Encounters with the Mythical Man Month

Train wreck “Question: How does a large software project get to be one year late? Answer: One day at a time!”  Frederick Brooks, 1975 (The Mythical Man Month).

I’ve been run-over by the mythical man month recently.  It’s been slowing down my startup, and it’s driving me crazy.  None of the start-up books or blog posts talk about it, but its as effective at slowing down my attempts to get to market as anything else I can think of.  Not familiar with the ‘mythical man month’?  I bet you are, you just don’t know it by that name.

As an example, some time ago, when I was working in well funded tech start-up, a consultant said to me that getting a successful product into the market would take twice as long and cost twice as much as the company thought.  It certainly seemed to be taking longer than management said and that would also certainly lead to more costs.  But twice as much?  No way!  The company had lots of great people, working really hard to get the product out the door.  It had well credentialed management (although in retrospect, perhaps less well credentialed at running that particular type of business) and was very well funded – to the tune of tens of millions of dollars in the bank.

As it tuns out, it took much longer than twice as long to get the idea to market – in fact, six years after I left the company, they the technology has yet to be fully commercialised.  So maybe that consultant was right…

Fast forward to the present day, and I’m facing the same problem again, only this time on a much smaller scale.  I have gathered a small group together to bring my idea to market, and the clock is ticking.  Why is the clock ticking?  Well, my idea is a consumer product, so Christmas sales loom large in the calendar.  I start every email to my business partners with “X weeks to Christmas!!” just to make sure my sense of urgency isn’t lost in translation.  But despite my best efforts to push things along, the mythical man month keeps biting me on the you-know-what.

If you’re not familiar with the idea of the mythical man month, it’s an idea coined by Frederick Brooks in his 1975 book, the Mythical Man Month (go figure..).  Brooks was a software developer and after some analysis he observed that  “adding manpower to a late software project makes it later”. What resonates with me more than that is the quote at the top of this post which points to the fact that it’s often not the major disaster that makes a project late, but the accumulated effect of lots of small delays.  Fred was sick on Monday, the photocopier was broken Tuesday. Wednesday the courier company was on strike and Thursday the computer network was down… Again. You get the idea.

In my case, the issues are things like aligning calendars, days of delay responding to email, family issues and many more.  Individually they don’t really matter, but I can feel time running through my fingers every time one of these little events occurs.

Is there a solution for this?  Well, good planning and agreed ways of working never go astray. Having everyone signed up to the project and business timelines also helps (going back to the start-up I mentioned above, the challenge of getting everyone to sign up to goals was so problematic, that the company’s internal slogan one year was ‘delivering on our commitments’…). But much like the problem is no single event, the solution isn’t one either.  And that’s where good management and leadership come in.  It takes a consistent and persistent effort to make sure everyone responds to emails (or use the phone!), to organise meetings well ahead of time, and putting some slack in the schedule so that time risks can be effectively managed.

This sort of discipline often gets missed in discussions of innovation, pivots, minimum viable products and the customer discovery process.  But it’s an important discipline to have or to develop when you’re in start-up mode.  Because as sure as VCs will want more than you want to give (!) there will be a range of things that you can’t control that will slow you down.  So when there are things that you can, you’d better make sure you’re on top of them, or you’ll end up being a lot more familiar with the mythical man month then you are at the moment!

Un-orthodox: getting to a new ‘right’

recordsUnorthodox [uhn-awr-thuh-doks]: adjective meaning not conforming to rules, traditions, or modes of conduct, as of a doctrine, religion, or philosophy; not orthodox: an unorthodox ideology.

I’ve been giving some thought to the matter of technological change recently, and more specifically some of the things that help or hinder that change.  One of the things that strikes me about this type of change is that many of the barriers are hiding in plain sight, as it were.  That is, we are so familiar with them, that we cease to see them as problems at all.

This problem is nowhere more apparent than in the electricity industry.  Unlike IT, for example, the electricity system has a long history of development that has created ways of thinking about the world.  A consequence of this is that best practice has been codified, and to some extent fossilised into ‘the way we do things here’.

