At the core of the digital revolution we’re experiencing right now is a mindset change. More and more corporations understand their new corporate social responsibility.
Yes there are new apps, yes there are new gadgets, yes there is more data.
But no data, no new dashboard or app will help you, when your organization is set up to suppress transparency and collaboration, there will be fancy new machines but no one to take the risk to stand up and do the right things with insights from for example analytics.
It is about the need that people have to continuously learn and improve, themselves and their company.
The digital era is a fast changing environment, only fashion industry has faster cycles. 60% of what you learn today will be obsolete within a year.
For this, most companies are not prepared.
And for this reason it is required to implement mechanisms that stimulate collaboration as well as continuous learning and don’t suppress it. Only in a group we are able to learn fast enough to keep up with this pace.
If you don’t, you will be obsolete.
The proposed approach really is a series of different aspects required to collaborate efficiently.
As discussed in my previous article, goals must consistently support overarching goals, starting from vision down to the products of a company and the actual measures in a product have to provide information of the status of the companies goals in real-time.
Incentives in corporate environments
Achieving the goals described earlier is usually enforced by financially incentivizing individuals in the hierarchy to reach the given (profit) goals.
At the same time, most individuals have a private agenda such as climbing up the ladder or earning more money to buy a bigger house.
Because of the combination of incentives and the private motivation, peers are incentivized to create silos.
This leads to the following problem:
Mindset of sharing
During my time in the US I learned “sharing is caring”.
If you generate assets such as services and products, make them available to everyone in the organization to use and sell to the customer.
Count the use of the service you created and paid for. Don’t do margin stacking but report the amount of reuse. It shows how central pieces in the puzzle are. It is easy to do this if you use central repositories by counting dependencies.
Create a culture of reuse. If something isn’t there yet, build and share it. Stop wasting human capital and stop building the same thing over and over again.
Ask employees to publish ideas on a central platform. All employees can vote for the products listed there. That way small things that impacts many gets the deserved attention.
Use it as central place for documentation and enables others to commit to supporting the idea, either financially or with their manpower. At least in times of low business in the own area this could prevent layoffs and protect know how.
Use this tool for reporting financials and goals as well as their status. Make it visible to everyone.
It is important for individuals in the organization to identify themselves with the products. Only someone who does this will be motivated to learn.
Stop product related email chains. Provide a messaging area that can semantically reference the products, processes and people. This way the questions are categorized and are available for others to look up the answer.
Let the teams around this form organically and not only out of the companies structure. See the company structures more like a grouping of people with the same interest and as a channel to a customer segment instead of competing entities.
We are far enough regarding digitalization of communication that people, sharing the same passion, don’t need to be colocated. I would prefer colocated teams that commit together on the work to do (product) though.
Create customer specific projects as separate entries in this tool. Projects executed by solution teams use / group products (including services which I see as product) to fulfill customer needs that are not satisfied with an existing product that has stand alone value.
Credits as measure for collaboration
Once the product platform is in place, allow the contributors to rate the contributions. This can then be used for incentives.
Vision, Objectives, KPIs and Principles
Use tags to link all products to goals. Each team can specify own goals but needs to document and link their contribution to the overarching goals.
Provide easy access to data that can be used to calculate the KPIs that measure the goal achievement.
In this setup it is very important to formulate a clear vision, not only for how the company is supposed to look like, but more importantly what the company wants to be for the customers, the society etc.
Basing on the vision, define objectives and their key results. KPIs are to be defined as indicators that monitor the key results.
Last but not least, setup a set of principles that act as guiding rails in day to day business. They need to be as precise and short to fit all on one baseball card such as “customers go first”. Think about the audience and choose appropriate wording.
To be clear, this shall mean: no abstract and empty sentences. Everybody is supposed to act according to the principles.
This enables the empowered teams to prioritize their work and decide whether preparing internal slides or the customer is more important (to pick up the example above). It allows everybody to justify their decision based on a common set of rules. This also leads to situations that artificially urgent internal demands automatically gets suppressed.
Self Contained Offerings and Modularization
Products are supposed to deliver clear (customer) value, either in form of stand alone, or enablement value.
This value is to be part of the previously mentioned documentation and needs to be linked to customer goals.
Self contained services have to be build around shared requirements and grouped to provide a clear value. An indication that the service contains functionality that should be carved out is, that it provides different values.
A good example would be user management in software or a modular power supply for hardware.
