Today’s rapidly evolving economy involves a deep interweaving of the worlds of technology, science and business – although the connections are not always obvious.
By Herman Singh, CEO of Future Advisory
Businesses are sustainable money-making entities that exist to deliver products or services to satisfy a customer’s need for solutions. Science
demonstrates the fundamental laws to make new systems and processes predictable and encapsulated. Technology is a means of exploiting and scaling up science to create products to deliver a solution to a customer, and can play a disruptive role.
The true magic of business occurs when a firm can deliver more customer value at a lower cost than competitors while still earning an economic profit. The word “value” is key here as it is the relentless march for more, for less.
Value is defined by the customer’s perception and not the producer. Perception is important because sometimes value is created in the mind of the consumer from the way in which it is communicated. Customers derive value from a product or a service to the extent that it helps them perform a job and eliminate pain on the journey of performing that job or allows them to gain by scoring a new benefit.
If a job is to travel from A to B then the pain might be in the frustrating task of hailing down a taxi with widely fluctuating cost at the end. A ride-hailing app removes the pain of the varying time needed to hail down a passing taxi, and not knowing the quality of the vehicle or its driver, and of course eliminates the challenge of what the price will be and how to pay at the end.
The cutting edge of business competition today depends on which firm can best build business capabilities using technology to create and deliver this value quickly and at the best cost position. These capabilities are examples of applied technology and are not product or technology specific. The rapid explosion in technology capabilities combined with its ready and simple access to billions of customers everywhere all the time is what has transformed so many aspects of our life.
Looking back at the start of my career, there are four key lessons I would offer my younger self:
1. Experiment: The product development journey has increasingly become a scientific and predictable one albeit fraught with business failure due to the challenges of creating customer adoption – what is called achieving “product-market fit”. The latter is best illustrated with products like the recently discontinued Segway that was an excellent innovation but that lacked resonance with consumers in the market.
The most successful innovators today have a deep understanding of where value lies for customers and how they create meaning. They engage in a series of experiments to try to create small solutions, called a minimum viable product, to test appetite for the solution and constantly iterate this until they “stumble” onto a magical formula that hits the sweet spot between problem and solution
2. Create products that are simultaneously desirable for customers, technically feasible and financially viable: Innovators craft the ideal customer experience to make solutions desirable and ensure that barriers to adoption are lowered. Many messaging apps started with a basic texting feature before allowing for the exchange of audio, video and even files. This journey from science to solution is a process of gradually reducing risk and increasing certainty.
Constant and agile differentiating innovations are now the order of the day to avoid being perceived as a commodity with minimal utility in a marketplace that is crowded with lookalike competitors. This explains the benefit in businesses that provide the common shared platform components to everyone, allowing these players to differentiate rapidly and create competitive advantage more efficiently in finished products.
3. Understand the wider environment, to design the right things: This means engineers must be close to customer teams and become immersed in the complex and messy environment of understanding customers and their needs and how this affects business models. Innovators need to envision likely emerging needs to get to the future jobs to be done first. Innovation in business models can be as transformative as the application of the technology that underpins them.
It is therefore important that engineers are not dogmatic, locking into early ideas as this restricts agility. Insights on products, perceived value and business models emerge over time based on customer research.
4. Develop learning agility: Continue to develop skills in adjacent areas rather than remaining as a pure technical specialist to remain relevant in a world of exponentially expanding knowledge. Technology is pervasive, from the management and task tools used within the firm to the platforms on which these systems operate and connect to other partners systems all the way through to the data collected and the channels engaged.
Engineers are the true modern-day artists and often experts in multiple fields. The winners are often those who can combine multiple technologies in crafting a compelling new service.
The modern-day tech alchemist can integrate and combine disparate systems into a harmonious and powerful whole – the emphasis being on integration. This ability to use already proven solutions in a new build is what aids low-cost, low-risk innovation but also allows very rapid time to market – a key driver of success in a winner-takes all market.
This article was originally published in the first-ever edition of CIO Magazine, which is now available for download here.