For example, there is an implicit assumption that electricity systems should use alternating and not direct current to take power from the point of generation to the point of consumption.  This assumption comes from the early days of electricity networks, when the long distance transmission of power from large scale, economically efficient plants had to use AC power to reduce losses.  Of course the use of AC power systems has created a whole range of compatible appliances which further entrenches the incumbency of AC power.  But technology has moved on, and we don’t have to transmit power over long distances any more.  None the less we remain rooted in the alternating current paradigm, for better or for worse.

Another, more familiar example to some is the case of the sharing economy.  Companies like Uber are encountering a range of regulatory regimes around the world that aren’t compatible with their business model.  This leads to great wailing and gnashing of teeth, as the incumbents claim that Uber isn’t following the rules, and Uber asserts its ‘right’ to push the old system aside (technological progress is inevitable, right?).

Part of the problem is that technology is evolving faster that the regulatory regimes that took decades, if not centuries to develop.  And in that time, regulations (as well as other thought patterns) have become so embedded in people’s thinking, that they don’t think about them at all!  Arguments between technology boosters and the old regime then become akin to arguments that pit articles of faith against arguments based on logic.  The end result is conflict that can take some time to resolve.

The idea that differing world views created barriers to technological change is a relatively well established concept, but it can be relatively difficult to express simply (although as Einstein said, if you can’t explain something simply, you don’t understand it well enough!).  However, I had a small eureka  moment recently when I realised that the whole idea is captured in the more familiar idea of ‘orthodox’.

As suggested at the top of this post, orthodox implies accepted rules, traditions and ‘modes of conduct’.  So an orthodoxy defines (or reflects) a standard away of thinking that has evolved over time – that’s the ‘tradition’ part of the definition.  But the origins of the word are even more revealing, as its Greek origins means “having the right opinion“.

And there are lots and lots of orthodoxies around technology.  AC power in electricity networks.  Expected range in electric cars.  Licencing in taxi cabs.  Screen size in mobile phones.  You name a technology, and chances are there’s an orthodoxy – or rules, traditions and modes of conduct – that surrounds it.  The older the technology, the stronger the orthodoxy.

A key barrier to technological change is orthodoxies, because you may need to change the orthodoxy before a technology is adopted and that’s a very difficult thing to do.  Many technological innovations are unorthodox, almost by definition, as innovation involves newness and change.  Truly radical innovations are also truly unorthodox in both a technical and social sense.  In fact, this is largely what disruptive innovations are – successful radical innovations that drive technological and social change.

So it’s worth keeping the concept of unorthodox in mind when you think about technological change, particularly if you’re trying to produce that change through innovation.  The ‘rules, traditions, or modes of conduct’ that evolve with technologies can be powerful barriers to change.  That doesn’t mean that change can’t occur – it just means that you need to overcome the orthodoxy, as well as the incumbent technology if you’re going to be successful.  Just ask the good people over at Uber.

Open Innovation – Crazy Brave, or Just Plain Smart?

Lego design

I finished reading Henry Chesbrough’s book Open Innovation recently, and I have to say it makes sense.  But it’s also a little bit scary.  Here’s why.

Innovation is a balancing act.  It’s a balance between creating a great idea that could change the world with creating an idea that can actually be implemented.  It’s about spending cash to develop that idea, with preserving some of that cash for the long and winding road that’s yet to come.  And it’s a balance between keeping an idea secret for a time and sharing it so that others can help make that idea even better.

And it’s this last balancing act that can lead to problems.  I’ve been in a number of situations where the balance has tipped too far towards the secrecy side of things that there is a real reluctance to bring new people in on the idea at all.  Perhaps even worse is the situation where the innovator has become so convinced that they are the only ones that can solve the problem that they actively discourage ideas from others, even within the same company.

I guess another motivation for not wanting to bring others in on an idea is that it’s much easier to innovation in private, where no one can see you fail.  It’s pretty well recognised that failure is a big part of learning, particularly when it comes to innovation, but it’s not always an easy thing to accept that as an individual.  Your competence is on the line, perhaps your reputation and definitely your pride.

