Barrier 3 - Failure is not an Option
Traditionally, the materials industry has complex product conversion cycles that require strict adherence to quality standards and safety constraints. To achieve these standards, firms developed carefully engineered facilities and precise manufacturing processes. The cost of failure in these initiatives is so great that firms employ common risk management approaches including lengthy planning cycles, complex oversight structures, and rigorous change management reviews. This has formed a performance-based culture that is highly results-oriented and used to dealing with risk and complexity.
While this culture has proven effective in many regards, firm leaders must consider: when it comes to digitalization, what are the downsides and failure modes to such a performance mindset?
We have observed that in digital projects, this orientation results in a hesitancy to undertake initiatives that do not offer the promise of success as well as imposition of unrealistically high hurdles and narrow timeframes for success. This performance-based mindset prevents materials firms from achieving optimal results in their efforts to employ digital sales and marketing techniques.
Breaking the Barrier
The blind spot here is not recognizing that in the realm of sales and marketing, especially around digital tactics, there is a different risk profile. Treating the marketing and production risk profiles as identical can have significant negative consequences on digitalization.
In the digital realm, the failure rates are high, the risks and costs of experimentation are low, and the speed of iteration is imperative. Excessive oversight slows or even altogether halts progress.
In his Harvard Business Review cover article, “Building a Culture of Experimentation,” Stefan Thomke cites a performance-based mentality as a key barrier to digitalization, due to its suppressing effect on experimentation.
"For every experiment that succeeds, nearly 10 don’t—and in the eyes of many organizations that emphasize efficiency, predictability, and 'winning,' those failures are wasteful… At many companies the risk associated with experiments makes managers reluctant to allocate resources to them."
Because of its low experimentation cost and data-driven approach, digitalization enables and requires iteration. As such, leaders must remove processes, norms, and behaviors that hinder iteration. Before launching their digital sales and marketing initiatives, materials firms must consciously and aggressively address the following cultural shifts: autonomous teams, minimal oversight, processes reinforcing rapid iteration (e.g. Agile), and tolerance for ineffective tactics.
Changing this mindset requires leaders to set long-term expectations for digital initiatives while viewing tactics and individual attempts as experiments and learning opportunities. Every digital tactic employed is a conversation with customers providing immediate feedback. As such, any commercial leader should want their teams engaged in more of these exchanges and sooner.
Materials companies have pockets of this culture worth highlighting as examples. For instance, building a safety culture requires treating every incident or near miss as a learning opportunity, without publicly assigning blame to the actors. Customer face time is also commonly viewed as a learning opportunity; in which case, sales organizations encourage more frequent customer interactions and eagerly disseminate learnings without demanding account managers close the deal in any particular meeting.
When companies view digital tactics as points of customer interaction rife with learning potential, they can institute processes and norms to encourage experimentation and learning. This removes a critical barrier from the success of digital initiatives.
