One lesson we’ve taken from hundreds of engagements with enterprise executives: high-performing companies are big on templates, tools, and frameworks that help to streamline and systematize their businesses. The most disciplined enterprise organizations we have worked with have the habit of developing and documenting systems and processes to help increase productivity, control costs, and reduce errors. These habits are particularly important in larger organizations with many moving parts and will be invaluable in helping to build the frameworks of future growth.
Building on a foundation of systems also can help organizations reinvent themselves for a faster-moving future. How will your current systems for finance, customer success, sales, and product development need to evolve to meet future goals? If you’re watching how quickly high-impact exponential technologies like artificial intelligence (AI), robotics, and blockchain are remaking every industry, you realize that all current processes should be reimagined now, before they become obsolete—if they haven’t been already.
That doesn’t mean that traditional business models are dead. It means traditional business models should no longer enjoy protected status. These not-so-sacred cows should be questioned and carefully evaluated going forward, with the knowledge that they could remain valuable—or throw your organization’s innovation journey wildly off course. The business models of tomorrow will include new ways of humans working side-by-side with AI algorithms and technologies that haven’t been invented yet. One certainty is that it’s just not possible to fully understand and achieve exponential growth by following traditional models and clinging to the safety of the herd.
Future growth models, frameworks, and checklists
That said, many of today’s leading organizations are remaking traditional business models—or creating new ones from scratch—that might evolve into the best practices of tomorrow. We often talk about the importance of developing new strategic choices and assumptions to survive in an uncertain future.
At SU, we have found that checklists have proven to be popular with our community, particularly those on the topics of innovation and future growth. Checklists are low-tech tools that have proven their worth in applications ranging from launching space shuttles to improving emergency aircraft landings and reducing surgical errors.
With much respect to Dr. Stephen Covey, author of the landmark book, The 7 Habits of Highly Effective People, we’ve created a checklist designed to help enterprise organizations find their true north and avoid the wrong turns that can slow their journey toward exponential growth.
The future-ready checklist for exponential enterprises
☑ Break your business model
Relying on a single product or service for future growth is a dangerous habit that’s often hard to break—particularly when those existing products are driving revenue. Long-time Apple watchers know that the company already has reinvented itself several times. In 2007, when Apple introduced the iPhone, the company knew it was cannibalizing its popular iPod product line, but Apple chose to do it before any of its competitors. Today, iPhone sales are down and another Apple transition—from a hardware company providing PCs, phones, and tablets to a services company—is well underway. Apple services including iCloud, Apple Pay, App Store, and Apple Music are on track to earn $56 billion in 2020 revenue. Netflix, Amazon, Adobe, and Microsoft all have found powerful growth in services and subscription models.
☑ Become customer-obsessive
The challenge of success in the Software as a Service (SaaS) and subscription economy is ensuring that customers remain satisfied and productive, month after month, for a lifetime. It’s a challenge that means committing to ongoing product upgrades and delivering experiences that customers find increasingly valuable. Thinking in terms of reducing customer churn while increasing engagement, and expansion revenue—any revenue generated in addition to the initial subscription sales price—can help enterprise organizations find powerful pathways to future growth. When your organization is focused on creating exponential value for customers, exponential outcomes like 10x growth become much more realistic.
☑ Embrace data-driven decision-making
As product and market cycles move faster, enterprise leaders face shorter decision cycles. Today’s leaders must create a culture informed by data analytics, and increasingly, predictive analytics. Analytics should inform and improve decision-making in every dimension of the business, including which products to develop, how to acquire new customers, and what new markets hold the greatest growth opportunities. Organizations that have built strong analytics capabilities also are able to gain deeper insights to create more engaging solutions and customer experiences.
☑ Evolve with exponential technologies
It’s no secret that today’s cutting-edge organizations are achieving rapid growth by building on a foundation of exponential technologies. But it’s not enough to become technology-aware. Enterprise organizations must become hands-on by running experiments, building prototypes, and developing future product portfolios. Ongoing experiments with machine learning, for example, can help your organization understand that technology’s role in robotics, supply chains, sales and marketing, analytics, customer support, and more. It’s valuable to observe how other organizations leverage exponential technologies, but developing your own frameworks to move rapidly from ideation to experimentation and revenue impact can provide a massive competitive advantage.
☑ Build virtuous cycles
We have talked about how exponential technologies such as AI and big data can be a powerful combination to drive competitive advantage. We are seeing this proven out by innovative organizations that use AI and customer data to continually add value and improve their solutions. In turn, these improved solutions attract more customers, who provide even more data, which fuels the development of the next generation of breakthrough products and services. As these cycles gain momentum, organizations that have harnessed exponential technologies pull away from those that have not. And companies that have yet to apply exponential technologies will fall further behind more savvy competitors as cycle times accelerate.
☑ Find growth in adjacent markets
Your adjacent markets are those that are similar, or related in some way, to your current core business. For example, before Uber launched as a car-service app in 2009, its pitch deck to investors included an interesting note. In addition to earning revenue with ride-hailing, the deck explained, Uber could potentially leverage its fleet to earn money making food deliveries as well. In 2019, Uber’s challenges include slowing growth for its core ride-hailing service, but its food delivery service is on track to make $1 billion in annual revenue. Adjacent markets are important opportunities to leverage your organization’s existing skills and capabilities and apply them to create value for new audiences, much the same way Uber builds services like delivery and bike-sharing on its core platform.
Your focus on adjacent market growth will depend on specific goals, but research shows organizations allocating 70% of their innovation activity to core initiatives, 20% to adjacent ones, and 10% to transformational ones tended to outperform their peers. Finally, remember that your adjacent market initiatives should include a defensive component. How will you compete against competitors from adjacent industries trying to enter your space?
☑ Seek diversity and community
There is a growing body of research indicating that a diverse working environment helps unlock innovation and growth. Research in the Harvard Business Review showed that more diverse organizations were 45% more likely to report growing market share and 70% more likely to report having captured new markets. In addition, a diverse environment signals an attractive workplace that can help to attract top talent. Similarly, there is evidence that diversity is correlated with value creation and profitability, according to research from McKinsey & Company. The upshot? Organizations focused on finding talented individuals to drive future growth will do well to build a community of individuals with diverse backgrounds, ideas, and perspectives. To multiply your results, connect your core team to broader communities outside your organization to expand your ideas and perspectives.
Go further, together
If you’re seeking a community of changemakers, dreamers, senior leaders, and architects of the future, join us at Singularity University Global Summit in San Francisco, August 19-21. You’ll learn how emerging and converging technologies are changing every company and industry, and gain insights on building a foundation for your organization’s future success.
If you can’t make it in August, you can join SU’s global community from anywhere in the world to help create a better future. Download our mobile app and connect with the SU community wherever you go!