10 May 2017

In the Race Car Business, Speed Means Simplicity

The world of commerce is growing increasingly complex as new technologies can quickly enable disruptive business models and change how customers interact with us. Innovative products and services are introduced faster and with higher frequency in all industries. Disintermediation of supply chains causes old partners to compete and new partnerships to form. At the same time, millennials with completely different values and buying habits are starting to become a substantial part of B2C and B2B buyers.

All these are examples of complex challenges and phenomena that require constantly evolving business strategies and business models to stay competitive. Historically, most of the complex business problems have been solved with complex IT solutions that, in most cases, grow even more complex over time. Complex solutions are often monolithic in their approach and require huge budgets and a lot of time and sacrifice to get implemented in the organization. Say "big-bang ERP implementation” and most that have gone through one and survived will agree.

Complexity is the enemy of speed, flexibility, and innovation

Race cars are optimized with one single objective in mind—to be as fast as possible. If we, for a minute, consider an organization as a race car and we think about what we need to do to make it fast and competitive, most of us will not think about adding weight or designing a hard-to-use cockpit. A race car is fast because it is stripped of everything that isn't necessary to reach the goal—winning the race. A race car's cockpit only contains the controls that are needed to drive really fast and provide the driver with an unobstructed driving experience. Adding controls in the cockpit for managing a front loader, or a towbar in the rear of the car, just doesn't make any sense as it will only increase the complexity of maneuvering and add unnecessary weight that will inevitably slow things down.

Complex and bloated processes and it's ugly sibling "the enterprise model," combined with all-in-one system support, adds time-consuming process steps and tasks, whether they are needed or not. Not only does complexity make things move slowly, it also makes things hard to change and is often the cause of inflexible organizations that leave employees disengaged and unmotivated. So not only is complexity the enemy of speed, but also the enemy of flexibility and innovation.

Become a disintermediator instead of becoming disintermediated

Amazon has been growing extremely fast and is now one of the largest companies in the world. Despite that, they are still moving and innovating much more quickly than their competitors in the traditional retail space. There are, of course, many reasons for Amazon's success, but complex processes aren't one of them. In a letter to shareholders, Founder Jeff Bezos wrote: "As companies get larger and more complex, there’s a tendency to manage to proxies. Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing. This can happen very easily in large organizations." When the process becomes “the thing” you end up with the all-encompassing enterprise model and its monolithic system support.

Instead, Amazon is laser-focused on what Jeff Bezos calls "True Customer Obsession." As the Amazon example shows, staying nimble and focused can help an organization move fast, grow quickly, and stay innovative. Simplicity requires a focus that encompasses everything, from organization and processes to system support. This is the opposite approach compared with yesterday's all-encompassing enterprise model, unfocused all-in-one enterprise software packages, and big-bang implementations.

Think of your organization as a race car and strip away the unnecessary weight of yesterday and focus on what's truly important. That way you can be the disintermediator instead of the disintermediated.

Johan Boström, Co-founder and Evangelist, inRiver