November 7, 2017
A couple weeks ago I attended the Forrester CXSF 2017 customer experience conference in San Francisco. In addition to enjoying my first trip to the Bay Area, including a massive post-conference walk from the financial district through Fisherman’s Wharf and all the way across the Golden Gate Bridge, I found the conference presentations and conversations really helped me solidify some loose thoughts and opinions I had been turning over in my head for a while. These ideas relate to both “AI,” which was featured prominently in the conference (and which I put in quotes because it does not have, nor has ever had, a definition, so it can mean whatever you want), and innovation, or more specifically, what companies who can produce a steady stream of innovations look like.
Let’s take a look at the 3 areas of competency that I think are necessary for organizations to innovate repeatedly.
1. Executional Agility
Yes, the Agile Manifesto is still relevant. No, it’s not the only kind of agility necessary for successful innovation.
In the 16+ years since the Agile Manifesto codified the challenge to the prevailing approaches to managing software development lifecycles, even teams working in the most regulated and hardware-dependent industries have adopted many of its principles. If you are applying the practice of retrospectives well, your teams have likely already surfaced:
- the need to streamline how the working software they produce gets into production
- the value of decisions and priorities being supported by the availability of meaningful and pertinent data
Indeed, we can observe that organizations that had strong agile software development practices were among the first to build DevOps practices that accelerated delivery, and analytics and Big Data practices that supported decisions and priorities.
Today, the benefits of all three approaches to execution, Agile software development, DevOps, and analytics and Big Data, are noticeable individually but transformative when taken together. It is the combination of the three that produces the Executional Agility that allows an organization to innovate repeatedly.
2. Customer Experience Centeredness
Outside-in Design, Jobs-to-be-Done, Design Thinking, The Golden Circle, … what all of these approaches/frameworks are pointing us towards, and what organizations that are repeatedly innovating are doing, is understanding and improving the experience of using a product or service.
I am adding the emphasis on experience because I think many organizations have improved their offerings and customer satisfaction by being customer-centered but I don’t see competence in being customer-centered as being enough. I think some examples will help illustrate the difference.
The education market has long been dominated by Apple and Microsoft. By being customer-centered they identified what was important to buyers and decision makers (e.g. size of discounts, “ease of use,” market-use, perceived future relevance) and have created solutions that have stood up against lower-cost, Linux-based alternatives, for years. Google, however, by being customer experience centered, transformed the jobs of administrators (e.g. provisioning, security, monitoring) and nailed those of teachers and students (i.e. teaching and learning, respectively) is now the go-to solution in education. More, Google is starting to leverage their success in education to power growth in the business market.
Another good example is Airbnb. The initial insight was driven by an unserviced/underserviced customer need: accommodations for travelers on very low budgets. The answer for this was a customer-centered “air mattresses in the spare bedroom.” What transformed the startup and was the genesis of their new Trips offering, was a focus on customer experience.
3. Hypothesis-driven Discovery
As you may already have noticed from the examples in previous sections, some truly transformative customer experiences arise from hypothesis-driven discovery. The Chromebook wouldn’t have disrupted the education market without the creation of Chrome OS to test the hypothesis that “some people can do everything they need in a browser.” Airbnb probably wouldn’t exist today without many different experiments to learn how to build a superior travel experience.
A hypothesis doesn’t have to be transformational to merit experimentation. Indeed, it is often the successive testing of small hypotheses that follow one from the other that can lead to “breakthrough insights.”
When companies are in the startup phase of their existence, like a young child, they do many experiments to understand themselves and the world they’re in. Those organizations that repeatedly innovate are not like teenagers that experiment with whatever they see their peers doing. They are more like an emerging tennis pro who is tweaking his powerful serve to make it more accurate while also working on adding a net game to his arsenal to be a more complete and effective player. Bringing this back into the terms of established organizations, they both experiment with ideas to improve their current business (e.g. A-B testing on a shopping cart) and explore more radical thoughts (e.g. automatically delivering an item from a wish list at a significant discount).
Yes, I know I started with a list of three and I still say there are 3 Competencies, however, there is a fourth feature that all repeatedly innovative organizations have: a culture of choosing to make progress in those competencies over choosing short-term outcomes.
In a way, we can say that repeatedly innovative organizations don’t allow the ends (short-term outcomes) to justify the means (tactics and approaches that undermine their teams’ work across these 3 Competencies).
If you want to repeatedly innovate, your culture must:
- Support investments in people, processes and technologies to enable Executional Agility
- Be unsatisfied with customer-centric answers and both dig deeper and think broader to center solutions on the Customer Experience with your products and services
- Value invalidated hypotheses as much as validated ones to create an environment where “wild” experiments can be run as well as “mundane” and for the organization to be discovering truths rather than reinforcing wishes
Putting it together in Practice
If you know your organization needs to grow in any of these areas, or if you’re not sure, we can help you identify incremental areas of improvement, deliver those improvements and/or spread those improvements across your organization. While you will not achieve your organizational optimum until you “level up” across all three areas, from my experience, observations and learnings (including at Forrester CXSF 2017), focusing on incremental improvements in any of these areas and executing towards the vision of becoming competent in all of them, will lead to realizing benefits beyond those you would expect from such limited initiatives. One of the most powerful “oversized” outcomes of some limited scope incremental initiatives, is that their completion helps other leaders in your organization see the vision just a little bit better such that they become advocates for more improvements.
If you want your organization to be a great place to work and for it to be a leader in your industry, the answer is the same: create a culture that values and supports repeated innovation, big and small, through competency and continuous improvement in Executional Agility, Customer Experience Centeredness and Hypothesis-driven Discovery.