Adopt an ‘Invest to Test’ philosophy to quickly abandon, pivot, or continue…
To extend and deepen our discussion on digital disruption (see our last post on the concept of Future Surfing), let’s look at how to leverage digital technologies and mind-sets to create new company opportunities within highly complex environments.
We’re residing in a so-called “VUCA world”: characterised by Volatility, Uncertainty, Complexity and Ambiguity. Across almost all industries, we’re seeing product lifecycles shortening, technology change accelerating, and customers demanding ever-greater value from businesses.
In studying decision-making in VUCA environments, British organisational theorist Professor Ralph Stacey notes that with longer product cycles and little technological change, it’s possible to be rational and measured making use of their investments. We now have the time to construct comprehensive business cases, and run proof-of-concept and proof-of-value programmes, once we develop standardised services in fairly static markets. We could “prove” the job before we start.
In VUCA environments, where product cycles are short and technological change is fast, taking a traditional approach to decision-making actually turns into a liability – potentially costing time, money and lost opportunity. Variables replace constants as our decision-making factors.
Within this complex environment, decision-makers want to use Invest to Test.
Invest to check is really a dynamic approach… Focus on some well-founded assumptions, but don’t forget that however confident you might be, these are still only assumptions. Invest the tiniest viable quantity of resources (financial, human capital, intellectual etc) in building real-world prototypes and services that may reliably test these assumptions. Here you’re looking to make variables “constant” (no less than for a time).
Let’s assume, for digital transformation , that the customers would like you to quote competitor prices when presenting quotes for them. Don’t immediately dismiss this as irrational or unlike best-practice. Test the belief: develop a prototype experience and present it to 50 of one’s most loyal customers. Require their feedback… Is it as useful because they believed it could be? Will it increase trust and loyalty in the brand? Can it enhance the customer experience? Would they be prepared to purchase this type of service?
It’s important to ask the right questions, to stress-test your assumptions and decide whether they’re valid.
From this point, there are three options: to abandon the item or feature, to pivot it (re-cast it as something slightly different and test again), in order to continue with further incremental investments and cycles of user feedback.
The fast fact is ‘not necessarily’. In everything that your company does, we must draw a pointy among two approaches:
Future-Proofing… fast-following your competition start by making sure you’re aware and ready for industry change, positioned to quickly adapt to new demands, however, not actually being the catalyst for change.
Future-Surfing… once we introduced within our last blog, this really is about actively using the battle to your competitors and inventing entirely new methods to solve customer pain points.
Interestingly, in McKinsey’s ‘The case for digital reinvention’ report, the analyst firm indicated that fast-followers (future-proofers”) saw the average 5.3% revenue uplift in comparison to the competition. The true disruptors (“future surfers”), however, enjoyed a 12.3% revenue improvement.
However the real goal is to merge both strategies in your organisation, using every one where celebrate one of the most sense. For instance, you might apply future-surfing to your core regions of differentiation, and future-proofing for anyone more commoditised areas where you’re not planning to tell apart yourself. Adopting both strategies, and executing them well, `could generate revenue uplifts as high as 18.6%, according to McKinsey.
For details about digital partners web portal: click for more info.