Open letter to a CEO
How to embrace innovation and delight your customers
Dear CEO,
You successfully led your company through the very turbulent waters that Covid19 pandemic posed you, but despite your capacity to sustain a profitable business, I believe that you still have many doubts about until when it will last.
You are investing in innovation, but your teams are focusing on incremental changes, since they do not want to lose focus on getting the most out of the core business. But the question remains, until when these incremental changes will be enough to keep your position in the market?
I am reaching out to you because I truly believe that I can help you on this!
I challenge you to follow these four simple steps together with me:
1. Get out of that analysis paralysis state!
Incremental innovation is important but if you want to lead your business to a more promising future, you must create things that are new and also deliver value to your customers.
There is no innovation without uncertainty, but with the right approach you will be able to deliver value to your customers and all other stakeholders.
If you are only willing to invest on something that will have a certain outcome, you are a follower, which is fine, but you will be exposed to the potential advantage that your competitors will achieve with your customers, when they deliver them more value than you through innovative products and services.
However, if you want to be on the front row, you must believe that innovation is the way, without seeking certain outcomes before you even start. Even with all the questions you have, it is imperative to start paving the road for these innovations to happen, now!
2. Build a credible function on the enterprise for innovation!
You cannot ask your teams to successfully run your business every day and find incremental changes to boost efficiency, and at the same rethink the way your company engage with customers. These are two opposite focus, where the short-term results will always prevail against the long-term results.
As a leader you must build an innovation function, side-by-side with what you already have for Operations, Finance, Marketing or Legal, and equip them with a very diverse set of people and tools to achieve results.
You want your organization to be ambidextrous and while this new innovation team will focus on explore new value hypothesis, the others will remain free to exploit your current business model by focusing on efficiency and short-term growth.
However, setting up this team will not be enough, because it is necessary to build a specific incentive system to reward their success, since long-term results will not be possible to measure with short-term metrics. When they start working you will not ask them about revenue, but rather about how risky are the assumptions they are making, and you will release to them incremental investments and incentives according to their progress towards a successful innovation.
3. Make innovation a repetitive process!
Looking for new products, services and new business models must be a systematic process, and you need innovation to be embedded in your daily processes so you can create new growth engines for your business.
To do that you need a management system in place that helps to go from an idea to a profitable business model, by fostering experimentation to validate the identified value hypothesis.
As an example, in IBM we use the Innovation Garage Framework, which is an iterative and repeatable workflow that allows to create, build, measure, learn and scale ideas that realize business value. At the end of the day, we want to get agile, change fast and build things!
The IBM Garage is an end-to-end model for accelerating innovation, helping teams to generate ideas, and equipping them with the practices, technologies and expertise to rapidly turn those ideas into business value. The study conducted by Forrester Consulting demonstrated that teams experience 10 times more innovative ideas, 67% faster speed to outcomes, 6 times as many projects into production and 102% ROI (“The Total Economic Impact Of IBM Garage”).
4. Go deep into understanding your customers!
Last but not least, you need to have a radical focus on your customer, on how to delight them and on how to create value for them and all other stakeholders.
I know that you are already very keen to understand your customer, but you mainly look to what he does and what he says. Now you must go further, and you need to understand what your customers are not explicitly telling you, but they are thinking and they are feeling about the products and services you are offering them.
By empathizing with your customer and combining it with all your knowledge about the market, you will be able to create outstanding products and services that will delight them.
I understand that all these steps might be overwhelming, but if you want to lead your business to a more promising future, the time to act is now!
With a radical focus on your customer, you should embrace innovation, leveraging all your incumbent advantage in data and talent, combining it with digital technologies and an ecosystem of partners that will help you to accelerate this path.
You can count on us to help you on this journey! But you have to answer the question: Are you willing to do it?
Sincerely yours,
Pedro Silva
IBM iX
