Wednesday, August 23, 2017
Tuesday, August 08, 2017
“Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. ” ~ Peter Drucker,
I want to briefly write about what we’ve learnt about what kills Innovation in an enterprise and the antidote to it. I’ll touch upon just a few things and try to back my arguments with few examples from our company.
So what do we need for Innovation?
Of course there are many answers to this question, depending on your perspective, situation and experience. But I want to talk about something fundamental - Space.
Space is fundamental to any creation. It can be as simple as a clean sheet of paper or it can be more complicated like having time and resource to work on new ideas and initiatives.
I want to deal with the later here. For businesses large and small (so also for individuals) creating space is fundamental to renewal and sustainability, especially so for tech and tech driven industries (which incidentally encompasses nearly everything today).
And how do we create Space? What constrains it?
There are many ways here and one of them certainly is to create extra resources. But then it’s not a choice automatically and easily available to a lot of business. Especially the ones that desperately need it.
I’ll leave out the individuals at the moment and focus on organisations and businesses, touching upon a few Operational choices first, that we need to make to create the space for innovation.
So what fills up the space and kills innovation?
Complexity fills up space very quickly, eating up time and resource and management bandwidth, killing Innovation and eventually the business.
Let me illustrate this by an example from our company. Prior to moving to the cloud, we were running an enterprise software business i.e. we were installing our software on the customers servers. What that meant was that we were dealing with a lot of variations with a virtual responsibility for nearly every layer of the IT infrastructure. If the email malfunctioned for any reason at all, it was our problem. The resources, team capacities, equipment’s, policies, cultures, all changed from one location to the other. It wouldn’t be an exaggeration to say that for 90%+ of our time we were dealing with repetitive maintenance work. It was tough very very tough. Add to this, the reluctance of the IT teams to permit quick upgrades, and us having many versions of the software floating around, further multiplying the complexity. It was nearly impossible to deliver a uniform good experience to the customer no matter how hard we worked. It was tough Physically and Psychologically. There was little space left to take up innovation & new initiatives.
Moving to the cloud as a delivery platform for our software, changed all that. We now had to deal with a single site, with a uniform and scalable infrastructure. That hugely cut down operational complexities, freeing up a lot of space for us to work on innovation.
What is making your business complex? What are the variations that are adding complexity and eating up the resources without adding much value in return? Those are the questions that a business must ask routinely to free up the space for innovation
Second, Lack of Flexibility
Lack of flexibility in your operations leaves no room for experimentation and in turn kills innovation.
Again, because the of the limitations of the enterprise software model, it was hard to find and set-up resources for experimentation. And because it was such a painful exercise, it was taken up infrequently, reducing the room for experimentation.
Lack of resources is a common problem for all start-ups and being able to tap into resources on demand (as on the cloud, with its infrastructure and services model) creates room for undertaking experiments without high capital costs and high set-up and maintenance effort.
Fortunately, a number of on-demand services are being available to start-ups and small businesses today enabling them to experiment at relatively low rental costs. Such mechanisms can create considerable room for experimentation and fuel innovation.
Third, Lack of Automation
Lack of automation, keeps you busy with the mundane.
Automation can free up a lot of space from repetitive service, maintenance and management tasks. This is critical because automated systems are a lot more scalable and reliable than people driven systems & processes. It’s hard and wasteful work to keep people motivated in running repetitive tasks. Most people are not good at running disciplined processes and neither is it the best use of human intelligence. Using people to run processes takes away the space for them to be creative.
Besides, automation can take away much of what is considered as managerial tasks of monitoring processes run by people. And that can then free up management bandwidth (a very precious resource, especially if the top management is involved in it) for innovation and growth initiatives.
Lets look at things from another perspective, Culture.
What about the culture creates or limits the space for innovation?
First, something from our Statement of Values.
One of our statement of values says - Live in Possibilities, Pursue Excellence, Practice Sincerity. You have to believe in possibilities for innovation to happen. The stronger your belief in it is, the more space it creates for trying things out, for innovation. Nothing kills innovation like Cynicism.
Second, Lets look at the Rules an enterprise runs by.
