September 24, 2013
An Era of Choice
Finding new lenses for strategic planning
We’re well into a knowledge era, but its full effects may not yet be upon us. We need new lenses to chart the course for a new era.
Like the industrial revolution before it, the knowledge revolution is already changing our lives in profound and unexpected ways. We now understand that much of the information technology revolution has merely allowed us to do old things in new ways. Much more needs to change. It’s helpful to know where we’ve been and where we might be going.
The industrial revolution led society out on era of scarcity into an era of abundance. Companies were built for scale, employing the technologies and strategies of the day to create enough supply to meet a rapidly growing demand. That revolution took many years, largely because of slow communications. Today we don’t have that problem. In fact our technically advanced societies are rapidly coming to the close of the industrial age.
Technology and globalization are carving out new landscapes. Web era darlings like Amazon, Google, Facebook, and Twitter are easy examples of companies writing a new playbook. Meanwhile, brand leaders like Nike, Apple, Starbucks, and Disney are doing something similar – experimenting with new models for creating and delivering value. It starts with selling books or music online, but it ends up transforming publishing and music. The promise of ubiquitous mobile computing and Internet-enabled objects, self-driving cars and mapping the human genome, offer new opportunities for how we live.
Like a frog in water coming to a boil, these seismic changes can be slow motion shocks to a business, until they kill it. Many companies show symptoms of stress as they experience stiffer competition, higher customer expectations, and changing market dynamics. Strategic planning has moved from 10-year horizons to 3 years, to today when we question if strategic planning can help at all. A default mode is to pedal harder. While this strategy may work for now, it’s not sustainable.
Strategic models are useful lenses to enhance understanding, but too often models get confused with reality. The map is not the territory. Strategic planning may be in question because the strategic models are out of date, or need to be updated.
Just do it: Nike’s FuelBand represents a category reframe from shoes to athletics, enabling a new kind of offering.
A common denominator is that these firms are not bound by their category. Industry language and measurement often define, and result in, limiting a company’s perceived ability to change. While not every industry has the fluidity of the tech sector, category boundaries are often self- imposed. Indeed, how to reframe one’s category or industry to better contextualize and optimize for today’s customer is a key objective for company leaders today.
When Nike acquired Cole Haan, it thought of itself as a shoe company. Today, it has divested itself from a tangent shoe segment in order to pursue athletics directly. Its mission is to bring “inspiration and innovation to every athlete in the world.” Identifying its user’s terrain (athletics) and marking its territory (inspiration, innovation, global), enabled Nike to move into consumer electronics (Nike+), or even health. Customers choose Nike because it’s about athletics, not just shoes.
Businesses thriving today on new market dynamics, from technology to brand leadership (Apple being a potent mix of both), are paving a new strategic path others can follow. Not all firms are employing the same model, but each one is discovering new ways of working. Next generation companies are questioning historical precedents about scale, productivity, centralization, sourcing, and talent. Innovation is emerging as a discipline rather than an exception. New ideas about problem solving, agile prototyping, and socialized innovation are leading to new breakthroughs.
Shirts on our backs: The focus of how we’re meeting societal needs is shifting.
Courtesy flysfo, allyoncars.blogspot.com, and Apple
The success of the industrial era is yielding a post-abundance era of choice. Companies built for scale will need new strategies – new ways of seeing and criteria for making decisions.
Assembly line innovator Henry Ford famously quipped that his customers could have any color car so long as it was black. If industrial scale was about automated sameness, knowledge-based choice is about personal meaning. Understanding people, their behaviors, motives, and ultimately how people make choices, is critical in the new era. Though not new, concepts in human-centered design applied to new business conditions (“design thinking”) is emerging as a significant approach for finding and building upon new opportunities.
Disruptive change of this sort forces leaders to get back to basics. Category and company orthodoxies should not be taken as givens as firms try to answer two fundamental strategic questions: Where are you going to play? How are you going to win? These two questions sound deceptively simple, but getting to answers requires new a way of seeing.
Deciding where to play involves better understanding the context of your business through the eyes of the customer. Most businesses view themselves as providers of products or services, but they might be better served to describe what they do in terms of customer value. What companies sell isn’t always what customers buy.
User research can be used to discover what Patrick Whitney calls user “terrains” – a collection of motives, priorities, and aspirations that comprise ways users think about their goals. Starbucks makes money by selling coffee, but it sells a larger envelope of activities – a place to meet a friend or colleague, to learn about music, browse merchandise, or learn about coffee. Nike sells shoes but focuses on athletics. Disney sells entertainment but focuses on fantasy experiences (“magic”). Identifying user terrains can expand a company’s opportunity area for innovation. Understanding what users value is a step toward creating meaningful value propositions.
