Why the Lean Start-Up Changes Everything
Steve Blank

https://hbr.org/2013/05/why-the-lean-start-up-changes-everything

Incredible article. Two  concepts have been the literature for a while—Lean Startups and Design Thinking. They are fundamentally based on creating, rapidly testing and validating concepts. If we look at the Market Driven Growth model (MDG), we basically show how to do this from concept creation, concept validation, resourcing (often ignored in other discussions), and then execution. Leadership Framing, critical in MDG is again often ignored in discussions of these processes. .

Going forward, I will be sharing some tools that have not been incorporated into our Kellogg class but I think our valuable

Launching a new enterprise—whether it’s a tech start-up, a small business, or an initiative within a large corporation—has always been a hit-or-miss proposition. According to the decades-old formula, you write a business plan, pitch it to investors, assemble a team, introduce a product, and start selling as hard as you can. And somewhere in this sequence of events, you’ll probably suffer a fatal setback. The odds are not with you: As new research by Harvard Business School’s Shikhar Ghosh shows, 75% of all start-ups fail. 

But recently an important countervailing force has emerged, one that can make the process of starting a company less risky. It’s a methodology called the “lean start-up,” and it favors experimentation over elaborate planning, customer feedback over intuition, and iterative design over traditional “big design up front” development. Although the methodology is just a few years old, its concepts—such as “minimum viable product” and “pivoting”—have quickly taken root in the start-up world, and business schools have already begun adapting their curricula to teach them continually learn from customers. 

One of the critical differences is that while existing companies execute a business model, start-ups look for one. This distinction is at the heart of the lean start-up approach. It shapes the lean definition of a start-up: a temporary organization designed to search for a repeatable and scalable business mode. 

After decades of watching thousands of start-ups follow this standard regimen, we’ve now learned at least three things:1. Business plans rarely survive first contact with customers. As the boxer Mike Tyson once said about his opponents’ prefight strategies: “Everybody has a plan until they get punched in the mouth.”2. No one besides venture capitalists and the late Soviet Union requires five-year plans to forecast complete unknowns. These plans are generally fiction, and dreaming them up is almost always a waste of time.3. Start-ups are not smaller versions of large companies. They do not unfold in accordance with master plans. The ones that ultimately succeed go quickly from failure to failure, all the while adapting, iterating on, and improving their initial ideas as they continually learn from customers.

The lean method has three key principles:

First, rather than engaging in months of planning and research, entrepreneurs accept that all they have on day one is a series of untested hypotheses—basically, good guesses. So instead of writing an intricate business plan, founders summarize their hypotheses in a framework called a business model canvas 

Second, lean start-ups use a “get out of the building” approach called customer development to test their hypotheses. They go out and ask potential users, purchasers, and partners for feedback on all elements of the business model, including product features, pricing, distribution channels, and affordable customer acquisition strategies. The emphasis is on nimbleness and speed: New ventures rapidly assemble minimum viable products and immediately elicit customer feedback. 

Third, lean start-ups practice something called agile development, which originated in the software industry. Agile development works hand-in-hand with customer development. Unlike typical yearlong product development cycles that presuppose knowledge of customers’ problems and product needs, agile development eliminates wasted time and resources by developing the product iteratively and incrementally. It’s the process by which start-ups create the minimum viable products they test.

The founders of lean start-ups don’t begin with a business plan; they begin with the search for a business model. Only after quick rounds of experimentation and feedback reveal a model that works do lean founders focus on execution

The 10 Principles of Organizational DNA

https://www.strategy-business.com/blog/The-10-Principles-of-Organizational-DNA?gko=c5b42&utm_source=itw&utm_medium=20180531&utm_campaign=resp

Very interesting article

Amid the turbulence of changing business environments and personnel, 10 precepts have remained useful, for empowering people and unlocking any organization’s potential. 

