It’s going to happen in 2021. There will be two paths for firms: diminishing returns or vibrancy. The rising tide will only lift well prepared boats.
The danger is that we’re going to be tempted to spend most of our time trying to get “back to normal” – and we’re going to find out that we are not the same people who went into lockdown. Rather, our markets’ needs, preferences and trajectory has shifted.
We need to bring our best efforts to detecting and aligning with that shift.
Contrast this with the truth that, for the most part, our firms are built to be optimization engines and are not market-seeking missiles. Our predisposition towards optimization and risk removal will tend to keep firms on a linear agenda.
Is your firm built to capitalize on the fresh expectations?
Linear Agenda + Market Shift = Diminishing Returns
It’s happened dozens of times. I’ll ask a senior leader about their firm’s origin story and hear a journey of what happened years, or sometimes decades, earlier which set up the current moment the firm is in. The usual format for this story goes something like this: “our founders followed their intuition and built this, and a small group liked it.” Then they doubled down and had a spectacular failure. This led them through a near-death experience for the firm before coming up with the winning formula. The rest is history.
Usually, the reason they are talking to me is that the valuable part of their market is showing signs of moving on. They are surprised how hard it is to reclaim the fire. Talk to any individual in the firm and they see it, yet as a group they reach for the ring and miss it.
The solution lies in the blind spot in the story. There is an underlying assumption they are now somehow immune from needing to do this again now that they are “successful.” That they can somehow “call the winners” without experimentation.
But when you zero in on the real story, you find that growth has always been preceded by exploration, and in honing that value proposition that finally made it, there was a need for research, prototyping, and partnership with a real risk of failure. They are enjoying their current success because of the pioneers.
Remove the risk of failure, remove the significant opportunity.
The Elephant in the Room
“We tried to (project) and the (pick your villain) shut it down…”
I hear this frequently from frustrated creatives inside larger, more complex firms. There is a natural path that rewards operational efficiency and risk reduction that can seem like a chain tethering the elephant at the circus.
Here’s the surprise: I get hired by the “villains” in these stories. They are great people who know full well that they need to take risks to enjoy the fruits of breakout markets. But, they also don’t want to spend hard-earned margin dollars on unproductive investments.
When a firm gets operationally efficient, its market-seeking guidance system gets out of practice, which can lead to some spectacular misses. Under pressure to create a quick win, the creatives can engage the scale of the firm too quickly and create a big hole in the P&L. This fear of loss frequently gets translated into a “No.”
Some firms work to mitigate market risk by using M&A. It is true that acquisition can rapidly add know-how and operational knowledge. It is also true that scaling that know-how back into your larger business is very challenging. I’ve worked with firms that are still working on “integration opportunities” years after the event. M&A shifts risk from market risk to organizational and culture risk.
An Exploration Engine Worthy of Investment
There’s much to say here, but for today let’s talk about how to build a team from the competencies found in most firms.
First an analogy: the entertainment industry is a beautiful, brutal engine of market seeking, and it provides us with a powerful set of insights. We are living in an amazing renaissance of serial storytelling on streaming technology…not a month goes by without a fresh movie pilot and the emergence of a new “season” of stories with new characters. Many are one-season wonders, but some get traction and endure. The winners have clear, relatable characters (many times deeply flawed), that are faced with new challenges that they need to work together to solve. The truly long-lived ones have fresh characters come forward and others die or move on.
A Framework to Take Purposeful Risks
Using this analogy, we need a framework that allows us to take our business and organizational competencies (analogous to characters) and bring them forward in fresh and valuable new ways. Yes sometimes we need to challenge and evolve them, and sometimes they need to leave the script.
STRIDE is my proprietary five-step framework that spans the strategy-to-profitable business gap.
The right-hand side of the STRIDE model has the traditional elements of product development at scale and uses tools such as segmentation (including agile), lean methods, and optimization tools (like six sigma) that build on the firm’s core processes.
On the left-hand side is where the power is developed. This is where we build the team, knowledge architecture, and make learning decisions.
The ST portion of the STRIDE curve stands for Strategy and Tactics. Using the talent of the firm and strategic outside resources, we build a nimble, cross-functional team to completely detail the emergent product or service the client is hiring the firm to do. This includes enterprise tactical advantage, go-to-market alignment, and journey and ecosystem maps that complete a comprehensive business case. We then ruthlessly interrogate the business case for assumptions and areas of confirmation bias. We build that into a tornado diagram that quantifies the risk and drives our next phase.
The R for reality phase is where we jointly assess, bracket and agree on risks and how to mitigate them. We outline expectations for them, we set budgets for them and we have a conversation after we’ve done them to make sure we’ve learned all we can from them. We make sure that all stakeholders are in on the discussion. If we decide that we need to learn more, it’s a joint decision.
This can involve the development of wireframes and prototypes that allow high learning, value interactions with clients, beta agreements with development partners on services, and ride alongs to assess the distribution and go-to-market team compatibility (as examples). The principle here is to take on the “killer” risks first and systematically set the work done in ST on a solid foundation.
Putting Both Halves of Our Firm to Work for Success in 2021
The key to a powerful 2021 is going to be executing in a truly collaborative and efficient path that allows you to capture the momentum of a fresh set of market expectations. Will you be the one that sets up your firm for success by establishing a stronger platform for purposeful experimentation?
If you’d like to talk more about what it takes to have a successful journey through the early phases of installing new growth projects in firms, we should talk. Please reach out by using this link. Or give me a call at (847) 651-1014.
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