In recent weeks I have been thinking a lot about value creation and how it has changed over the past few years. As I thought about this topic more deeply, I came to realize that value creation hasn’t changed at all, what’s changed is the willingness, almost eagerness of those who participate in the value chain to blame market conditions rather than themselves. Here is what I believe, there are only two ways to create value (as an engineer) in today’s market:
- Be a first mover (an innovator)
- Be a fast follower (an optimizer)
Neither of the above means you need to be “splitting the atom” what it does mean is you need to be innovating. Think about DevOps, why developers have become “The New Kingmakers” and why the Ops guy is getting increasingly difficult to find, the answer lies in innovation. Good Ops engineers innovated, they automated, and they pushed into the developer space, while frustrated developers watching infrastructure Maytag repair men point-and-click over and over again pushed into the Ops space and DevOps was born. The value is in the developer’s ability to deliver Ops elegantly. I am so happy to see a robust API get more attention than a slick GUI; this is the way it should be and should have always been.
To be successful a first mover (innovator) you have to identify the problem, develop (innovate) the solution, evangelize (create and sell) to the market often defining both the problem and the solution, etc…
“Fast followers” enter defined markets, they still need to innovate, but their innovations focus on optimizing the delivery model, reducing COGS, lowering cost of sales, etc…
Innovators and “fast followers” have always existed, these are the two entrants discussed in “The Innovators Dilemma”, no other viable market entrant has ever really existed, so I started thinking about what feels so different? Why are so many people, today, comfortable blaming market conditions for failure? I arrived at this conclusion; the market for “followers”, who are not “fast followers” looking to innovate differently is contracting fast, nearing extinction. These followers are the paint-by-number crowd, the crowd who thinks executing the best practice as defined by the innovator can deliver value. They have convinced themselves of this; thus they are working hard and not understanding why it’s not yielding results, the only rationalization is to blame that which you have no control over aka “a changing market”.
I started crystalizing these thoughts in the context of my everyday. It’s common to watch businesses seemingly do all the right things, at least from a going through the motions perspective but continue to fail and contract. Why is this? Running a business, an entire company (aka the corporation) or a piece of the business (aka a division of a company) requires decision making. Required decisions are increasing in complexity, frequency, and velocity. Decision-makers need to be able to quickly identify all the constants, variables, constraints (these are vast, objective and subjective and often not obvious), then render a decision and move on. Traits, like the ability to maintain focus on macro-level objectives and not trade off strategic initiatives for tactical wins, the ability to quickly assess risk and calculate opportunity cost, act decisively and expediently are a few traits that separate those who are accepting and capitalizing on market change from those who are whining about it.
It’s incredibly important to have a business plan, to understand your cost structure, your team objectives, and how each team member will contribute to the macro-level goals. Personally, I always expect exponential returns and strive for combinatorial explosion; I don’t like linear ROI models.
The challenge is obvious; it’s easier to find people who can paint the Mona Lisa using a paint-by-number model vs. finding the next Leonardo Da Vinci. Enter the value of apprenticeship, a long-term strategic vision and a culture focused on exponential returns.
The same but very different!!
The Mona Lisa paint-by-number kit sold at Walmart sells for $44.99, and I’d be willing to bet that there is a depreciation of that $44.99 expenditure once the kit is opened, and even further depreciation once the painting is complete. The Mona Lisa painted by Leonardo Da Vinci has an estimated value of $790 million dollars. Now the Mona Lisa painted by Da Vinci is an example of an innovator, the paint-by-number vs. innovator idea is here is pretty easy to follow.
There is a great blog that outlines five reasons why the Mona Lisa matters in the context of business and value creation.
- Originality: Doing something new and different requires a belief in a vision and a willingness to take risks to get there.
- Uniqueness: The way you execute creates uniqueness, if your not unique your painting-by-numbers, even if the lines and numbers aren’t on the canvas.
- Time: Perseverance, personal investment, the desire to deliver a masterpiece, etc…
- Reputation: Self-explanatory. Subjective and objective reality are critical aspects of building a reputation.
- Mystery: There has to be mystery. Ever hear the saying “when there’s mystery, there’s margin”. If you in a business where all the mystery has been removed you need to find a new business, and fast.
There is a thriving “fast follower” ecosystem, where innovation is happening it’s just happening differently, with a different purpose, admittedly “fast followers” are often viewed as “bad actors” within their communities. These communities range from art to technology.
An example of a “fast follower” in the art community might be Mr. Brainwash, for those who have seen “Exit Through the Gift Shop” you’ll know what I am talking about, for those who haven’t watch the documentary or do some reading on Mr. Brainwash. The tech sector is full of “fast followers” but they are also innovators in their own right. Amazon is an innovator and a “fast follower”, their use of Open Source and lack of contribution back to the community has them labeled as an Open Source “bad actor”.
The success of any organization today requires a mix of traits that are not easy to find, develop or maintain but thriving organizations possess these traits.
- A shared vision and goals.
- A mature culture that trusts in and puts the organizations goals above individual goals. Realizing that individuals win when the organization wins. Superstar over achievers possessing OCD welcome, heroes need not apply.
Quick litmus test is to rank the following motivators in order of personal fulfillment: Praise, Money, and Accomplishment
- Laser focus. Only entertain tactical diversions which contribute to strategic objectives.
- The existence of a concise and transparent measurement system that can be leveraged at all levels of the organization to metric and drive individual impact in the context of macro goals.
- An expectation that the organization should be self-directed, self-healing and self-managing.
- Grit, hustle, drive, relentlessness, belief, etc…, etc… wrapped in humility rather than hubris.
- An insatiable thirst for differentiation through collective intellect.
- Results-oriented. (results are empirical and defined but the concise and transparent measurement system mentioned above)
The bottom line is without a strategy all that is left is excuses.