As a leader when you look to the future you need to anchor yourself with a degree of certainty, otherwise it will be impossible to make the decisions you must make. But with the world spinning around you and so much changing rapidly, how do you find that anchor?
Active Knowledge Question:
As a leader do you have a robust approach to bringing certainty into your business’s future?
Seeing Into The Future
The world is a rapidly changing place and there is a lot of noise that a leader must cut through to be able to direct their business on the road to success. Building competitive positions in chosen markets is a long-term play and leaders must be able to discern factors that may not have yet even emerged in formulating their strategies.
Decisions made today are ones that will affect where your business will be in five or ten years time.
These are decisions requiring foresight but, most importantly, are decisions that require a positioning of customer need and a winning value proposition. All of which need to be supported by the type of organisation that will be able to deliver on that value.
Where Is Technology Going To Land?
Whether you consider yourself a technology business or not, technology impacts your customers and your business, and cannot be ignored when crafting your future competitive strategy.
But how do you know which technologies are going to be successful and hold, and which are more likely to fall by the wayside?
As a business leader, you can’t sit back and wait and see. You will likely need to align or adjust your offerings in one way or another to technologies emerging in your marketplace.
Melissa Schillling in her article, ‘What’s Your Best Innovation Bet?’, published in the Harvard Business Review, provides three steps that can assist you to ‘tie your wagon’ to the winning technology.
Schilling believes there are three critical steps that supports successful technology innovation:
- Identifying key dimensions relevant to the specific technology.
- Plotting the value consumers presently derive from each technology dimension.
- Identifying where the most room for improvement exists.
And that is where you want to position yourself.
If we use audio as an example you will see how these three steps can allow you to gain a greater clarity as to which direction you should move in. The key dimensions of audio are:
- Desynchronisation: the ability to record a performance so you don’t have to be physically there to enjoy it, solved in the late 1800s when recording became possible.
- Portability: the shift from the original phonographs to today’s variety of portable devices.
- Selection: improving capacity and therefore choice.
- Fidelity: improving sound quality.
- Customisation: allowing individual choice in what is copied to your device.
- Cost: continually reducing relative to the value provided.
Each one of these technology dimensions reflect a benefit delivered to the customer and when you plot the current standing of value you gain an appreciation of whether the consumer is likely seeking greater improvement in this dimension, or not. For example, do they want a device that can hold a greater range of songs? Given current device capacity, it’s unlikely.
When you then consider a new technology coming into the market, you compare it to where that dimension presently sits on the value curve and ask, does the consumer really need or want more of this? If the answer is yes, and the predicted cost seems to reflect value, then it is likely that this technology will be taken up.
But of course, it’s not as simple as that. You also need to step outside what is presently known and consider what is possible.
In considering what dimensions presently exist, how far they may move and what new dimensions may be introduced, it’s important to allow your imagination and creativity to flow. Be careful not to allow cost, what presently is possible or even consumer feedback to restrict your thinking. For example, classic folklore is Henry Ford asking people ‘what do you want in your transport?’ and they answered ‘faster horses’.
What do you think people would say if you asked them what else they wanted in a digital music device? There is probably not much more value to be delivered if we look back at what is already being provided. But what if you look forward, what do you think could be possible?
Where could music go to next? Well, Schilling asks in her article, is it possible that artificial intelligence will be able to identify the elements of your preferred music and then create your own music tailored to your personal tastes?
Every day your business goes out to compete and win. But do you really understand what it takes to ensure your business always wins? My global competitiveness benchmark test will quickly show you whether you are fielding your best every time you step up to compete.
Building The Future
In a recent interview by Adi Ignatius, also in the Harvard Business Review, titled ‘Don’t’ Try To Protect The Past’, IBM CEO Ginni Rometty spoke about how she plans for the future.
Rometty is seeking to transform IBM into a cloud-based ‘solutions’ business and is undertaking a transformation process of selling off legacy businesses whilst building what she considers to be a ‘durable IBM’. One of her biggest bets is Watson, IBM’s artificial intelligence platform. In 2016, IBM earned $13 billion on a revenue of $79.9 billion, but the transformation is driving down revenue as the legacy businesses are sold off.
There are the eight key points, which I discerned from the interview:
- You must be clear about what you are seeking to transform into. In IBM’s case that is allowing individual businesses to make better decisions by releasing the ‘data’ which every business has locked behind their own firewall.
- IBM see data as a natural resource, akin to oil, for example, but the profits are captured by those who can refine it, process it, and turn it into something else. This is where IBM believes competitive advantage will reside in the future and will provide the platform and tools to unlock it.
- You must have deeply held beliefs about your vision to drive these forward but these must always be tested against actual results as you advance.
- You need to grow in the right areas being those that have value and shed those that don’t. For IBM, it is moving out of businesses whose services are becoming commoditised and moving into new businesses with higher margins, which can be scaled up.
- The ability to change must be part of your business’s DNA. A key element of this DNA is not trying to protect the past so you have the freedom to reinvent yourself for the future.
- Your organisation, processes and people, must transform also to position your business strongly. IBM have adopted ‘design thinking’ to make their B2B products consumer friendly in terms of ease, feel and simplicity.
- To change and transform you must have passion, clarity and perseverance.
- You must set the bar high and keep moving faster. To increase their speed, IBM have adopted agile workflows in every part of the business.
Developing Your Approach
There are common elements which both Schilling in her approach to deciding whether technologies are likely to be successful, and Rometty in the way she speaks of plotting the course for the ‘durable IBM’ share.
These elements provide an insight into what is required by leaders to develop a robust approach in bringing greater certainty to the future of their businesses.
- Watch your marketplace: The marketplace in which you currently compete is dynamic and you must always be adaptable and actively watching for changes occurring in your marketplace. Changes that will impact the value of your offering and changes that will impact the needs of customers. However, identifying what changes are relevant to your business will require you to be able to cut through the noise in your marketplace.
- Be ready to move: There will possibly come a time when you need to recreate your business and it must be capable of such change. It is the time to leave the past behind and craft a new future.
- Connect with your customer: Your starting point in crafting a new future is to look toward your customers and to intimately understand their needs and what real value they receive from using your product/services. In a B2B context, that value may well lie in helping their business be more competitive as IBM is seeking to do. In a B2C context, it may lie in the enjoyment or utility that you deliver to your customers.
- Activate your imagination: Once you have real sense of customer value then you must engage your imagination to create a new image of how that may be dramatically improved.
- Assess the impact of technology: In considering how technology may impact your business or your customer needs, look to assess how it will shift the value the customer will receive and what opportunities it may open.
- Develop and pursue your vision: Once you have formed a view as to how you intend to compete in the future and you begin to build towards that vision, you must build the momentum but always assess that it is still the right path.
- Build the organisation that is capable of change: Designing an organisation that is capable of change and delivering on your vision is critical. It is about the DNA you build in your business and how that allows it to overcome challenges and deliver.
Your future success lies in identifying how you will continue to deliver value to your customers that outcompetes everyone else.
That will require you to continually assess changes occurring in your chosen marketplace that may close existing opportunities and open new ones. It may well require a complete shift in products/services and the value you deliver to your customers.
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