So the idea of Open Innovation can be a bit scary.  If you’re not familiar with the concept, Open Innovation involves partnering with others to give life to an idea.  Among other things, this can involve sourcing ideas from the outside, on the basis that not all the smartest people work for you.  It takes a really pragmatic view of the creative process and promotes an agnostic approach to sourcing ideas.  That is, it doesn’t matter where an idea comes from: if you can find it, and use it, then don’t bother creating it yourself.  And you don’t need to totally own an idea to benefit from it.  There’s lots of other ways to extract value from the ideas of others.

Open Innovation is often contrasted with the process of industrial innovation that dominated the 20th century.  In that distant past (!) large corporations owned ideas, from basic research all the way through to commercialisation and sale.  It resulted in some truly brilliant outcomes, but it also restricted the range of innovations that could be created.  After all, when innovation involves the combination of existing ideas in novel ways, why would you restrict the range of ideas to the ones you can generate yourself?  If we all behaved that way, Steve Jobs may never have breathed life into the mouse (amongst other things) by licencing the idea from Xerox!

So Open Innovation makes sense.  Why recreate the wheel when you can licence the idea from someone else?  And you see some great ideas coming out of this approach.  My favourite is Lego.

Lego has had its ups and downs, but one turning point for them was the release of the Mindstorms range of modular, programmable robotic Lego.  When they released Mindstorms, they found that people started hacking the basic code.  Initially that concerned them, but they soon realised that this hacking was creating features that Lego’s development team hadn’t even thought of themselves.  And it made the product better!

This was a serious learning event for Lego and led to some really interesting approaches to innovation.  At one stage Lego would let anyone create a new Lego design and they would build, package and ship it to you.  That was probably unsustainable, but what that program morphed into was the Lego Ideas program. This program allows anyone to design new Lego products based on existing Lego pieces.  These designs can be posted onto the Lego Ideas website and if they receive 10,000 votes, Lego will put the idea into production.

The brilliance of this approach is that it leverages the creative minds of millions of Lego fans around the world, a much more powerful proposition than the limited capacity of their own design teams.  It also ensures that there’s a market for a new idea before it goes into production, really de-risking the product development process.  Quite frankly, that’s both incredibly smart and just outright cool!

But that sort of approach is also pretty brave.  You need to be able to acknowledge that you aren’t the smartest person around (ouch!), that you don’t have all the answers (ouch!) and that you may need to share your idea to really give it wings (scary…!).  To a lot of people that may not sound like a big problem at all, but let me tell you, I’ve seen plenty of examples where that kind of openness to outside ideas simply wouldn’t only not be accepted, but it would be actively discouraged!  Even worse, I’ve seen situations where a company actively rejects the ideas of new employees, simply because they thought they had all the answers already.

As always, I try to think how these ideas would work if I were in the driver’s seat.  In this case that’s pretty easy, as I have a start-up and there’s no way I can bring the idea to market without using other people’s ideas. But it’s still a little confronting.  But open innovation makes sense to me (and to Lego!), but sometimes it can feel crazy brave to share your idea with the world before you’re convinced it’s even ready for to be released into the wild…

My Start-up Journey – Episode II

Startup Journey

Last week I kicked off this series of blog entries about a start-up I’ve created with a co-founder. The idea is to share what I learn on the journey, but before I start doing that, I’ll provide some background to the venture.  That way, future blogs will make a little more sense.

The idea for the start up had been rattling around in my head for over 20 years. Or to be more precise, the problem that led to the start-up product had been rattling around in my head for 20 years.  What changed more recently was that all of a sudden the problem could be solved in a much more elegant way  than it could two decades ago. Back in the 1990s I had a hardware solution in mind, but it was clunky and only solved the problem indirectly.  However, last year I realized that I could solve it through a combination of hardware, software and some smart analytics, all wrapped up into a package that I think will solve the  same problem for other people as well.  And in fact, my rather unscientific survey of friends, associates and other random people suggests that not only is this the case, but the number of people for whom it may solve the problem is big enough to support a business – or start-up in the entrepreneurial vernacular.

So that’s a good start, yes?  A realizable idea and a target market that just might be interested enough to buy it in volumes that make it commercially viable. Cool!

