Thrive through disruption: 3 steps to be among the top 10%
- Posted on December 7, 2020
- Estimated reading time 3 minutes
The global pandemic is merely an accelerator to change and disruption that is already in progress – it’s not the cause. However, with disruptive changes now frequently occurring in increments of weeks, if not days, organizations must embrace a new mindset. Whether economic, societal, or technological, the unrelenting challenge for organizations through these regular disruptions is to keep focused on core business drivers, while still innovating new products and services to meet changing customer and employee needs.
At Avanade, we are seeing that a ‘rapid test-and-learn’ approach has become the default approach for top-performers to drive a responsive and resilient mindset across their teams – a philosophy of ‘spot the opportunity, then rapidly test, learn, evolve.’ Market dynamics are also cultivating greater competitiveness in innovation. For example, an organization we’ve worked with decided the market wasn’t ready for an idea they had prototyped 12 months ago and now another company in a different industry has successfully launched a very similar idea. A slowdown can often make organizations more conservative, but now is the time to be bold and expansive, using data and industry insights to make smart innovation decisions.
Research from MIT Sloan Center for Information Systems Research (MIT CISR) shows that top-performing companies adopt a three-step innovation approach: “formulate hypotheses about how a given innovation relates to business objectives, test the results of early experiments and prototypes, and then adjust and prioritize subsequent investments accordingly.” This is a more disciplined approach than fail-fast as it clearly makes the connection between innovation and the impact on business objectives. The drawback of traditional “fail fast” approaches using was that they could leave you at the end of a year or two with little to show in terms of business impact. That is why we partner with clients to drive an upfront focus on business value and then use a disciplined Agile approach to create a set of data points that continuously test and validate innovation impact.
To be clear, strategy cannot be sacrificed for speed at any point. Consensus on business objectives and purpose is key for this rapid test-and-learn approach to be effective. These objectives should be informed by a holistic strategy incorporating and bridging both business and technology. Different parts of your organization will also respond to disruptions at different velocities, so it’s critical to assess and continuously monitor 10 strategic levers to prioritize and balance investments. Significantly, these strategic levers identified by Avanade Advisory span investments in both operational efficiency and customer facing/new business models, which MIT CISR notes is necessary for an organization to become and remain Future Ready.
It's also key to embrace an outside-in mindset to deal with disruption: firstly, with respect to the ecosystem you operate in; and secondly, with respect to obtaining expert counsel. In terms of the ecosystem, look to engage and collaborate with your suppliers and partners to creatively optimize your supply chains and ways of working, rapidly scale capabilities, and enter new markets. The right external counsel will also provide you with insights and market intelligence to inform prioritization of investments. This is vital because industry boundaries have blurred and the market is moving so rapidly, making it difficult to keep pace – and often to recognize who or where your next competitor is. Best practices are also constantly evolving, so it’s necessary to augment intuition and institutional knowledge with trusted third-party insights to stay ahead of changing market dynamics. A single strategic input can have a huge impact on profitability, but also reputation, which is more pivotal to organizational success than ever before.
Research from Harvard Business School shows that less than 10 percent of organizations flourish after an economic slowdown. To remain competitive and succeed, historical siloes must be broken down. Adopting a comprehensive strategy approach spanning both business and technology will separate the winners from the losers.