“May you live in interesting times” said Feng Menglong in 1627, and it’s never been a more fitting expression than today. With companies leapfrogging in the age of disruption to change the way they work and the business models that they use. Scrum has brought us autonomous hyper productive teams that can quadruple your output, but how do you as a leader know what they are doing? and how do they know what strategy you want them to follow?
In this blog I will talk about the Product Samurai Strategy Canvas. An easy to use tool to discover if your autonomous teams are working towards your strategy or if they are moving in random directions. For it is our purpose to lead our teams like the Samurai.
There is a problem in the industry today. Where in the previous age we had the luxury of figuring out how to make money in a business over a relative long period of time, today it’s months (if you are lucky.) Our classical answer to this problem has been business responsiveness, or agility. Yet we see many enterprises struggling to change their internal way of working to a new and more agile format. This in turn has given rise to many initiatives to make the transition (seemingly) easier or more controlled. Unfortunately an Agile transformation solves only half of the problem.
Just as with martial arts, agility is a welcome feature but one must know where we are heading in order to be able to use it effectively. In fact, enterprises need a state of continuous innovation. A startup-like DNA with the assets and power of the enterprise. In the latest innovation survey stated 85% of the respondents that their current business model is obsolete within the next 5 years. Perhaps I should repeat that: 5 out of 6 enterprises will not be able to make money without changing them selves. This means you.
More interesting is the fact that only 18% believes that their current strategy is effective and 35% is confident they can adapt. It feels like they know what is coming but fail to define a new strategy. I can relate of course. Every now and then I can practice ne waza (ground techniques) with Judoka’s that compete on national level. While good for practice, the outcome is very predictable but doing nothing is not an option. So what characteristics should a solution have?
The Xebia Story
The Xebia story is an interesting story in itself. It’s original foundation lies in the Netherlands, yet the unit is only responsible for roughly a third of the turnover. Early on in the development of the company geo-expansion policy was applied. Hence we would take what made the company successful in the Netherlands and export that to countries where the values and mission would create a unique proposition. Take what you do best and expand. This strategy accounts also for roughly a third of the turnover.
What happens next is even more interesting: from these bases new businesses are spawned at increasingly shorter intervals. Each of the businesses addresses a different need in the market, coupled with a new business model. The new businesses attribute also roughly a third to the groups turnover but got to that level much faster.
In short, the existing business grows well, but a significant portion of the turn over is made from business and markets that did not exist a few years ago. If you look inside the original units, you can see a kind of broccoli fractal structure. The growth of the original units also can be accounted to new products and services that did not exist a couple of years ago.
So what are the sowing seeds of entrepreneurship? what makes that these new enterprises rise seemingly effortlessly? I believe it has everything to do with the kill rate of new ideas. In a culture of continuous innovation, the ability to (rationally) kill ideas is key. Roughly 2/3 of all ideas doesn’t make it. The ones that do need 4-5 iterations to get them right.
The innovation pyramid
“Of course we innovate!” is the typical response I get when asking enterprises how they defend against disruption. Over the years I’ve seen examples of four different types of innovations:
Most innovations happen close to the core product or service; e.g. feature level innovation. By tweaking the feature set the product works better for existing users or attracts users that had a slightly different problem. This is called sustaining innovation and Scrum teams are usually quite good at it.
Product / problem
But what if you go beyond a slightly different problem and focus on a new problem. TomTom’s fleet management product is technically closely related to their personal navigation product. But the problem is new. Rather than finding your way, fleet management is about optimising resources and improving driver behaviour.
Technology / problem
To stay with TomTom: did you know they make sports watches? Using their knowledge of GPS, maps, design, production and battery technology they ventured in a different problem area for the customer.
The final level is business model innovation. Getting money from customers in a new way. Usually creating a new product or service at the same time. For example: we all know Sony as a great creator of fast moving consumer electronics, as we did Philips. But where the latter moved into new business domains like medical equipment is Sony still making great electronics, but much more vulnerable to disruption.