That was the easy part thought, the ‘ideation’ as it were.  Given that I know very little about hardware, or software, but something about the analytics, I needed to find someone to help bring the idea to market.  This, then,  presented me with my first significant decision; whether to find a co-founder, or simply pay someone to do what needed to be done.  The problem, of course, is that I didn’t know what needed to be done, so it could end up being a very open check book indeed. So I went looking for a co-founder to share the load.

That wasn’t an easy process though.  When I first had the idea for the product, I was lucky enough to have some people around me who had the skills I needed to get the start-up off the ground.  But skills aren’t the only thing that a co-founder needs to bring to the table; they also need to bring some passion and drive to the endeavor, otherwise they’re not really a co-founder at all.  More like an unpaid employee.  And that’s where I started – with an unpaid employee as a co-founder. That wasn’t what i needed, so I went looking for another co-founder.  Some networking led me to a suitable candidate, this time with the skills and the enthusiasm, but not the time (despite what I thought was the obvious financial appeal of the venture).  So that partnership died before it started. Finally a friend pointed me to a mutual (although old and slightly tenuous) acquaintance.  But this time it stuck.  Skills + enthusiasm + time = co-founder! And away we go!

Getting back to some of the basics of the startup, what I can also tell you is that the product could be said to be part of the ‘internet of things’; that is, it uses a wireless sensor and some smart analytics to provide decision making information to the user in a way that simply hasn’t been possible in the past. That’s kind of cool, as it’s a product of the times.

The product also has a very niche market.  This makes the potential sales volumes relatively small (although there are a number of market or product extensions that can expand this) but large enough to create a break even volume relatively easily.  The upside of targeting a niche nature is that there is no similar product out there.  There’s lots of products that almost compete with it, but not quite.  So there’s some market building to be done, but that should be relatively easy (you’ll have to trust me on that for now).

Another consequence of the market size is that it’s no Nest we’re creating here. But all going well, it will be profitable and more importantly, provide a platform for bringing other products to market. This is an idea suggested to me by an adviser to the venture and I think it’s a good one.  The first product builds a partnership, along with trust, skills, capability and a supply chain that can be leveraged into other ideas in the future. That’s the reason for the start-up’s name – Smart Sensor Technologies.  The ambition is to keep the risk low by starting with a single product, and leveraging the success of that one into others.  No success, no other products.  Not shooting for the stars, but not a risk free adventure either!

Which leads me to the penultimate I want to make – that I am a highly pragmatic about managing risk.  I’m not a dreamer (I’m a 43 MBA/DBA educated civil engineer, in case you want to know, so I’m past wild dreams to some extent…) and while my skills and knowledge are pretty diverse, I also know what I don’t know.  Which makes me very focused on building partnerships that allocate tasks to the people best placed to execute them (or in contract jargon, passing risk to those people who are best placed to manage it).  This might reduce the portion of the pie that my co-founder and I can claim, but it dramatically increases the chances of success in my view.  In some respects, it’s the same philosophy that underpins the idea of ‘open innovation’; that is, ideas can come from anywhere and you don’t need to control them all yourself.  You’ll see this philosophy play out in all sorts of ways as this blog continues over time.

The last point I wanted to make in this post follows on from an awareness of what I don’t know (and the fact that I like to know as much about an undertaking as I can before embarking on it; go figure, I’m an engineer at heart…).  Based on this awareness and a general interest in innovation, I’m going to find and follow a road map.  At this stage, that road map is laid out in Steve Blank‘s Four Step to the Epiphany. It might not be the right map, or perhaps the best one, but it’s the one I’m going to use.  So lots of future blogs will reflect on what’s in that book and whether it’s been useful or not.  Hopefully that ties my own experience to that of others and might even provide some guidance to anyone thinking about the start-up journey themselves.  However, if you know of other, good road maps, let me know!

Till next time…


My Startup Journey, Episode I

I have a start-up.

Well, it’s sort of a start-up.  More of a pre-start-up start-up really, but a start-up none the less.  It’s a very part time gig, but I have a novel (i.e. innovative!) product idea that I’m developing with a co-founder and we intend to bring it to market some time in the next 12 months or so.  The vehicle for that effort is “Smart Sensor Technologies” and the reason for that name will become clear in future posts.

