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February 15, 2017

Excerpts: Sense and Respond: How Successful Organizations Listen to Customers and Create New Products Continuously

By: 800-CEO-READ @ 9:45 AM – Filed under:

Senserespond

The following is an excerpt from Chapter 1 of
Sense and Respond: How Successful Organizations
Listen to Customers and Create New Products Continuously

by Jeff Gothelf and Josh Seiden, which was released
by Harvard Business Review Press last week.

 

 

Continuous Uncertainty

Everything’s Changing, All the Time

It was Christmas 2012, and Facebook was more popular than ever before. What’s more, smartphones and digital photography were more ubiquitous than ever before, and Facebook was far and away the most popular photo uploading destination. But with all these photo uploads came a new problem for the social networking site: people were reporting millions of photos as inappropriate. To review all these reported photos in a timely fashion would have taken thousands of people.

This story, first reported by NPR in 2015, caught the attention of mainstream readers.1 But the tech world has heard stories like it before. Increasingly, it is the new normal for companies working in the digital space: companies launch software, the software has unpredictable effects, and companies struggle to respond. That’s because the digital revolution has brought to the world of business two critical forces. The first is uncertainty: as our software systems get more complex, it becomes harder to predict what people will do with them. Savvy companies are adapting their processes to deal with this by harnessing the second force: continuous change.

Unlike manufacturing products, digital products can be changed and updated rapidly. Organizations that apply the power of continuous change to products, services, and their businesses as a whole are able to adapt quickly in the face of uncertainty.

Older methods for dealing with uncertainty don’t work in the digital age. Careful, detailed planning, for example, fails over and over. In 2013 the British Broadcasting Corporation shut down a decade-long attempt to build a new, organization- wide content management system. The project, called the Digital Media Initiative, was supposed to allow BBC staff to create, share, and manage digital content from their desktops. Despite the careful plans made by the project team and sponsors, after many years and close to £100 million, the project had delivered no value. Project managers complained that requirements kept changing, making it impossible for them to deliver. In other words, no matter how diligently they planned, the plans never worked. Conditions kept changing. The BBC project failed.

Every business leader you speak to can probably tell you similar stories of software- related projects and strategic initiatives that failed to deliver value, failed to deliver on budget, failed to deliver on time, or simply failed to deliver. Every year, our society wastes hundreds of billions of dollars on failed software efforts, mostly because we think we can use industrial-age management approaches on digital- age problems.

At the same time, software has become an ever more critical building block for every business of any significant size. At Goldman Sachs, for example, the largest single division in the firm is now technology, employing eight thousand—a full 25 percent—of the firm’s thirty-two thousand employees. 

Slowly but surely, we watch as the products and services around us are transformed by software. Apple’s iPhone spelled doom for Nokia and RIM, two companies that were built on technological excellence but couldn’t cope with the unpredictable change wrought by the software revolution. Amazon did the same to Borders and Barnes & Noble. Netflix did it to Blockbuster.

The software revolution is here, and we can’t predict the ways it will play out. Customers use products in unpredictable ways. Competitors emerge where we least expect them. This new level of volatility and uncertainty is one of the side effects of the digital revolution. We need new ways to respond.

◊◊◊◊◊

The team at Facebook could have simply hired more reviewers to deal with the deluge of “inappropriate” photos, but before it did, it started to look into the reported photos. That’s when the Facebook team discovered something strange: most of the photos were not actually inappropriate. There were photos of people in ugly sweaters, people hanging out with their ex- boyfriends and ex-girlfriends, people in unflattering poses. The photos weren’t inappropriate—no nudity, no harassment, no drug use, no hate speech. But Facebook’s photo reporting tool didn’t have an “ugly sweater” category, so if you didn’t like a photo of yourself, you had little choice: you had to report it as something, and “inappropriate” seemed to be the best option. 

This is uncertainty at work. Users come to a system with an idea of what they’re trying to do. If they don’t see an easy way to do it, they’ll try to find a way. Just as a stream flows around obstacles, cutting unpredictable paths along the way, so will a group of users find the easiest, fastest ways to achieve their goal. If they can find a way to do it on your system, they will, even if it means doing something you hadn’t predicted, like reporting an unflattering photo as inappropriate. And if they can’t find a way to do what they want to do, they’re likely to abandon your service in favor of something better.

Facebook’s product team responded by trying to fix the reporting feature—and it used what we call a sense and respond approach to dealing with uncertainty. Because team members weren’t sure what was going on, they started to update the product in a way that would help them figure it out. First, they added a new step to the reporting process— a question that asked, “Why are you reporting this photo?” This open- ended question helped them learn that, in most cases, people were embarrassed by the photos they were reporting. Armed with this knowledge, the team updated the product again, this time asking people to contact the poster in these cases of embarrassing photos. This helped but didn’t solve the problem.

Then the Facebook team added a blank message box so that people could use the reporting feature to contact the poster directly. The team tested that. It was a little better. Then it added a default message in the message box. That was better still. The team members tried lots of different small changes, pushing these changes out to small segments of the user population. Each time, the changes attempted both to fix the problem and to get more information about the problem.

Eventually, by tweaking and trying and asking and measuring, the team was able to solve the problem. The reporting feature now has a category for embarrassing photos, directs users to contact the person who posted the photo, and prompts the poster with a carefully tested written message (which users can edit but rarely do).

Still, if you now go to Facebook and report a photo, there’s a good chance you’ll see something different from what we’ve described here. That’s because somewhere at Facebook, someone is probably looking at the numbers on this feature, spotting a problem, and running tests to improve the situation. This is sense and respond, and it’s a continuous process.

Facing Uncertainty

The uncertainties faced by the team at Facebook are the new normal. The tactics the team deployed are the emerging standard for how to respond. And even though the tactics can be thought of as simply a management approach (measure customer behavior, test solutions, scale what works), they rely on the ability to act, and act quickly. Until now, the common response in business and government has been to consider technology the domain of specialists and segregate it from core business operations. We know now that this approach doesn’t work. The reason it doesn’t work is that it reduces the business’s capability to act.

In other words, we no longer have the luxury of ignoring technology—or leaving it to the technologists. Instead, we must all become adept at managing in the face of it—both the uncertainty it creates and opportunities it offers. The reality is this: assigning responsibility for software to your IT department is like assigning responsibility for breathing to an oxygen department.

Excerpted from Sense and Respond: How Successful Organizations Listen to
Customers and Create New Products Continuously
 by Jeff Gothelf & Josh Seiden
with permission of the publisher, Harvard Business Review Press
Copyright © 2017 Jeff Gothelf and Josh Seiden
All rights reserved

ABOUT THE AUTHORS

Jeff Gothelf is a lean-thinking and design evangelist, spreading the gospel of great team collaboration, product innovation, and evidence-based decision making. He is an author, speaker, and thought leader on the future of product development and design, often teaching workshops or giving talks on building cultures that support teamwork and innovation. Earlier in his career, Jeff led the UX design teams at TheLadders and Web Trends. He also worked with and led small teams of software designers at AOL. Find Jeff Gothelf online at jeffgothelf.com, on LinkedIn, and on Twitter @jboogie.

Josh Seiden is a designer, consultant, and coach who helps companies create new digital products and services. In his 25-year career he’s worked with start-ups, large organizations, and enterprises of all sizes, whether in Silicon Valley or on Wall Street. He is a founder and past President of the Interaction Design Association. Find Josh online at joshuaseiden.com,  on LinkedIn, and on Twitter @jseiden.