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Wednesday, 16 April 2014

Fail fast or suffer slow

Telstra recently released its Connecting Countries thought leadership report, which was based on a survey of some 4,100 executives across Asia capturing their views on best practices, challenges and overall business performance in the region. It was exciting to read that there were a number of management lessons that businesses can take with them as they seek to invest into Asia as well as an insight into the profile of an Asia Business Champion – one who doesn't only recognize best practices but also lives and breathes them.  While there were a number of takeaways from the report,  there was one which jumps out at me particularly as it relates to driving success in an Asia market place. One of the key management lessons for success in Asia was looking at the need to move forward with multiple growth strategies concurrently.

Now I have always believed that a person cannot multi-task (despite my numerous attempts to try!) hence this strategy could only ever exist for a large size business and not an individual or SMB. But the need to look at multiple strategies is important for international businesses to consider in order to balance the potential risk of one failing due to internal or market challenges. I must make clear though there are limits to running multiple strategies. A couple of years ago for example, one vendor shared with me their plans to run 25 new initiatives in parallel. Now I don’t care how big you think you are or how mature your strategy execution process is, but when you talk about multiple strategies to this degree it is simply a death warrant for the strategy itself and puts the business at risk of losing its way. I am glad to see that San Francisco based vendor has since realized this and re-evaluated how many initiatives it takes on at the one time.

Now when a business is looking at multiple strategies it needs to understand the levers it can use, for example how quickly a strategy decision can be moved into action and equally, how quickly it can be shut down. These days it is increasingly common place that a strategy is dependent on people, systems and communication. Now, we know we have the ability to redeploy people to other projects and – as hard as it can be at times – sometimes people choose or must move on , however for Systems and communication platforms we often have to make investments that tend to have a pay back only after 3-5 years,. This can cause a challenge as businesses then need to assess how they can mitigate risks to drive a strategy to a positive outcome. For this reason it is important for businesses to adopt what is increasingly being known as a “Fail Fast” principle. The Fail Fast principle looks at prioritizing initiatives that need an investment based on requiring limited capex and leveraging platforms that can be turned up quickly and equally turned off with very little delay post a decision, if it is not working.

Take for example the idea of replicating a solution into a new vertical, which  might require assigning people temporarily, adding  system capacity for marketing campaigns, tracking opportunities and managing customer deployed solutions. But what if all of this could be set up within weeks and taken down even quicker? Would that make you rethink your prioritization of business strategies and equally consider additional initiatives, knowing your investment risk is significantly reduced and not committing the business to years of investment? Well hopefully the answers to both are yes, if not then perhaps a multi path strategy is not for you (either that or you have money and resource to burn).

Historically this would have been a challenge; however the virtualization of IT and communications means that businesses are now more empowered than ever to introduce the Fail Fast principle into their strategy decisions. Now considering the feedback from the Connected Countries survey that businesses need to consider multiple strategies in order to achieve success – at the beginning of this article it would be perfectly normal to think this is only achievable by either very large businesses or for those who have learned through expensive or painful experiences of what strategies work and equally which don’t. However hopefully now you are thinking about how your business could introduce a multiple path strategy by leveraging the advancements of technology that exist today, combined with the key principle in defining which strategies to go after based on their ability to align to a fail fast approach.


We are not talking about transformation or changing the way your business operates. This is very much about understanding how a business can be successful in a market like Asia where the only constant is change. But there are clearly multiple market opportunities and with the right approach –  as demonstrated by the Asia Business Champions – combined with the right principles, businesses can create the environment needed to succeed by failing fast, which ultimately has to be a better approach than suffering slow and not reaping the rewards of a multi path strategy.

You can find the Connected Countries report at the attached link - http://www.telstraglobal.com/connectingcountries/?concountries=tgbanner

4 comments:

dougperis said...

"Fail Fast" is almost a norm in the tech start-up world, and is also associated with the start-up's "pivot", which to me is moving on to the the next idea after the first one as failed. All good in my books, but culturally, in Asia, failing at anything is nothing to be proud of or write about, i.e. loss of face.
Agile/SCRUM development methodologies also support the "fail fast" ethos, even if the real intent is to build small chunks quickly and evolve quickly in say, 2-week development cycles.
As for companies with 25 new growth initiatives on the go at any one time (...and I think I used to work for a firm that did that once!), "fail fast" should not be a substitute for good planning and anticipating market movements ad customer sentiments, but I get the intent of making decision quickly based on certain factors rather than faffing about and then realising something needs to stop.
Good article.

Nathan Bell said...

Hi Doug, very interesting point re the cultural aspect that will definitely bea challenge, I guess it was more in terms of encouraging teams to try out new ideas, test them in the market. Historically we have had to invest so much to start an initiative we were too afraid to shut it down given we would have to justify the cost, today however technology has evolved. I guess to your comment the question needs to be can the culture evolve as well?

andrew said...

Hi Nathan.

This is a very interesting topic, and a question that I grapple with regularly, working in an innovation area. While startups embrace this methodology, why do large companies struggle with it?

I think there's another cost to shutting products that you haven't mentioned: the reputational cost from disappointing customers. Google received enormous negative feedback when they shut down Google Reader. If a startup was providing that service and it folded, people would have been forced to move on. However, Google is still around to receive the ire of their ex-users.

Realistically, if a large company wants to continue in a market, they need to be willing to pay the costs of migrating customers away from the "failed" product or pay the reputational costs of disappointing those customers. This makes the "fail fast" approach much more costly for large companies than for startups.

Nathan Bell said...

Hi Andrew, another great point and there is clearly a theme here of brand reputation risk and what that can mean off the back of a introducing a fail fast principle. I think though this is where the business needs to separate where it needs to make its big bets based on incorporating the brand risk and where it is running internal initiatives.For example a lot of businesses talk about a strategy to grow into a new vertical or market but not the avenues they will use to get there. Consider the idea for a moment re a global business seeking to enter an adjacent market space but not informing the market on the how. This is where I see the fail fast principle adding value to the business testing concepts until they can find the one that works and then announcing to the world the success they are having - hopefully!