Perpetual Beta

 

 [originally posted here at denuology.com]

denuo beta

I’m in the 5th of 6 modules of the Berlin School of Creative Leadership. As you can imagine, we spend lots of time on management processes and models in tumultuous environments. My friend and classmate Rikke Grundtvig (Communications Director, Omnicom, Copenhagen) regularly makes demands for guidelines and recently asked for a set any business can apply to ensure they’re perpetually in beta. She did so a couple times yesterday, so I thought I’d get the ball rolling on her behalf. I do so knowing full well there isn’t an answer, but some trends do emerge when you start looking at the most flexible of companies.

The executive summary:

[1] Listen.
[2] Know your company’s purpose and don’t change it.
[3] Empower employees to co-pilot the mother ship.
[4] Assume everyone is a potential collaborator.
[5] Place lots of bets and be ready to double down.

 

Listen.

This is an obvious place to start, but an embarrassing number of brands are guilty of not doing. Ironically, the worst offenders were forced to adapt and now lead the pack. For example, Comcast and Dell made the right enemies and do an amazing job of listening to large numbers of consumers… one at a time. If your company is in an industry in which it’s possible for someone to have a complaint or make a recommendation (email me if not and I’ll start on Monday), there’s no excuse not to listen to your current, former, or potential customer base. All the tools to do so are free and those customers are talking about you anyway, and they just assume you’re in beta.

Know your company’s purpose and don’t change it.

This sounds almost counterintuitive in a recommendation about flexibility, but without an overarching outcome-centric purpose, any company is lost. The key is to avoid a business tactic- or service-centric purpose. Probably the best example I’ve seen is Xerox, who sees itself in “the document business” and deftly avoided the pitfall of being in the “copier business.” The former drives their decisions in a digital future (scanning, security, sharing), while the latter clearly would result in a slow and steady decline in fits. Just ask Kodak, who seemed to think they were in the film business, not the images business.

Empower your employees to co-pilot (or at least inspire) the mother ship.

The most famous institutionalized example of this is Google, who grants employees 20% of their time to work on personal projects. The case study benefit of this for Google was the creation of GMail. The benefit is straightforward; it lets you allocate your most precious resource (according to all those memos you keep putting out saying you’re all about the people) to experiment on your behalf across all levels of the organization. Oh, and employees see it as a perk. Win-win.

Who knows. The sideshow might just become the main attraction, as it did with Twitter.

This principle, held strongly by our very own Rishad Tobaccowala, explains how we function with no president or COO.

Assume everyone is a potential collaborator, not a competitor.

Collaboration isn’t just fun web 2.0 jargon. Companies that collaborate mitigate risk and tend to find at least something in their partner worth aspiring to. The best example I’ve seen is Netflix. Netflix could have seen any distributor of video content as a competitor and instead managed to successfully (and surprisingly) move into VOD (see their ability to define themselves as a home viewership company not a DVD rental service in point #2 above). Their partnership with Microsoft to deliver content via Xbox Live has been a huge success, has delivered over 1MM active users, and was worthy of an entire post by Benny.

Exhibit B: Hulu.

Furthermore, collaboration is not limited to other companies. Organizations that listen best also collaborate with their customers, with the benefits magnify in multiples based on the number of collaborations. Here in Chicago, 37Signals has done an incredible job of collaborating with customers while managing their input appropriately to avoid large-scale work for minor improvement.

Place a lot of bets and be ready to double down.

This one, like most of the others, isn’t rocket science. Yet so few companies capitalize on their experiments appropriately. It’s easy enough to invest some marginal dollars to wade into a new space or three, but it’s a lot harder to be prepared to significantly increase investment (across all types of resources) if it’s successful. From an outsider’s perspective, Amazon seems to do this really well. Amazon has not strayed from the core retail business, but their ability to move into other relevant businesses based on early success is praiseworthy (e.g., Amazon Unbox and the Kindle). Lots of companies could learn from a company this large that can still act so nimbly.

One specific note as it relates to this is that once a bet is paying out, it’s not off the table. What works today may stop working tomorrow, so keeping alternatives open and testing is an ongoing process, not a checklist. Managing this with fluidity is why every successful company that appears to be in perpetual beta also has an incredible CFO.

As I said, this list is just a start. I’d love to hear what I left out or examples of other companies embracing any of the above:
saneel@denuology.com [update: I’ve since left Denuo, so tweet me @saneel].
.

[Special thanks to @shaunabe for sharing his perspective and wisdom]

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