always fully actionable. That’s ok! Perhaps in 2019, consider hiring outside help to objectively aid you in working through these questions and forming actionable plans aimed to help you avoid the suffering of business transformation purgatory.
4. Get Stuck in Your Old Ways
What’s worked in the past may not work in the future. As Einstein said, “We cannot solve a problem using the same thinking that created the problem in the first place.”
One of the best ways to get unstuck is through thorough introspection. Find the most aware people in your organization – the leaders who know the business, the industry, and the dynamics of the market, people who are able to understand the challenges and patterns of today, with the ability to reasonably prognosticate the future. These folks will be your best champions in driving forward change.
Yes, the past can definitely teach us great lessons about the future, but take it with a grain of salt. Don’t let past performance entirely bias your future actions and decisions. We can’t keep doing the same thing over and over, while expecting different results.
5. Fail to Harness Data Integrity
We are in the middle of the data revolution. More and more businesses are finding opportunities to harvest insights from data, and use it either to drive revenue, streamline operations, or improve cost efficiency. We’ve seen this take the form of automated decision-making with real-time bidding for advertisements, or in the heightened communication with Internet of Things devices to delight users with the next generation of customer experiences.
In 2019, adhering to the data privacy expectations of users, as part of the privacy social contract they sign when they agree to your terms and conditions, will become of utmost importance.
Have you benchmarked your business’s data integrity standards and protocols – particularly around how data is stored, archived, backed up, and protected from mishaps, theft, or attack? For 2019, customers are expecting companies to establish better commitments to managing their user data. As we’ve seen with Facebook this year, any leak of data will vilify your company’s reputation in the eyes of your customers, employees, partners, and the government. This will really test the resiliency of your business.
6. Lack Stakeholder Support as You Diffuse Innovation
Too often radical business transformations bring with them lots of inefficiencies as stakeholders ramp up to use new tools, understand new processes, and adapt to the new and enhanced “business as usual.” Throughout the product development journey, you might ask a few internal stakeholders to pilot- test product iterations, so that you can understand whether the product being built is aligned with expectations and adds real value.
However, frequently asking internal stakeholders to take on additional work with new tools/ processes before they’re fully comfortable with them, even if they have bought in to the vision of the value the product will bring, will stress them out and divert time away from their current responsibilities. Furthermore, if these stakeholders are also expected to maintain the same level of productivity without accommodation for innovation from their management, this becomes a sure recipe for failure. You’ll know you’ve experience this at your company when the product team receives feedback that is rash, impulsive and overwhelmingly negative. Cumulative moments like that contribute to sponsors dropping projects, shelving products, and moving on to other innovation initiatives.
For 2019, level set with functional managers of pilot users to accommodate operations, while alpha/ beta-testing new products. After all, these early stages are the most crucial to diffusing innovation.
7. Don’t Engage Your Most Critical Stakeholders
The bigger the organization, the more stakeholders you need to appease to keep the momentum of innovation alive. It’s challenging and you know how vital it is to keep your stakeholders, sponsors, managers and end-users excited. Companies that effectively garner stakeholder’s trust and engagement are those who emphatically listen to and understand how people adapt to change. Once you better understand your stakeholder’s personas, ask them how they’d like to stay informed throughout the product development process – this will allow you to double-down on the format of keeping them in the loop, and make them feel heard and excited to be involved in something great. You can emphasize more frequent demos, sharing of progress/delivery reports, or holding ask me anything/feedback sessions.
You won’t reach your transformation goals by simply introducing new technology just to stay cool and hip. Don’t confuse the means for the end. There must be a deep, fundamental reason, a connection with not only the business, but must importantly, with the people who act as drivers and catalysts of change. For 2019, take a second look at their incentives, their desires and motivators. See if you can create a more dynamic way to communicate and evangelize your transformation vision across functional silos. If there’s push-back from essential early adopters, get feedback early and ask for more clarification. For 2019, whether it be the introduction of new technology, processes, tools or operating models, make transformation a people-first initiative.
We get it – failure sucks. But it’s one heck of a teacher.
So, for 2019, we hope that your organization can avoid these business transformation pitfalls. But even if you find yourself in business transformation purgatory, failing in one of the above pitfalls, remember you are not alone. Short-term failure is wonderful. It’s healthy. However, if at any point you feel you are truly failing the long game and are thinking of dropping this innovation initiative for another, we are here for you. We are here as your one additional soundboard before you commit your focus, your resources, and most importantly, your time to transforming your business. Cheers to your success!
How will you fill your canvas for 2019?
About Concept Key
Concept Key helps business/product leaders deeply understand how to convert market needs into strategy, strategy into incremental delivery, and delivery into continuous learning and improvement. Focusing on Consumer Products, Telecommunications, Internet of Things (IoT), FinTech, and Real Estate companies, we combine human-centric design frameworks with agile product delivery to manifest the concepts that are key to adding measurable value to customers.
New York, NY | Philadelphia, PA
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