How to build a corporate culture for the digital age

A product in the digital age require a different lifecycle - one that is faster. So the organization around that new product's lifecycle must be sleeker, streamlined, and more experimental.

Anyone who has been involved in innovation will tell you that not every step on the road is necessarily a forward one. The wonderful Picasso Museum in Barcelona shows the route the great artist took before arriving at his first cubist painting. He tried one route, one mode of deconstructing his images, representing objects down to their essence one way, and then he tried another. When one approach didn’t work, he backtracked, and tried another route. That wasn’t quite right, either. But a combination of several of his attempts, his paths forward and then back, finally led to something that changed art forever.

Picasso didn’t get locked on a single path. He was constantly searching out new paths. His attempts and stepping back to try another path, a different path, was what mattered. Picasso was only one man, albeit a genius. Yet modern companies can learn from Picasso because his method was the essence of failing fast. 

The lessons of failure

Successful technology innovators tend to fail fast, too. They also know that it’s important to allow the people around them to fail, and that what can be learned from those failures is highly valuable. As Thomas Edison said, “I have not failed. I have found 10,000 ways that don’t work.” Or Bill Gates: “It’s fine to celebrate success, but it’s more important to heed the lessons of failure.” So how do you inject their advice, and Picasso’s approach, into the DNA of your organization?

Start with the fact that products in the digital age are fundamentally different and therefore require a different lifecycle, one that is faster. So, too, must the organization around that new product lifecycle be sleeker, streamlined, and more willing to experiment. In the past, we favored large, 18-month or two-year projects. The new product lifecycle requires many small steps rather than one great one. These steps need to happen fast—monthly or weekly, rather than quarterly or annually.

Taking smaller steps allows us to continually test not just the product or our team, but our customers. Digital technology is moving so fast that there is no way that a designer can predict what will be doable 18 months or two years from now. Neither can our customers. To find out how customers will react to these new technologies, we have to take a step and see the results for ourselves.

How, for example, could anyone have predicted the response to augmented reality? Deliver it one way—via Google Glass—and it’s a failure. Deliver it as a game that involves catching and collecting Pokémon throughout your neighborhood and beyond, and suddenly augmented reality is a worldwide hit. 

Digitization allows us to change a product’s lifecycle by adjusting these delivery systems. In turn, this allows enterprises to conduct business in a different way. The fundamental change in the product has to do with the nature of the product itself, and the software inside it. Software is constantly changing, constantly updating, and constantly altering the functionality, adjusting and adding what’s possible and removing what’s no longer useful. All these new routes, these new paths forward—it’s enough to make Picasso proud.

The value of experimentation

Of course, this allows for new, more public failures, too. Enterprises can release products before they are market-ready or market-tested. But why not enable digital products to learn how customers use the product, adding and taking away functions constantly, growing and changing alongside customers.

Startups do this all the time—it’s called minimum viable functionality. Famously, Gmail stayed in “beta” mode for half a decade. Traditional companies don’t tend to think, “Let’s release our new product idea and see how customers react.” But this is beginning to change. Business leaders are moving from a traditional, failure-averse approach to something more risky: “Let’s try it, and see what happens.” Maybe it’s a masterpiece, or maybe it’s not. Regardless, you will learn something.

The concept of minimum viable functionality can also be applied to digital technology in customer experiences and core operations. But only if you’ve set things up to learn from experiments, failures, and iterations. We might, for example, attach sensors to the pumps in water-pumping stations and see what data is being generated. Then, after a couple of months, we might feed pump data into a prediction engine prior to failure. Now we can build a model that can predict when pumps will fail.

We might then deploy an augmented reality system that displays a pump’s schematic for maintenance engineers. Or we might release a version of the product in just one country, monitor the data sent back by the product, and adjust accordingly as we expand to more countries. These sorts of experiments can lead to new insights and new paths forward.

In 1865, English economist William Jevons demonstrated the value of experimentation when he observed that as coal prices dropped, consumption rose so that the amount spent on coal remained the same. One would think that as the cost of commodities such as fuel decreases, customers would bank the savings. Not so. Anecdotal evidence suggests that Jevons’ paradox also applies to experimentation. If we make it easy and inexpensive to experiment, then we will have more experiments and our rate of innovation will improve. Lowering the cost and friction of experimentation is an essential component of the new product lifecycle.

Building a foundation for continuous innovation

Digital transformation is a continuous process. If you can change a product's functionality overnight by downloading new software, then you can innovate continuously. In this situation, any smart organization will put in place a foundation that allows it to “industrialize” the steps that let it forge new paths, experiment, and embrace failure, all while moving forward. Businesses must standardize these organizational processes so they don’t need to reinvent the wheel every time and can ensure a certain level of quality.

Non-IT specialists shouldn't need years of training and experience before taking their first step toward digital transformation. Maybe once a month, often more, we should look across customer experiences, products, services, and core operations. The people taking these steps of self-examination must come from all departments, not simply hardened application development experts working in enterprise IT. Like Picasso, let’s fail fast, learn rapidly, and find new ways to move forward.

Building a digital culture: Lessons for leaders:

  • Embrace the lessons to be learned through failure.
  • Experimentation can lead to new insights and paths forward.
  • Put in place the organizational processes for continuous innovation.