Have the commited team run the ops for that service. If others in the organization need some more functionality, they need to commit resources. Duplicates are not permitted.
In case of the hardware example, the power supply is supposed to be produced by that specific (regional) product team.
Manage the services in the product platform. It is especially important to track the use of shared services to show how central they are to the ecosystem.
Product & Project Culture
In other articles I wrote about the difference between a product and a project. This is why I focus on the core with the following statement.
A product lives until it is discontinued. It lives. Whereas a project is defined by its uniqueness, scope, etc.
This is a major difference and it seems this difference is hard to understand by many. It regularly leads to misunderstandings and awkward opinions / statements about the other side, especially when one side needs something from the other side.
The point is, project folks expects defined scope to be delivered at a certain date whereas product folks is used to explore what is actually needed, maximize product market fit and return on invest. For them it’s most of the time less important whether it is this or next month. What counts is maximum value and high scalability.
As an organization, product thinking is important to identify what the market actually demands and to decide whether the cost is reasonable to adress a certain value pool.
Project thinking is important to get certain products to the customer that need a lot of coordination and integration. Those products are typically to be integrated into a bigger landscape and require lots of customization / engineering. In this case the main products are the planning, engineering and commissioning services to manage complexity and take the risk.
Both are equally important and it depends on your business where you set the focus but it is important to understand and communicate the differences as well as to make sure one side can leverage the specific value the other side provides.
People at Forefront
Innovation is the core of future business and the foundation for future growth and profit.
We distinguish between:
- Product innovation: the iterative improvement of the portfolio and its products (what)
- Process innovation: the improvements in how we create products
- Business innovation: the improvements or changes in the business model. For example to implement a multi-sided platform and to participate in revenue streams, not primarily generated, but enabled by our offerings.
All engaged employees are stakeholders in the business journey. And it is important to give the individual a way to influence future business. This can be done via the previously described product platform.
Especially people in the first line experience the customer journey every day and have the best relationships with your customer base. This can be used to generate viable insights into what the customer is struggling with.
Let these people document the customer experience, typical workflows, tools used, personas, contact persons and pain points in a systematic way. This gets invaluable when making informed decisions on where to invest and during product ideation.
This content can then be referenced by the products in the product platform and gives a clear picture into potentials and how your current solution space matches the problem space.
Especially in larger corporations this view of your company is incredibly helpful when setting up strategies.
Management and an Empowered Organization
Up to know we discussed how to empower your employees by flattening the hierarchy, innovation needs to traverse, to be close to the market and orient the company to deliver the right products with the use of a product platform as central element.
But there is still a void that needs to be filled to keep it all together.
How do you make sure the organization is heading into this right direction and has the capabilities to implement the vision?
In other words:
- Who makes sure we’re hiring the right people?
- Who gives the direction?
- Who gives purpose and vision ?
- Who defines the rules of the game?
- Who ensures we learn the right stuff about the market?
Some of it will be a logic consequence of an empowered organization.
Hiring for example needs to fill a future demand. If the organization however gets into the situation that capabilities are not available, there is something wrong in the employee employment strategy.
So identifying and building up the know how (especially the learnings about the maket, validated learnings) and to manage the distribution internally is one of the core activities required from the leadership team.
So planning demand ahead with the constant feedback from the teams is essential. On one hand it is important to have the right technological skills but more important is the “drive” potential candidates have.
Don’t hire to fill a gap in skills, but select self directed, autonomous people that have shown their willingness to make a change. I know that team play is a highly requested skill but it is way overrated nowadays.
People who want to perform and make a change but lack team skills will find their way to communicate. Whereas people who lack the drive can communicate but don’t make a change. It is way more complicated to change people’s motivation than to teach them how to communicate.
So focus on finding performers that can demonstrate their ingenuity.
Ask what business they would found, why, how to make money, whom they need for this. Why they didn’t do it yet. Let them draft overviews in the f2f interview and skip one or two abstract “how do you feel about…” questions without context.
Take your time but recruit continuously, not just on demand.
If a manager is required to make day to day decisions, this will lead to resource issues later on. Taking the decisions on a product level is the job of a product team. Between products and on solution level, the teams need to negotiate.
Whether the decisions are right is measured by their contribution to the overall goal, even when this requires to step one or more levels up in the goal hierarchy.
