Using 'orders of magnitude better' to help reimagine our businesses.
Here is a trick we use to open our minds to how different any category might be in the future. It’s obviously easy to demonstrate that you can systematically predict the future in retrospect, which obviously you can’t. Like I say, this is about opening the mind.
You can use this approach to stretch the thinking in internal change projects too. Pick factors that describe customer service, or cost, or risks - any performance measure.
1. Pick three factors that characterise what you do. You have to be able to express the factors as a number! Make sure they are independent; that none are functions of another. If you looked at mobile phones you might pick cost per unit, weight and battery life. Don’t pick battery life and transmitting power as they might be too related.
2. Write the current value of that factor. Just guess or make it up for this purpose.
3. Make each factor an order of magnitude better. Let’s assume we mean ten-times-better. Taken together these three factors will be 1,000 times better. The numbers will instinctively look ridiculous.
4. Consider what the world would look like if these were true. Suspend disbelief. How different would your whole sector be? Would your sector per se even exist or would it be a completely new thing? What would your products and services look like? Who would be using them? What new applications would be opened? How would the flow to market?
As a warm-up try the above for mobile phones 25 years ago and now.
5. Ask ‘yes if…' What would have to be true to make those numbers real? If you find yourself saying they wouldn’t then ask the question again. Keep asking it. It’s this question at this point that should open interesting lines of discussion and exploration for your strategic thought. If you get bogged down in constraints ask 'yes if...'.
If it starts to feel (very) real at this point and the 'yes if...' answers look like your roadmap the you are probably working in an emerging industry. You'll need to go round the loop again, at least once.
6. Pick different factors. If you find yourself thinking ‘Interesting but it doesn’t work for our mature sector you digital-wielding snake oil seller.’* then pick so different factors. If in automotive the unit cost of a vehicle looks static then pick fixed-cost of ownership or cost-per-mile.
The filthy trap is that the factors you need to work with might be ones customers don’t care about today. The reason they might not care about them is that they don’t change. But what if they did? Because customers don't care about them, and you are a great business that thinks about customers you might miss them. See Innovator's Dilemma.
7. Make each factor an order of magnitude better again. Run Step 3-5 again. If you are feeling really clever then do Step 6 again too. Consider how the actual factors you choose might change. It can get a bit silly at this point but that’s part of the point of it. As the great management guru Mary Poppins said ‘Every job to be done should contain an element of fun.’
[Advanced super-stretch technique: go back to the factors and invert them. Imagine we pay you to own the car, that your mobile phone is has lift not weight, that your fridge produces energy not consumes it, that your customers have negative wait times in your call centre (I know, I know) or broadband speeds get better the further you are from the exchange. You get the idea.]
If you want someone to help you look at your products or business this way, to help create some new answers out of it or to generally just make your corporate strategy fit for a world gone digital then obviously we’d like to help. It’s why we write these LinkedIn articles.
* If you got this far into this article then you probably weren't thinking that. So I don't know who this footnote is written for.