Wednesday, July 30, 2008

Analogy #196: Just-In-Time Learning

I had a boss one time who would often come back from top executive meetings with a particular look in his eyes. When we saw that look, we knew exactly what it meant. Right away, we’d ask him, “Okay, what did you just promise to the CEO that we would do, which right now we have no idea how to do?”

You see, this boss had a knack for promising to deliver a result, long before he even had a clue on how to deliver it. What he promised would often require expertise in an area where we had no prior experience. My boss just assumed that the team was smart enough to figure it out in time. And you know what, he was right. We always found a way to deliver. Sometimes, however, it required learning a lot in a short period of time.

This reminds me of someone I knew in the consulting business. He used to get called in to consult with businesses on topics he knew nothing about. As a result, the night before the meeting he would be furiously tapping into whatever resources he could find so that he could at least stay one step ahead of the client. He referred to this practice as “Just-in-time Learning.”

In today’s dynamic environment, future success often requires doing something new and different from the past. That is why innovation is often the key to making great, long-term strategic gains. By definition, innovation requires venturing into unfamiliar territory.

Therefore, if we remain only within our comfort zone, we will never transform into what is necessary for the future. We will stay stuck in the past—becoming “experts in the obsolete.”

Every large and exciting business sector in existence today at one time did not exist. Somebody, somewhere had to take a risk and create that business opportunity…long before there were any experts in that sector. After all, how could there be experienced experts in an area before it is created?

As my old boss and consultant friend knew, sometimes we need to stretch ourselves and venture into areas beyond our expertise. We need to commit ourselves to accomplishing things before we have a clue on how to deliver them. We need to become comfortable implementing strategies which require working with the unknown. In other words, we need to embrace “Just-in-time Learning.”

To succeed in such an environment, one needs to find that balance between embracing the unknown and minimizing the risks and dangers inherent in the unknown. Either extreme tends to lead to trouble.

For example, the only way to totally eliminate the risks and dangers of the unknown is to wait until everything is known. Of course, by then you have an industry which is totally mature. That is typically a time for consolidation (and people leaving the industry), not typically a time to enter a business. Plus, if everything is known, then it is more difficult to achieve a proprietary competitive advantage. The rules and standards are already set, the leaders are well entrenched, and much of the profitability has already been squeezed out of the business.

Finally, with mature environments, you run the risk that some new innovation is just around the corner, which will make all that “known” knowledge obsolete and require another venture into the unknown.

Conversely, a blind leap into complete darkness is also rarely a wise idea. That leap may be a leap off a tall cliff leading to nowhere but destruction. Not all new trails lead to the Promised Land. Some are just dead ends. In fact, most are dead ends. Back during the original dotcom bubble, a lot of people ran blindly into the unknown—with horrible results. There is not enough time and money available to afford running down every path into the unknown.

As a result, one needs that balance—a way to gain insight about the unknown, yet not have to wait until early mover advantage is gone. We’re calling this just-in-time knowledge.

Here are some tips for Just-In-Time Learning:

1. Look for Parallels
Although every new industry will evolve in its own unique way, there is often a parallel industry which has already taken a similar path. If you study the parallel industry, you can gain quick insights into what may occur in the new industry.

For example, the revolution in consumer-driven health care, such as in-store clinics and consumer-driven web resources, may look foreign and unknown to those schooled in the ways of traditional health care. However, it may look fairly familiar to people from other consumer-driven or information-driven fields, such as retailing or mass media. By tapping into these parallel industries, one can gain some quick just-in-time knowledge to help understand this new field.

Dr. Leonard Berry has for decades been one of the leading academic professors in the field of retailing. From 1982 to 2000, he was the director of the Center for Retail Studies at Texas A&M University. However, he has now turned his attention to applying that knowledge to other service industries which are entering areas that are unknown to them, but familiar to someone with a retail background. In particular, he has been focused on the health care industry, but has also looked into areas like banking. These are the types of people who can help with just-in-time learning.

2. Focus on Superior Solutions
Sometimes, we can get all caught up in the new technology or new technology applications and forget about serving the customer. Yes, new technology can often open up all sorts of new business opportunities. They can also lead to all sorts of business failures. Success or failure is typically not the fault of the new technology. It is how the technology is applied.

Take Twitter, for example. Twitter is a social networking, mini-blog type of instant alert. Many people are trying to find ways to build new business models around the Twitter technology. I suspect most of the ideas will eventually fail.

The way to increase your odds of succeeding is to step back away from the technology and look at customer solutions. People have all types of problems. They currently have ways to cope with these problems. If you want people to switch to your new business model, you need to provide a far superior way to cope with at least one of these problems. If this superior solution uses new technology like Twitter, great! If not, that’s great, too!

The problems of life are all pretty well known. The ways people cope with them today are pretty well known as well. Just-in-time learning will take these “knowns” and apply them to the unknown space to see if it provides a superior solution to what is already known.

Looking for cool ways to apply new technology tends not to be as fruitful as looking for better solutions to known problems (which may or may not use any or all emerging technologies). In fact, by focusing on the problem, you may end up having to create a technology which did not before exist. How cool is that!

3. Embrace Flexible Experimentation
Sometimes, the best way to learn about something is to perform an experiment out in the real world. Build some prototypes, open up the business on a small scale on a web page, or try out the business in a limited geographic area. There’s nothing like real world activity for learning.

The keys to experimentation in unknown areas are as follows:

a. Keep the Scale Small—you can be faster, waste less money…and if you make a mistake, the whole world doesn’t see it.

b. Be Flexible—Don’t assume that you have a perfect business model from the start. Be willing to try different variations of the business model to see which resonates more in the marketplace.

c. Be Authentic—The experiment has to be run like a real, for-profit business. At best, the customer should not even know it’s an experiment, but think it is the real thing. A little test with a few college students in a business school classroom is not a true experiment of the business model. Too many of the variables have been compromised.

4. Minimize Opinion Research
Some at this point would also advocate opinion research…or even do opinion research prior to or instead of experimentation. I disagree. You are working in an area which is unknown. Not only is it unknown to you, but it is unknown to your potential customers. It is probably even more unknown to the customers, because they haven’t been thinking about it as much as you have.

Asking people opinions about business models for which they have no experience is not very insightful. Sure, they’ll give you an opinion, but it is a guess. And often their guesses are way off course.

Trust me. I’ve done lots of consumer research over the years. Much of it is very useful. However, opinion research into new areas where the customer has had no personal experience is usually a waste of time. Asking consumers about their personal experience with your experiment, however, would have value, because we’ve moved from opinions to experience.

Successful strategies usually take businesses from their current area of comfort into evolving business models which are not yet fully known. To do this properly, one cannot afford to wait until all the knowledge is known. Yet it is also risky to jump in without any knowledge. This is when Just-in-time learning is needed.

I once worked with a President of a retail brand which was going through some tough times. I suggested some changes, but he resisted them. He told me that he had been in this industry for decades and knew how things were supposed to be done. He said if you change the rules, customers would be unhappy. All I could think of was the fact that another retail brand owned by the same firm was far more successful than his because it totally rewrote the way things were be done.

Sometimes you have to go out on a limb and rewrite those rules.

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