The journey from “I’ve got an idea” to running a billion-dollar company is happening faster than ever before.
This is partly because today it is no longer necessary or, in most cases desirable, to build vertically integrated organisations as was often the norm in the 20th-century. Instead, many startups are challenging incumbent players with new business models that are weaved together from a tapestry of loosely coupled service providers and products.
The most notable features of this new paradigm are how much theses organisations achieve with relatively few employees and their agility.
Certainly, the odds of success are stacked against startups and many will fail but, that’s not the point. The point is that with this new operating model, the cost of trying has reduced dramatically, and the number of attempts is growing bigger every day.
Many startups refer to incumbent players as dinosaurs, they see themselves as the small mammals and eagerly await the next (digital) asteroid strike to wipe out their bigger competitors.
If as an established company you want to avoid going the way of the dinosaurs, you should consider transforming your business by embracing the same “Lean Playbook” that most of the fastest growing startups use.
When you need a place to start, consider using the following as four cornerstones for your transformation:
No. 1 Modular and flexible technology
In the age of digitisation, technology, and particularly data and software should be an essential part of every competitive positioning strategy. Considering this, you need to assess your current IT infrastructure, staff and capabilities.
Your IT infrastructure must be modular and flexible enough to enable rapid prototyping of new applications and do so in a manner which is efficient, compliant and cost-effective. This isn’t a huge leap for forward leaning CIO’s who have already embraced DevOps and agile development. However there are CIO’s who are absolute in the level of control they exert to maintain predictability and as they see it, protect against downside risk while delivering reliability, scalability, security, etc.
Under these circumstances, it is common for a two-speed IT framework to emerge where “innovation” gets separated from “maintenance”.
No. 2 Cross-functional teams
Traditionally companies have been organised by specialism. Sales people joined the sales team; technology people joined the technology team, etc. Many modern successful companies repeatedly restructure their teams around customer journeys, products or services. Such teams are typically small, more nimble in their approach and avoid much of the bureaucracy associated with inter-functional projects.
An emerging trend is for organisations to create “anchor roles” and the for other staff (both internal and external) to be recruited for a “tour of duty” to complete a particular project, or achieve a pre-defined deliverable.
When I say small teams, I do mean small. For reference consider Amazon’s “two-pizza team”: If you can’t feed a team with two pizzas, it’s too large. That sets the outer limit at about six or seven people.
No. 3 Responsive management culture
New operating models will, of course, need new management methods. Central to this is a change from “gut instinct decisions” to “Build-Measure-Learn”. Additionally, expect big launches and consequently significant failures to be replaced by small scale Lean launches with fast iterative improvements and pivots when ideas are not working.
Naturally, this new management model relies heavily on data to make decisions, facilitated by step-1 above big-data will be the new norm and astute managers will employ user-friendly interfaces to interact directly with the data to guide every decision.
No. 4 Agile and Customer Obsessed
No amount of technology will endear your organisation to customers if you are not providing value. While agile and lean business models tend to favour speed over perfection, speed will always be required, and your customer will ultimately be the one who defines perfection. You will need to get comfortable with the idea of launching imperfect or incomplete products and then learning directly from customer experience while making necessary improvements.
It is essential that senior leadership are comfortable with this approach and fully embrace a customer obsessed and agile mindset because there are sure to be some bumps along the way. Senior management needs to foster a culture where honest failure is acceptable and expected by changing, performance incentives, carefully managing communications and above all, by demonstrating agility and risk appetite through their own choices.
One size does not fit all.
Under many circumstances the benefits of agile are clear. The four steps above are not, however, a panacea for every organisation. Convincing business and IT leaders to shift to an agile mindset can be difficult. Depending on how fast you want to transform your organisation, the level of executive commitment, and the level of economic/competitive pressure you face the steps highlighted here might enable you to set up a transformation bridgehead and use it to demonstrate the benefits of making this journey. In many cases, however, time to do this might not be a luxury that you can afford.