One of the rules we live by is - The Customer Comes First - This may sound like a cliche and not as cool as saying Employees First, but then we’re not talking about running a people effort based service business here, where keeping a motivated staff is key to delivering great service to customers. We’re talking about innovation here. If we keep the Customers in focus, their needs through their life cycle, their life choices, their pains, it becomes a source of a lot of insights and therefore a source of many innovation opportunities.
The rules you follow can create the space or constrict it. Choose them carefully.
Third, Let’s look at company Vision as a source for creating space for innovation.
E.g. our vision statement states - Bringing the 'Collaboration Advantage' to Every Enterprise.
One of the problems with the tech business is the pace of change. It is brutal. It is why people work long hours, to catch that window of opportunity before it goes away. But if you can frame your work in a way that offers you a long continuous opportunity space, you create a much wider window of opportunity for yourself. E.g. we believe that just like the 20th century was about transportation and industrialization, the 21st century is going to be about Collaboration and Sustainability. Hundreds of new forms of collaboration are already being built, delivering big advantages and savings in effort and resources. It’s a large and continuing opportunity space. Now, collaboration and sustainability are not the only spaces available to us, like transportation and industrialization were not the only available spaces in the last century. If you can define the area of your work in the context of a large continuous and growing space, it creates the space for you to invent and reinvent yourself to tap into the opportunity offered by it.
What’s more, it may even help you stress and fret a little less about missing out on a window of opportunity.
So much for now. Hope to write more on this soon. Do let me know what you think.
Thursday, May 18, 2017
Friday, April 21, 2017
Your capital requirement can be pretty large if you plan to run a 24x7 critical business IT system or want to build highly scalable software applications or want to target large consumer markets, than e.g. if you want to run a boutique digital marketing business.
When your business is underfunded, everything is compromised, the team, quality, distribution, marketing, sales system, speed…nearly everything. That slows you down. Stretching out the time it takes to reach product maturity. For a tech company this is dangerous. It is eating into your window of opportunity. The tech landscape changes fast. Also if you get in with your product at a later stage, gaining customers becomes that much harder. Much opportunity can be lost. Worse still you may miss the window of opportunity altogether.
How do you break out from this? Better still how do you avoid getting trapped in a situation like this?
Being well funded is the obvious answer but getting funded itself is a low probability event for most start-ups. Getting well funded can be even harder, especially so in places where risk capital ecosystems are not so well developed. It might be easier to find initial capital (angel fund) than follow-up capital in such underdeveloped ecosystems. Leaving you stuck in the middle of no where at a later stage in the start-up lifecycle.
You can adjust to the low capital availability or lack of it. The real answer lies in the design of the business model.
By innovating on the business model, you may be able to scale down your funding requirement or at least postpone it to a later stage in the business life cycle, giving you more time to work on it.
Business Models are a very effective way of getting around the shortage of funding. Its an option filled with many possibilities.
But what about the business model can you change? The simple answer lies in examining the number of parts that go into creating the engine that would generate revenues for you. The more parts there are to the business, the more is the complexity of the business and therefore, higher the cost and capital required to put it in place and run it. Simplifying the business model by reducing the number of parts that go into creating your business engine is a very effective way to bring down the capital requirement. Yes it may mean using other peoples services, sharing revenues etc. which could reduce the size of your pie, but, it may also be a surer way to gain control and find success.
Thursday, April 20, 2017
One of the best things I’ve learnt from Dr Adizes is the importance of Mutual Respect within the team for it to perform well. He says that the lack of Mutual Respect causes conflict, the lack of synergy within the team. It is a drain on the teams energy that it could otherwise use in overcoming obstacles to growing the enterprise. Lack of Mutual Respect at the top (between founders, owners, top mangers) can be completely destructive. Now Mutual Respect is not something that can be feigned nor can you psych yourself up for it. It is not something that can be developed in a few off sites or Mutual Appreciation camps. It can only be developed by spending a good amount of time understanding each others points of view and building out a shared understanding and vision. Of course the pre condition is honesty, sincerity and integrity on the part of the team members. And Prejudice here is poison.