1. There are only a few organizational personality types. Every company may seem unique, but in their enterprise-wide behavior, they fall into just seven behavioral patterns (in order from the least to most effective at execution): passive-aggressive, over managed, outgrown, fits-and-starts, just-in-time, military-precision, and resilient. People who take our online survey (the Org DNA Profiler®) continue to identify their company as one of these archetypes, regardless of industry and geography. That means that, no matter how pernicious a performance problem may seem, other companies have undoubtedly faced it before —and some have prevailed, often by changing their organizational personality. 

2. Companies are mosaics of personalities. Most companies contain a mix of personalities—having two or three, or more business units that fall under different archetypes. This is especially true of companies that have made major acquisitions. For example, a 20-year-old technology powerhouse might be a resilient organization. But its newly acquired health-tech division matches the fits-and-starts profile, characterized by smart entrepreneurial talent but a lack of collective discipline. 

3. Weak execution is prevalent. The connection between the organization’s personality type and how well the organization executes on strategy is always strong. When we analyzed our most recent data set (more than 20,000 respondents), we discovered that a whopping 48 percent fit a profile distinguished by weak execution. And 11 percent fit into the most vexing of those profiles: the passive-aggressive organization, in which people pay lip service to results but consistently undermine the necessary efforts. 

4. Strong execution is not self-sustaining. The 52 percent of respondents with a strong-execution archetype can’t afford to be complacent. In our experience, even a company with the most desirable profile, the resilient organization, must continually work to stay at the top of its game. For example, its leaders should relentlessly seek feedback from those closest to the market, encouraging and acting on criticism from customers and front-line employees, and taking action to address minor issues before they become bigger problems. 

5. Performance is based on interdependent factors. Your organization’s DNA is made up of four pairs of building blocks: decision rights and norms, motivators and commitments, information and mind-sets, and structure and networks. The way that the building blocks combine determines your company’s aptitude for execution. It is crucial, then, for companies that want to improve their execution to consider the building blocks as a whole and not individually. 

6. The org chart isn’t the solution. Many company leaders fall into a common trap: They think that changing their organization’s structure will solve their problems. They may remove significant management layers and temporarily reduce costs that way—but all too soon, the layers creep back in and the short-term efficiencies disappear. We see structure as the capstone, not the cornerstone. It’s better to change other formal elements first, like decision rights, motivators, and information flows, and then figure out the structural changes needed to support the revitalized company. 

7. Intangibles matter. Those formal organizational DNA elements are attractive to companies because they’re tangible. They can be easily defined and measured. But they’re only half the story. Companies often realize this after they’ve made significant changes—reassigned decision rights, reworked the org chart, established new incentives, or set up knowledge-sharing systems—yet don’t see the results they expect. That’s because they ignored the informal, intangible elements. These include norms (what people think is the right way to behave), commitments (the promises people feel motivated to keep) mind-sets (deeply held attitudes and beliefs), and networks (connections among employees outside the formal structure). They add up to influence the ways people think, feel, communicate, and behave. Until you learn to influence these factors, your efforts to build performance will be unbalanced. 

8. Decision rights and information flows deliver. Decision rights and information traits are twice as powerful as structure and motivators in driving organizational effectiveness. We analyzed dozens of strong-execution companies and discovered that information had the strongest correlation to execution, at 54 percent, and decision rights correlated at 50 percent. Structure came in at 25 percent. That may be why we see more and more companies making smart use of digital information technology to differentiate themselves. But these changes can also be low-tech. One company boosted its performance by setting up regular meetings to ensure that people at the top and the bottom of the hierarchy were regularly talking together, and information flowed more effectively among them. 

9. Informal factors change when you focus on what works. The best approach for improving intangibles like norms and commitments is to use them as a force for transformation. So, instead of trying to change the culture of your company, use your intangible strengths to help improve it. Suppose your company is losing customers despite having a deep commitment to customer service. By focusing attention on a few powerful and positive behaviors, you can draw out that commitment and boost customer retention rates. 

10. High performance can’t be isolated. Rarely do departments or business units work in isolation. Changes are more likely to last when they’re made holistically, across a company or division. Manufacturing needs to know what sales intends to sell, and sales, in turn, needs to know what marketing will promote. The more connectivity among different groups or functions, the more effective they can become.

