The New Imperatives for a Modern Business

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Presentation I gave to an MBA class at George Fox University on what I feel are the 3 imperatives to managing a modern business.

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  • One of the most amazing things about 21st Century life is how fast things change. Not that long ago, it took a generation to build a business, and unless you screwed it up, things just puttered along.These days, The NYSE moves 1,000 points in an hour. Multi Billion dollar industries are created and destroyed in a matter of a few years. Change is perhaps your greatest competitive advantage.Keep your eyes open; Embrace it; Love it and success it yours.
  • Wicked problemsThe problem is not understood until after the formulation of a solution.Wicked problems have no stopping rule.Solutions to wicked problems are not right or wrong.Every wicked problem is essentially novel and unique.Every solution to a wicked problem is a 'one shot operation'Wicked problems have no given alternative solutions.
  • Can anyone think of an industry that is still relatively stable or one that you feel might be immune?
  • Be ready when your business environment turns into a jumpy house – and put a smile on like these kids
  • Who, why, how all coming together to create the ‘what’
  • Customer Development is simply about questioning your core business assumptionsOne Potential Benefit of embracing Customer Development principals is that it teaches you how to be self aware and how to question and analyze you beliefs. It encourages you to be honest with yourselfApproach the market with Naïve thinking
  • Emerged early in the 20th century – evolved in manufacturing, adopted by CPG in 1950s and spread to tech in last quarter of the centuryModel is a good fit when launching into an established well defined market where the basis of competition is understood and customers are known.. Few if any new companies is this trueMany existing companies are finding themselves in this same situation as their market changes and/or they create new productsWhats wrong:Where are the customers – not about the development of products but about development of customers and marketsFocus on first customer ship dateEmphasis on execution rather than learning and discoveryThe lack of meaningful milestones for sales, marketing and business devUse of product dev methodology to measure salesUse of product dev methodology to measure marketingPremature scalingCost of getting the launch wrongNot every new product is the sameUnrealistic expectations
  • Customer development is a framework for operating in Chaos. The objective is to see how quickly you can changes guesses into fact.Your opinion while interesting is irrelevant – Get out of the building.Minimum Viable ProductMinimum desirable product (Andrew Chen)Pain Driven Development
  • MVP: 3 min screen cast on hacker news – lots of immediate high quality feedbackPrivate beta launch video > 12k diggs. Beta waiting list jumps from 5k to 75k in one dayWOM – referral programs – give users tools to spread the loveSept 2008 – 100k registered, Jan 2010 (15 mo later) 4 mil -- 35% daily signups from referral -- 20% shard folders, viral features15-20% month over month growth
  • Interestingly enough – one of the downfalls of finding an early adopter is that it tends to be hard for them to not be in control. In fact we are in the process of unraveling that contract after micro pivots
  • Get out of the building
  • The company owns the vision – the customer owns the pain. You must weigh customer input against your vision carefullyMany look to confirm hypothesis rather than test themSean Ellis: Product-Market Fit requires at least 40% of users saying they would be ‘very disappointed’ without your product
  • Mihaly Csikszentmihaly
  • Dan Pink - DrivePink explains intrinsic motivation as a natural evolution from earlier modes of motivation. “motivation: 1.0,” is a biological drive — everything you’d find at the bottom of Maslow’s hierarchy. Like all other animals, we’re motivated by a need for survival. But as humans became more social and survival needs changed, “motivation 2.0” emerged and we began to respond to external motivators, or rewards and punishments. Pink maintains that conventional wisdom about what facilitates peak performance and optimal creativity is grounded in assumptions we make about motivation 2.0. We’re all familiar with bonuses and disciplinary action as modern management tools. But they don’t always work. In fact, they’re far less effective for people who are driven by “motivation 3.0”Type X vs. Type IX – externally motivated, short termI – internally motivated, long termThis does not mean that people will work for free – there is a minimum threshold for intrinsic motivation to kick in.
