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How to climb the COVID change curve

By Haydn Shaughnessy

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In this second article out of our series of three, we look at how to initiate positive change against the backdrop of COVID 19.

Your first reaction to COVID might have been “it’s temporary”. But right now you need to figure out how to make permanent change happen fast. Here Haydn Shaughnessy looks at how Flow’s CATE Value Discovery methodology can be used as a tool for adapting to disruption.

Being in denial

Say you are managing a University or a sports’ club. What you have in common is attendance. People come to your campus or your stadium for some of the most important and uplifting events in their lives. 

If you sell prestige cars, your showroom is where people conduct life affirming transactions. Showrooms are like stadiums, often on the periphery of cities, gleaming and important places to be seen. But car sales in the UK in April were down over 97%! 

The value propositions of these systems of attendance have remained largely unchanged for decades.

We can see in these examples the industries that never quite made it to the digital table. The same goes for restaurants, cinemas, pubs and so on. 

There are plenty of examples of slowly transforming companies. Can they discover new forms of value quickly? We believe Flow’s CATE value discovery method can help them do just that.

Systems of attendance

What many high value businesses have in common is scarcity value. 90,000 people can fit into the Bernabeu, but only 90,000. Good restaurants prosper by being able to turn people away. We know Harvard and Oxford are a ticket to a good career, that’s what makes restrictions on access a good revenue model. 

The scarcity of strong reputation is what created high margins for businesses of attendance. Can you maintain scarcity when you take attendance away? Here’s the reason for asking.  

Universities will have to put their businesses online but can they still charge reputationally high fees? Restaurants can do take-aways but can they maintain reputational pricing? Will soccer teams be able to charge premium broadcasting rates with atmosphere-free matches being played in half empty grounds?

These businesses and many more need to revisit the relationship between value, scarcity and price.

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Coming out of denial

For the most part, a senior team believes it is on the only value journey suited to them, their culture and their products. But COVID’s impact is not going away. 

To continue to survive, companies will have to transform to serve new customers with new needs. What does that mean in practice?

Satisfaction or success? In our experience, companies have often entered into a cosy relationship with core customers and while they will respond to their needs, they are not looking at new, emerging needs in the wider market. And while they want to do well by customers they don’t go to the next competitive level by figuring out how to bring them more success. 

Broadening the asset base. They over-sweat their existing assets (University campuses, cinemas, restaurant kitchens, stadiums) with their existing customers and small adjacencies. 

But they don’t look to the other assets they have, for example the wider market of people who want some engagement with them, the ones who don’t buy memorabilia or don’t pay for summer short courses or who get turned away on a Friday evening.

Innovation as gambling. When they innovate, they innovate for their existing customers not for the wider market. Or they innovate lamely by using lean iterations. Supposedly a fast way to test ideas, lean iterations usually mean too many projects get the green light without enough prior validation. It’s even been called making small bets..

Forgetting the ecosystem. Finally, how many of these businesses really look to an ecosystem? Ecosystem businesses look to integrate services across sector boundaries but also to do good for the community. They are not business as normal.

CATE Value Discovery

At Flow Academy we’ve been working with this set of issues for over a decade. In our workshops we typically find people excited by a simple value wheel that they can engage with to think in new ways. It can help you now to ignite new value journeys.

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There is a prerequisite for running CATE sessions. You need to segment the markets you are in or the markets you are interested in. We don’t validate innovation against our existing customers. We validate against the market. Markets change faster than our customers do.

Here’s a hypothetical case. Say you are a university with a marketable reputation. Your campus is now a liability because the normal levels of interaction that brings in profit is not going to be safe. What do you do?

Your first reaction is to say – we go online. But take that through the CATE cycle. 

First, though, what is your market segmentation? Is it relatively wealthy parents with high aspirations for their children? Chances are you will now be competing for these with every university thinking of going online. 

In fact your market segmentation will be deep and broad, encompassing a huge range of people who may want to access your assets for many different reasons, and at different price points.

With CATE, we encourage you to select a small number of these and work through the four points. How can I bring success to this (or these) segment(s)?

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  1. The C in CATE stands for Customer Success – how can I bring new kinds of success to customers’ lives? Perhaps education in the form of courseware is less significant to one segment than helping those people transition to a real time learning mindset. How can I define this as a set of success factors for customers? What are their outcomes and how can I make these imperative to customers?
  2. The A stands for assets. How can I make maximum use of my existing assets? Amazingly most companies we deal with simply do not exploit the assets they have. Asking what assets I already have can make innovation very fast. But you need to be committed to discovery rather than just launching a new project!
  3. The T is targeted innovation. We aim for innovations that are targeted enough that they don’t need to go through lengthy iterations. They come validated. If you’ve assessed your assets and don’t have critical features, ask what very specific innovations you need to make to bring this success to this segment of customers? That’s where you can target your product development. 
  4. Finally E stands for ecosystem. Who in my networks, or on the periphery of my business, can help get my innovations right and help start delivering value to those customers fast?

CATE gives you a way to get your people focused on value that’s close by but not yet captured through thinking about successful outcomes for customers, using assets that are lying idle, validating ideas and working with partners and interested parties who can help.

The requirement you face is more than just your revenue streams, though of course revenues will be top of mind. Once you reduce the significance of today’s prime assets, however, a new operating model is hugely important. We’ll be writing about that on Friday.

CATE is the centre point of what we call Value Discovery. And Value Discovery is just a part of what we do in Flow. 

However, the more clients we work with, the more we realise that they are missing the fundamental building blocks to effect real transformation. Their starting point is wrong (e.g. IT agile) and their destination can be thwarted by change-averse people.

CATE sessions are a quick and incredibly productive way to reshape your thinking. They help draw out the collective intelligence of your people and point it at all the ways you can remodel your business around new sources of growth. And with COVID, all bets are off. Now ‘s the time to remodel your business or die.

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