Speed and failure improve
productivity and growth
In the wake of the 24th Conference of Montreal, businesses learn to increase their likelihood of success
By Jean-Luc Burlone
Impeccably planned and managed, the Conference of Montreal brought to the forefront enlightening ideas for governments and businesses alike. Among the themes that were discussed, this paper has identified features of methodologies that employ speed and failure to implement innovations that increase productivity and growth. Managers must adapt to the new business environment that is a sea of contradictions where old ways are obsolete and new ones are counter intuitive.
Democratic institutions react long after the consequences of changes have upended their expectations. Their linear decision making process (enquiry and so on) delays their response to the new situation. Authoritarian regimes have the ability to react more rapidly but remain at a disadvantage in the long run as their populations’ frustration is unvented.
Managers must adapt to the new business environment that is a sea of contradictions where old ways are obsolete and new ones are counter intuitive.
Businesses are less encumbered than states but even then, CEOs have difficulty establishing and implementing their strategy in an environment rapidly moving toward an unknown future. An increasingly digital economy has many rules that are still to be written and though speed can be costly, management is constantly under pressure to keep pace.
Go narrow and deep
The implementation of a technological innovation should be thoroughly discussed. A new process for either a new product or a new service may not be easily accepted when a business has an ingrained modus operandi. Beliefs, habits and fear may hinder its success. Management questions are then as important as their answers: Is the young staff embracing the innovation? Where is it needed? Where does it make sense? How will it serve customers?
Specific questions will reveal concerns issued from the business culture that should be addressed upfront. As well, it is necessary to explain clearly the need to establish an in-house efficient method that can be orderly and repeatedly applied to design and implement innovations. Transparency of purpose will entice understanding and support from everyone in the company.
The first task is to break down the innovation project into its main sections or constituents. Each is to be tackled separately and simultaneously by a knowledgeable small team and the most important sections are prioritized. Answers are then tested with customers whose feedback helps review not only the section itself but also a part or the whole implementation process.
Hence, a virtuous test-and-learn cycle is induced that brings customers closer to the company and more involved in the process that will result in a product or service that will meet their needs. It is a process where failure cost little as it triggers fast learning and hence rapid adaptation; it harnesses speed by reducing its cost while preserving its value.
‘… a virtuous test-and-learn cycle is induced that brings customers closer to the company and more involved in the process that will result in a product or service that will meet their needs.’
Thereafter, an intimate relationship is built with customers who favour the company over the competition. Speed is gained by the efficiency of the test-and-learn cycle and even more so when all sections move forward together. Management rapidly gets the feedback and adjust itself accordingly. (Businesses can reach a large scale and be fast to act at the same time.)
Nimble feet are required
Adaptability is the main advantage of this process. The ability to adapt rapidly is made possible by the small and multidisciplinary teams that oversee their assigned sections of the implementation simultaneously. Members of these groups are individuals selected according to their respective expertise. Together they offer the specialist-generalist talent – the winning combination of labour in today’s era.
Small and entrepreneurial teams, vested with the proper authority, are the brainy component of the test-and-learn cycle; they are well suited to build an intimate relationship with the customers and to manage their feedback. The ability to disband a team once the job is done and to form a new one to tackle an upcoming task strengthens the versatility of the process.
The nimbleness of the process allows for rapid and costless change to occur. It should be noted that two-thirds of successful implementation of technological innovations had to change their original concept significantly to meet their objective. The process improves implementation results by 250% and more. (Bain & Company)
Performing in a highly uncertain environment is challenging. The old ways no longer allow for the performance that is expected from management. New methodologies serve customers better and faster than old ones while they endow labour with authority and responsibility that render team members more productive and happier.
‘The ability to adapt rapidly is made possible by the small and multidisciplinary teams that oversee their assigned sections of the implementation simultaneously.’
More and more managers realize that businesses are facing a new era where monopsony reigns rather than giant suppliers; speed increases profits rather than risk; capital is abundant and cheap rather than scarce and costly; growth is fed by talents and ideas rather than capital and labour, and value is represented by owning ecosystems rather than assets (that can now be rented as needed).
Managers have to adapt or become “passé”. Being successful in the past will not bring success in the future. One may be lucky for now but as my brother once said: “Do not trust your luck, work on it.”
Jean-Luc Burlone, Ms. Sc. Economy, FCSI (1996)
Economic Analysis – Financial Strategies
The paper above reflects my opinion, induced by my participation to the International Economic Forum of the Americas – Conference of Montreal. A New Globalisation: Managing Uncertainty. June 11-14 2018. – JLB
Fellow of the Canadian Securities Institute (FCSI), Jean-Luc Burlone has an excellent knowledge of financial product management and holds a Master’s degree in economics from the Université de Montréal with a dual specialization in development economics and International economy – finance and trade.