  • Autonomy – compassMastery – Painters boardPurpose – footprints towards an objective
  • Top of the curve: the effectiveness efficiency inflection pointDave Snowdens blog post "Antonyms for sense-making“Efficiency is about stripping away superfluous functionality so that you only have what you really need left. This is great if the context does not shift and has dominated re-engineering and six-stigma approaches. Effectiveness involves introducing a requisite degree of inefficiency so that the system as a whole can be more resilient and adaptive. Focusing on effectiveness is appropriate where the context is, or may shift before you can re-engineer your system.
  • Tim Brown (Ideo)Great design thinking results in  functionally and emotionally satisfying solutions where the emotional value is generated through the creation of meaning.A bee colony could be considered a beautiful example of emergence. What would a beautiful, innovative organization look like or feel like?Do I need a slide on business models?
  • There is no such thing as a standard business model anymoreBusiness models are key to organizational agility – not the act of having one but the ability to know what it is and be ready to change it as part of a macro business pivotThink about companies like skype and linux and how foreign these would have been 15 years agoAlex Osterwalders Book – community feedback around content developmentElegant business models form the foundation for a beautifully designed organization
  • OODA Loop - Observe, orient, decide, actPDCA (Demming Cycle)Everyone understands feedback loops, but there are two main issues:Companies forget the most important part – closing the loop-they may close the loop but the cycle time is so long any learning's are lost
  • What we are talking about today are the bottom 2 or three circles, however feedback loops can and should shift up in larger and larger increments. Scrum can actually be applied at all of these levels.
  • Cooking vs being a chef – seasonal herbs, types of meat etc.Some process’s you want to map out - accounting
  • The New Imperatives for a Modern Business

    1. 1. The New Imperatives for a Modern Business<br />Kevin Donaldson<br />
    2. 2. If you like these cartoons – they are created by Hugh Macleod<br />See Hugh’s entire gallery at http://gapingvoid.com/<br />
    3. 3. About the Speaker<br />Twitter: kevnd<br />kevin@donaldsoncrew.org<br />Ent. Community<br />
    4. 4. Familiar?<br />We have been successful up until now so why change a working formula?<br />We have all processes in our organization mapped and everyone knows what to do<br />We are big enough where there is no risk from small startups<br />My company/industry is stable – it has been around for X years<br />We know what's best for our customers<br />
    5. 5. It’s a New World<br />‘Global’ can apply to anyone<br />Disruption is coming to an industry near you<br />Wicked Problems are common<br />Chaotic Environments are normal<br />The nature of ‘employment’ is changing<br />Intersectional Innovation happens more easily<br />Geographic boundaries are meaningless<br />
    6. 6. Recording industry<br />Newspaper industry<br />Book/magazine publishing<br />Television<br />Telecom<br />Energy<br />Automotive<br />Education<br />What was once stable…<br />
    7. 7. Your organization need to match the relative stability of your environment <br />
    8. 8. 3 Imperatives<br />Why<br />Who<br />What<br />How<br />
    9. 9. Customer Development<br />Who<br />You must attack your assumptions at all times<br />
    10. 10.
    11. 11. This is Good…<br />(Customer) Your Product is Awesome<br />(You) Our Product is Awesome<br />
    12. 12. (Customer) I am Awesome! [because of your product]<br />This is what<br /> you want<br />
    13. 13. Product Development<br />What’s wrong with this model?<br />
    14. 14. Customer Development<br />Pivot<br />Question your core business assumptions and find a market<br />
    15. 15. Example<br />File sharing across computers<br />Hostile environment – many competitors<br />MVP: Learning vs. Launching<br />Put something in users hands to get real feedback<br />Know where your target audience hangs out and speak to them in an authentic way<br />Make something you will use<br />If your customers don’t think they have a problem – hard to pitch a solution<br />Traditional marketing isn’t always the best approach<br />
    16. 16. Example<br />First Pivots– market interest but expectations between cost and value not aligned<br />Second Pivot – found an early adopter/paying customer; no additional customers <br />Third (current) Pivot – new product; early adopter /paying customer to fund development<br />Currently 20+ clients with thousands of users; approx. at transition of customer validation and customer creation – still carrying out micro pivots<br />One Learning: In our market, software alone is not enough to satisfy the customer need<br />
    17. 17. Your opinion, while interesting is irrelevant<br />
    18. 18. The Customer Feedback Pivot<br />
    19. 19. Intrinsic Motivation<br />Why<br />‘Flow’ is a single-minded immersion and represents perhaps the ultimate in harnessing the emotions in the service of performing and learning<br />
    20. 20.
