Has Business Experimentation Finally Come of Age?
As I left my second meeting of the day, the client, a COO of a global oil and gas organization said, I suppose we’re all asking the same questions? My wry smile and nod were enough to affirm her question.
The earlier meeting had been with a UK-based charity and yet, despite the very different size of the organizations and contrasting business sectors, the questions were the same:
How can we become a more innovative organization?
How can we develop more agile leaders?
The similarities of the two meetings made me question why we are still having these conversations. Why do these topics continue to be priorities for nearly every business?
Since its initial concept to uncover better ways of using software in 2001, it seems that a whole industry has developed around the quest for greater agility and innovation. Consultancy practices, academia and others have all contributed with theories and tools.
Googling “agile organizations” or “agile leadership” will produce 43 million and 100 million results respectively... so it is not through lack of discussion or guidance. Nor is it through lack of enthusiasm or commitment by organizations, as our client discussions over the last 20 years have proven.
Yet the quest towards a more experimental, innovative culture remains difficult. For larger organizations in particular, the questions above remain largely unanswered. But... the events of 2020-21 may have provided the opportunity to finally make the leap.
COVID-19 saw many companies facing existential threats that some failed to overcome. Others were compelled to reconsider their whole business models and working practices. This agility was seen in the ways that organizations, both large and small, adapted to support the health sectors:
- In the UK, McLaren was able to design prototypes and manufacture essential health equipment.
- In Spain, Acciona used 3D printers to manufacture protective masks.
- In Germany, Siemens produced 50 million antibody tests per month.
- In North America, Hewlett Packard provided connectivity kits to healthcare facilities.
The world surprised itself by the energy, goodwill and can-do attitude that it brought to the situation. It showed how organizations became more experimental; they improvised and became more curious. They were forced to cast aside the traditional structures and established business practices and became more agile.
However, few businesses have emerged unscathed and those aiming to survive and prosper will need to re-think. The past 18 months have driven organizations to become more experimental as the ONLY way to survive. Working practices have changed, flaws in supply chains have been exposed, consumer behaviour and customer expectations are different and new delivery channels have created competition.
A survey of 600 small businesses in the USA in August 2020 indicated that 92% had fundamentally changed their business model in the previous 4 months to address exactly these types of issues.
It may be argued that during this period there has been more impetus in the quest towards innovation in organizations than at any time in the previous two decades.
Now, as businesses rebuild and re-calibrate, there is an opportunity to capitalize on the experience. Companies need to reflect on what worked, what didn’t and what needs to be done differently. They need to look at ways of sustaining the energy, the mindsets and the creativity that played such a major part in discovering better ways of working.
They need to continue experimenting!
Below, I have drawn together 6 of the key characteristics of an experimental culture and framed them as questions. The questions are supported by reflections from business leaders to illustrate how their experiences during the pandemic align with the 6 characteristics.
More importantly, the observations show how they have already started to lay foundations for innovative organizations of the future. For these organizations, there is no going back.
1. How much are you learning from failure?
Sometimes we got it totally wrong, but we were quick to learn from it and try again. We had to remove the fear of failure - and that started at the top of the organization. It is something we need to retain going forward if we want to continue this journey towards a more innovative business.
2. Are you measuring the right things?
We talked about being innovative and 'agile' and yet our performance management system and KPIs were driving behaviours that rewarded people for sticking to well-drilled processes. We were measuring the opposite to what we really wanted. They will have to change for 2021-22 and beyond if we are to sustain the new culture we want.
3. Are your people equipped to innovate?
Our people were energized by the challenges. The business being under threat seemed to generate a ‘blitz spirit’. We were surprised by the way they engaged - proposing ideas and seeking solutions. They had the ‘will’ but their skills were intuitive and we have now committed to further training opportunities. We want to build the knowledge and create a spirit of enquiry and experimentation throughout the business.
4. Are you resourcing innovation?
With normal production and delivery processes disrupted we were forced to try out different ways of doing things. The outcomes not only kept us afloat but showed us we were capable of doing the same under ‘normal’ conditions. We now have more confidence in diverting resources to experiment with new opportunities without impacting the main business.
5. Is bureaucracy strangling you?
We were a bit like the medical regulation agencies who accelerated the drug approval process as we also had to expedite decision-making processes. We then realized how cumbersome and bureaucratic our current systems are. Having done without them, and not impacting performance, we are now looking at ways to eliminate needless hierarchies and strip control processes to the minimum.
6. Are you extending horizons?
During the pandemic, we were more curious about what others were doing. Not just our competitors and our industry but other business sectors. We gained a lot of ideas and were constantly curious. “What can we learn from them” was a mantra that paid off and that we will continue. It’s a big world out there and lots to learn.