When corporates try to be more innovative they often have to fight against their own DNA. Or at least they have to fight their own daily way of work. I’d like to talk about this dilemma a bit…
A traditional company is used to work in well-defined markets. Those markets have been evolving for decades and used to change very slowly. That made those markets very predictable. Predictable markets lead to predictable improvements and to something that makes every manager happy: projectable costs!
Superstar markets
Well, that has changed. Nearly every new market evolving can be classified as a so-called “superstar market”. A superstar market is a market where the winner takes all. As distribution is no longer limited in case of services available via internet, there’s just no logical reason to stick with number 2 in the market. So a great majority of customers will do business with the best in class. If you occupy the top position in a niche, your competitors will have a very weak position.
But this does not only work for new markets. Also existing markets change rapidly through new distribution channels. Think about insurance for a second. Since direct insurance and insurance planing via internet is common standard now, existing big players on the market are fighting their own destiny not being ready for digital communication with customers. There are a lot of initiatives but a real game changer yet has to come.
As a logical consequence of this fact you can see, that speed is one of the most important factors regarding innovations. Speed has a big problem when looking at it with corporate eyes: it’s not the same as efficiency and therefore it’s not deterministic! When you take the advantage of very fast project progress you will have the permanent feeling of missing something, of someone you have not talked to or the fear of doing something that just doesn’t help your company. Speed is the only way of being first, but at the same time makes your goal more fuzzy and unclear. That’s a big thing for corporates. Those companies have very efficient processes and structures that allow employees to move through the organization correct. This is only possible when you know what you want to achieve. An hypothesis yet to prove is not really a clear vision. It’s more a bet. And corporate people don’t like bets. They like prediction!
There’s the big question: how can a slow corporate be first in a superstar market?
Great variety of ideas & project approach
My opinion is that there are two answers to that:
Addressing new markets can’t be done with only one idea or one projects, there needs to be a great variety of parallel projects to access a new niche and to start new business models. Corporates work in a process landscape where you have to wait for approval based on a project request, funding or budget or management attention. When you have to do that for every idea that comes up no idea will ever be fast enough to see the market before someone else has already done it. Also there will be a lot of people being involved in every decision made. How do you want to explain anyone why you want to try out 10 different things at the same time. Naturally this will look like a waste of money to every corporate decision maker. Projects that have a great chance of failing? no way!
But that’s exactly what you need. You need to try out different things and you need to try them fast. Don’t get yourself handcuffed by traditional structures and budget requests.
The second thing is a modern project approach. That’s where lean projects come in. The way projects have been done in the past were great in slow markets. You’ve put a lot of effort in being sure of everything and in creating a great quality. Complexity was good thing somehow because it made your product harder to be imitated. The new markets don’t care about imitation. The most important thing is to be first and to be developing fast. If you succeed in being first you will be the one gathering the first customers. When you improve your product quickly there will be no reason for the customer to change to someone else’s offer since the hassle of switching is more expensive than the positive effects. You will create a strong vendor lock-in by being fast.
So a lean project approach will help you to be faster by ignoring the old structures slowing you down when the market around you is speeding up.
Categories: basics, motivation
the lean consultant | mantro.net 