Rethink Sustainable Business (6 of 7) Scaled Co-Creation

Warm welcome my friend to this seven-part series, where we answer:

How can businesses accelerate their profits by building a better world?

In Part 5 we looked at the first two accelerators (technology as well as metrics and disclosure). This time we’ll rethink the the last accelerator; scaled co-creation. Let’s explore.

Scaled Co-creation 3.0: What are you doing to innovate at scale?

NEW WAY OF THINKING ABOUT SCALED CO-CREATION: As an Industry Leader 3.0 we are scaling co-creation from team level to ecosystem level to be able to deliver the solutions the world needs.

This is where we bring everything together. Having landed in ambition, direction, and alignment, it’s time to realize value and impact. Co-creation is all about collaborative innovation.

NET-POSITIVE BY DESIGN
80% of a product’s environmental impacts is determined in the design stage. Coupled with the fact that poor quality and rework are sinkholes for profit, then innovating for impact is all about designing for quality over quantity, product excellence over timeline, and value over price.

Customers almost always aim to maximize their total value and minimize their total cost. They mainly pay with their money, time, or effort; also weighing in risks and opportunities in the total.

This means that opportunities and risks can outweigh the costs. Paying a premium for a more sustainable product, for example, because it is better for the world, can make the customer feel better about the higher price. But, how about everyone else?

A net-positive product makes everyone better off — at a lower cost. It is net-positive by design.

THE INNOVATION ACCELERATORS
Those that can successfully innovate will outperform their peers and secure long-term value. When transforming the business model to customer value, innovation through the Global Goals is no different from how innovation is usually performed. Let’s look at three powerful innovation accelerators.

1. WORLD-CENTRIC DESIGN THINKING — THE DOUBLE DIAMOND SWEET SPOT
Design thinking is a useful approach for the early stages of innovation. Three concepts are snuggly situated at the core of design thinking:

One: Sweet Spot is about exploring the intersection of a product that is net-positive (Global Goals), feasible (technologically possible), desirable (customer needs), and viable (economic success) to find your innovative solutions.

Two: Double Diamond is about making your thinking diverge and converge — leveraging your analytical and creative mindpowers — to go from problem to solution. Design the right thing and design the thing right.

Three: Learning Loop is about deep customer empathy. By iterating through six stages: empathizing with the customer, defining their needs, ideating the solution, prototyping the solution, testing the solution, and learning from the process, you can iteratively move closer to a solution that aligns with the customer need.

2. A SPEEDY MARKET LEARNING LOOP
Lean Startup is like the Learning Loop, but with a high focus on testing the market at speed and finding your ideal customer; providing desired products in the hands of customers faster. This is about working smarter, not harder, by developing minimum viable products (MVPs) close to customers, eliminating uncertainty, and validate learning. The heart of the approach revolves around 3 steps:

1. Ideate: Start from the Global Goals to define the space of opportunity in a hypothesis. Ideate prototypes and list the tests and expected learnings.
2. Prototype: Build one or more MVPs to validate the hypothesis.
3. Data: Measure, gather feedback, and analyze the data. Learn what in your requirements adds customer value and what does not. Go back to step 1 and include the learnings into your new iteration. Pivot completely if you find it to be the most effective way to reach the desired outcome.

Lean Startup is about building a business model around a specific need by listing the assumptions of the business model and testing the riskiest ones first. The goal is not to make money. The goal is to learn. Do people even want cars anymore? If the answer is no, you get to redirect funding to explore a better product instead.

3. AGILE
Agile, at its essence, values people, collaboration, and delivering workable product increments in short feedback loops. These intense cycles of experimentation help you understand the gaps between your value proposition, strategy, business model, and delivered value; increasing your ability to adapt to change — or even lead the change.

Agile and Lean Startup are closely similar. Lean Startup combines Agile with Lean customer development. But while Lean Startup tests the product against the market, Agile tests the product against the users. The key concern of Lean Startup is to avoid creating a product that people do not need. The key concern of Agile is to avoid creating a product that is not useful.

COMBINE AND CONQUER
All three innovation accelerators have their strengths but are not mutually exclusive. Take it one step further by combining them to drastically increase the chances of success.

THE OBVIOUS CHOICE
Look at the Global Goals, listen for what is important to your customers, and create insanely great experiences and emotional connections. Explore value that customers find more attractive, simpler, and cheaper; simply better. Play with behavior science, nudging, and gamification. Make your net-positive product the obvious choice for customers.

SCALED AGILITY
Agile started out as a way for teams to create better software in less time. Since then, it has in many ways become synonymous with change management and helping cultures evolve. Many companies feel the pressure to change their ways of co-creating to be more adaptive to their changing circumstances. Simultaneously, they are recognizing that it is hard to change people and culture. Leaders are learning firsthand what Peter Drucker stated long ago: Culture eats strategy for breakfast.

In this context, scaled agility, with high focus on leadership, is leveraged to help in the culture shift, while scaling agile ways of co-creating and better integrating culture with strategy.

To seize the $12 trillion opportunity, Industry Leaders 3.0 have a clear direction for their company. Running in the same direction comes down to alignment in purpose, strategy, and culture. This is where scaling agile from team level to organizational level can make a huge difference.

Leadership, especially, plays a key role in enabling a culture of motivated and purposeful people passionate about building great products that speeds up net-positive value at greater scale.

