The growth problem - when doing more of the same won’t help
The innovation breakdown happens when companies are doing well but are stalling, flatlining – this is when doing more of the same won’t help. Doing more of the same in this case is not the cure but the poison. Many of you will know the situation. The company is doing fine, has linear growth with the market – but what people actually want is the hockey stick.
Before I go into depth, let me have a little room for some vanity intro. I have a very deep introduction into theoretical computer science and all sorts of strange maths and logic like category theory (which is much less useless than it sounds), temporal logic systems, coordination languages and so on. One of the easier concepts, I often think about in daily life is the Halting Problem. Many of you will know it. A short explanation would be that the Halting Problem (one of the few words I prefer in German: Halteproblem) is the task of having to decide of an arbitrary algorithm (computer program, whatever) will ever stop. Now, the thing with the halting problem is that it can not be decided and as such is called undecidable (or noncomputable). Especially, no algorithm can exist which determines for all given algorithms if they will ever halt. For all feels out there, I know that you know that the halting problem is NP-hard but not NP-complete.
Real life – me as a kid, waiting
Now a real life example, which also might explain why I think about the Halteproblem all of the time and why I went off with this vanity intro. (Refer to the pic in the beginning now, please)
When I was a kid, every Wednesday after school, I would have guitar lessons. I had to leave home around 7am, take the train to the town where my school was at, walk some 20 minutes to school, endure whatever went on there and then walk another 20 minutes to the guitar teacher. Then, after the guitar lesson, every other Wednesday, my parents would forget to fetch me from guitar lesson. I would stand in front of the block where I had guitar lesson and wait … and wait … and wait. The next train home would only run in a few hours. So it made no sense to walk to the train station already. Also, I had no money with me to grab some ice cream or something that would nicen up the waiting. (’cause, of course I wouldn’t think this will ever happen again, except next week, maybe.) After waiting for an hour or so, it was clear that they really forgot about me. (No tears, please!) I am talking about the 70s here. So, no cell phone. I could, of course, walk to the phone cell a few blocks further down the road. But first of all that’d mean I had to have some change with me. But, and here we are diving deep into the problem – as Murphy was no stranger to me already - I knew, just knew that the moment I was out of sight, my parents’ car would cruise around the corner. When, on a hot summers day, you stand long enough an that corner, you will get the idea that you could fake walking to that phone booth so that fate and Murphy will make your parents appear. So, sometimes I was deranged enough to pretend to go to the phone booth. But Murphy and fate knew I had no money with me anyway. So, the algorithm is my parents and I am the algorithm that has to decide if they will ever turn up. After the above introduction and knowing humans might even be harder to figure out than algorithms, we all know: After a certain time it makes no sense to keep doing the same thing. In this case: waiting. It. Just. makes. No. Sense. Simply doing more waiting work won’t change the world and thus the parents will never appear. So, the philosophical question is: when to you stop waiting? And: Will it do you good or bad? There will, of course, be a moment of no return regarding dehydration, weakness, sleep deprivation, hunger – in roughly that order. So there is a moment at which you will have to change your behavior. And so, little Markus did and asked people for money to call (again: will that make them turn up while I’m gone and they will drive off, thinking I took the train, met someone, whatever.) or went to the train or went to the youth center or …
I guess you got the idea now. Now what has all of this have to do with you?
The desire for the mythical hockey stick
Let’s say this is you (and your company, product, …)
Chances are people are happy with that situation for some time. You have linear growth, you grow with or slightly above the market. What more could you want? Well, maybe not you but some others. They might remember the past of the company, and this story went like this:
Your company or product grew, found the right customers, made them happy, some even enthusiastic. Possibly, you killed some other competitors along the way or acquired them. But now you’re not the new kid on the block anymore. Customers know what you’re doing for them, when your product helps them, when it doesn’t, when to pay the price and when not. What to expect and what not to expect.
It will be of no surprise to you and will have probably experienced this, that after a while of growing with the market in a linear way does not trigger the phantasy of your investors, stockholders, or your board. preparing annual budgeting a strategy meeting will be held, the YoY growth of the last five years will be shown and a surprising curve will come up in one of the last slides. There will be some tired nodding of heads, some explaining of how the company became to be what it is and some will even remember those wild times when the current head of marketing was giving these parties at home and when hotel rooms where smashed at every offsite:
Hello, hockey stick. So, yes, everybody wants the hockey stick. And worse, the fun experience of the hockey stick is still engraved into the collective memory of the company. S, who could resist. The last slides after the hockey stick will explain how we get to the hockey stick – or how the hockey stick comes to us. And basically, this program will tell everyone in the company to do as we did before, but more and better and faster.
Hmm, wait a minute. Didn’t we already work very well and lots of and really fast and weren’t we busy all the time already? And, wait another minute: why would doing more of the same and better and faster change anything? Doesn’t the first curve (how we are doing today and how we got there) tell us that the problem is at the core that we re doing the same thing over and over again?
And wait: didn’t we get the initial hockey stick because we did things different than the market, cheaper, just good enough for most but not all the clients (aka disruption), serving a special niche incredibly well, finding a completely different approach than anyone else – whatever the recipe was: It was against the market. And now, now we are the market.
The customers know what we do, we do it in a predictable way, with repeatable precision and results. Most people already know what we’re doing for them at what price and that is exactly what got us here. And – by the way – we’re doing fine. So, how could doing more of the same chance that? Well, it can’t and it won’t
The thing is: To get to the hockey stick you will have to do other things. You will have to solve other problems for other people. Just like in the beginning. But we forgot how we worked in the beginning. The CMO is now living at the lake, in the quiet, no more parties. No more smashing of hotel rooms. Others are doing this now. Those that are getting the hockey stick now – against us. And with a little disgust but more of a grudge and some envy, we look at them. Thinking: They won’t do well – but we know better than that.
Stalling in the small
Let’s look at the problem one level deeper. In one of my last trainings a person came to me and asked when is optimizing a page finished? The person was optimizing a single page since three moths and what the data said was: All the important numbers on the page were basically flatlining. Like not changing, like stalling. Working on that page any more days is clearly not a good idea. This page is out-optimized.
In both cases, think about little Markus on a hot summers day: Waiting little makes sense. But after a while it is simply futile.
As a product guy, when numbers are stalling: More of the same won’t help and is a bad idea. (It is actually irresponsible.) But, of course, we are frightened of leaving the spot we’re waiting in, because god know what can happen. And: when is the right time to leave? And what will happen the second we leave? The car is just around the corner, possibly.
Now, what to do? It is research time, of course, as we can not know what to next from inside the company (think blind spots, innovators dilemma). We actually have to watch the change in growth already (second derivative) and start doing things when things slow down. Better yet, wet always work on new things.
Hints are the three horizons model (deploy people to finding new problems to solve all the time), the Pioneers, Settlers and Town Planners model by Simon Wardley (organize so that the ones looking for new problems will not interfere with those protecting and perfecting today’s business) and of course my fine training in which you learn everything about finding new problems to solve for new people and thus developing new products by exploring your companies’ talents.
I am writing this, because it is my observation that there is a lot of frustration out there in the following ways:
- We are optimizing and optimizing but only find linear growth (now you know why)
- We want to do something really new but no one goes for the risk (because we are not used to it anymore or because we only want to milk our current biz model.)
- We want to do something new but can’t remember how this works anymore, because we were only optimizing for the last few years
- Any mix of these
The problem here is that it is rare that conscious and explicit decision are made along these lines. But that is the first step necessary. Whatever the decision is, people will be much more happy, because they know what it expected and how to get there.