The ability to successfully lead a team or an organization is heavily dependent on efficient and effective decision-making. In start-ups and smaller teams this success is often vested in a single individual. In larger and more complex organizations decision-making is often cascaded across multiple teams and individuals. When there is a single decision-maker, success is defined by that individual’s ability to understand what it takes to win in the target market. In the more complex structure, success is dependent not only on understanding what it takes to win but more importantly, alignment across all of those tasked with decision-making authority. Even one person acting contrary to the rest of the team can lead to disastrous outcomes.
Aligning decision-making should not be a difficult task, assuming organizations take the time to understand exactly what drives success for the small business or for a project within a larger business. And what exactly drives success? That would be what creates the most value for customers in the target markets. If one truly understands this and has appropriately aligned all those in the organization then success is dependent on the organization’s ability to execute. If it were only that easy.
What Is Driving Value for Customers?
Understanding what creates the most value for customers is where most organizations fail. This lack of understanding can take many forms. One could simply be overstating the market need for a given product or service. This could be due to the lack of market research, poorly understood data or simply choosing to ignore the data. In this case alignment of the organization around a value proposition is not the issue. The organization is doomed from the onset. Good execution will minimize the damage but nothing can overcome lack of demand for an innovation. This type of failure is more often found in entrepreneurial start-ups where the founder(s) convince themselves there is a need for their product or service and no amount of market data will convince them otherwise.
Is Everyone in Sync with Realizing This Value?
Another form of failure is where there is a good understanding of the market and the value proposition is real and meaningful, but the organization does not take the time to ensure there is alignment up, down and across the organization on what matters to customers. Some innovations are so revolutionary that there are many paths to success and as long as the organization is moving in a general direction then success will follow. Unfortunately, these types of innovations are rare.
More often the innovation is incremental in nature and the path to success is more narrowly defined. The market need is there but competition is already serving that need. The innovation entails some improvement in how the need is served. In these types of innovations, it’s critical to ensure that all those in the organization understand and agree on what is critical to realizing the value of the innovation from the customers’ perspective. A lack of alignment/agreement could lead to an increase in cost, a missed product requirement or a more complex workflow than originally projected. If any of these are material in the eye of the customer the innovation will fail to meet expectations. One important assumption here is that all those in the organization are competent and are doing what they believe will be of most value to the customer and the business. The decision to compromise a performance specification is not due to incompetence, but rather a trade-off is made based on the best available information that unfortunately optimizes the wrong objective function because the priority of the optimal objective function was not clear.
Many refer to this as finding the right “product-market fit” in today’s business vernacular. Finding the right product-market fit is critically important, but equally important is ensuring that everyone in the organization tasked with making decisions understand what drives value in the eye of the customer and what entices those customers to purchase a given product or service over another product or service.
Simply put, all oarsmen in the boat must be rowing in harmony and following the guidance of the coxswain. Even one oarsman out of sync will disrupt the boat and almost certainly lead to failure.