If the past year has demonstrated anything, it’s that we live in an unpredictable world supported by technology. To thrive within these conditions of uncertainty and to future-proof our businesses, we must strive to become ‘sensing organisations,’ that can sense and respond, continuously, in real time.
In the latest of our series of exclusive Harvard Business Review Press events, we welcomed Jeff Gothelf and Josh Seiden. Authors of the bestselling book Sense and Respond, Jeff and Josh discussed how organisations need to rethink the way we organise work in order to sense and respond quickly.
- Agile organisations move through the feedback loop quickly, delivering the smallest thing possible, sensing how it affects customer behaviour and responding accordingly. That means within days, hours or even minutes.
- One of the pillars of Sense and Respond is measuring to outcomes. A mindset switch away from measuring against outputs and deliverables is key to determining whether you’re generating real value.
- Thinking like a software company isn’t limited to tech companies. Traditional and legacy organisations have the opportunity to build a continuous conversation with their customers if their leaders embrace the sense and respond model.
Accelerating the feedback loop
If we rewind the clock by 20 years, software development was incredibly slow. Shipping meant physical posting, adoption was limited by the audience’s access to computers and feedback lagged months behind the point at which a new product was launched.
As Jeff remembers from his early career in software development, the development process would take around six months after which 15 million copies of a product would be printed onto CDs and shipped around the world. Then the waiting game began. Would people use the software? It would take months for feedback to be received that would inform development of the next version.
Today, we’re working in much shorter cycles. Developers are delivering the software that affects our daily lives, continuously. They can optimise, improve, or remove features instantly. There is now no finish line to product development nor is there a predetermined route to an end goal. This fundamental shift in how we think about the integration of technology is something that a lot of organisations are struggling with.
Development with no finish line
In organisations that can ship, sense and respond effectively, product development only stops when return on investment no longer adds up. Not when the next version is ready to be released. This is a far cry from the software product launches of the 1990s and 2000s. Think Windows 98, then Windows 2000.
Why are we so conditioned to incremental product refreshes? It’s a marketing gimmick conceived by the automotive industry more than 100 years ago, says Jeff. A tactic to encourage buyers to purchase a new car every year with new and improved features. But something’s changed. Automotive engineers started to think like software developers and brands like Tesla became able to sense and respond.
“I can go to sleep, wake up and my car can do new and different things and I didn’t have to do anything. My car can drive itself. It can park itself around the corner from my house. And it’s not just the car that operates differently it’s the systems that support the car, and the organisations that build the systems.”
– Jeff Gothelf
Building the continuous conversation
Tesla can sense and respond at pace using technology because it thinks like a software company. With this amazing capability comes tremendous opportunity; the opportunity to build a continuous conversation with the people in the market that it serves.
“Continuous software development allows us to get ideas to market quickly. To ship something small, quickly into the hands of our customers to understand whether or not we’ve delivered any value because we can sense how it impacts their behaviour.”
– Jeff Gothelf
Whereas in days gone by a product cycle might have taken 12 months, there is an opportunity to achieve this in a much shorter time using digital technology. If you can get through the feedback loop in a month, or in a day or even in an hour, you’re building a continuous conversation with your target audience. You then have the choice to scale up changes that improve the product and to stop or roll back on ideas that are not shown to generate your desired outcomes. A quick change of course is easy once you can quickly deploy ideas to market.
“How can we move quickly through our learning loops as an organisation to test our ideas, so that we’re not spending a whole year and our budget building stuff?”
– Jeff Gothelf
This is the continuous conversation of ship, sense and respond.
Ship – the smallest thing we can
Sense – how does it affect customer behaviour?
Respond – What are we going to do about it?
“Our goal is to get through this feedback loop as fast as possible, because the faster that we get through this, the faster we learn whether we’ve actually delivered something of value.”
– Jeff Gothelf
Managing to outcomes
From the five pillars featured in the book, Josh chose to focus on ‘managing to outcomes’ for the second half of our discussion. Managing to outcomes means changing the target for what success looks like. Rather than defining success by outputs or features, we measure it by outcome. That is: “A measurable change in behaviour that drives business results”.
Using a model from the non-profit world: Resources – activities – outputs – outcomes – impact, Josh urges us to be specific about the nature of change we want to get. While impact is long-term and complex (for example customer loyalty or profit), to achieve outcomes, we need to step back and look at outputs (activities like building new features) whilst being aware that our outputs may not lead to the desired outcomes.
“What are the behaviours that drive results? What do we want our customers to do that will create value for them and will create value for us as a result? How do we get people to do more of those behaviours?”
– Josh Seiden
In a traditional product development journey, leaders would expect to see a specific set of features or deliverables for their investment. If we measure to outcomes, then we are instead using a methodology that assesses whether those features and deliverables generated real value – the desired outcomes.
Advice for sense and respond thinking
Jeff and Josh finished with some questions from our audience, offering some advice for leaders who are making the change to becoming a sense and respond business.
- Defining your target audiences is critical. This is central to understanding which outcomes you want to generate. Whose behaviour do you want to change? Refine your broad list to three or four personas then put them in priority order.
- We all need to keep running normal DevOps as well – so prioritise. Define your success metrics as outcomes and treat your outcomes as filters that sit on top of your backlog. Do you believe that a new idea will help you towards an outcome? If so, it’s a priority, if not then it has to be put on the backburner.
- In risk averse organisations, compartmentalise the risk into an innovation experiment. Instead of trying to change an entire business unit or organisation, take a small team, give them a strategic mandate for a finite period and help them set their outcome goals.
- Language makes a difference to mindset change. There is a subtle vocabulary shift from talking about ‘making stuff’ to talking about ‘what people will be doing differently if we succeed’.
Lastly, Josh talked about agile ways of working and how to learn them. The most valuable experience he had was to be an apprentice on a team of people who are already behaving in this way. People who can model the ability to think agile and measure to outcomes, is a powerful way to win hearts and minds.
Thank you to our speakers, Jeff Gothelf and Josh Seiden, authors of the bestseller Sense and Respond. Savannah Group’s co-host for this event was Louisa Perry, head of Savannah’s technology and digital practice.