The purpose of this particular post is to flag an intention to blog about my own, personal start-up journey with Smart Sensor Technologies.  The reason for this is that although I know a lot about a very small slice of innovation (I did a doctorate in the area, after all…) there’s a lot to know outside that small slice of innovation.  In an effort to improve the chances of my start-up succeeding, I’m trying to learn as much as I can about what goes on outside my slice, while also placing that learning within the context of what I already know.  I thought that others might be interested in that journey, as what happens to my initiative might be instructive to others.  Hopefully it’s not the learnings you get from the train-wreck kind of experience, but that would be useful too!

So I’ll interweave my start-up experiences with my other blogging to show what I’m learning and the lessons I’m drawing from the journey.  I’ll put that logo at the top of the page at the start of each start-up blog entry, and tag the posts with ‘start-up’ as well, so you can see the whole, unfolding journey in all its magnificent glory.

In discussing that journey, I’ll be a little evasive on exactly what the product actually is, at least until it’s advanced enough that we’ve got a firm launch date in mind.  Hopefully readers will understand the reluctance to not completely open the kimono at this stage of the game!

Given the nature of these posts, I would also invite comments from readers, as many of you will have experiences that are vastly different to mine, including many in the start-up space.  In that way, I can learn from you too.

So here we go.  An experiment in starting-up, as well as blogging about it.  Can’t wait to see where it goes!!!

Good at your job, but bad at innovation? Here’s one reason why.

Man & anchor

Innovating can be a challenge for established firms.  Some the reasons for this range from inflexible management structures, to unsuitable organisational design to inappropriate systems of incentives.  I can’t speak to all of those, but what I can speak about is the constraint that being really good at your job puts on your ability to innovate.

One of the things that makes people successful in their field is their mastery of the rules of that govern that field.  These rules can be technical in nature, for example engineering or accounting standards.  These are ‘hard’ rules that are usually written down and are relatively easy to identify.  Alternatively rules can be ‘soft’ in nature, for example collective organisation behaviours.  These unwritten rules often define what needs to be done to get ahead in a business, for example, expectations about the hours spent at your desk (as opposed to the quality of your output!).  In all cases, learning and mastering these rules tends to go hand in glove with a rise up the ranks.

While there are some obvious downsides to that, there are upsides too.  Mastering the rules means that a lot of behaviour becomes automatic, freeing you up to deal with more complex tasks.  This is one of the things that distinguish more experienced practitioners from the less experienced ones.  By being familiar with the rules, mundane activities can be completed much more efficiently as you don’t have to sit down and think about what needs to be done – you just get on and do it.  This allows you to add more value in a context where productivity is important.  So mastering the rules is a valuable capability in most business environments.

Where it falls down though, is where the environment is uncertain and non-standard behaviours are required to be successful.  This is one of the reasons that a transition from a large, established corporate environment to an entrepreneurial one can be difficult.  Predictable action based on established rules can be totally at odds with the dynamic, undefined and unstructured nature of small, start up endeavours.  Conversely, the transition from a fluid, open environment with unformed rules into a highly structured business can be traumatic as well.  What makes you successful in one isn’t likely to make you successful in the other.

This problem is even more evident where innovation is the name of the game.  Those ingrained rule-following abilities that are fused into minds over the years can be a real barrier to developing truly innovative ideas.  This is largely because follow a set of rules provides a predictable set of outcomes; this is the point of having rules in the first place.  However, innovation involves the deliberate use of uncertainty which can mean breaking the rules.  But really successful people have embedded these rules into their behaviours and make them part of their habits, habits which are difficult to because people are no longer consciously aware that they govern their behaviour and thinking.

A couple of recent experiences highlighted this problem for me.  Firstly, I had an engagement where a client had asked an engineering firm to come up with some cost savings on a new technology.  A group of engineers were gathered around the table to brainstorm the issue, and the discussion centred on optimising the engineering of the current solution.  That was great, but it wasn’t going to bring about the step change in costs that the client needed.  Refining a design based on ‘normal’ or ‘good’ practice wasn’t going to be enough.  The rules had to be broken.  Eventually we came up with an innovative solution, but it took time to break the team out of their engineering habits on what was a relatively simple piece of work.

