I recently joined the board of directors of a mid-size company that had decided to drop a new business venture in which they had invested heavily. When I asked the board chair what went wrong, he said it was a well-executed project but a flawed idea.
We have been told that the best companies are learning organizations — that they experiment, fail fast and fail forward.
But how do you know which experiments to initiate in the first place? … how much to invest? … and how far to go before you pull the plug?
Large companies like Google have departments for new business development. Ideas are evaluated for strategic fit with the company’s mission, the future of technology, possible consumer interest and potential financial viability. And if a decision is made to proceed with a project, processes are in place to evaluate it at each stage. Smaller companies that do not have the same resources must still be able to answer these questions.
Most companies are operating in a world where their industry has been disrupted and they can no longer rely on their current business model to carry them into the future.
A focus on excellence means little when your business model is crumbling.
Being the best library doesn’t mean what it used to now that people have instant access to information through the Internet.
Being the best publishing company doesn’t mean what it used to now that people can easily and cheaply self-publish.
Being the best school doesn’t mean what it used to when people can watch a YouTube video to learn how to do almost anything.
Yes, it’s important to experiment and fail forward. But there’s a difference between failing forward and stumbling forward.
To choose the right experiments, you need to take a step back and understand what business you’re really in and how you can add value to the customer experience in today’s world.
For example, libraries were once primarily a source of information and provided access to books. They might install computers in a library as a creative application to their existing model. Or they can take time to look at the bigger picture of what people need and want in today’s world in relation to information and books.
Although people have instant access to information, they have difficulty evaluating its accuracy. What we need is information we can trust. Could libraries serve as trusted resources that curate information? What would that look like? Although people can easily download or order books from the Internet, they want to discuss what they are reading with others. Could libraries create opportunities for learning and discussion on topics of interest? In a world where people are increasingly connected virtually but physically isolated, could libraries offer an inviting community space where people come together?
Rather than trying out random ideas because they sound creative and potentially viable, the place to start is with a serious look at what business you’re really in.
Understanding your core business and competencies from the perspective of the value you offer and how that could be extended in the context of today’s world, will help you determine which products and services you should experiment with.
Yes, Jesse, understanding what business you are in and how you can add value to your customers are the first key steps to moving your business forward. Good article. Thank you, Dr. Dennis Reina
Agree! It it the first key step to moving forward, to problem-solving, and to making any major decisions. Much appreciation for taking the time to share for your insights, Dennis!
Excellent piece. I’ve seen organizations on the other side of the spectrum as well, abandoning an initiative early without assessing where the flaw occurs–was it the idea, execution, unanticipated external factors?
Thanks for pointing out that giving up too soon can be as big an issue. it comes back to needing clarity on your fundamentals… and if the fundamentals have shifted, needing to go back to the core of who you are. Other things that need to be assessed is where external things are headed in terms of technology, geology, etc, which is difficult to do in a VUCA world, but still needs to be considered.
Well stated and helpful today for me as we consider a couple significant shifts, but needing to assess those shifts against our vision and objectives.
Great to hear that, Jordan. Timely and important for you to do.
It’s like the classic HBR article pointing out the decline of railroads because they failed to recognize they were in the transportation business, not the RR business. Today we see RR embrace the new reality and partner with trucking. We see evidence every day as we observe trailers on trains. Ontological unpacking is essential. Thanks for reminding us Jesse in this age of disruption!
Great example of how companies need to look to their core purpose in order to re-purpose.
Great points. I like the analogy of the library and it’s possible uses in the future.
Thanks Aaron. Just one of many examples of how companies can rethink their strategies and where they want to experiment by gaining a deeper insight into what business they’re really in. So Glad to hear you found it helpful.
Another eye-opener indeed!
Thank you. So glad to hear you found this helpful.
Hi Jesse, as always a thought-provoking piece. As far as falling forward goes, I like the eBay story. In this case, they didn’t have much of a forward plan so much as an intention to try out things which looked like they should work and learn from when they didn’t. I like the idea of failing fast with course correction.
It’s a great story. The interesting thing about eBay is that it was always an auction web-site and that fundamental has not changed. If you’re clear about what business you’re in, failing forward works quite well, as eBay has demonstrated.