Amazon CEO Jeff Bezos has famously observed that there are two basic decisions that an organization needs to make. What he calls type 1 decisions are those that have huge implications for the organization, are potentially highly risky, and are irreversible. Type 2 decisions, in contrast, are reversible, low risk and rich in learning potential. A well-documented success at Amazon is Bezo's use of small teams to act on type 2 decisions.
This approach reflects the popularity of "agile" methods as an alternative to conventional bureaucracy. One principle is that teams should be small and empowered to make decisions about low-risk activities under their control. At Amazon, Bezos instituted his famous "two pizza rule," meaning that no team should be so large that it could not be adequately fed by two pizzas. In his view, a team of 10, perhaps twelve people is as large as teams should get, since they don't require much coordination and can work together fluidly. He also describes delegating authority in making type 2 decisions. Such decisions, Bezos argues, should not have to be made under the heavy scrutiny of corporate bureaucracy.
Upstarts such as the Dollar Shave Club and Harry's explored a direct-to-consumer model with less expensive blades offered on a subscription basis. Gillette's market share went from roughly 70% of the men's shaving market to around 54%.
Today's Assumptions: Men's spending on personal grooming, in particular on shaving.
Potential shifts: social shifts to make daily shaving less essential to younger generation; willingness to grow beards; Greater price sensitivity.
Future possibilities: Resources devoted to entire category might be in decline.
Today's assumptions: Gillette-70% share; Schick - 20% share; others very small.
Potential shifts: Digital enables creation of direct-to-consumer market.
Future posssibilities: Explosion of competition even in a shrinking market.
Stakeholders and their important jobs to be done:
Today's assumptions: Three types of shavers: Ritualistic - get the job done at high quality.
- Begrudging - get the job done quickly and cheaply.
- Aesthetic - focus on the look and emotion.
Potential shifts: shaving itself losing relevance to many men in favor of a different look - the job is shrinking in importance.
Future possibilities: Consider running a smaller business more efficiently. Find ways to open the market to more demand.
- The consumption chains that deliver these jobs (awareness, search, selection, contracting payments, etc.)
- Today's assumptions: sales through retail channels.
Potential shifts: Digitally enabled platforms make other channels possible.
Future possibilities: Direct-to-consumer becomes popular.
- The attributes stakeholders experience:
- Today's assumptions: + Decent shave; - "Razor fortress"; - Expense; ? Differentiation; ? More blazes = better.
Potential shifts: sources of differentiation have eroded for Gillette; Men are finding other razors good enough; Global supply made by few manufacturers.
Future possibilities: Adding more blade is not going to be differentiating; May require a really disruptive strategy.
- Organizational capabilities and assets:
- Today's assumptions: Huge spending on both R&D and marketing; Relationships mediated by retail channels.
Potential shifts: probably need to change the mix.
Future possibilities: be a controlled cost player.
Gillette has responded to the post-inflection point world partly by going on the defensive and partly by moving toward developing direct relationships with end users with its Gillette On Demand. Defensively, it's lowered the price of its razors to be more competitive with the upstarts. Offensively, it's introduced the Razor Maker project, which allows users to personalize their shaving devices with 3-D printed handles. The company is also exploring ways of making the shaving consumption chain less irritating. For instance, you can now order blades by sending a text message, and the company will deliver them straight to your home. Notwithstanding all of this, it doesn't seem likely that the comfortable days of Gillette's dominance in the shaving business are likely to return.
Discovery-driven planning asks you to set some parameters for a future state and then to work backward to figure out what must be true to make that future state real. Similar to the weak signals, this process differs from the risk-averse, failure-avoidant nature of many corporate planning processes.
In a discovery-driven approach, the project would have been undertaken in such a way that it would provide proof of value all along the way. This would have involved creating quick checkpoints at which specific assumptions about the way the project would ultimately work would be tested, and implementing course corrections if they were thought to make sense. Instead, the DMI project didn't appear to have an effective governance process incorporating senior business leaders as well as technical staff, or to require regular project reviews that would have fed into this process.
To begin a discovery-driven planning exercise, articulate what would make a particular initiative worthwhile. This could be couched in terms of opening opportunities or expanding the reach of an organization.
The next step is to specify the benchmarks that suggest whether the initiative is realistic or not in terms of key comparisons. Then spell out how, operationally, things would need to be done to make it a reality. As you do this, you're going to find yourself making a great many assumptions. Write them down and then think of how you might validate, or even better, invalidate the assumptions.
The practice that brings this all together - and that differentiates a discovery-driven plan from a conventional one - is planning around critical learning moments, which I call "checkpoints." A checkpoint can be a naturally occurring event (the regulation passes or it doesn't). It can be part of an experiment. Whatever the case, quickly moving through these checkpoints is the key to mobilizing an organization that is facing potential strategic inflection points.
In a 2013 talk, she described the process of taking a two-day off-site twice a year for the team, with a one-day off-site at other points. During that time, she said, "we got ourselves aligned." First issue: strategy. Strategy, she said, is pretty straightforward, defining "who are we serving, what problem are we solving, and what is our unique competitive advantage." While that seems right to the point, she cited the problems that can arise when the overall strategy is not clear to all the team members. if you're sloppy on the direction of the company's strategy, lots of things get built that aren't needed, and lots of people get confused about the "why".
The second thing on the table for alignment is what she referred to as "the culture stuff." This includes mission, vision, and values. She could recite each of these when she was at Constant Contact and made sure that everyone else on the team could as well.
Next is alignment on key priorities. Gaining clarity about what is really important in the business and in what priority order is a critical topic. These are called "rallying cries" in Patrick Lencioni's book The Advantage. "We would come out of these off-sites with rallying cries and priorities," Goodman explained, then added, "It's always better to do two or three things completely right than do a half-assed job at eight."
Your job is to be open to hearing the feedback, even if it isn't pleasant. Your job is not to argue, to explain, to justify, or to otherwise undermine the message.