WHY MARKETING ANALYTICS HASN’T LIVED UP TO ITS PROMISE


Carl F. Mela
Christine Moorman

https://hbr.org/2018/05/why-marketing-analytics-hasnt-lived-up-to-its-promise


A very important topic and really worth going to the article for greater insight

We see a paradox in two important analytics trends. The most recent results from The CMO Survey conducted by Duke University’s Fuqua School of Business and sponsored by Deloitte LLP and the American Marketing Association reports that the percentage of marketing budgets companies plan to allocate to analytics over the next three years will increase from 5.8% to 17.3%—a whopping 198% increase. These increases are expected despite the fact that top marketers report that the effect of analytics on company-wide performance remains modest, with an average performance score of 4.1 on a seven-point scale, where 1=not at all effective and 7=highly effective. More importantly, this performance impact has shown little increase over the last five years, when it was rated 3.8 on the same scale. 

How can it be that firms have not seen any increase in how analytics contribute to company performance, but are nonetheless planning to increase spending so dramatically? Based on our work with member companies at the Marketing Science Institute, two competing forces explain this discrepancy—the data used in analytics and the analyst talent producing it. We discuss how each force has inhibited organizations from realizing the full potential of marketing analytics and offer specific prescriptions to better align analytics outcomes with increased spending.

The Data ChallengeData are becoming ubiquitous, so at first blush it would appear that analytics should be able to deliver on its promise of value creation. However, data grows on its own terms, and this growth is often driven by IT investments, rather than by coherent marketing goals. As a result, data libraries often look like the proverbial cluttered closet, where it is hard to separate the insights from the junk. 

In most companies, data is not integrated. Data collected by different systems is disjointed, lacking variables to match the data, and using different coding schemes……..What’s more, most companies have huge amounts of data, making it hard to process in a timely manner. Merging data across a vast number of customers and interactions involves “translating” code, systems, and dictionaries. Once cohered, vast amounts of information can overwhelm processing power and algorithms. Many approaches exist to scale analytics, but collecting data that cannot be analyzed is inefficient.An irony of having too much data is that you often have too little information 

The Data Analyst ChallengeThe CMO Survey also found that only 1.9% of marketing leaders reported that their companies have the right talent to leverage marketing analytics. Good data analysts, like good data, are hard to find. Sadly, the overall rating on a seven-point scale, where 1 is “does not have the right talent” and 7 is “has the right talent,” has not changed between the first time the question was asked in 2013 (Mean 3.4, SD =1.7) and 2017 (Mean 3.7, SD =1.7)… 

……In light of the exponential growth in customer, competitor, and marketplace information, companies face an unprecedented opportunity to delight their customers by delivering the right products and services to the right people at the right time and the right format, location, devices, and channels. Realizing that potential, however, requires a proactive and strategic approach to marketing analytics. Companies need to invest in the right mix of data, systems, and people to realize these gains

Liberate Your Team with Clearer Processes
Elizabeth Doty

https://www.strategy-business.com/blog/Liberate-Your-Team-with-Clearer-Processes?gko=b4eb7&utm_source=itw&utm_medium=20180522&utm_campaign=resp

The age old debate/feeling about process---could not have explained it any better:

Effective processes are not about adding red tape — they are about enabling “flow.”

Ask the members of any team if they want to institute better processes, and be prepared for them to roll their eyes. “‘Better processes’ means ‘more bureaucracy,’” someone will mutter. But ask that same team how much they enjoy doing projects the hard way — duplicating efforts, scrambling to meet deadlines when someone drops the ball, or bearing the brunt of customer fury — and you can expect the floodgates to open.Why do people love to hate “process” but rail against disorganization? It is because most people associate processes with checklists, forms, and rules — the overseer breathing down their necks. Not surprisingly, leaders wanting to foster innovation and creativity are reluctant to institute such rigid controls and procedures. 

