Responsiveness

Products and Innovation in the Covid World

Large companies have unique challenges. See why doubling down might be a bad idea.

Like most people, I’ve swirled in many thoughts about our Covid-19 experience. My first instinct was to call on my strengths to address the challenges I see. And my approach was to re-visit models and techniques I’ve used with many clients. But I realized that past thinking might not be helpful. And for many businesses, it may be a fatal mistake to double-down on existing strengths, those based in the “Before-Covid” world. Stick with me so I can explain.

Portfolio Triage

In my career, I taught product portfolio management to many large clients. And I would often find they enjoyed learning about “Portfolio Triage.” Within the approach, I have a favored analytic technique that creates a “Cumulative, Go-forward Frontier.”

The frontier graphic is based on values to be gained and money to be spent on development projects underway. “Go-forward” means to remove from the analysis all money and resources already spent or consumed. And it also means to recalculate the value to be gained based on up-to-date knowledge. So when you compute a discounted cash flow, you disregard money spent and investments already made. You also must use new knowledge to revise the diffusion rates you expect from your products.

Portfolio Managment Cumulative Frontier

Figure 1 A Cumulative Go-Forward Frontier is a plot of current projects underway. Project sorting and the Value Gain summation (y axis) and Go forward spend summation (X-axis) is based on a descending order of the ‘bang-for the-buck’ index.

Frontiers into the Unknown

Figure 1 is an example of the frontier graphic[i]. What’s important is that the approach usually finds that 90% of a development portfolio’s gain (value) will come from less than 60% of the go-forward spend. And the 90% gain usually comes from less than 50% of the projects, by count. The triage process works by peeling off resources from the worst projects on the frontier and then shifting those resources to create, not just execute, projects with greater value.

I thought this analysis would help companies refocus work in the new Covid world. But there’s a significant problem. The method only works when companies can forecast product demand and each project’s work effort. Then, along with new knowledge you need new and meaningful insights to conjure up better products and offerings. But the change into a Covid reality is like a cliff dive into the unknown. Forecasting and concept generation become challenging when you’re playing field is in flux.

Uncertain Scenarios

If you’re like me, when you confront tough business issues like forecasting the unknown, you call up friends who are experts in the topic. I did just that[ii]. And I learned that I needed to use other methods like Delphi research, then think hard and create a set of scenarios.

In the current environment, creating useful scenarios is difficult, if not impossible. It turns out crafting probable versions of the future is an exercise in optimism versus pessimism. This process may best be carried out with a Freudian psychologist at your side. You’ll need someone to explain how when people have no clue, their optimism may be delusionary reality, and their pessimism may be a fixation on death.

The uncertainty can be so significant that the numbers you come up with may reflect your childhood, not the situation. The current uncertainty is untenable. And forecasts are random conjectures.

More than a Virus

Today, the uncertainty is not just toward Covid-19. It’s also about the ensuing global recession or depression. It’s about fiscal and monetary policies, and political strains around the world. It’s about supply chains and competitive shifts. And most challenging is the uncertainty toward customers and markets. We may be seeing a fundamental shift in a customer’s Jobs-to-be-Done priorities, destroying demand for a company’s current products. Even the forecasting experts throw their arms in the air when they probe the uncertainties of concurrent changes in demand, supply, and behaviors.

It’s clear to me that as companies maneuver into and past our Covid experience, their focus should be on their products and service offerings. Products connect a company to its customers and bring in cash. And when current offerings suddenly don’t match customer needs, you’ve got serious problems. Sure, scenarios and forecasts can help you gauge the match between products and customer needs.  But uncertainty is causing huge needle swings on each gauge for each product, development project, and potential innovation.

Products – Resiliency and Responsiveness

A company’s leaders and managers need to see, in real time, the dynamic changes across their playing field. The problem is not about portfolio management or cumulative frontier analytics.  Most important, companies need a map that morphs with the playing field and that directs and re-directs product changes, work efforts, and decisions. This is not an easy job. It demands a profound combination of Resiliency and Responsiveness.

