An article by Quentin Ellis
“Big companies that fail to innovate risk extinction. That’s the stark truth in the era of ‘digital disruption’.” This is a headline from a BBC article titled “Innovate or die”, dated 2014. This article goes on to mention the demise of Woolworths, Polaroid, Alta Vista, Kodak, Blockbuster, Borders. Remember them?
Fast forward, with 2018 just around the corner, companies still are trying to work out how they too can be nimble enough to keep up the changing times. Jackie Fenn, a specialist in innovation at research consultancy Gartner was quoted in the same article as saying “you cannot afford to stay still – business is a moving escalator. The world is moving around you – customer expectations are changing, competitors are always catching up and threatening to take away your business.” This is dramatically illustrated by Deloitte’s Shift Index which shows the average life expectancy of a Fortune 500 company has declined from around 75 years half a century ago to less than 15 years today.
But how do big companies keep moving, keep innovating, stop being inflexible and become more nimble? Luckily there are some amazing books to help us. Obviously The Lean Startup by Eric Ries is at the top of the list. He describes how to adopt a start-up approach to innovation, by developing a product or service step by step, constantly consulting with customers so that money isn’t wasted on features they will not want. Each stage of development is tested – so-called “validated learning” – so that future success is almost built into the process. Unfortunately nearly everyone in a large company setting finds it difficult to implement these ideas successfully. In their book Lean Enterprise: How High Performance Organizations Innovate at Scale, the authors start by saying that “in most cases it was impossible to realize anything more than incremental improvements because only part of the organization changed — and that part still needed to work with the rest of the organization, which expected them to behave in the traditional way.”
But it’s not all doom and gloom. Big companies can become more nimble. It’s just not easy. Infact being nimble inside the confines of a large company is really hard and this impacts innovation. Management structures hinder nimbleness. IT restrictions stop nimbleness. Reporting lines stop nimbleness. People need to be given space to be nimble and this leads to innovation. British Gas understood this when they decided to compete with the likes of Nest and other newcomers and make smart devices for the home. They realised that a new service could not come about from within British Gas’s complex corporate structure so they adopted a start-up approach and created Hive, its smart-metering subsidiary. 80,000 customers later, nearly three-quarters of Hive’s business is staffed by people with digital backgrounds from outside the group. Kassir Hussain, director of connected homes at British Gas says ”we believe that job titles can actually prevent cooperation and teamwork, It’s about encouraging an entrepreneurial mentality throughout the business. Hive’s product development is in days and weeks, not months and years.” This is achieved by being nimble.
Another component to being nimble is the ability to work at speed. Steve Duesbury wrote in his fantastic article titled Digital strategy is dead “The traditional foundations businesses relied on in the past to provide a clear enterprise digital strategy, business case, and roadmap forward are non-existent today. Complexity and time to value continue to rapidly expand, while the time horizon of what can be confidently forecast/anticipated has shrunken from years to months.” Company leaders have to understand that traditional decision-making processes can no longer be applied to digital strategies and that the answers they want simply don’t exist because of digital’s speed, asymmetrical growth and impact. They have to be more nimble. We are telling our clients that experimentation beats strategy. Excessive data-gathering can be seen as a form of resistance. So rather than getting stuck in endless planning cycles, try running experiments. Being nimble enables innovation which in turn is all about experimenting, trying many things at once and seeing what works and failing fast. Being nimble allows companies to quickly identify and deploy a portfolio of bets in a matter of weeks or months, not years. “Rapid measurement and iterations then determine which ideas are most viable, profitable, and successful in achieving your business goals. It’s an intentional effort to prove what positive outcomes can be generated by leveraging a portfolio of experiments versus a project approach.” says Steve Duesbury.
We are living in a dynamic business world where advances in technology and process have made it possible to build, evolve, and scale disruptive products and services rapidly and with little capital investment. Talent is abundant, with India and China pumping out graduates at a rate of over 10 to 1 compared to the West. Small nimble teams across the world can prototype new software-based products in days or weeks, using free or cheap services and infrastructure, and then rapidly evolve those that gain traction. All they need is the freedom to do so and the space to do it in.
The hardest part of being nimble is that big companies get caught up in the strategy, the thinking and forget about the doing. To this end I will leave you with a quote from Herb Keller’s – Co-Founder and Former CEO, Southwest Airlines. When asked about Southwest Airlines strategic plan Herb said, “We have a strategic plan. Its called doing things!”