Key takeaway is not that you should do any of these things, but you should do all of them! Now going back to the beginning of this blog where we talked about autonomous teams. How can you guide your product owners, product managers not just to build products fast and right, but build the right products?
As with all things agile: where is the simple, visual tool that can help us to detect and steer our people? how do we discover what is our implicit strategy and what is our explicit strategy. (This assumes you have an explicit strategy, if not at least you can discover your implicit strategy.)
My son is a Judo enthousiast, aged only 6 he is rapidly learning what it takes to become a faster and more nimble judoka. He is also an eager young man, and sensitive to reward in the form of higher belt ranks and when I bought the yellow belt exam card for him, he protested and wanted to go for orange instead. Clearly, it doesn’t work that way. You have to master a number of throws and joint locks before you achieve “belt” level. The good thing is: there is an elegant chart showing the things you need to master, a strategy chart so to say.
The advantages are obvious: you can stick it on the wall and chalk off what you know. Simpel, clear and visual. Which got me thinking: do we have a similar thing for our innovation strategy? and what should that look like?
The Product Samurai Strategy Canvas
The product samurai strategy canvas has two axis. On the horizontal axis we have:
- Existing customers
people aware of their problem and good for them: they bought our solution! Your support desk talks to them.
- Competitor customers
people aware of their problem and they bought a different solution. Your marketing talks to them.
- New customers
people aware of their problem and undecided! I hope your sales is talking to them.
- New market segments
People with new problems. Product Management should unearth these.
On the vertical axis things get slightly more interesting since we can focus on:
- New technology
Scrum teams are really good at this. They usually know when a technology is slowing them down. The customer usually doesn’t profit directly from new technology (alone.)
- Improve existing product
here we do sustaining innovations but only on our core product
- Add modules to product
here we do sustaining innovations but by adding modules or services on top of the core product. We create an eco system of value, often with the help of our partners
- New products
We can of course also solve new problems by repositioning our existing ones. Just like the fleet management example we discussed earlier.
- New product / market
New product market combinations allow you to leverage your knowhow and apply it to a new problem with a new product.
- New business model
Xerox survived in the copier market by none of the above, but by allowing enterprises to rent copiers rather than own them. Quadrupled their turnover by changing the way value is captured, not created.
The next step involves all the strategic thinkers in the company. Next time you have a strategy session: have them sticker the canvas and explain what investment goes where. Remember there is no right or wrong solution, but not knowing and not telling is definitely a bad idea. So go for “new tech / existing customer” to improve churn, or “new business model / new product” to reinvent the way we capture value, take “existing product / all customers” and double down on a sales spree, etc.
One word of caution: don’t plaster the canvas all over, you are not van Gogh. Spreading out all your bets causes you to lose focus and is like peanut butter spread over too many sandwiches.
Congratulations: you now have an explicit strategy map.
Take an empty canvas and talk to your product managers, product owners, project and program managers (note there is a lot of “manager” in that sentence, if you just have owners and leads, good for you and talk to them.) Have them put stickies to explain where they are working on. It is very likely that you will discover that your explicit strategy (what you think you should do) does not meet with your implicit strategy (what they are actually doing.)
No amount of agile is going to fix that, in fact: autonomous teams are a health hazard if you are not able to align your implicit and explicit strategy.
Go fix 😉 Seriously. You have got the ultimate weapon against being disrupt by having an agile organisation. It’s like having the body of a Samurai and not knowing how to battle. But don’t do just to survive or become a great company, do it because it will make your company a great place to work.
Autonomous teams mean high engagement, high engagement means happy people. As leaders it is our purpose to lead, not to create strategy documents that nobody reads. So lead like the Samurai (and go for that Judo belt exam.)
As always comments are welcome but even more welcome if accompanied by a foto of your strategy canvas.