A second experience involved a tender for significant piece of engineering infrastructure.  Upon reviewing the preliminary design provided by the client, the (very experienced) engineering team decided that it had been well designed.  However, to win the job, the business needed to bring innovation to the table.  By agreeing that the design was done well, what the team was saying was that the rules that they use for designing this type of work had been effectively applied to this project. This was a great validation of our systems of education – it had produced a cadre of skilled engineers that could efficiently design large infrastructure projects in a similar way, despite their differing organisations.

However, drilling down into those comments it became clear that a whole range of assumptions weren’t appropriate for this particular project.  The high standards normally applied to public projects of this type weren’t mandatory for this work, meaning that far more radical approaches could be taken.  Old rules could be abandoned in favour of (in this case) better ones.  Once the veil of familiarity had been lifted from the team, a whole range of innovative ideas were thrown into the mix and the challenge become one of narrowing them down, rather than coming up with them in the first place.

Both of these examples highlight that part of the challenge to coming up with innovative ideas is finding ways to see what is taken for granted.  It’s a forest for the trees type of problem, but there are tools that can help the process.

One is to get someone involved who is completely unfamiliar with the task at hand. They ask the ‘really stupid questions’ that can allow a team to see what assumptions are being made without even knowing that they are being made.

Another is to use the questioning technique outlined in the recent book by Warren Berger, called A More Beautiful Question.  This book is focussed on asking questions rather than moving straight into solutions.  Berger defines A More Beautiful Question as ‘an ambition yet actionable question that can begin to shift the way we perceive or think about something – and that might serve as a catalyst to bring about change’.  His basic framework for achieving this is start by asking ‘why’ something is as it is at the moment.  This is followed by asking ‘what if’ and then ‘how’.  To get a feel for how that works, you’ll need to read the book, but I like the process because it forces a rethink of assumptions that underpin how things are today, providing space to think about innovative ways to approach old problems.

Another good reference is Gamestorming by Dave Gray, Sunni Brown and James Macunufo.  The book is a collection of techniques for idea generation and development aimed at creating breakthrough innovations.  The book is particularly useful because it presents a wide range of tools to choose from, all of which are set into a context of creating change.

Above all of these though is the explicit recognition that the things that make people successful in the past won’t necessarily make them successful innovators in the future.  The things that make someone an engineer, accountant, technician, IT guy or programmer are also the things that can constrain their imagination and ability to generate out of the box solutions.  The good news is that it doesn’t take much to turn that around.  Breaking the habits of a working lifetime can actually be relatively easy once you recognise where you’ve come from and how it shapes your thinking.  The most dangerous course of action is to assume that what’s served in the past will serve in the future.  Once that hurdle is overcome, what makes you good at your job today can make you even better at your job in the future, as it opens a whole range of possibilities that the rules simply don’t anticipate.

Coming up with a strategy is easy; coming up with the right strategy is hard!

The Thinker

Coming up with a strategy is easy; coming up with the right strategy is hard!

I was reminded of this recently by a couple of events.

The first of these was a post by Tim Kastelle, where he outlined the advantages of a small company over a larger one.  In that post, Tim points out that large companies can become victims of their own success.  They achieve growth through a successful strategy, which reinforces the value of that approach, making it increasingly difficult to change.  Size also brings with it the need for systematic planning and execution processes which increase that difficultly due to set planning and review cycles.

In contrast, with little to lose, small companies can change direction almost at the drop of a hat.  Without ossified corporate planning processes, they can be nimble, skirting around large incumbents by changing directions as new information and understanding emerge from markets and the product development team.

Of course, this can be a double edged sword.  I have worked in companies that have changed their plans so often and so quickly that staff have never had a chance to add value through execution.  Chopping and changing direction may be all very well when those changes are worked through at the board, or founder level, but at some point everyone else needs to understand where the company is going and how they can help it to get there.  While it’s all very well to expect people to be as flexible as entrepreneurial founders, that’s often a lot to ask.  Flexibility without communicated understanding simply leads to chaos.