DANCE AT THE SPEED OF LIGHT
To propel innovation and co-creation forward it is all about creating flow. Remove impediments toward customer-centricity and maximize the intrinsic motivation of people. Ensure people have the right skills, resources, and incentives. Take a long hard look at your incentive structures and make sure everyone is aligned around:

1. Customers: From company purpose and value proposition focusing on activities that increase customer value in alignment with your strategy.
2. Leadership: Servant leaders supporting the organization in the best way possible and creating space for new ideas to flourish.
3. Financials: More time off or higher salaries with bonuses that are based on results of meeting net-positive customer needs.

With an inclusive, self-organized, and cross-functional organization of diverse, innovative, and passionate people experiencing equity, feeling psychologically safe, and having shared goals toward net-positive value creation and impact, you have solid dance floor to dance at the speed of light; rapidly co-creating great customer experiences and taking your impacts to the next level.

To understand the reason for scaling co-creation and impact another level, let’s look at wicked problems.

WICKED PROBLEMS
Wicked problems represent some of the most complex problems of our time, and the Global Goals represent the global needs to those problems.

These complex problems are interdependent, which means solving one helps solve another. For example, 17% of all food available is wasted. Reducing food waste can help meet the Global Goal of zero hunger. Even better, it requires no increase in the land devoted to crop cultivation, which often causes deforestation and loss of biodiversity.

The interconnectedness can also go the other way; problems causing problems. One example is when third parties are affected by the activities of others. A road construction project, for example, can cause water pollution downstream due to chemical runoff and erosion. This is a cost for which no suitable compensation usually is paid.

Another important aspect is that solving these challenges means addressing many of them simultaneously. For example, efforts to alleviate poverty will be restrained if the low-income population keeps falling back deeper into poverty due to a lack of affordable medical care.

TOGETHER WE ARE STRONGER
Data, innovation, and technology are crucial for breaking the barriers and solving these complex problems. However, no single organization can hope to solve them alone.

To turn wicked problems into business opportunities — and find successful solutions — then expand, engage, and transform your business ecosystem.

BUILD A CO-CREATIVE ECOSYSTEM OF TRUSTED PARTNERSHIPS
Recognize that you are not in a vacuum. Your company is part of a much wider and deeper ecosystem of both social and natural systems. And, to avoid irrelevance and instead feasting on the major slice of the $12 trillion pie, it is all about going beyond the limited opportunities, or even the status quo, in existing systems to enable system level transformations (new ecosystems, new markets, new value chains) and net-positive impact across organizational boundaries, by tapping into the power of weaving net-positive co-creation efforts end-to-end throughout that ecosystem.

WHO ARE YOUR DANCE PARTNERS?
What your interconnected web-like network of courageous collectives that look out for each other looks like is a unique orchestration and depends on your context and ambition.

Except for your board, employees, and shareholders, there are five levels of groups to consider (potential purpose for partnership in parentheses):

1. Supply chain and value chain: suppliers (secure human rights and labor standards), distributors and retailers (innovation), and market forums (collaborative strategies).
2. In/across your industry and sector: businesses (technology integration), trade associations (knowledge share), startups (speed to new products), investment bodies and banks (capital).
3. Civil society and nonprofits: academia (R&D), research institutions (IP), and citizens (societal innovation).
4. Government and non-systems: government agencies (environment for innovation), standards organizations and policymakers (proactive influence).
5. Unconventional partnerships: competitors, artists, and customers. Rethink the concept of customers. Instead of owners and users of your products, think of them as co-creators. Co-creators buy into your purpose and join your journey towards impact. By including them in the problem-solving process to produce shared value, the result is breakthroughs that would not have been possible otherwise. Think Airbnb. Think Uber. Think Roblox.

The important thing here is diversity of thought to help see beyond assumptions of how to solve the wicked problems as well as diversity of capabilities to leverage the cumulative strengths of the ecosystem to unlock value and revenues at scale.

Trine, for example, is an ecosystem of investors, mobile payment platforms, and solar companies, that boosts a greener and more equal future for one billion people lacking electricity.

RISK-SHARING MECHANISM
Except for the enormous opportunities presented by ecosystems to impact at scale, they are also a form of risk-sharing mechanism with the ability to better allocate risks and cut costs.

They can also overcome technical, economical, or other structural barriers that come with long-term technology development via pooling resources and investment.

7 ECOSYSTEM ACCELERATORS

1. Prioritize: Focus on a few shared problems and their boundaries.
2. Join forces: Collect a critical mass of partnerships with shared goals to trigger system tipping points.
3. Plan: Visualize the problems across the system and map a shared blueprint for action, including research, policy levers, and key technology.
4. Finance: Quantify the financing requirements and explore economic models to solve the shared goals in net-positive ways.
5. Pool resources: Look at what capacity is estimated, available, and needed. Assemble people and resources to build the solutions.
6. Upskill: Skill employees correctly.
7. Establish transparency: Embrace open innovation processes, borrow ideas, develop shared standards for sustainability measurement, and create integrated platforms to share data and insights. The lifeline of any network is information.

Whatever form it takes, the honey of openness, consistency, and transparency will make your partnerships sticky and attract all the right bees to your ecosystem, supply chain, and customer value chain.

SOLUTIONS TO GLOBAL NEEDS WILL BE GLOBAL TOO
From now on, driving systemic change on a global scale and developing radical net-positive ways of doing business in line with the Global Goals through ecosystem clusters will be an essential and differentiating skill for a world-class industry leader. The dance scene is set. Co-create net-positive impact at scale, share the risks, and seize the $12 trillion revenue opportunities.

We’re now ready for the final step; to put the AHA model into practice.

See you in the next and last one.

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