Winning by Design

Sounds very clichéd and over-used? There are folks who swear by this term and those who question its relevance in today’s rapidly changing world. The average shelf-life of companies is on the decline. As a result, focus has shifted towards higher speed in execution across the board – from strategic planning to product launch to Brand Building to Fulfillment to Growth & Profitability. Along the way, companies are having to make more and more complex decisions in less time and backed by less data. This is the world that we live in. Interestingly, there is enough scientific literature to prove that the human brain get exhausted after making complex decisions. We are more likely to make decisions based on intuition and cognitive bias than logic and data which by nature is time-consuming. The opportunists tend to follow the former while the purists tend to lean towards the latter!!!

Is Design still relevant?

The case for design is very strong. Classic Examples are the plethora of companies that have succeeded through sheer dint of design. I like to think of opportunity-led thinking being complementary to a design-based approach. Here’s how

Design Opportunistic
Step Change in Value for all Stakeholders Capture incremental value at every point
Critical for complex problem solving & avoid pitfalls in longer run (Type-1 decisions) Help remove obvious bottlenecks and win in shorter run (Type-2 decisions)
More applicable in core areas – Technology, Product, Process, People Applies in softer areas – Promotion, Partnerships, Pricing
Creates a significant competitive wedge and sustainability over a longer duration Value & Differentiation – Both are marginal & can be erased quickly

In the longer run, it is design that generates value and drives a differentiation for a firm. This is amply exemplified by the best firms in business – Apple, Google, Salesforce, Baidu, Netflix, Airbnb, Amazon, Alibaba, TripAdvisor, Zapier, DropBox to name a few.

The Design DNA

To win by design, companies need to operate with what I would like to call a “Design DNA” – a fundamental design-led approach towards solving problems, building products, developing process, delighting customers and in the process, creating sustainability in business. The design DNA guides everybody in their choices  – Choice of Products, Markets, Strategies, Business Models, Processes and Brand (Positioning & Communication)

In particular, I wish to call out 3 essential ingredients critical to the design DNA

  1. Clarity in Purpose – As broad as it sounds, Purpose is defined by a strong clarity in thought on what a business seeks to achieve. It answers fundamental (and mostly uncomfortable questions) around a business’ existence – also the part that needs constant evaluation to validate core assumptions. Have borrowed some of these principles from a popular book on multisided platform economics
    • What problem are we trying to solve? How big is the problem and who benefits from solving it?
    • Does our company’s offering solve the problem and do it better than others?
    • How hard is initial adoption and do we have a plan to achieve critical mass?
    • Do we need to rely on partners in the ecosystem to achieve initial adoption? If yes, are we capable of making necessary investments & deal with associated risks to lock in & scale through partners?
    • Do the prices necessary for adoption and growth enable us to make more money?                     

                                                                                                                                    

  2. ‘User First, Product Second’ – This is the brutal reality of our times. Unless you have a breakthrough product like a Tesla or an iPhone, most firms will fall in this category. Once the base value (which is addressing the core problem) is captured, products should be designed to delight users – nothing short of it. If its only an incremental improvement over substitutes, the value will not just be incremental but will be eroded very quickly. With the explosion of web and mobile, users are inclined to window shop for products atleast for the first time. Users are waiting to be delighted for aspects beyond attractive pricing – Features, Ease of Navigation, Utility, Ease of Payment to name a few. Users are expecting a valuable yet premium experience for them to migrate from their existing provider. Once they get hooked onto a platform, the next player is considered only in cases where the base value is not met. 

     

  3. Making Scalable Tradeoffs – This is part of the “ignition phase” of a company – The time when many tradeoffs are made to achieve speed of execution. Now tradeoffs are inevitable but a scalable tradeoff is one that can be seamlessly scaled going forward. For example, customer support in an internet business. This is usually driven by being agile in responding to customers and managing customer escalations on the go. While this solves the problem, inherently, it is not scalable as it is usually people driven. A scalable tradeoff in this scenario will look like this – Document & communicate processes for service delivery and fulfillment and cascade it throughout the organization. In due course, these manual processes get codified into automated systems to track customer journey and product usage, allowing human intervention only to detect & address gaps in servicing the customer. Another tradeoff happens in go-to-market – While it is ideal for every single user to buy our product, it is humanly impossible to reach & service every customer (either directly or through partners). This implies gearing organizational resources to tap your high priority segments even it means losing out on potential business from low value and non-scalable customer segments. While most of these trade-offs are generally reversible, there is a danger of less efficient solutions becoming part of organizational and people DNA as business grows.

So what does it mean for us?

The design rules apply more so in the Indian context where the average customer generally expects everything for free and is willing to switch if the platform or product does not meet their expectations. This is clinically achieved by the likes of Airbnb, Uber, Amazon as compared to their local competition. What these firms may have lacked in local context is more than made up in their design. Sure, they have deeper pockets than their Indian counterparts but their constant endeavour to rule by design separates them from the rest. After the great Indian startup meltdown, it is heartening to see some startups playing by these design rules  – SwiggyCoverfox, Razor Pay – to win in the market. We can expect lots more to follow suit.

