In another recent HBR article, Mark Bonchek and Barry Libert, argue that organisations wanting to undertake a transformation are in need of a new mental model and new measurement model just as much as a new business model.
You have to change how you think before you can change what you do, and then change what you measure to close the loop.
The authors cite examples of companies trying to copy the business model of another and failing as they had not change the way they thought or measured results. The primary example given is the Southwest Airlines business model and the attempts to copy it by Continental Lite, Ted by United, and Song by Delta which all failed. Whereas JetBlue, which has emulated all three models, has succeeded.
Southwest cofounder Herb ‘Kelleher is known for saying: “I tell my employees that we’re in the service business, and it’s incidental that we fly airplanes.” Other carriers fly airplanes that carry people. Southwest serves people using airplanes.”
“Traditional carriers were still thinking about their business as flying planes rather than thinking about serving people, still worrying about capturing share rather than growing the market, and still measuring success based on how well they utilized planes rather than how well they served passengers.”
“In contrast, companies like JetBlue decided to emulate Southwest’s entire system: mental model, business model, and measurement model. Like Southwest, JetBlue focuses on people over planes, with a mission to “bring humanity back to air travel.” Beyond the usual financial metrics, JetBlue also measures the strength of its culture and the quality of its experience.”
You can read the full article here.
In a recent guest post on HBR, Tara Nicholle-Nelson, explains that companies need to obsess over their customers, not their rivals. As she explains, “The question is not who your competition is but what it is.”
Your competition is any and every obstacle your customers encounter along their journeys to solving the human, high-level problems your company exists to solve.
Nicholle-Nelson goes on to articulate that companies need to change their thinking from selling a ‘product’ in a one-time transaction to selling a ‘transformation’ from the “status quo to the new levels and possibilities“.
In turn, your customers are everybody whom has the “problem your business exists to solve”, not just somebody whom has brought something from your previously.
As Harvard marketing professor Theodore Levitt once said: “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.”
You can read the full article here.
I recently came across an article by Josh Bersin, whom is linked to Deloitte, discussing the results of a worldwide Deloitte survey into organisational design and the changes afoot in companies worldwide.
The conclusion reached by the report “is that today’s digital world of work has shaken the foundation of organizational structure, shifting from the traditional functional hierarchy to one we call a “network of teams.” This new model of work is forcing us to change job roles and job descriptions; rethink careers and internal mobility; emphasize skills and learning as keys to performance; redesign how we set goals and reward people; and change the role of leaders.”
Surprisingly, at least to me, was that only 38% of companies claim to be organised along functional lines. Many respondents believe they are already working in a “network of teams” – at least from a day-to-day perspective – but I think some of those have considered the informal networks that inevitably exist across functional domains to get things done, as evidence that they are working in a team-based model as opposed to a functional one.
Of course working in a formal network of teams where functional silos no longer exist brings with it its own challenges. As articulated by Bersin, the problem becomes “how we coordinate and align these teams, how we get them to share information and work together, and how we move people and reward people in a company that no longer promotes “upward mobility” and “power by position” in leadership.”
Bersin believes there are four key ingredients to success for a ‘network of teams’ model:
- “Shared values and culture: As people operate in geographically dispersed teams which are closer to customers, they need guidelines and value systems to help them decide what to do, how to make decisions, and what is acceptable behavior.“
- “Transparent goals and projects: People operating in teams and small groups have to work with other teams, and they can’t do this unless goals are clear, overall financial objectives are well communicated, and people know what other people are working on.“
- “Feedback and a free flow of information: As teams operate and customers interact with the company, we must share information about what’s working, what isn’t working, what’s selling, and what problems we have to address. While local management and team leadership (i.e. a plant manager or sales leader) should take immediate responsibility for errors, others need to know what problems are taking place, so they can respond to support the team. This takes place today in digital information centers, analytics dashboards, and free flowing feedback systems that have replaced annual engagement surveys and performance reviews.“
- “People are rewarded for skills and contribution, not position: Finally, the network of teams rewards people for their contribution, not their “position.”The days of “positional leadership” are going away (i.e. “I’m the boss so you do what I say.”) to be replaced by growth and career progression based on your skills, alignment with values, followership, and contribution to the company as a whole.“
Organisations based on purely functional lines are being replaced. So too are those early attempts to break down those silos with “matrix organisations” that were essentially a ‘paper over’ or band-aid and not an adequate response to the problem, Bersin explains…
“Many of us remember the old fashioned “matrix organizations” which were popular in the 1980s. Well today the “matrix” makes a company look more like a series of Hollywood movies, where people take their skills and functional expertise, they work on a “project” or “team” or “program” to get work done, and as they learn and the company adapts, they move into another team over time.”
As Bersin articulates, its not as though executive positions disappear – although no doubt many middle management ones would – but their roles are also changing.
“While there are still senior executives in the company, leadership now becomes a “team sport,” where leaders must inspire and align the team, but also be good at connecting teams together and sharing information.”
You can read the full blog post here, including links to the research.
Want an example of a “network of teams” model already implemented in a corporate environment? If so, then check out this interview with two executives – one current, one former – from ING banking group in the Netherlands, on its transformation to an ‘agile’ way of working.