In one sense, this aversion to processes is justified. Historically, formal procedures have been used to maintain control, not to simplify work. Process engineers can get carried away with forms and spreadsheets. However, a culture of “winging it” can be just as frustrating. In their 2011 book, The Progress Principle: Using Small Wins to Ignite Joy, Engagement, and Creativity at Work, Harvard professor Teresa Amabile and developmental psychologist Steven Kramer show that employees are least motivated on days when they face setbacks that inhibit their work. And sociologist Randy Hodson has found that coherent production processes are a key driver of trust in management. Hassles, exceptions, and “gotchas” increase stress, sap the feeling of progress, and force your team to fight the same fires over and over. Even worse, winging it tends to erode safety and quality, and increase the risk of ethical drift. 

At their heart, effective processes are not about adding red tape — they are about enabling “flow.” According to management thinker Eli M. Goldratt, the real innovation behind Ford’s production lines, the Toyota Production System, and “lean” production is the shift from managing resource efficiencies in isolation to managing the flow of value generated by a system. Wherever there is an activity that happens repeatedly in your business, there is a potential flow. As a leader, you have the choice to leave this flow to chance, to control it, or to channel it. 

At their heart, effective processes are not about adding red tape — they are about enabling “flow.” 

Think of a river. If the banks are not strong and defined, the river dissipates across the countryside and has little force. This is like the operation in which employees are given little guidance, and whose efforts meander or collide. Another river may have locks that strictly regulate how much water can flow when and where. This is a company that tries to control every step every employee takes every day. The entire system is rigid and slow, because management can never keep up with the exceptions and re-prioritizations, and employees’ time is consumed by filling out forms and following procedures.

By contrast, a company with effective processes is like a river with strong banks. People’s attention and energy are channeled where they will have the most impact. The work environment, habits, tools, and methods guide people into doing things right the first time, based on a continually evolving set of shared best practices. No locks are required: Instead, employees are liberated to focus their creativity on developing new best practices, delighting customers, noticing changes in the competitive landscape, or tackling their company’s next moon shot. 

Designing processes this way involves looking at how work naturally gets done and where simple structures can increase the throughput of value — much the way Japanese gardeners will design the paths in a garden after seeing where people walk. There are several approaches that incorporate this idea of flow, including Goldratt’s “theory of constraints” (and its project-based counterpart, “critical chain”), agile project management, and lean production’s “pull-based” scheduling. Whatever method you choose, here are three core ideas that I’ve found lead to the biggest breakthroughs:• Make sure everyone sees the big picture. When people focus on efficiency in one part of a process, they suboptimize the system as whole — because they don’t weigh the impact of their actions on downstream groups or on the customer. To improve the flow, ensure everyone understands how their work fits together and how to prevent downstream defects through clearer handoffs, giving other departments sufficient lead time, and prioritizing based on overall goals. 

• Love your bottlenecks. As Goldratt has shown, every flow has a capacity constraint — a “Herbie.” Instead of blaming your bottleneck, treat it as scarce resource whose capacity should never ever be wasted. Does it receive top-quality inputs from other groups? Is it ever left idle? Do you squander capacity by constantly switching priorities? A meta-analysis of Goldratt’s methods found companies reduced lead times by 75 percent and improved on-time performance by 50 percent. 

• Do the right things more reliably. As management theorists W. Edwards Deming and Joseph Juran have shown, variability kills quality. Your team may produce excellent work most of the time, but if it is inconsistent, people will be forced to waste time checking to ensure no one drops the ball. Did you call the client with the update? Should I? You can reduce workload and increase the psychological experience of flow by identifying a few best practices and making them into solid habits. 

What flows do you need to master in your business? Launching apps? Integrating mergers? Hiring and retaining employees? Select one that will increase your firm’s competitive advantage, set a goal, and then support your team in using one of the methods above. Don’t wait until the fires are out — firefighting is a symptom of poor processes. Instead, dedicate small chunks of time to improvement, chipping away at the biggest time wasters first. A Pareto chart can help you rank problems by frequency or cost. Wherever possible, listen to your team and adopt their recommendations, but insist on rapid feedback so they learn which solutions work. In the end, working on processes in a collaborative way is one of the fastest, most effective vehicles for building engagement and translating values into action.