You need a Next-Gen company in your risk management strategy
“Business as usual is dead. We will need to get much better at driving change - or we will be driven by it.” These words, from futurist Gerd Leonhard regarding digital transformation, are more accurate now than ever. The global health crisis and the impending recession might be the worst time for investing in change. Or, paradoxically, the best. Which scenario applies to you will depend on your risk management strategy.
We are facing one of the greatest crises of the last few decades. The COVID-19 outbreak is a global health threat that is already slowing down the world economy. JPMorgan predicts that global GDP may decrease by 1.1%, which will cost the world economy trillions of dollars. What is even worse, we are still at an early stage of the pandemic and no one can forecast its real impact.
This time of uncertainty forces businesses to redefine their risk management strategies. Companies are slowing down their digital transition and postponing investments in software development. That is the most “safe” strategy - to wait it out. However, the future may require bolder action from bolder companies. For such companies, the question is not “how to avoid the risk” but “how to reduce it and push further”.
To be ready for what comes next, you need to become a Next-Gen company or partner with one.
What is a Next-Gen company?
A Next-Gen company is the kind of organization that is leading a digital transformation, has a dispersed structure without loss of leadership and decision-making, has bullet-proof processes implemented, and has a high level of resistance to a crisis.
It is a company that not only can operate in a business environment of volatility, uncertainty, complexity, and ambiguity but also embraces that environment and uses it to power its future performance.
You won’t become a Next-Gen company over night. It takes time and a profound transformation of your organization. However, you can start by choosing one of the actions mentioned in this article and implementing it in your company, and as part of your risk management strategy.
However, if you don’t have time for that, you can try another approach.
You can reduce the risk of development if you partner with a specific type of company. You need a company that will be a real backup for your product development, from idea to release… that will be able to fill in the gaps not only in your dev team but also in business-related departments… that will have the skillset and deep understanding of your business needs to run the product alone, if necessary.
If you find that kind of company, you can incorporate it into your risk management strategy and embrace the chance to push forward when everyone is slowing down.
Software development risks that can be mitigated by a Next-Gen company
Developing a new digital product always comes with risks: lack of skilled developers, lack of market need, lack of time and budget, strong competition - the list is long. However, today certain types of risks are climbing their way to the top of the list. Among them are:
- The risk of your in-house development team suddenly being unable to work (who will finish the product?)
- The risk of your management suddenly being unable to work (who will manage the development?)
- The risk of remote working (what about communication and quality?)
- The risk of a shrinking market (who will use the product?)
- The risk of an interruption to the budget (who will pay for the development?)
- The risk of a partner being unable to deliver (what if our partners face the problems listed above?)
Some of these risks can be managed and reduced by a specific combination of strategies and tactics.
How can Next-Gen companies reduce product development risks?
There is no simple answer to this question. I can’t give you a magical key to a bright future. There is no such thing. The solution doesn’t lie in paper plans quickly developed when the crisis is already knocking on the door. The answer lies in a holistic approach to your business and your organization. So, what action should you consider to ensure that your company is ready for a crisis?
Digital transformation for driving change in a disruptive world
Digitization, mobilization, augmentation, automation, disintermediation - the Five Horsemen of digital transformation. Make them work for your business. According to Statista, by 2023, businesses worldwide will have spent up to $2.3 trillion on technologies and services that enable digital transformation. In essence, it is not a trend; it’s a must-have for companies to compete in the global market.
Now, more than ever, it is time to invest in a digital transformation that can help in reducing your risks. How? For example, by transferring your offline business to digital, you can lower dependency on the physical world; an obvious example would be the development of virtual financial services that don’t require physical customer centers.
Digital transformation is no longer a matter of plans - sometimes, it is the “to be or not to be” of your business.
Dispersed leadership in a holistic organization
How you build your organization defines its resistance to crises. Instead of a hierarchical structure, which is sensitive to a sudden inability to fulfil critical roles, you can choose a different path.
You can build a company based on radical transparency, communication, and trust, which are the foundations for dispersed leadership. In this model, decisions are not the sole responsibility of one person or one position. Instead, many roles have decision-making accountability and they can be distributed across many locations, for safety. Collectivity doesn’t mean weak leadership, it means that the leadership is based on a much wider range of knowledge and experience.
You don’t have to figure out how to make it happen yourself. There are ready-to-use frameworks which help in such transformations, for example, holacracy. If you’d like to know a bit more about new types of organizations, I recommend this article: “The Next:Land of Organizing.”
A risk management team is a must-have
The risk management team shouldn’t be appointed when the crisis has already arrived. It should be an integral part of your organization, predicting, detecting, and acting on the risks associated with product development.
If you want to ensure that this team will be able to react to changing project circumstances immediately, you need to consider its structure and goals. I recommend you assemble an interdisciplinary team, containing dev and non-dev roles. A complex problem requires complex skill sets and unorthodox approaches.
How would this team operate? For example:
When you work with an external partner, this team can be an additional arrangement working alongside the dev team. The risk management team should assess risks related to product development at every stage, both on your side of the project and your partner’s. The team shouldn’t operate as a control unit but more as a help, enabling cooperation and providing support and assistance to dev team members.
Tailored processes - lean startup and scaled scrum
When you have the right processes in place, the chances that something will go south decrease. Agile and scrum are obvious choices for software development projects. However, if you want to ensure that your product will be meaningful for users, you should consider the lean startup approach. The process of constant learning by gathering data via MVPs and working on actionable metrics increases the chance that the product development process will achieve its goal.
Another approach to reducing the risks of software development is nexus. This scaled scrum process uses the scrum framework, usually with small teams and projects, to build complex digital products iteratively. You can learn about scaled scrum here.
The global outbreak of COVID-19 will change the way we live and how we do business. It already has. There is no going back, we have to rethink how the future world will operate on a business level.
I’m convinced that the post-pandemic world will require a new type of company for a new kind of customer. It will require bold decisions and bold strategies. It will require organizations that are able to deal with a crisis in the new reality and on a daily basis. It will require Next-Gen companies.