Digital Transformation | Act Like a Startup: experiment, fail and resurface
Recently, I read an article published by Jeanne Ross, a leading MIT researcher, in which she states that companies will only succeed in establishing a proper digital strategy if they take into account customer needs and evaluate solutions on a permanent basis.
In summary, as entrepreneurs, we need to answer two questions: what can data and digital technologies do to solve our customers’ issues? And what kind of solutions are valued by customers? Focusing on what clients do not value is clearly an effort in vain, such as Federal Express, which lost approximately $350 million in 1984 by investing in electronic delivery service, ZapMail, in an attempt to compete with fax machines. An exciting invention, but it failed to convince FedEx customers at the time and was abandoned by the company two years after its launch. Coca Cola Life, another famous example, was launched in 2013 and despite very high sales prediction, it failed to seduce the audience.
In other cases, success is achieved by correctly answering both these questions, as did Chilean Cornershop, Colombian Rappi and Swedish Spotify, which were able to meet the needs of their customers, and understood the value of the services they offer. Here lies the key to success: making a perfect match between need and assessment.
Now, how may a company achieve similar success? First, it shouldn’t be afraid of failure. A company may not embark on a journey into the unknown if it does not include that possibility. It also needs to remain aware of the fact that all experimentation requires a tradeoff: to be willing to invest in something that may seem to be an expenditure in the short term to obtain long-term profit. If we, as entrepreneurs, are unable to endure certain losses, we will never achieve different results. Coca Cola’s example is a typical case of trial-and-error, of customer validation and of maintaining an open culture of experimentation. That’s something companies which call themselves “innovative” cannot avoid.
How do we create a culture that’s open to experimentation? It’s not easy to answer that question, let alone implement the answer. However, not everything is lost, there are several steps companies may take to achieve that goal. The first one is to invest in the company’s testing environment by inviting people to analyze processes, reviewing strategies, improving work environments and the interactions between different areas. These are some of the challenges that employees may help tackle to improve the company. When employees start devising new ways to do things differently, that means we are promoting experimentation through innovation.
Second, as I mentioned previously, we need to accept failure as an instance of the change, growth, and improvement processes. We were raised to seek success and approval for tasks we complete, and that’s the reason why we are so afraid of failure. We need to change our focus and understand that failure is an opportunity for improvement. It is vital that everyone realizes that experimentation allows testing ideas in a controlled environment where possible “losses” are tolerated and expected, rather than surprising. Failure is, therefore seen as a necessary step to success. The fact that the company not only approves of experimentation but also encourages it, will naturally persuade employees to challenge themselves and their traditional mindsets.
Third, but not least, every change has to take place top-down. If the company leadership lacks commitment or interest, change won’t happen. Company culture begins at the top of the pyramid, and conscious and true adhesion is only achieved through example. What is described above won’t come true without the commitment of upper management, which should encourage the administration to explore the path of experimentation. Lacking that factor, this recipe will never succeed.
These recommendations are only part of a recipe that aims to encourage companies to start “acting like a startup.” Startups have a very healthy relationship with risk. They are not afraid to try out new ways or make mistakes, because it allows them to acquire new knowledge to launch again into the adventure and “to beat the lottery.” By creating experimentation and testing environments, we are inserting a portion of startup into our traditional DNA that is essential to be competitive in increasingly demanding industries.