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Creative Leadership

Over the last 10 years, I have worked across a variety of organizations – from a large International MNC in a steady state industry to a fledgling startup in the Fintech space. The goal of every organization is to maximize profits for its stakeholders. While the pace of change varies with industry, it’s intriguing to look at definite patterns that make certain industries and organizations more suited to disruption than others. I would like to call out Creative Leadership as a key disrupting factor.

In today’s era, every wannabe graduate wants to start the next big venture or be his own boss. For those who join traditional large organizations, the primary goal is to achieve some stability before they take the plunge. While not all may take the plunge, the dream certainly exists. It begins with an idea that can be converted into a product and is marketable in some ways. Now since the golden opportunity is so short-lived, people scramble to make the most of it which has spawned over 4000 startups in India in the last few years. A few of them have achieved unprecedented success while others had a much short-lived tenure. While the media has documented several reasons for the failure of startups from building the wrong product to rapid capital burn, I choose to focus on Creative Leadership as a critical ingredient for success in today’s business environment.

What does Creative Leadership mean? By no means, it precludes building a great product or operating as a monopoly or being reckless in burning cash. It means willing to challenge the norms at every step of your journey. It means imagining the world as it has never been perceived before and building it. It means innovating at a pace that leaves your so called competitors way behind (Case in point – Does anyone even consider Bing or Yahoo to be a competitor to Google search). While many would argue that creativity is an essential ingredient for all, I choose to focus on Leadership as in most businesses, ideation and strategy are the preserve of a few chosen people at the top. So it’s imperative that creativity prospers in this select group first.

Many times, the executives are wary of adopting creativity in leadership. This is particularly true in the Indian context where startups are constantly under the pressure of raising funds or meeting board targets or reducing cash burn. The reality is that creativity does not place any demand on any of this. All it demands is to juxtapose rational business thinking with imagination. The former is very easy to achieve as it’s mostly driven by numbers. The latter isn’t very difficult either but it does not come naturally given the snackable environment we live in. It’s much easier to crunch some numbers and decide on a certain course of action than stepping back and reason the actual problem we are trying to solve.

Recently, I have been reading Creative Confidence where the authors make a very valid argument on how business can grow only when the product design meets all 3 requirements – business viability, technical feasibility and people centricity. My sense is all the 3 requirements have a creative element to decipher. Business viability largely depends on the market where the intended product is to sell – Is it a new market or mere substitution of an existing market? Most executives tend to think their product is so radically innovative that it’s creating a new market (fallacy of positive attribution) whereas it’s merely shifting spends from an already established market. This primarily stems from the core competition that executives use to benchmark against. Does an online business in fashion compete with traditional fashion & luxury stores and other similar online fashion businesses or do they actually compete with other online businesses in food, travel, payments and the lot? The reality is it will be a bit of both. Remember we only have 24 hours in a day and fixed (although growing) amount in our wallet – That won’t change.

Technical feasibility boils down to the development of the product itself. If it is a software product, is it built to scale?  Can it be truly made modular so that organizations outside your own can use your platform to develop new products?  There was a time when we all thought that an engineer’s job is to get shit done (which it still is) but the era has dawned where the creative engineers (ones who keeps the ecosystem in mind) will begin to outdo the traditionalists. One area worth obsessing for the executives is if the so-called product is genuinely a product without any service wrapper or one that needs multiple wrappers to deliver value effectively. It’s not uncommon to see many next gen firms launching products with galore only to realize that the product really cannot survive in the market without extensive servicing support for its customers. No wonder companies are investing in automating their service operations to ensure their core product is able to survive and grow.

Finally, People centricity is an area that is more likely to get compromised once executives plough through the first two requirements. What makes a certain product appeal  to users – How much friction does it reduce for those who use the product? Which features really help to reduce this friction? Are these features part of version 1 or parked until later?  So if the product is designed to ensure all its features function properly but misses the larger point of reducing friction for its users, it will lose its value. It may have little to do with feature or functionality changes but more to do with actually governing the users’ product experience. Now, an online business can do little if the telco network doesn’t load the website fast enough but users will drop off for that very reason. For an online business delivering products and services remotely, it becomes critical to build trust with users at the point of consumption. We are entering an era where people trust the words of those who have used the product or their own experience. This is particularly true for very complex digital products. Push marketing can help place your product in front of the masses but scaling it will depend a lot on your users. It requires executives to think imaginatively about their product and brand – What do we really stand for and care for? Are we trying to outdo or worse match the nearest competitor in their claim or are we serving unmatched experiences to our users?

These are very exciting times indeed with so many young leaders entering the market from very prestigious backgrounds leading companies that will drive the future of India. With the government willing to put its weight behind Startup India, the stage is set for the next generation of entrepreneurs and young leaders to make their mark. They have the opportunity to create a huge impact in our nation, create jobs and lead thousands of young people in the future. There could have never been a better time to inspire and invoke Creative Leadership.