In a previous post, A Transparent World, properties of our increasingly transparent world were discussed. Here we discuss what these ideas mean for companies. I will focus on three themes:
- Employ a Value-Creation Playbook focused on the customer.
- Use web-based collaboration platforms to create a transparent value-creating enterprise.
- Work globally with the best talent inside and outside the company.
In today’s global innovation economy, there are abundant major opportunities with correspondingly huge and growing markets. But it is also a most challenging time because technologies are improving at rapid exponential rates and global competition is increasingly fierce.
Adapting at or beyond the speed of the market is increasingly difficult. The average lifetime of companies is down to about ten years. Absent the introduction of transformational new innovations, all companies go away. Just becoming larger and more efficient is eventually a losing strategy.
Our poor economic results in America have been given a name, “the new normal.” This pessimistic conclusion is reminiscent of Albert Einstein’s observation, “Insanity is doing the same thing over and over again and expecting different results.”
Essentially all companies know they must create new high-value innovations faster and more efficiently. But how many even have an “unreasonable” sense of urgency about improving? The world is full of major opportunities and most companies have enviable human and financial assets. Experience shows that companies seldom fail for lack of these assets. Consider Kodak, Polaroid, Nokia, and RCA. They all had enormous assets but lacked the most essential one, the ability to innovate
A major reason for poor results is that companies have ineffective or non-existent value-creation methodologies. To prove that, ask a middle-level manager to describe their Value-Creation Playbook. If they can’t describe their process, or worse have to ask what that question even means, they likely have none. That has been our consistent experience all around the world – they effectively have none. Because few companies have productive innovation processes, the potential for improving performance is immense.
An enterprise’s Value-Creation Playbook describes the basic knowledge, skills, processes, and human values staff must have to be successful innovators. As Peter Drucker pointed out, important innovations come from the convergence of multiple forms of knowledge. In multidisciplinary teams each discipline is defined by its own words, concepts, and business models. Unless a common language is put in place, it is a Towel of Babel, and poor results must be expected.
Since the function of a company is to create customers, the enterprise’s common language and concepts must also be based on the needs of its customers. An example is the definition for a “value proposition.” This is the core framework for all value-creation activities. Experience shows that only a handful of companies use a common definition across the enterprise. The resulting confusion seen is often stunning. The shortest complete definition for a value proposition is: 1) the customer and market Need, 2) the Approach for the solution and business model, 3) the Benefits/costs from the solution, and 4) the Competition and alternatives: i.e., NABC).
Value-creation is about learning and creating – fast. Actions that slow down the value-creation process must be removed and actions that speed it up must be embraced. For example, barriers that limit access to people and information are to be eliminated. Too often even basic consulting with staff across the enterprise is discouraged.
The most effective and efficient way to break down organizational barriers and speed learning and value creation is to use Value-Creation Forums. These are recurring meetings where teammates come together to present their value propositions and learn from each other.
Value-Creation Forums are a core part an enterprise’s Value-Creation Playbook. Other concepts in the Value Creation Playbook include finding important opportunities, identifying the few key insights that have previously prevented a solution, developing enterprise-wide metrics for success, ascertaining customer pain points, encouraging positive behaviors, and incentivizing success.
One of the benefits of using Value-Creation Forums is that they help sort out which initiatives are interesting to just a few staff members from those that are important to the enterprise. In our workshops in dozens of companies, universities, and government laboratories, typically less than 20% of what is being worked on has any value for the enterprise. They decide that, we don’t. We simply give them a framework for evaluating their projects.
Eliminating the waste from unimportant activities is critical, but even more important is assuring that the enterprise focuses on major opportunities. This has become even more of a critical issue in the global innovation economy. First, there is an abundance of them. There is no excuse for not working to address them. Second, intense competition makes minor innovations quickly irrelevant. For additional Value-Creation Playbook concepts and processes see, Innovation: The Five Disciplines for Creating What Customers Want and If You Really Want to Change the World.
As described in A Transparent World, to maximize its innovative potential, the enterprise must use state-of-the-art Internet collaboration platforms and tools. This platform must have several key attributes:
- Enable synchronous and asynchronous collaboration throughout the enterprise.
- Allow contributions as required from all appropriate staff and outside partners.
- Drive value-creation across the enterprise by implementing the Value-Creation Playbook.
All major companies work globally with sales, R&D, and other resources at strategic locations. The biggest companies can have R&D centers at 5 to 10 sites around the world. This is essential for understanding local markets and for working directly with customers to provide competitive solutions. At the same time this creates difficult challenges. A senior executive at a top-10 global company with several hundred thousand talented employees told me, “One of our biggest problems is figuring out how to get the right people on our projects.” This company has the talent to solve just about any problem that comes up, but only if they are engaged. Today they are not.
Since people are working in different time zones, both synchronous and asynchronous collaboration is essential. In addition, the collaboration platform makes it easy to add and subtract staff and outside partners as appropriate. Having access to the best people in the enterprise when a problem needs to be solved profoundly increases the speed of value creation. This is obviously a mechanism for proactively implementing “open innovation” across the enterprise.
By integrating the Value-Creation Playbook into the collaboration platform, everyone in the company can learn the fundamentals of value creation. Different functions require different levels of knowledge, but everyone in the company should understand and use the basics, such as NABC value propositions. Using NABC value propositions across the enterprise means that every conversation begins with the customer’s needs, as it must. That one factor completely changes how the company performs.
The collaboration platform is the essential tool for making both the company and the world transparent. At the same time, it is the mechanism to train and have staff use innovation best practices. Because the work product of a team is available to all team members and management, it creates a positive but highly competitive environment.
Measurement tools on the platform provide feedback on who is participating and who the team members consider to be the best experts in different areas. Because the platform allows for asynchronous collaboration, it becomes a particularly valuable tool for unleashing the creative potential of introverts, who are often diminished in face-to-face meetings.
Staff embrace this form of high-value collaboration and value-creation because it allows them to rapidly develop valuable new skills. They understand that constantly learning and becoming more skilled is essential today. In this environment highly trained professionals self-motivate themselves more than can management.
Today’s collaboration platforms are providing these kinds of capabilities. However, as outlined in A Transparent World, we will soon see a family of advanced AI tools and services to make these platforms much more effective and efficient. Today they are like the first PCs with only a few basic software applications. Decades from now there will be hundreds, if not thousands, of applications and services to aid in the process of value creation.
As in the Kaggle airplane planning example, companies that can rapidly assemble superb teams from within and without the company to solve important problems, and then rapidly drive them forward using best practices will have a profound competitive advantage in the global innovation economy. These developments will ultimately create a revolution in work practices more profound than what happened in the 1950s with the Total-Quality Management (TQM) movement.
Thanks to Norman Winarsky and Greg Eying