The second thing that made me think about the challenges of developing a viable strategy was a guest lecture I did at the University of Queensland.  That lecture was aimed at conveying the challenges of strategy under conditions of uncertainty.  Uncertainty can come from a staggering number of areas, with product/technology and market uncertainty being the usual suspects.  The reason for this is that competitive advantage is usually derived from either a novel product or service, or from a novel business model.

The importance of the former was highlighted in a presentation by the Australian Institute of Company Directors where a novel lighting technology was described that allowed an established firm to take a dominant position in retail lighting products.  There wasn’t any business model innovation involved here, just a really good idea brought to market through existing sales channels.  The strategy was relatively easy to come up with in this case.

Reading Henry Cheesborough’s book on Open Innovation recently reinforced the importance of the latter.  He describes some excellent examples – including some from Xerox PARC – that demonstrate that a novel product without a viable business model (i.e. strategy) can be an interesting waste of time.  A great idea without a business model to extract value from it remains just an idea.

Another idea contained in reading material for the lecture I did identified the concept of competing on the ‘edge of chaos’.  I am sure that working at many of the current darlings of the new wave of digital innovation, like Uber or Airbnb, probably feels like working on the edge of chaos at time.  Their strategy will be evolving as their product meets their customers, and market requirements impinge on how their business model operates.  Uber in particular is striking unexpected regulatory and legal hurdles in a number of markets. The very public face of this process seems to be a lot of sabre rattling, with Uber voicing an unwavering faith in the validity of its business model and regulators voicing an unwavering faith in their, well, regulations. In the background though, Uber will be refining their strategy on a regular basis, based on emerging information from the marketplace.

This type of dynamic strategy is difficult to pull off, which is one of the reasons that many otherwise well-resourced start-ups with good ideas fail.  The commitment to an innovation can lead to strategic inflexibility early in a company’s lifecycle, as well as later in it.  One advantage that businesses based on digital products have though is that they can iterate, or pivot, relatively quickly.  However, businesses that are involved in the development of manufactured products have less flexibility.

Take, for example, a developer of a clean energy technology I worked for at one stage.  They were in the process of developing a product using a small number of multi-skilled people.  They potential of the innovation brought investment, which allowed them to hire more specialised people, which in turn allowed the product to make significant leaps forward.  However, the investment meant earning a return, and the company had to invest in manufacturing capability to get the product to market.  So they had to draw a line in the sand and commit their limited resources to building a highly specialised and expensive manufacturing line, thereby largely locking their design into a particular form – and excluding some other, promising possibilities.  Their market was understood relatively well, and although it was pretty dynamic they knew where it was likely to go.  As a result, they could match their strategy to the market need with some precision.  However, regular the ability to pivot regularly wasn’t really available to them.

Take another example of a company I’ve worked with recently which is working on advanced, next generation medical equipment.  This company has what it believes to be a disruptive innovation.  That is, an innovation that is lighter, cheaper and better performing in a market where the dominant incumbents are competing on old technology.  However, this company also has a competitive, current generation technology in an advanced stage of commercialisation.  The strategic challenge for them is whether to dedicate their resources to making money out of the current product, or divert their attention to the next generation product.

Classic disruptive innovation theory would suggest that they back themselves with the next generation technology.  But open innovation suggests that the incumbents might actually have the next generation technology too, but have chosen to continue ringing profits from their current generation technology before they disrupt themselves.  In this context, the small company can either make some (relatively!) certain returns now, or make nothing and bet the farm on their ability to capitalise on their next generation tech.  It sounds like a relatively simple choice, but when you’re living on borrowed time – or money! – then it can be hard to see through the fog of uncertainty to decide on a path.  And with this type of technology, pivoting is an expensive and time consuming action that can open the door to competitors as you regroup around a new direction.

There is no simple answer to this though; there are no strategic silver bullets.  Good solid planning and rational thought processes are a start.  Deriving an understandable strategy that can be communicated and executed is another.  So is retaining the flexibility (and the humility!) to junk prior investments in an old strategy in favour of a new one.

Perhaps even more importantly thought is to not be so blinded by the brilliance of an idea that you start to think that the product is the strategy.  Choosing the right strategy might be hard, but it remains a core part of any successful business, even in the current age of rapidly accelerated innovation.