In a previous post, HR Departments Have To Change, I highlighted an article on LinkedIn encouraging companies to follow in AirBnB’s footsteps and replace traditional HR with a capability focused on the employee experience.
Now a HBR article, Design Your Employee Experience As Thoughtfully As You Design Your Customer Experience, authored by Denise Lee Yohn, argues that companies already know how to improve their employee experience. They simply need to use the same tools and techniques they apply to customer experience and apply them to their HR processes.
I’m not sure I agree with that view as I know first hand there are still many large companies that are not customer centric – they may pay lip service but in reality they are not – and have no immediate plans to become customer centric.
But I do agree that many of the tools and techniques are transferable should they learn them and apply them. These include:
- applying needs-based segmentation to your employee base rather than simple and, generally irrelevant, demographic factors;
- understanding the employee journey through the use of journey mapping while recognising that employee journeys, just like customer journeys, are seldom linear;
The best customer experiences bring the company’s distinctive brand values and attributes to life, and the same is true of employee experiences.
Read the full article here.
In a previous post of mine titled A New Education System, I collated a number of videos from Sugata Mitra’s TED Talk, ‘Build a School in the Cloud’, to an animated video of a talk ‘Changing Education Paradigms’, given by Sir Ken Robinson, explaining how education systems are not student centric and essentially “educate” our creative capacity out of us and another by American Author and Marketer, Seth Godin.
Well here is yet another video that puts today’s education systems “on trial”, literally.
In a recent HBR article, Why the problem with learning is unlearning, Mark Bonchek contends that in this age of Digital disruption, companies have been too focused on learning new ways of doing things and have not paid enough attention to unlearning the ways of the past.
In every aspect of business, we are operating with mental models that have grown outdated or obsolete, from strategy to marketing to organization to leadership. To embrace the new logic of value creation, we have to unlearn the old one.
Boncheck clarifies that its not about forgetting what has been learnt in the past, but acquiring the ability to re-frame the situation and use a different mental model.
He gives the example of Porter’s Five forces and the essence behind the model that limits or boundaries must be set and then argues the likes of Google, Uber, Faebook and AirBnB don’t subscribe to this notion of setting limits.
They look beyond controlling the pipe that delivers a product and instead build platforms that enable others to create value. They look to create network effects through ecosystems of customers, suppliers, and partners.
Boncheck also articulates the core problem with modern marketing is the existing “one-to-many mindset” where we pretend “everything is linear and transaction”…
- We segment into discrete buckets even though people are multidimensional.
- We treat customers as consumers even when they want to be cocreators.
- We target buyers and run campaigns that push messages through channels even though real engagement increasingly happens through shared experiences.
- We move people through a pipeline that goes in one direction even though the customer journey is nonlinear.
He then asserts that “instead of using relationships to drive transactions, we could be building brand orbits and embedding transactions in relationships. Instead of customers being consumers, we could have relationships with them in a variety of roles and social facets. Beyond delivering a value proposition, we could be fulfilling a shared purpose.”
“In the area of organizational design, we are seeing an evolution from formal hierarchies to fluid networks. But this requires a substantial amount of unlearning. Our instincts are to think of an organization as an org chart. We automatically escalate decisions to the boss. I often hear executives talk about being “more networked,” but what they really mean is collaborating across the silos. To truly become a networked organization, you need decision principles that create both alignment and autonomy. But this requires unlearning in the areas of management, leadership, and governance.”
The good news, Bonchek contends, is we can practice unlearning. So get started today!
Read the full article here.
I have recently read the “international bestseller” Blue Ocean Strategy and found it a very insightful read. A blue ocean is essentially an uncontested market space where there are no competitors allowing the company that creates it to excel. However, a blue ocean strategy is not just about delivering something customers want that hasn’t been delivered before, its also about delivering a value innovation for the company as well.
Typically main stream strategy theory suggests companies must either choose a high cost differentiation strategy or a low cost price led strategy. Companies that create blue oceans however simultaneously achieve low cost and differentiation.
Red Ocean Strategy
- Compete in existing market space
- Beat the competition
- Exploit existing demand
- Make the value-cost trade-off
- Align the whole system of a firms activities with its strategic choice of differentiation or low cost
Blue Ocean Strategy
- Create uncontested market space
- Make the competition irrelevant
- Create and capture new demand
- Break the value-cost trade-off
- Align the whole system of a firms activities in pursuit of differentiation and low cost
While a company competing in a red ocean fights for existing customers that that market, a company competing in a blue ocean cultivates an entirely new set of customers as it creates an entirely new market space.
For example Cirque du Soleil didn’t just enter the existing market space of traditional circuses, it created an all new market and captured customers whom were not typically customers of the circus but customers whom were looking to be entertained.
It also reduced its costs when compared to traditional circuses by removing big name star performers and animals.
When Casella Wines introduced its ‘easy to drink’, ‘to be enjoyed by everyone’ wine Yellow Tail, to the US market, it took customers from the two distinctive wine markets – the high end and ultra cheap – and combined them with customers whom would normally drink beer, alcopops or cocktails, to create an entirely new market space.