Resiliency: Think as if you’re in a boxing match with Mike Tyson. You’re scared out of your mind, and you just took a punch to your head that knocks you down. A plan won’t mean much. Remember the Mike Tyson quote, “Everybody has a plan until they get punched in the mouth.” Resiliency is squashing your fear and getting back on your feet. You hope that Tyson doesn’t take another swing and that others enter the ring to help hold back the boxing prowess. But don’t be surprised. Resiliency is the courage to get back up, punch after punch.

Responsiveness: Once you get up, you’ll quickly see that you need action to move your organization forward. More specifically, you’re likely to need fast pivots and coherent moves based on quickly accumulated insights. How fast can you and your colleagues combine their strategic, creative, and systems thinking to form useful insights? How fast can you create sharp insight from astute speculation and, if possible, rapid experiments? How do you do this remotely ― without laboratories, shop floors, or a customer interface? And how quickly can you translate new insights into succinct pivots and smart actions to drive notable outcomes?

Bouncing Forward

With Covid-19 on top of us, it’s too late to build greater Resiliency into large organizations. Now, its purely a leadership and management trait. And thankfully, you’ll see that trait instinctively at play. Most companies, both large and small, have leaders and managers with strong Resiliency skills. This is not just a sports hero or John Wayne type trait. It’s a human trait embedded in companies across the globe. And thank goodness because today resiliency is in high demand. And it’s become a cornerstone of organizational morale.

Resiliency is a business’s best recourse to the immediacy of Covid-19 and our lockdowns. It’s about  survival. But you’ll see that Resiliency won’t be enough to deal with the uncertainty of a global recession coupled to changed behaviors. For that, companies need to be Responsive.

Responsiveness comes after getting back on your feet. It’s about actions geared toward intelligent outcomes. For most, it doesn’t mean doubling down on existing strengths and past strategies. Nor is it to “re-balance” a portfolio of development projects. Instead, Responsiveness is the act of making changes deliberately to drive new actions toward meaningful outcomes. And this is precisely where smart companies – their leaders, managers, and contributors – need to step up. They must learn the foundations of smart strategy moves and pivots. And they must organize to form impactful new insights to form such actions. This is tough, but necessary, brain work.

A Change Tsunami

The main challenge is that the economic and behavioral tsunami that’s coming differs from anything businesses have dealt with in the past. We’re in uncharted waters. And reflexively pushing harder on an existing approach is neither helpful nor wise. For example, don’t think “lean” will spare you from the change tsunami. Lean is the removal of waste in any workstream. But if you’re doing the wrong work, the workstream may be irrelevant. And don’t jump to the conclusion that the best course is to sell harder. What you’re selling and to whom you’re selling it may also be wrong. You’ll find the stick-to-your-strength approach may fall short. And with major changes in economics and behaviors headed our way, being lean and doubling down on strengths may prove unwise. The approaches will waste time. And time may be your company’s most precious asset.

Instead, you must figure out how your products and service offerings must change, and how you must adapt your market approach and operating models. By definition, this is a strategy move or pivot, and It’s foolhardy to think you can wing it.

Key Tenants

For innovation, product development, and product management, there are three tenants to consider:

  1. Growing markets forgive mistakes. And shrinking markets exacerbate mistakes. There’s much that companies did inefficiently but succeeded because a market pulls their offering along. Now, for most companies, this forgiving grace is gone. Expect to see your past inefficiencies and mistakes rear their ugly heads. But remember, sunk costs are irrelevant. You can’t change what you did in the past. But you can stem losses, remove pain, and re-orient.
  2. Every organization’s culture is tied to core assumptions. But when things change, assumptions become flawed. And holding a flawed assumption too long can kill a business. The challenge is that an organization’s culture is based on many assumptions. They’re the glue that holds together a business model and a company’s approach toward innovation and products. Good, stable assumptions help companies avoid continually creating similar insights. They speed up decision-making and ensuing work efforts. But when things change abruptly, as with Covid-19, flawed assumptions can stun an organization.
  3. Smart insights are the fuel of good strategy moves. And how fast you form good insights matters. Plus, you’ll see that when change happens quickly, stupid or shallow insights can be enormously harmful. Still, even the best insights fall short if they don’t lead to great outcomes. And to deliver great outcomes, companies must combine newly formed insights with a deep understanding of product strategy moves and pivots. It’s the union of insights with strategy moves that drives positive actions toward great outcomes.

