How to navigate choice and mitigate risk
If you’re responsible for the direction of your business strategy, or the strategy of a large organization, deciding on the next move is tricky. Early-phase companies should try something novel and potentially disruptive to be relevant and unique in today’s business world, but large companies require constant improvement and evolution. Unfortunately, some organizations are disrupted to such an extent that they literally run themselves out of business. Developing capabilities to gather effective insights and translate these into action can help drive a successful business. How do you propel a business forward while maintaining what is working? Disruption and innovation are often paired in a way that sounds both compelling and destructive at the same time. Clayton M. Christensen, author of The Innovator’s Dilemma, coined the term “disruptive innovation” which refers to companies or industries that are “disrupted” via unforeseen competitors or innovations. While large companies can undertake incremental innovations (or “ìncrevations”) and stay relevant, most of the high-valuation companies keep an eye on disruption possibilities and are occasionally prepared to disrupt their own business models when the time comes. So “increvations” help a company keep pace with competitors and provide short-term revenue while breakthrough innovations can drive a new product or service much further ahead of competitors. Disruptions usually require a new business model and are much more difficult to implement and gain traction with customers. If you’re an early-phase company, you’re certainly looking at a path of uniqueness but how far do you push your new product or service? Medium-sized firms can often coast on increvation or some form of continuous improvement, but maybe you want to generate fresh growth. If you’re driving strategy for a large company you likely need a balanced portfolio of incremental gains and riskier bets. The path you choose depends on your appetite for risk, scale of company, customer channels and overarching strategic goals. So how do you choose a path and mitigate risks when doing new things? Let’s take, for example, the (industrial) design process. It’s an ideal method for defining, shaping, validating and refining new ideas. For any new idea, the general goal is to find the MAYA blend for your new product or service. MAYA (Most Advanced Yet Acceptable) refers to the duality of both advancing sufficiently upon previous solutions and piquing enough interest for customer adoption. When at the “defining stage” for new ideas, it is safe to explore both incremental and advanced or disruptive ideas. You can then explore how these ideas might look, feel, and work. Sketches and prototypes can be validated with customers. The ideas that you put in front of your customers can range from storyboarding an interaction to digital mock-ups, working prototypes or even mock-ups of future environments. This design process can lead to both incremental ideas and potentially uncover paths to disruptive innovation - a win-win situation. By mitigating risk through testing of loose ideas and getting real feedback you can more effectively map out a suitable strategy for your business. “Increvate” in the short term and innovate in the long term, or go for immediate disruption - it depends on your goals as a business, appetite for risk and the potential for customer adoption. With the right process and tools you can effectively map out your next move. (This article was originally published in Design Product News, Nov 2015)