Written by Damien Downes, Curriculum Lead on our Digital Business Stream.
Having studied and researched start-ups and established businesses for some time now, it strikes me that success or longevity comes down to one differentiator – the search for constant improvement. This search comes in many forms e.g. improved employee engagement, innovative capabilities, improved customer satisfaction or new previously unrecognised partnerships.
There are four words and two questions that I believe hold the key to achieving constant improvement: Proactive, Simplify, Effectiveness, Efficiency, Why and How.
As entrepreneurship and start-ups are my point of reference I want to focus on their impact on the founder and the growth of their business.
When you are Proactive you are constantly looking to make improvements, take control of a situation and working hard to make things happen. You learn from your mistakes and make sure you do not repeat them. From a leadership perspective you become very opportunity focused, stronger and more confident in your ability, working more ‘on’ your business than ‘in’ your business.
As a founder with confidence, your energy can become contagious, you have the potential and, I would argue, the obligation to empower people and improve the innovative capabilities of your team by asking two questions on a regular basis – why and how. Asking these questions tilts the balance to the power of many (goal congruence) over the power of one – you build a cohesive unit with a clear vision and direction and so establish a competitive advantage.
To maintain this advantage, you have to keep asking Why (to overcome inertia and complacency) and How (to improve processes). Why are we doing things this way? Why are our competitors doing things their way? How can we improve our processes? How can we Simplify the process journey for our customers? How can be improve the experience for our customers?
Let’s consider the growth of a start-up through an evolutionary lens – Variation, Selection, Retention and Struggle. When a start-up brings a new offering to the marketplace it’s all about Product/Service Innovation – if you strike gold and achieve Product/Market fit you have managed to move your endeavour from the battlefield that is Variation into Selection. Your idea stands out from the crowd and customers have chosen to select your offering over others.
At this stage, consumers have decided what they like and it becomes the Dominant Design and from now on your focus should move towards being as Effective (producing a desired result) and Efficient (maximum productivity with minimum wasted effort) as possibly, otherwise known as Process Innovation. This may mean being faster to market, developing new products or services, having a lower cost base or having better customer engagement that your competitors.
The good news is it can be a virtuous circle. If you empower people to ask the above questions in a safe space (not always easy – ego is a terrible thing), as a founder, you should improve the engagement levels of staff and improve the overall culture within the organisation and your team’s ability to innovate and stay ahead of the competition.
As a growing start-up, customers now trust you and keep coming back to you (Retention) and not only that they begin to refer their friends and family – life is good.
For any business to survive it must be looking to solve a problem on an ongoing basis – over time the problem may evolve and change and your ability to step back and constantly ask why and how should help to maintain a solution based focus and innovate your way through the Struggle phase.
No business exists in a vacuum so engage with suppliers and customers to ask how you can improve their journey, share knowledge or why they are using your product in a different way than you intended.
In summary - if you want to be Proactive to become more Effective and avoid reactive fire-fighting then you should ask the question why more often to maintain your focus. For example: Why are we doing things this way? Why do we believe this action will give us the required outcome? Why do customers like our product over the competition? Essentially you are looking for data to help you make qualified decisions.
If you are looking for Simplicity to become more Efficient, then you should ask the question how more often, e.g. How can we reduce the number of steps in our customer on-boarding process and so improve customer engagement and satisfaction? Again it’s about gathering data and running experiments to make qualified decisions.
A word of warning – the law of diminishing returns. At a certain point you may notice that the search for greater efficiency becomes an obsession for some people, it tends to occur when cutting costs comes into play and as a result you may stop adding value to the business.
Be humble, admit your mistake, learn lessons by defaulting to why and how: why did it happen and how can we make sure it doesn’t happen again?