In the new economy where accelerating change is an overriding force, the window of opportunity to capitalize on new ventures is getting shorter. Liken it to a baseball game where a team finds itself behind in the later innings. Outs are at a premium, and playing “small ball” is a much less viable approach as it would be with a lead earlier in the game. Enterprises that take a risk-averse approach to investing in opportunities may find themselves between a rock and a hard place in the bottom of the ninth if those investments don’t pan out.
The Three Modalities of Change
Investing in change can take on one of three modalities:
- Don’t invest in anything new but try to ride your existing offerings as far as they can go.
- Invest in new opportunities but serialize the investments back to back to minimize risks in case of failure.
- Invest in multiple opportunities concurrently with the expectation that at least one will succeed.
The first two modalities have historically been the typical path for most companies. This was fine when windows of opportunity were longer and the barriers to entry into the marketplace were difficult. But that is no longer the case. The third modality would be the equivalent of a batter adjusting his swing to better connect with pitches outside the strike zone or his preferred “wheelhouse.” With this approach he can foul balls off to prolong the at-bat, hit a flare to keep the inning alive, or better yet, drill a pitch into the gap or over the fence and win the game outright!
The Game Has Changed
Rapid advancements in technology have changed the dynamics of the modern economy. Resources needed to develop and operate production of new products and services are becoming cheaper and commoditized due to large economies of scale (cloud infrastructure and mobile computing are just a couple of obvious examples). Also, many products and services themselves are highly integrated with technology or fully digitized in a virtual world. As technology advances the lifetime value of these products and services are getting shorter and shorter. The window of opportunity is closing sooner than before. And this will only get worse as the rate of change is exponentially accelerating and is not linear as many may falsely assume.
What this means is that if a company continues to follow the first two modalities of investing in change, they may quickly find themselves behind the curve (or the fastball, as the case may be). There are plenty of modern examples of companies that have failed because they haven’t been able to re-invent themselves quickly enough to survive. J.C. Penney, Best Buy and Circuit City are just a few that have been in the media lately.
Bigger Risks, Bigger Rewards
Today, companies have to take bigger risks. Ideally a company may have some idea of what the future brings—or maybe not! So one way to approach this is to keep taking different kinds of swings at the pitches being thrown at you and see what connects. If you foul a few off or hit a seeing-eye single, you’re still in the game. If you anticipated the pitch correctly and hit that home run, it will pay for all the others that missed! And then some!
The idea here is not about avoiding risks; it’s about embracing risk as part of the process. Once you’ve embraced it, there are ways you can minimize the frequency and impact of failure. First you must accept the primary governing principle:
For every X number of failures you will have a single success that will pay for losses incurred from those failures with the delivery of a new substantial revenue stream.
If you are willing to accept that, there are things you can do to minimize risk.
- Get better at predicting where the opportunities lie by developing tighter relationships with your customers and using sophisticated analytical tools to gain insight into emergent consumer behaviors and latent demand. This will maximize the chances of success by focusing your investments on ideas that target this potential demand. So, use those advance scouts and statistics like a baseball team would to increase your odds of success.
- Shorten the lifecycle of product development through collaborative design both with your customers and employees. Basically, the collective insight and continuous feedback from your employees and customers allow you to get it right sooner while lowering overall costs of development. That way you can kill a project mid-lifecycle if needed, reducing the impact of failure. In other words, don’t be afraid to call in a relief pitcher or pinch hitter based on the advice of your coaches.
- Include your customers from beginning to end. Keeping your customers involved, ideally through collaborative product development and social media, gains trust, loyalty and buy in while developing a customer base that grows as the product is developed. This can vastly shorten the time to gain a return on investment while introducing these new customers to your other products and service offerings as well. While no baseball team would let its fans dictate its strategies on the field, every team knows that winning puts butts in seats. Enthusiastic cheers and sold-out stadiums are clear indications that a team is on a successful trajectory.
These are just a few things you can do. There are many others that can be applied depending upon the size and complexity of your organization.
The Bottom Line
Winners in today’s marketplace are going to be those that take chances and take many chances. You have to constantly be re-inventing yourself to survive over the long run and one way to do that is to keep swinging for the fences—especially in the later innings with the game on the line and a walk-off win is within your grasp!