Converging Issues

Today’s big problem is that issues across the three tenants have converged. The assumptions upon which you’ve based products and your business model have become flawed. Markets have shrunken or are shrinking. And there’s a shortage of useful insights on which to base smart moves. Unfortunately, you and your colleagues may have found yourself in this position. And that’s truly a punch in the face!

My advice is to adhere to the first law of Resiliency and the first law of Responsiveness.

The 1st Law of Resiliency: “Exude courage, get back on your feet, and move forward. Expect more punches and bounce forward, not back.”[iii]

The 1st Law of Responsiveness: “Do not die because of flawed assumptions or poor insights. Be smart. Take actions that enable great outcomes.”

You must be a leader, no matter how bad the punch or the situation. And don’t expect only one punch. The problem with crises is that punches will continue, sometimes coming out of nowhere. You’ll find new punches rooted in sales, finance, or your supply chain. Or they may stem from market behaviors, economics, or competitive actions. No matter, you must spot them quickly, take the hit and bounce forward.

And your response will be critical. But don’t be surprised to see responses get bogged down in flawed assumptions, foggy insights, and poor knowledge of strategy moves and pivots.

Kill the Bad, Build the New

You’ll see that the first clue your organization has flawed assumptions is when conflicts arise among contributors. Somebody is holding a faulty assumption. You must figure it out and kill the erroneous assumption. If you don’t, you’re headed for a bad outcome. And to move forward, you must counter those assumptions with new, smart insights. That takes clear facts, sharp thinking, and a fundamental understanding of product strategy moves and pivots.

Big companies have an especially difficult challenge in responding to current world challenges. Without strong leadership and guidance, it’s near impossible to sever wrong assumptions, to build smart new insights, and to formulate and carry out good strategy moves. Yet the onus is on all contributors to get it done. If ever there was a time to push hard on coordinated Responsiveness, it’s now. Don’t shy from sharing thoughts and don’t mope in rejection. If you need to buy information or buy knowledge, do it. This is not a time to be penny-wise and pound foolish.

The Resiliency – Responsiveness combination is powerful. It isn’t a choice between one or the other. It’s the combination that matters.

A Call to Action

Examine your company’s product related approach toward the Covid experience and the changes that will come. Answer the question: How can my company reinforce Resiliency and ramp-up Responsiveness?  And with the answer in-hand, organize or reorganize and get to work.

My offer:

First… I cannot build scenarios for you. Nor can I create great insights for you or determine which of your assumptions are flawed and which are not. These are jobs you and your colleagues must do with your knowledge, understanding, and sharp thinking. I can, though, work remotely to coach and guide you and your colleagues to do these jobs better and faster.

Second… I can teach you and your colleagues what separates good product strategy moves and pivots from bad ones. And I can do this in a matter of hours, within the context of your business and products.

If you’re interested in expert help, just ask. Together, we can quickly lay out a sharp, responsive approach. And we can get the job done.

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Contact me at: Contact Us

email me at paul dot oconnor at adept-plm dot com

or call +01-904-373-5428

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[i] I first published on the Cumulative, Go-forward Frontier in 2009.

[ii] Thank you Ken Kahn and Greg Githens.

[iii] My friend Greg Githens suggested to me the notion of Bounce Forward.  You can find more depth on this in “Bounce Forward, The extraordinary resilience of leadership,”  by Elle Allison-Napolitan, 2014 Corwin

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