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Someone in the organisation has a great new idea! However, the issue with new ideas is that leaders within traditional organisations will generally only be comfortable to commit to a new idea if they understand the logic and assumptions behind it, and have the data to make an informed decision. The tricky thing about new ideas is that there is no data yet to analyse – otherwise the idea wouldn’t actually be new .
Large organisations are typically risk averse, with structured ways of working which include decision making being limited to a few people in senior positions, and a heavy focus on upfront planning to provide a familiar and favourable predicted outcome. Although the outcome may be more predictable, the results have limited innovation and lengthy delays in time to market due to:
This is where start-ups are able to compete with large enterprises. Instead of discussing, debating and trying to convince leaders this is a great idea, they experiment! Take Spotify as an example, they see their people as innovators and provide an experiment-friendly culture, by promoting key idea validation questions such as :
“The consequence in the business world is that start-ups who are more willing to explore new ideas systematically outflank and often demolish established companies trapped in exploitation mode”. . An example of this is Yellow Cabs in San Francisco being forced to file for bankruptcy protection because of ride sharing services like Uber and Lyft .
Organisations are realising that they need to adopt an exploration-based approach in order to compete with start-ups. Agile, Lean Start-up and Design Thinking can be used to aid organisations through iterative and explorative based approaches or experimentation.
An experiment is a hypothesis-led and time boxed approach to testing and validating ideas or solving problems in a rapid, repeatable way. Below is Deloitte’s high-level experiment process, which is enabled by a cross-functional team of between five to nine people using Human Centred Design, Agile and Lean Start-up methods to focus on the core problem/opportunity, to iteratively create solutions, and ultimately test a hypothesis. This results in reduced time to make better informed decision on whether to pivot, pursue or stop.
Whilst the above framework seems linear, each stage is not a formal gate. As the team goes through the experiment process, the team can and should go back and forth, which makes it feel more like the below Design Squiggle.
Whilst this framework helps provide a consistent means to experiment and to deliver tangible business insights/outcomes faster, the organisation as a whole will benefit if it promotes an experiment-hungry culture. Culture can’t be defined on paper, leaders need to define a set of behaviours and continuously learn and evolve their behaviours as the organisation experiments more.
Based on our experience, there are three key elements to creating an experiment-hungry culture.
1. Embedding ‘Test & Learn’ to ensure you are building the right product
As mentioned above, the only way to learn is through information, however traditional organisations rely on historical data, opinions and assumptions to build and deliver solutions.
High-performing organisations, place their customer at the centre of everything. They leverage the power of prototyping, which is an inexpensive tangible or intangible representation of an idea or hypothesis. It allows you to engage with real customers, users and stakeholders to rapidly test, validate and gather tangible data to make an informed decision.
Prototyping is different to piloting, as it doesn’t have to be a working solution. Rather it helps to rapidly create and validate if a hypothesised solution will remediate the problem. Examples of prototyping include, but not limited to:
Below is an example of how a product can transition from a low-fidelity prototype to a high-fidelity prototype, ready to be scaled and then released to customers.
Embracing a test and learn mindset, throughout the development process, with customers, users and stakeholders ensures the right problem is being solved, the solution is fit for purpose, and overall risk of failure is reduced.
2. Embrace and remove consequences of failure
In a traditional organisation, people work in an environment where mistakes result in consequences, and people/teams are individually called out for making the mistake. As a result, people will refrain from taking risks and rather follow command and control instructions.
For ‘fail fast, learn fast’ to be effective there needs to be a significant culture shift within the organisation. Employees need to be willing to get out of their comfort zones and feel comfortable that they won’t be punished. A previous blog post provides point of view on the five core elements to create the right environment for people to be Agile, of which, one is to celebrate failures, no matter how big or small. Employees will only be confident to experiment when they:
High performing organisations recognise that failure is part of the process and focus on not blaming individuals or teams, rather encouraging and promoting blameless post mortems. Retrospectives help with building a culture of openness/experimentation. It helps teams reflect on failures consistently with a focus on how we can improve and avoid the same mistakes.
Retrospectives are one mechanism, however organisational change will be limited unless the behaviour changes. Change starts right from the top, and leaders need to embrace the new ways of working and ‘walk the talk’ by acting as role models. Below are the changed ways of working, for leaders, that will help build trust and empowerment across the organisation to be able to adapt and deal with complex situations and environments.
3. Provide High Autonomy through High Alignment to empower team creativity
Traditional organisations are typically risk averse with command and control style leadership which leads to micromanagement. Organisations that are trying to shift their ways of working and embed an experimentation culture grapple with the top left hand corner and bottom left corner of the diagram below. The usage of the four quadrant model is a great way to demonstrate the adaptability of Agile, which is explained in further in detail in our Managing Business Perceptions of Agile blog post.
This is where there is high alignment but low autonomy, team leaders are good at communicating the right problem but also provide instructions on how to solve it. On the other hand, teams that have high autonomy to prioritise and deliver outcomes, are not always aligned to the organisational strategy and vision.
Leaders of high performing organisations, strive to provide high alignment and autonomy by focusing on what problems to solve, but let teams figure out how to solve it. This enables teams to come up with their own ideas and learn to experiment effectively because they have a strong understanding of the user needs and organisations strategy.
A holistic change approach is required to explore new ideas, which combines frameworks, culture and technology to compete in today’s fast paced digital environment.
The above learnings have just scratched the surface on how organisations today can operate in a fast paced digital environment which is highly volatile, uncertain, complex, and ambiguous. Technology is changing and allowing organisations to be more nimble and embrace ‘test and learn’ frameworks to help teams experiment.
However, to take a step forward in creating a high-performing organisation, leaders need to concentrate on creating an experiment-hungry culture. This means empowering strategically aligned teams with highly motivated people, who can solve problems and respond fast to market needs through innovative customer centric solutions.