Prepare for the unexpected as a product manager
Today we are talking about change. Innovation itself means making change happen. Changes also come from external sources, with the COVID pandemic being an example of a huge cause of change.
Our guest, Jonathan Brill, is here to tell us how to survive through and profit from radical change. He was the futurist at HP, making strategy recommendations, and continues to help organizations prepare for the impacts the future brings. He also has written about the framework he uses in his book Rogue Waves.
Summary of some concepts discussed for product managers
5:17] What are business schools not teaching about strategy?
Business schools teach people to use a formulaic recipe to solve problems, but a recipe only works if the environment stays the same. A lot of business schools teach tools like Six Sigma or Extreme Programming; the founders of those frameworks understood a problem and created a recipe to solve it, but when a disruptive event like COVID, a financial crisis, or a new technology happens, the recipe doesn’t work anymore. I call those disruptive events rogue waves; unmanageable, huge waves that pop up out of nowhere because multiple, individually manageable waves combine in the same time and place. When that happens, your recipe isn’t going to help you unless you know how to cook.
To innovate in times of radical change, you need to understand three things: awareness to identify rogues waves coming; behavior change to prepare people to respond to the unexpected; and culture change to design processes and incentives to exploit change.
[9:02] Tell us more about Awareness.
Awareness means thinking about the social, economic, and technological changes that will overlap to create rogue waves, impacting your organization. Think about what could impact your financial, operational, or strategic performance or your external environment (the four foes). Product managers tend to focus on financial and operational impacts, but strategic and environmental issues are far more likely to occur.
[13:50] As an organization, how do we become aware of the trends that are shaping the future?
We need a culture shift. We make assumptions about what the future will look like based on the past, but it’s unlikely the low-volatility environment we have now will continue. We can’t assume our cookbooks will still work. To prepare for a changing future, consider having a future unit in your organization, like we have at HP. In the future unit, we look at the social, economic, and technological changes and what they mean across our functions. We report our findings annually to the C-suite and look at risks associated with the four foes (financial, operational, external, and strategic). As a result, we were prepared to respond to the rogue wave of the pandemic and HP’s revenue and earnings were stable over 2020.
[17:50] How does recognizing trends create a catalyst for new opportunities?
Recognizing trends not only helps us prepare for rogue waves; it also helps us find and exploit new opportunities. As an example, at HP we use microfluidics, moving very small dots of liquid on a page to make inkjet prints, a technology relevant for disease diagnosis. We had identified this application as an opportunity, and we knew a pandemic would be an accelerant. Just before COVID hit, we had funded a business unit that develops technologies for pandemics and medical issues.
To find opportunities, you can look internally at threats associated with the four foes, and externally at threats your customers are facing. The more you can alleviate your customers’ pain, the higher the value you’re creating for them.
We can apply some rules from Game Theory to innovation. First, make a dynamic threat into a static threat. This is what insurance does. I had two grass fires at the bottom of my hill, so the threat of my house catching fire is incredibly dynamic, but I pay $99 a month to turn that into a static threat.
Move a threat from symmetric to asymmetric or vice versa. In 2011, a nuclear power plant meltdown impacted Toyota’s supply chains and production for months. They added a 6-month buffer of semiconductors to their supply chain, and in 2016 during the Taiwan earthquake and again in 2020 during COVID they rolled right through the threats.
Move threats from synchronous to asynchronous. The goal is to make the threat hit you asynchronously, so you have more time to respond.
Finally, move threats from permanent to temporary. Truly disruptive companies like Amazon, Facebook, Uber, and Airbnb have flipped all four of these switches.
[24:12] What are ten major trends that may change the world in the next couple of years?
- The populations of the top 20 economies around the world, including the U.S., are aging.
- Although we’re getting richer, we may not have the labor to support increased consumption.
- The Data Economy has enabled companies like Airbnb and Uber, but often we may be extracting value rather than creating value.
- Automation saves money but decreases the cost of the labor.
- China trades with more countries than anyone else and is becoming a major innovation leader.
- Emerging technologies like AI and the Internet of Things have a social impact that must be managed and balanced.
- Faster innovation means the value of innovation decreases if you can’t capture it immediately.
- Disruptive innovation is more challenging when the value of innovation drops quickly.
- With new technologies, we must have a conversation about digital trust and cyber crime.
- We need to consider a new social contract, defining rights and regulations related to digital technology and the consolidation of wealth.
You don’t need to focus on any one of these trends, but consider what will happen if multiple trends converge to create a big impact.
Action Guide: Put the information Jonathan shared into action now. Click here to download the Action Guide.
“If I had to pick one piece of advice, it would be to understand the game you’re playing before you choose your strategy.” – Jonathan Brill
Thank you for being an Everyday Innovator and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it using the social media buttons you see below.