In November, I was fortunate to participate in a study tour of innovative companies in the US, which is a fantastic opportunity to consider how these leaders operate. It was my third tour in the past five years, which has allowed me the luxury of reflecting on how innovation methods are evolving in high growth companies.
These days, the word and concept of design is deeply embedded with executives and over the past five years, it has moved from being a fringe concept to a common and agreed approach to innovation. Companies no longer refer to Design Thinking, as if it is some foreign body brought in from the cold from the 'creative faction'. They have adopted the principles of being human-centred in so many ways that it runs across most parts of their organisations.
The adoption of Design Thinking is now table stakes – if you are innovating and building intimacy with your customers. As one of the companies highlighted to the tour group, the traditional concept of competitive advantage as we have known it over the past 20 years is dead. The only way to remain relevant to your consumers and your employees is the ability to be nimble and connect to them on meaningful, and authentic terms. Reliance on the traditional forms of competitive advantage will quickly be eroded.
But there is no need to throw your toys out of the cot and take an extended break this Christmas. There are some clear implications for how to harness talent, embed design thinking and engage both customers and staff in the process of innovation.
For me the key observations were:
Traditional organisation structures are struggling to keep up.
Young people coming into the workforce – they think and interact differently to how many of us are used to. They expect a degree of autonomy because this is how they learned or were trained at university – and how they connect all hours of the day. The notion of 9 to 5 is a relic of the times. Kids will connect and work when it suits them.
The response to this was the adoption of Agile methodologies across a variety of organisations. Spotify has become famous for how it learned as an organisation to use small, agile teams to work together across locations and employed ‘coaches' to motivate and align the activities toward their overall strategic direction. Working in small time frame ‘sprints' gives people a sense of autonomy and freedom within a strategic framework to ensure things don’t deviate from the master plan.
This structured autonomy is critical to attracting and retaining the best talent to your organisation and to build flexibility and speed to keep evolving your product or service so that it continues to be relevant.
Be obsessed with the customer’s problem or need.
The old “fall in love with the problem, not the solution” idea is a bit cheesy these days, but its importance can not be undermined. It felt to me that globalisation, technology adoption and increasing pressure from smart start-ups means that established organisations are being organised so they can be more single minded around dedicated customer segments to address their specific needs. Without this focus agile start-ups will clip at your heels and take your market share regardless of your size. Coca-Cola and other traditional firms are learning and leading in these disciplines
It was really interesting to speak to a number of the delegates on the tour and challenge them to think about specific customer segments and niches, and what this would mean to their business. There is reluctance to do this because we are a nation of generalists. However, if you want to remain relevant, New Zealand companies will need to say 'no' more often than they say 'yes' to ensure they are obsessed with solving the right problems.
Story telling is critical, and its needs to be genuine.
We all love to be romanced. The role of brand and advertising has been about seduction and tempting people to your products or service and this hasn’t changed, but the channels and multitude of platforms to communicate your messages means that any signs of weakness or lack of authenticity will become quickly apparent and amplified.
We were repeatedly entertained by companies who were expert storytellers, informing us about why they cared about different challenges their consumers faced and what this meant for how they organised themselves around those needs. In the 15 presentations we heard during the 4 days, none of the companies talked about their products or services. They talked about why they were obsessed with solving different users’ needs and what this meant to their lives. And then how they attracted talent who cared equally about these issues. There wasn’t a features and benefits pitch in sight.
My take on this is that it is another spoke in the talent attraction wheel. Companies need to orientate around dedicated user problems and have teams that are passionate to solve those needs because there is no competitive advantage other than potentially passion!
So it was a fascinating week and the observations were pretty unanimous across the group of 25 business leaders on the tour. As New Zealand companies we need to become more focused and single-minded on the problems we are solving for our customers and consumers, and build management structures in our organisations that enable the talent we employ to flourish.
Matt McKendry is chair of DNA, a BBD coach, investor, independent director and innovation junkie.
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