It also reduced its costs by initially creating only one red and one white and bottling them in the same type bottle. Traditionally red wine and white wine had always been sold in two different styles of wine bottle.
In my next post I’ll explore some of the tools and frame works that have been created to both help identify and execute a blue ocean strategy.
I’d like to highlight a recent post by Kimberley Crofts of Meld Studios which captures one of the core problems with legacy corporates and their adoption of a Customer Centric mindset. It’s “the problem with product-led thinking in a service-dominant world”.
Crofts references Lynn Shostack from 1984…
…these procedures (Gantt charts etc) provide managers with a way to visualise a process and to define and manipulate it at arm’s length. What they miss is the consumer’s relationship to, and interaction with, services. They make no provision for people-rendered services that require judgement and a less mechanical approach. They don’t account for the service’s products that must be managed simultaneously with the process” (Shostack, 1984).
Croft then goes on to contrast an Artisans way of thinking and working versus an industrialist or production line.
Where the artisan is guided by stories of past use to guide their making, the industrial worker is “bound to the execution of step-by-step sequences of determinate motions”
Croft continues to question how organisations might take an approach more like an Artisan.
You can read the full post here.
People with skills in service design, human-centered design, design thinking, experience design, as well as innovationists and customer engagement specialists are all in high demand. Everyone wants them but suitable candidates are a rare find. This is largely due to the explosion of organisations now seeking to use the toolset of design to produce human- centred strategies, business models, brands, organisational cultures, products and services. The relatively few tertiary courses focused specifically on this type of design in Australia compounds the scarcity issue.
Franklin suggests looking for individuals from nearby domains such as “ndustrial design, user experience, market research, organisational psychology, graphic design, and business consulting”.
And then “selecting individuals who think and behave in ‘designerly ways’”.
- True empathy matched with a passion to improve the way people interact with the world
- The ability to understand and shape other’s needs and behaviours
- A curious, open mind
- The ability to see patterns and make inferences based on these (known as abductive reasoning)
- Enough resilience to sit with not knowing the answer right now, but persevering regardless
- A desire to experiment, reflect and iterate
- The ability to paint a picture that allows others to digest what needs to be communicated
- Integrity and the strength to hold an informed point of view
- The skill and will to bring others on the journey.
- Upon finding individuals with a mix of these attributes, the program you put together to expose these individuals to immersive design projects – supported by formal learning and development activities – is a critical next step to meeting your recruiting needs.
You can read the full post here.
A recent opinion piece, “Why ‘Design Thinking’ is becoming a game changer for many enterprises” by Dmitri Khanine on cio.com, articulates how Design Thinking can be leveraged to improve, if not transform, the typical legacy IT Software/Solution Delivery Lifecycle (i.e. the SDLC process).
“Design Companies” have learned to appreciate what is now called the Human Factors — facts like that business requirements are created by humans and often given out in form of solutions, which may or may not be ideal and represent just one of all possible options… facts like asking business users what they want may lead a project going in a wrong direction… facts like that different types of users, different roles and personalities may have completely different ways of interacting with your systems and very different requirements.
On Requirements Management
Recent PMI study quotes that 47 percent of projects that are in trouble today are there because of a slip in requirements management.
Think about it. Out of all projects that failed to hit the mark — across all industries — virtually every second one is in trouble because of requirement management. Business users are called upon to do something that they have never signed up to do — design solutions. Business Analysts just come and ask them what would they like to see in a finished product…
Placing business users on development teams helps to better translate their vision to code but offers no protection against ineffective solutions and occasionally, going after completely wrong business goals.
Wrong solutions are being procured, implemented and developed. Years of effort are spent creating customizations, just to realize that they don’t fit very well with the way users are interacting with the system or that they’re solving the non-critical issue, while the most critical ones are left unaddressed. And that also creates confusion about scope and direction…
On Scope Creep
If you hang out with PMs, you hear a lot of complaints about the Scope Creep common phenomena – when new requirements are coming out of the woodwork long after a project is initiated and wrecking havoc in schedules and budgets. There’s also another related project risk – stakeholder management. That one is about managing expectations and dealing with ‘difficult’ people who cause Scope Creep by coming up with all of these ‘unforeseen’ requirements.
But why are they doing this?
You see, when business requirements or an RFP is created based on a ‘download’ from one stakeholder, there’s a very good chance that they will later realize that they’ve forgotten something. Other stakeholders and other business units will also pick up on missing pieces. And you have little control over when these insights can occur and whether or not this process based on spontaneous realizations will lead you to a complete and effective solution in the end.
Now what if we take most of this volatility out of user requirements? What if you could ‘magically’ extract the knowledge out of your key stakeholders and flesh out complete requirements in just a few days? What if you could also include the end users in the process to further insure against missing things – without stretching the process a lot longer?
If we do that – wouldn’t that just slash this 47 percent project failure rate down to low 5s for you? What would that mean for your current projects in terms of dollars saved and improved user productivity?
Now what if I could show you the processes your BAs can follow to get all of this done in just a few days, often before a project is started? Wouldn’t that be something you’d like to learn?
You can read the full article here.