Netflix, and Disrupting Your Own Business

By | AgileBusiness, Digital Disruption | No Comments

Lots to take out from this a16z podcast (embedded below) featuring Marc Andreesen talking to Netflix CEO Reed Hastings about how the company has successfully disrupted itself not once but twice on its journey to where it is today.

The appetite to potentially cannibalise your existing business whilst focusing on building the new disruptive model of the future is, as we discuss in the book, a key area of tension for many organisations. Saying it is easy. Actually doing it is terribly hard, not least because of the economic, resource and emotive challenges that this brings. Netflix is one of the relatively few companies that has shown itself to be willing to continually reinvent itself as new waves of technology, market dynamics, and consumer contexts hit.

In the interview Reed Hastings talks about how important it was to him for the company to retain agility as it scaled – as the company grew for it to have less rules, not more. But the key theme that he comes back to in different ways is the value of focus and context in enabling the big changes to happen. They spend, for example, very little time thinking about the what the competition are doing and instead focus their time and their thinking on how they can improve the service for customers. Where you choose to focus your attention is of-course a key determinant of organisational orientation. Many incumbents, he says, look at you as you are now rather than envisaging what you could become as technology inevitably improves.

Reed takes issue with Andy Grove’s maxim that only the paranoid survive. A key part of selecting where we put our attention is about having a point of view on the future (Netflix famously publish their long-term view), and if you see everything as a threat then it becomes distracting from following your own path – Reed compares this to a game of chess where you need to anticipate several moves in advance.

But the importance of focus was writ large when he talked about their transition from DVDs to streaming. If you need to develop an entirely new muscle as a business, he says, it has to be positioned as essential to survival. You can’t dabble in it. Consequently when the streaming business began to take shape he deliberately created space between the two (competing) businesses and teams and even went as far as separating the key management meetings to ensure that the streaming business should and could be built to stand on its own merits.

Fascinating stuff.

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FIST – Fast, Inexpensive, Simple, Tiny

By | AgileBusiness, Culture, Disruptive Innovation, Leadership | No Comments

In our book on Building the Agile Business we detail how agile approaches are far more than a process, and capture a far broader opportunity for operating effectively as leaders and organisations in the modern world. I do a lot of workshops with groups of leaders from large corporates helping them to navigate the rapidly shifting contexts within which leadership now operates, and one of the key challenges often lies in undoing years (decades) of waterfall thinking characterised by comprehensive inputs and gold-plated, ‘death star’ approaches, and instead learning to take far more iterative approaches to solving problems. It’s far easier to be additive with projects, to see future possibilities, to add features, widen the scope, take comfort in building something grand and expensive. Far harder to be reductive, to focus first on the key problem your trying to solve, to test assumptions and validate hypotheses as you go, to start small and scale fast.

Dan Ward, a specialist in defence acquisition, has a lovely way of capturing this approach. FIST stands for ‘Fast, Inexpensive, Simple and Tiny’. He developed this framework to describe a new approach for acquisitions and system development building on an original concept from NASA. In the 1990’s NASA saw great success with their ‘Faster, Better, Cheaper’ (FBC) series of missions that set out to redefine time, cost and output expectations of their work and included the wildly successful Mars Pathfinder mission (which for the first time ever put a rover on another planet at a fraction of the cost and time of the earlier Viking mission) and the Near Earth Asteroid Rendezvous (NEAR) mission (which collected 10 times more data about the asteroid Eros than expected yet was under budget by tens of millions of dollars).  FIST defines an approach that uses a small team of talented people working with tight time and resource constraints adhering to a particular set of principles and practices.

Like most great concepts, FIST has much broader application and lots in common of-course with Lean and agile. But we need to acknowledge that these approaches run counter to organisational policy and practice that has been dominant and embedded in many businesses for years. In an environment characterised by swiftly changing contexts, the ability of companies to be ambidextrous in their ability to both exploit and explore is more critical than ever. Learning to start small and scale fast is one of the fundamental shifts that leaders can take to begin this journey.