As both teams’ goals are derived from the same hierarchy, there will be a level the new goal of the collaboration contributes to. Both teams have to add the new goal to the product platform.
If the required contribution is exceeding the capability of team (A), a minimal delivery can be negotiated and extended later. If the required delivery still exceeds the resources of a team (A), the requesting team (B) has to implement the part and contribute to the team (A) via pull request.
In some cases, team B can’t contribute to team A, for example if a software team requires certain hardware features. In this case both teams have to use the addressed customer value pool to prioritize accordingly.
So the remaining activities of direction, purpose and rules. A company vision is vital and to keep track of the distance to it is essential. For this, the leadership has to work out tensionable top level goals and support the teams in defining team goals. It shouldn’t be required to dictate the goals from outside.
The product of the company internally (the managements product) are among others the north star / vision, empowered teams and qualified resource availability. This can again be described and shared via the product platform.
Defining management activities as products makes them transparent for employees, associate them to the goals and show how this has an impact on the vision.
See it as a corporate social responsibility to maximize the efficiency of which human capital is used.
Added value and the corporate hierarchy
Typically an organization has several hierarchy levels. Each layer should add clear value to the customer. If all decisions need to be escalated, the layers get overloaded. This is where principles become important. Principles act as guiding rails for every day decision making.
They need to be precise, easy to understand and tensionable. With proper principles, bottlenecks in decision making can be reduced and the resources are offloaded.
This new capacity can then be used to focus the energy on what really matters, the customer.
Hierarchy Value Delta
Every hierarchy level is supposed to add a certain delta to the customer value creation and shouldn’t be responsible for the value, created by the layers below. The responsibility is limited to the added value delta.
Let’s be a bit more specific about what is meant by this value delta. On customers side there is, similar to the own organization, a hierarchy.
So selling a product that improves the efficiency of a plant operator at costs of $19,99 per month can typically be approved either by the operator himself or his boss.
If we are supposed to implement a digital transformation for the customer, the decisions are made on executive level. This requires a different counterpart on your own side. While the products are still sold and under the responsibility of the product teams, the “transformation pitch” is the delta added on the own executive level.
On another level you find transformation of a whole industry, the adoption of certain business models or stimulating the buying environment of a country.
What changes is the excercised influence and the scope but without the responsibility for the aggregated sales (measured with revenue). Instead, these levels are guided using their individual objectives and corresponding measures, such as market share and number of customers.
Stop Aggregating Revenue for Controlling as main KPI
If you stop aggregating revenue in the organization’s hierarchy, measure it only with a flat structure (per aggregation of the product platform) and the use of product specific measures, chances are good that this sparks lots of collaboration.
Guiding KPIs should take the products maturity into account and focus on customer value driving measures such as number of users, an app’s use per user or runway in the introduction phase, given that profit grows with increasing customer base (scalability).
This does not mean not to measure profit, but depending on the maturity, other measures give you better insights into progress and achievement of goals.
Customers in the center
To focus your efforts on maximizing ROI, it is crucial to reduce investments in functionality that is rarely or never used by the customer.
Future growth hereby can only be found by consequently investing in topics the customer is willing to pay for, either with money or data.
Please note that this implies that you shouldn’t only talk to your existing customers. Typically a large portion of growth lies with the potential customers.
So learning from the customer is the only way to build great products. And it’s not the large increments that will get you there most of the time. Large increments bear huge risks and that the customer might not see the balance between value and price.
Choose small chunks that focus on delivering either stand alone value or enablement value. Be playful about this and test alternatives for example with A/B tests.
But most importantly:
Start including measures to verify hypotheses from day one. This is often seen as overhead and done after the product has been built, but at that point the true power of gaining insights is already over. Let insights gained by data guide your decisions how the final product will look like.
Use these insights to identify what’s valuable for the customer and forget what everyone seems to know internally about what the customer wants.
Interviews can give additional insights especially into additional use cases. They are the channel to learn from the customer. In addition they can be used to verify hypotheses.
With an open mind, they will allow you to identify opportunities and get direction for the next increment.
See the product team as your guide for a good product. Let it hike with the customer and allow them to interact with the customer. If they get to a crossroad, ask questions to verify hypotheses such as “if we go that way there might be mountain lakes to catch fish, do you like fishing?” If the customer says yes, head down that road for a while until you get to the next top and you can see whether there are lakes.
Now you already got a new business idea, next time sell a fishing rod. Put it back into the product platform.