How Do We Test Our Winning Logic?

 

How do we test the winning logic underlying our strategy?  How do we avoid the Innovation Theatre & corporate kitsch I’ve described in earlier pieces – smart people going through the motions pretending they’re creating Value?  The Board & senior leader team are often at a disadvantage, lacking the day-to-day connection with the front line, suppliers and customers.

The Value Stick

The Stick is a rough & ready way of testing our winning logic. Ambidexterity is a prerequisite. Can we both protect the core business with OpEx/Lean, and ignite new Growth using Digital methods?

Here are the Stick’s key components:

·       Willingness to Pay - can we increase WtP by providing kick-ass offerings that wow the customer?

o   Can we find new customers, new undiscovered needs, satisfied by news offerings; new channels; new levels of customer understanding & connection that open up new markets – the proverbial Blue Ocean?

·       Price – can we provide so much value that the customer readily pays more?

o   Here, facility with both OpEx/Lean & Innovation methods is essential.

o   A tremendous manufacturer who continually improves the process will both reduce waste and also increase Value in the customer’s eyes. (‘I no longer have to worry about that…’)

o   Similarly, an adept innovator with a deep, intuitive understanding of the customer can identify invisible opportunities that cost little to address but utterly delight the customer.

·       Cost – this is the arena of OpEx/Lean. Most industry remains awash in waste, which represents a giant ‘hidden bank account.’ 

o   OpEx/Lean leaders know both how to find these, and as important, how to engage their people in harvesting the gains.

·       Quantity – means getting people to buy more, which is the wheelhouse of growth hacking & other innovation hacks.

o   Possible means: partner with simpatico companies, develop adroit pricing strategies, understand & access where customers hang out, reduce buying friction, remaining relevant and top-of-mind with funny, engaging just-right content in the right channels.

Caveat: be aware of the Innovator’s Dilemma.  The Value of a given innovation cannot in its early stages be measured by conventional accounting methods – all the standard Value metrics are zero.

Use these elements to test your winning logic. At the very least, you’ll generate a meaningful discussion. Is the Stick enough to validate your strategy? No, but it’s a great way of testing & validating our thinking.  Validating your Strategy entails a good deal more, a topic I’ll take up in upcoming pieces.

Best wishes,

Pascal Dennis         E: pascal.dennis@leansystems.org