After learning about the user goals, a company needs to decide how to identify their “territory” – a focus on how they’re going win. What else might the company offer to help the customer accomplish her goal? User terrains are what customers do or want, and the company’s territory is how they’re going to help customers succeed. It’s like positioning, except categories are defined by customers rather than similar companies, and the claim is a specific subset of the category rather than a broadly inclusive offering.
Answering the key strategic questions enables system-level planning: What are the key customer touch points in your company territory? What is the exchange of value between people and organizations that motivates participation?
Customer touch points are parts of your new aligned system – key customer interactions, often enhanced by things you can make. Frameworks, like “poems” (people, objects, environments, messages, services), can be helpful to identify and describe system components.
Understanding how people make decisions, to what and how people assign value is at the core of behavioral science. What is clear from this area of study is that much of the value exchanged goes beyond money. Mapping these value relationships in a networked fashion can be described as a value web – in contrast to the more linear value chain.
Once a new system is established, consider how to express your value through a customer experience. What will your new or evolved offer be like? What needs to be done? When?
A human factors lens is useful for considering what a new experience will be like. Considering 5 key human factors – physical, cognitive, social, cultural, and emotional – is helpful for greater coverage.
Mapping a customer life cycle or journey is a way to consider time in your offer. Touch points can be mapped as a linear customer experience by business objectives (i.e., awareness, convince, buy, support) or user objectives (consider the “5E’s” – entice, engage, enter, experience, extend).
Activity systems map activities and dependencies to help plan how it is going to happen, and who is going to do it. In a networked knowledge economy, only some of these systems are in the company.
Finally, road maps, starting with envisioning and back casting to the present, can help describe when you expect things to occur.
Terrains and Territories: Asking basic questions about customer value can lead to profound insights.
Courtesy Kevin Budelmann
People: The Hidden Lens
People are the real drivers of change, though company culture is too often overlooked. Cultural orthodoxies (unwritten rules everyone follows) can extinguish even the best strategy. People will support what they help build. Collaboration is critical in an era that’s redefining boundaries, but true collaboration is hard. Collaboration – as opposed to merely cooperation – requires that team members admit shortcomings in order to dovetail with others’ strengths. Often teams can get along, but don’t always work toward a common goal.
Innovating in an era of choice often requires a willingness to be lost in the problem – a solution that has no clear path to success. Team members with different backgrounds need collaboration and communication skills in order to effectively solve new kinds of problems.
Organizations with an eye toward the future will create people systems designed with change, motivation, collaboration, and communication in mind.
Recognizing change, seeking new paradigms, and using new lenses require new skills. The emergence of “design thinking” is one of the innovation discipline trajectories in the new era of choice. Design thinking is dissecting and describing an ideal design process for the purpose of increasing engagement (teams) and making it repeatable (a process). Great designers exhibit these skills intuitively, but that may not be enough. The need now is to innovate reliably and often. As we seek to understand how Google and Disney innovate in the face of change, we build a vocabulary for the nature of innovation.
Solve the right problem
People often see themselves as problem solvers, but consider: What is problem solving? Problem solving is an emerging discipline. Start by thinking about problems as inputs and outputs. What is going in, what is coming out? Creating something new often involves unbundling and recombining.
Problem framing and reframing (defining the problem differently) is a powerful tool for making progress. Consider how abstractly or concretely the problem is defined, causes and effects. You may be a “big idea” person, but try to avoid being an ADD re-framer. Reframing too late can derail the best project.
Think in systems
Look for, find, create, and leverage patterns. Simple systems are better. The right constraints are productive. Have empathy for project sponsors, understand business goals and historical strategy models, and look for parameters.
Making is thinking
Language is abstract, but physical prototypes encourage decision-making. Meaning is co- created. Use prototypes as communication-boundary objects – tools for collaboration and failing fast. Language itself is tricky; words and measurement create orthodoxies of thought. After all, communication is not one way; it is shared. Broadcasting is not communicating.
People are complicated. They ask for something new but often reject it when they see it. What do you take as a given? What is your bias? Then consider what is genuinely different, and models for generating and communicating the something genuinely new.
Empathy is not a luxury. You are not likely to be your customer or user of your product or service. Seek a deeper understanding of the user context, behaviors, goals, and activities.
New lenses and skills will not solve all problems, but they are new tools to help us chart a course in an emerging era of choice.
Kevin Budelmann of Peopledesign says “much credit for this content goes to the smart people at the Institute of Design including Patrick Whitney, Jeremy Alexis, Marty Thaler, Kim Erwin, Hugh Musick, and many others. This is a lot of their thinking, here through my own lens.”