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Digital Transformation and the ‘Big Opportunity’

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In the book, we talk about the need to create a sense of urgency in order to catalyse digital transformation. It’s the first step in Kotter’s eight step process for managing organisational change. Yet there is an important difference to be drawn between the kind of urgency that can create positive, reinforcing momentum for change, and that which can instead spawn internal politics, fear and paralyse progress.

The wrong side of urgency can generate what Kotter (in Accelerate) describes as ‘anxiety-driven activity’, and lead to misdirection, panic, poor decision-making. Far better, he says, to frame the need to change in the context of a positive ‘big opportunity’. Opportunity-driven urgency engenders dynamic, positive and directional energy and pro-activity. It enables sustainable action. This is about winning hearts as well as minds. Too many vision statements are either vague platitudes to customer-centricity, or populated with meaningless jargon.

A ‘big opportunity’ should be emotionally compelling and motivating, but link to a change vision that gives a clear picture of what is needed to realise the opportunity, and a strategy that creates the path to success:

Kotter makes a couple of additional points related to the big opportunity. The importance of never assuming that the people you are leading can see what you see, are in the same place, have gone on the same journey that you have. And the value of positive energy in creating sustained effort at a high level.

The difference between a burning platform that creates anxiety-driven activity, and great leadership that can express opportunity-driven urgency, is perhaps the most critical starting point for any digital transformation.

Why We Need Less Management, and More Leadership

By | AgileBusiness, HR, Teams | No Comments

In his book Accelerate, John Kotter (who also wrote the very well known Leading Change) draws an important distinction between management and leadership. Most people use the terms interchangeably, or if there is a distinction it is usually defined in the context of hierarchy. And yet the difference between the two has, I think, never been more important. Kotter defines management as:

‘…a set of well known processes that help organisations produce reliable, efficient, and predictable results.’

Management is an excellent invention, since it helps us to do well what we already know, notably in the context of large, complex organisations – important things like planning, staffing, resource allocation, budgeting, measurement, optimisation. Without management there would be chaos.

Yet management is not leadership. Kotter defines the latter as:

‘…about setting a direction. It’s about creating a vision, empowering and inspiring people to want to achieve the vision, and enabling them to do so with energy and speed through an effective strategy. In it’s most basic form leadership is about mobilising a group of people to jump into a better future.’

Real leadership doesn’t have to come from visionary CEOs. It can come from anyone who is passionate enough to want to make a difference and can inspire and compel others to follow a vision towards creating something new. Leadership is associated with change, exploring new opportunities that reveal the future, the ‘central force mobilising people to create something that did not previously exist.’

It can come from any level, but a lack of sufficient leadership in a business means organisations slow, stall, and eventually fail.

In Kotter’s words:

‘Such best practices are like ornaments – some delightful, to be sure – on a holiday tree. But no matter how pretty the decorations, it’s still a holiday tree. After a while, if you keep adding lights and streamers and amazing stars on top, the tree will start to look less, not more, appealing. If you still continue to decorate, at some point the tree will fall over.’

The point is of-course that the two things are very different but businesses need both to survive and thrive. Management ensures stability, structure, process, efficiency, reliability. It’s the domain of best practice and expertise. Leadership creates change, takes advantage of new opportunities, generates new direction. That is the domain of vision and emergent working.

The problem is that as organisations mature and scale, the focus on management becomes steadily greater to the point where it is to the detriment of leadership. In most organisations therefore, leadership is stifled and de-prioritised. In competitive and consumer contexts that are stable, this may not prove to be critical. Yet in the contemporary environment where so many contexts are shifting all the time, this becomes a fundamental issue.

Organisational response to change is typically either stretching the time horizon for planning (more ’strategic planning’), or augmenting existing hierarchy with new boxes and relationships (‘task-forces’ and the like), or buying in capability through acquisition. As Kotter says, the problem with all of these approaches is that they build off of a management driven hierarchy and ‘the base, the core of the system, defines its limits’.

In the book we advocate an increasing emphasis on networked approaches to driving change. More fluid resourcing. Small, nimble, multi-disciplinary teams enabled by agile approaches and culture. We need to create the space beyond the existing hierarchy for change to happen. And a key part of that is redressing the balance of focus between management and leadership.

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