    21. 21. The carrot and the stick no longer have the power they once had<br />
    22. 22. Task<br />Time<br />Technique<br />Team<br />the urge to get better and better at something that matters <br />Autonomy<br />Purpose<br />Mastery<br />Yearning to do what we do in the service of something larger than ourselves <br />
    23. 23. Example<br />Google 20% Time<br />The real value of 20% is not the time, but rather the “license” it gives to work on things that aren’t important<br />Open Culture and a quest for the pursuit of ideas<br />Gmail, Google news<br />Larry/Sergey: Montessori school philosophy influenced their ideas on 20% time<br />
    24. 24. Example<br />Autonomy is required to support agility<br />Agile software dev practices promote autonomy<br />Team decide on ‘tasks’ to support goals<br />The Morning Dig: to provide individual focus time<br />Hiring process helps select intrinsically motivated people<br />Small teams eliminate slack and support a drive to mastery<br />A mission that supports a larger purpose – why before what<br />
    25. 25. Kevin’s Theory On Creativity<br />Effectiveness/Efficiency Inflection Point<br />Level/Type of Mental Stimulation<br />Creativity<br />Intrinsic Motivation Drivers<br />Most Organizations<br />40 hrs<br />Work Time<br />
    26. 26. Organizational Agility<br />How<br />Can organizational design be beautiful? <br />
    27. 27.
    28. 28. Small is the New Big<br />If you are small…<br />Elance.com, Alibaba.com, cheep/free software tools remove location constraints<br />Flat/elegant organizational design – don’t just create a doll house company<br />Don’t be ashamed of being/staying small<br />Focus, focus, focus<br />If you are big…<br />Create autonomous business units<br />Force teams/departments to function like startups<br />Constraints drive creative thinking<br />Move to Agile execution<br />
    29. 29. Business Model Agility<br />
    30. 30. “Agility…execute your OODA loop more quickly than your adversary”<br /><ul><li>USAF Colonel John Boyd</li></li></ul><li>Agile Thinking<br />Team Vision & Discipline<br />Validated Learning's<br />Customer Development<br />Initiate Change<br />People & Interactions<br />Results<br />Customer Collaboration<br />Respond to Change<br />Process & Tools<br />Comprehensive<br />Documentation<br />Contract Negotiation<br />Follow the Plan<br />
    31. 31. Example<br />History<br />Started in 1999 as a 3 person web consulting firm<br />2004 – decided to build project mgmt software for themselves for use with clients<br />Clients wanted the software for their use<br />Over 3 million users, millions in revenue<br />Intentionally small – 16 people spread across 8 cities and 2 continents<br />Invented and open sourced ‘Ruby on Rails’<br />Build products that intentionally are light on features<br />No long term plans because they are scary and usually wrong<br />
    32. 32. Example<br />Success in using Agile for Product Development<br />Using Agile (Scrum) as a management framework across the business<br />Annual Strategic themes > Quarterly Goals reviewed each quarter, translated into monthly or bi-weekly sprints<br />Add process when needed – test first<br />Capital constraints force agile thinking<br />One Lesson: Getting good at agile execution can put too much emphasis on throughput and actually enable a lack of focus<br />
    33. 33. Organizational Rhythms<br />Annual<br />Quarterly<br />Monthly<br />Weekly<br />Daily<br />Intra-day (Drive Gear of the Company)<br />
    34. 34. Mapped processes take you a step closer to business commoditization<br />
    35. 35. Lets Review<br />
    36. 36. Who<br />Why<br />Creativity<br />Time<br />How<br />
    37. 37. Books<br />
    38. 38. Enlightened Discussion<br />blog.kevindonaldson.me<br />kevnd<br />

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