The 21st century will see a dramatic change in strategic thinking from global companies. This era represents a breakpoint or strategic revolution which will demand a culture based on innovation and imagination. A new culture is needed with new values, allowing people to express their creativity, and new organisation principles where the traditional boundaries of strategic thinking will be challenged in a way never seen before.
The 21st century is epitomised by speed of change, where the question is no longer just how much can you make and sell, but how quickly you can innovate and design new products and services. Traditional business models relying on strategies that were based purely on cost reduction only guarantee a ride into oblivion in the longer term. Companies need to move from familiar process improvement strategies, like 6sigma, to a totally new way of thinking. Are we as leaders, and employees, capable of making this transition? And how? These are some of the key questions we have to ask.
The imperative in this Creative Economy is a heavier reliance on the intuition of “designers” and employees. This reliance needs to be complemented with factory working prototypes that can be tested and piloted with customers. Digital technology will also make it easier to test more concepts in a low cost, low risk way.
Companies also need to spend more time listening to customers. Or do they? For the last twenty years management gurus have been pushing the idea that companies need to listen to customers, but many companies still fail to fulfil their potential. Listening is very valuable providing the speakers know what they are trying to say. Unfortunately, many customers do not know what they need, or at least are unable to articulate it. This is the reason why many approaches adopted by companies fail to yield the desired results.
How many customers would have known that they needed a mobile phone or an internet, if asked twenty years ago? However, it is vital that companies know how to understand the customer in a holistic way that gives them access to information never before realised. Core competencies based on living with customers, understanding the way they think and what they are trying to achieve is becoming more critical than being able to produce products that no one wants to buy.
The key requirement of strategy in this new era revolves around the ability to design in a consumer centric manner. Companies need to think of creating consumer experiences and not products, and having an ability to determine what the customer wants before they actually know they want it. The customer experience goes beyond products or services incorporating intangibles of which the product is a small part.
A culture based on creativity, innovation and imagination needs to be created which involves the development of people and the creation of systems and processes that devolve responsibility to the lowest levels, in an entrepreneurial manner. Leaders and managers also need to have this design mindset so as to fully appreciate what their people are trying to do.
An innovation and design culture requires extensive collaboration through business and social communities. One way of developing these communities is to develop intersections (as practiced by the Medicis), where people from different parts of a company, and different backgrounds have an opportunity to share ideas in an informal, non directive way. An environment is required where people can talk about everything, and nothing, challenging perspectives and developing ideas from different viewpoints.
The development of a design based culture also demands that the company understands it current innovation capability. How are new ideas developed and turned into economic successes? What works well and not so well are questions that need to be asked. How are resources currently used and to what effect?
Design strategy skills that need to be embraced within this innovative culture are:
Observation skills – the ability to see, articulate and understand customer behaviour and patterns. What shapes customer decision making?
Prototyping skills – visualising concepts and turning them into tangible products that can be tested through pilot programmes.
Storytelling skills – emotional stories need to be created to place new products and services into the realms of the customer describing how these shape the lifestyle of consumers.
Creating organising processes – ensuring that progress along the learning curve is rapid and incorporates the lessons learned.
The key stages of the innovation process are:
Idea generation – developing processes in the organisation ensuring a constant inflow of ideas from across the organisation
Idea assessment and evaluation – a structured process is needed to “weed” out inappropriate ideas to minimize wastage in costs.
Development – creating processes that turn the ideas into tangible products and services that can be piloted and tested for potential.
Commercialisation – processes turning the tangible products and services into money making entities.
Remember for every 1,000 ideas, 100 have commercial potential, 10 get developed, 1 makes it!
Summarising the key steps in becoming an innovative organisation are:
1) Develop a strategic design based leadership capability
2) Educate the workforce on creativity tools and techniques
3) Establish credible managerial processes
4) Establish an organisational structure that encourages collaboration
Prof. Rakesh Sondhi is the Managing Director of BMC Global Services