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Effective Product Development for the 2020s

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Ram Sivasankaran, manager of business intelligence & data analytics at Oportun Inc., recently wrote an article which examined the infamous failures of three international market leaders caused by a reluctance to respond to market disruption. His analysis identified slow adoption of technology, a lack of data-driven decision-making and low customer focus. Martin Reeves, author and managing director at BCG Henderson Institute, also recently published a piece on the World Economic Forum (WEF) site about remaining competitive in the 2020s amidst rapid technology-enabled innovation, which the World Economic Forum describes as the 4th Industrial revolution. Similarly, Bill Lydon, chief editor of the ISA’s InTech magazine, recently wrote an article in which he presented case studies indicating that a gradual and evolutionary adoption of new competitive technologies is more effective than any revolutionary change.

Sivansankaran’s article looked back at Google’s loss of early dominance in social media, and the infamous collapses of Kodak and Blockbusters Video. For each of these well-known stories, Sivasankaran attempted to understand the cause of the company’s failure. In all three cases, according to Sivasankaran, the established player had been given an opportunity to adapt but failed to respond. Specifically, he explained that they had not been listening to changing sentiments from their existing users. Sivansankaran also concluded that in many cases, competitors embracing disruptive technologies were not seen as a threat. Further, he explained that metrics which could have provided insights into customer dissatisfaction were ignored. Sivansankaran wrote:

It is necessary to stay on top of a product’s vital signs throughout its lifecycle and treat any indications of monthly active users...dropping with profound seriousness, and corrective measures.

In his article, Reeves wrote that "regardless of their starting positions," all companies will "need to reinvent themselves for sustained success in the new competitive environment of the 2020s." He explained this as resulting from an "increased rate of technical and social change." Reeves wrote:

Even if your company is beating the average today, you can’t rely on momentum alone to guarantee future success. Business has become increasingly dynamic, driven by rapid technological and social change. As a result, past performance has become a weaker indicator of future success and the ability to compete.

Lydon wrote that the World Economic Forum (WEF) had highlighted 44 examples of organisations which had successfully embraced disruptive manufacturing technologies. He explained that these are known as "lighthouses" as they have led by illustrating effective ways of "applying advanced manufacturing technologies, including AI, the internet of things and big data analytics, to improve operations." He wrote that:

Lighthouses achieve high impact with minimal replacement of equipment. Most were created by transforming existing brownfield operations. Optimizing existing infrastructure and augmenting it with new machinery can deliver many benefits.

Lydon’s article referenced a recently published WEF paper presenting successful examples of companies that had remained competitive by strategically embracing disruptive fourth industrial revolution technologies. He wrote that Enno de Boer, one of the authors of the paper, had commented that many organisations attempted to embrace disruptive technologies, but found it hard to adopt and integrate them. Lydon quoted de Boer as saying:

(the report) consistently found companies are stuck in a "pilot purgatory," testing a lot (of) technologies and piloting a lot of projects but not figuring out how to scale technologies to solve business problems and create fundamentally new business impact.

Reeves wrote of the importance of companies embracing disruptive technologies to survive. He explained that companies wanting to remain competitive today must "build the capacity for continual reinvention", which he described as "necessary for a faster changing environment." Reeves reported that the majority of market leaders lose their dominance within five years. He wrote:

According to our analysis, top companies are falling faster: only 44% of industry leaders by operating income remain there five years later, down from 77% in the mid-20th century. Over the same time span, the rate at which companies drop out of the Fortune 100 has increased by 60%.

Lyndon wrote that sudden technological change was hard for organisations to succeed at. In contrast, he wrote that a gradual "evolution is comfortable with incremental changes, keeping existing processes, and preserving existing assets." Lyndon wrote:

To be complete, analysis of manufacturing return on investment should look at transformative process and business model changes enabled by technological shifts. These will accelerate competitive position and result in significant ROI.

According to Lydon’s report of his conversation with the paper’s authors, there is a high and imminent cost for those who are slow to change. He wrote:

American manufacturing companies are lagging behind in 4IR innovations and could lose out on up to $3.7 trillion in value by 2025.

Reeves warned against "traditional metrics" such as "sales, profitability and return on assets," which he described as "backwards-looking." Reeves wrote that these were "less useful for indicating whether a company is set up for future success." Reeves’ recommended the following factors as applying "across geographies and sectors" to overcome "averageness" in product development:

  • "Compete on the rate of learning" using AI and data-driven insights.
  • "Build a hybrid learning organization" combining technology and "imagination of humans" to "remove the bottlenecks of hierarchical decision-making."
  • "Apply the science of change..to build capacity for continual reinvention."
  • "Harness human diversity to increase the range of ideas, approaches and capabilities within the organization."
  • "Pursue social as well as economic value by following a clear social purpose and integrate social and ecological considerations into strategy".

Sivansankaran also provided a number of closing recommendations targeted at product managers, developers, UX designers, and executives in charge of corporate strategy. He reminded his readers the importance of taking a customer-centric approach, and also to measure steps, such as:

  • Constantly utilising "usage metrics" evaluated against a "verifiable hypotheses on user sentiment."
  • Studying "competing products closely" and seeking "subjective input" on how they outperform your existing products.
  • Ensuring "that the needs and expectations" of your "loyal users" are "not compromised at the expense of going after deserters and new user segments."
  • Staying in touch with emerging technologies which are "evolving at a rate faster than ever before."
  • Constantly identifying "different markets, user segments, and use cases" for existing products.

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