To thrive in this global economy and meet the changing demands of an increasingly sophisticated consumer base, organizations must bring new products, services, and business models to market faster than ever before. The dawn of the digital era has forced companies to innovate and adapt at lightning speed. Those that don’t will soon be overtaken by the next high-growth, well-funded startup that seizes the opportunity — just ask Blockbuster or the hotel and taxi industries.
The companies of old were built to design products on time, on budget, and at scale according to preplanned forecasts; they were measured by return on investment and market share. These companies are defined by rigid organizational charts, functional silos, meeting after meeting, annual performance reviews, and the pressures of quarterly reports.
Conversely, the entrepreneurial companies of today are built not only to create revolutionary products, but also to discover quickly which products they should pursue next. They’re defined by small teams of cross-functional leaders who work cohesively toward proving preset hypotheses, such as whether or not a new product will inspire customers to purchase more or tell their friends about their experience.
How can traditional hierarchical organizations transform themselves to keep up with the demands of this new economy? Shifting from a command-and-control model to an entrepreneurial one is certainly no easy task. Moving the Titanic takes time, effort, and determination over the long haul.
Assuming executive leadership has firmly bought into the need to evolve, here are a few impactful steps you can take to get started on this long march toward reinventing your organization:
1. Form Teams of Cross-Functional All-Stars
Your best performers are roughly four times as productive as your average employees. Just imagine how much you could accomplish with a team full of all-stars.
Put your best developers, designers, product managers, strategists, and shared-service business partners on one team with a shared mission and the freedom to dream and create. You’ll see a more productive team with innovative, creative ideas that can move your business forward.
2. Task Your All-Star Teams With Building Customer-Centric MVPs
As teams of all-stars brainstorm and test new product or service ideas, they should ensure that each one is intensely focused on solving a real consumer problem — and that customers would be willing to pay more for an innovative solution.
Don’t wait to achieve some internal measure of perfection to release a new product. Instead, build what author Eric Ries calls a “minimum viable product” (MVP), or “that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.”
For example, an eCommerce retailer with which I’m working is testing whether to open brick-and-mortar stores throughout Manhattan and Los Angeles. Instead of investing millions in doing a full launch, the brand built a temporary pop-up shop that allowed it to test, measure, and adapt the model first. Now, several iterations later, the retailer is more ready and confident than ever to begin opening stores across the nation.
3. Fund Projects in Stages
Take a page from venture capital and start your all-star team with a seed round of funding, just enough to build, launch, and measure an MVP. Once the product is validated, give the team an alpha round of financing, then beta, and so forth until you’re ready to scale the product fully. This type of funding method encourages the team to adopt a scarcity mentality and continuously prove the concept in order to get more buy-in and investment.
4. Reward Performance on Positive Indicators
Are you testing same-day delivery or launching a new product recommendation feature on your eCommerce site to a subset of your overall customers? Why not reward your project team on things like engagement levels, repeat usage, average shopping-cart value, time spent on site, and other measures that empower the team to make insightful iterations to further test and prove the concept? These leading positive indicators are far more appropriate than the ROI- or forecast-based models of the past.
5. Allow Teams to Be Flexible
Once a project has achieved its desired outcome, give team members the freedom to move on to the next project in which they’ll leverage their strengths, do work they love, and work alongside interesting people from whom they can learn. Modern workers value engaging work and opportunities to grow their skills and careers. Encouraging cross-team movement should improve both engagement and productivity.
At Facebook, for example, some teams might last a year or more; others might dissolve after just a couple of weeks. When employees finish one project, they get to choose their next teams. The idea is that employees who are given true autonomy will select the projects and teams that allow them to play to their passions and strengths. This, in turn, will boost engagement, creativity, and productivity.
Organizations that adopt these entrepreneurial practices will be able to learn which products are worth investment — and then bring those products to life — much faster than companies encumbered by archaic budget and political constraints. Companies like GE are leading the way in applying these operational concepts, and every company can use these tips to improve their bottom line.