Many corporations talk about plans in five-year intervals. They spend millions of dollars on research, strategic plans and consultants to get a sense of what their world may look like in the near future, and how to plan for it. They put hiring plans in place, align budgets and issue forward-looking statements.
The problem is, they are often wrong.
Some pieces might be right, or close; but they are almost always more wrong than right. Companies make expensive bets that are most likely going to be wrong.
So why do corporations continue to do them?
Once upon a time . . .
For the majority of large companies, their boards and senior leadership teams grew up in a time when five- and ten-year plans were common. Their industries moved more slowly, and there was less competition. Long-term planning made sense 30 years ago, when the world was a more predictable place and companies could make bigger bets.
With the democratization of technology, data and a new customer-centric model, the five-year plan is something that needs to be replaced. How about a five-year commitment, instead? A commitment to move forward, to be open to new ideas and offerings, and to be willing to be wrong early in the process, so that as mistakes are made, lessons are learned and the failures become valuable.
Let’s look at how to use this idea of five-year commitments to innovation, agile methodologies, and collaboration, and get rid of five-year plans that are wrong most of the time.
Go lean and learn
Eric Ries popularized the idea of the Lean Startup in 2008. The simple premise is that by shortening development cycles, startups can reduce market risks and bring products to market that have already had customer validation.
Build. Test. Learn. It’s a mantra that is taught across start-up communities. More recently it’s been applied to large organizations that have struggled to be as innovative and agile as their smaller competition.
By employing the same methodologies, global brands can build a hypothesis, use prototypes to validate assumptions with customers and learn from the feedback.
The goal is to use data and experimentation to lower the risk of innovation efforts. If the mistakes and lessons happen early enough in the process, then the costs of those lessons are relatively low.
The more prototypes a company builds early on — validating the important features or tasks its customers want — the better the chance the final product is something people will buy.
Fail quickly, move on
The labs that run out of Communitech often run sprints of one to three weeks in length. This means they are building prototypes quickly, and testing them with stakeholders two to three times per month. If they go down the wrong path, they only lose a couple weeks and can quickly recover at virtually no cost.
Now the challenge for enterprise customers is to be patient enough to follow the process. Sometimes product development takes longer than predicted and may not point to financial returns as quickly as one would hope.
It’s difficult in days of tight budgets to invest in something where the outcome is unknown. This is why a highly functioning Innovation Council is so important to a successful innovation strategy.
Without a strong Innovation Council, the process won’t be defended. The team won’t get the resources it needs when they need them, and the leadership of the organization won’t get the proper messaging around why the innovation strategy is so important.
As large organizations embark on innovation strategies, we must remind them that they will be wrong more than they will be right — but the key is to be wrong early so they can be right later on when it counts. They need to commit to a longer process without the burden of expecting immediate results.
Five-year plans are no longer relevant. Results will come when companies commit to agile methodologies and prototyping of the kind popularized by Eric Ries and the Lean Startup.
Finally, companies should leverage stakeholders, customers, prospective customers — and customers they’ve lost along the way — to help guide where their innovations are heading.
