Lessons from YLD Innovate

Innovation in a fast-growing environment

YLD Innovate is a series of events covering relevant business topics for the CIO.

The first event in this series covered the lessons learnt by Joe Steel when setting up Virgin Mobile. In particular, some of the challenges they faced and how the company managed them, as well as some good tips and advice on how to set up a company, grow it quickly and make the right decisions without losing focus.

1 — Setting up — differentiation

Regardless of whether entering an industry with established players or a new concept, there is always a need to differentiate for a company’s brand to stand out. For Virgin Mobile, differentiation was about providing an excellent customer experience. Given the market expectations of the Virgin brand, the customer experience had to reflect this brand positioning into the customer experience.

The company was entering a crowded market, where the four incumbents were providing an established, expected service. Differentiation was going to be, supported by the brand, the angle for the company to succeed quickly.

For each company, differentiation will be based on their vision and what their brand stands for. It should be reflected consistently at all customer touchpoints. Identifying what the business differentiation and positioning are must take place when setting the company, but have to be sustained thereafter.

It is paramount to translate the brand values into customer experience — constantly and consistently.

2 — Culture in a fast-growth environment

Culture is fundamentally important. Whether you are a new or an existing brand, the company has to empathise with the customer and reflect the values that the customer expects from that brand.

Virgin Mobile needed to create and maintain the company’s culture through a very fast-growth period. There was no manual for this, so the management team created an actual document, the blueprint, to ensure shareability and consistency. This document was given to all joiners who would read it and could ask questions. It explained the company’s vision, brand, approach and all details down to tariffs, phones, distribution… so everyone was “on the same page”.

One of the concerns at Virgin Mobile was to maintain that culture, ensure that the teams continued to be energised, focusing on the customer experience. An example mentioned by Joe Steel was the case of how people are at home: fun, responsible, good at relating with people around them… Yet, at some point, the business environment seems to destroy this behaviour.

Virgin Mobile’s management team was determined to prevent this from happening. The solution was to free the team so they behave well towards the consumer, and create a culture that allowed employees to bring their personality to work.

From a culture perspective, it is important not to allow bureaucracies, procedures, anything that drags people down. Don’t prevent people from behaving like humans.

There are three elements that need to be fostered to preserve culture and guarantee process is most efficient:

• Big picture — Everyone in the team needs to know what are the company is aiming to achieve. This is helped by creating a blueprint.
• Diversity — People who think differently, working together, achieve best results. To ensure they can work together, the big picture must be clear to all and the blueprint shared. It doesn’t matter what they need to do or who works in the same team: everyone understands the purpose of the company and the purpose of the group and specific projects.
• Take pride — Create a sense of purpose and ensure this is shared across everyone in the organisation. This sense of purpose is why people are in the company, they don’t join because of what they do. If this sense of purpose exists, they will be proud of what they do — and they will deliver on goals. When recruiting anyone new into the team, make sure the new person joins them in their pride.

Sharing the big picture, encouraging diversity and nurturing pride are relatively easy in a small team; but when a company is growing fast, values are crucial: having a shared vision and a blueprint that everyone understands and buys into is mandatory.

In the case of Virgin Mobile, the company was growing really fast and people were joining at different stages, all being shown the blueprint. Yet, that big picture was changing as the company evolved.

This is why there needs to be a very clear, unchangeable core: companies must never lose sight of the heart of their proposition (in this case, the customer experience). It also has to be loyal to the brand and reflect the values to the customers. This will naturally induce innovation.

3 — Process in a fast-growth environment

Very aligned with culture is process: how can you stay innovative with the day-to-day pressures?

This challenge was experienced by Virgin Mobile quite soon after launch. The company reinstated the emphasis on their vision and objectives. Having shared the blueprint, everyone in the business knew what was expected of them and how their work supported the bigger picture.

Within that unified vision, the model allowed for substantial diversity. This ensured an open approach to each project, with maximum efficiency and without losing sight of the main goals.

A particular case is how Virgin Mobile dealt with tariffs. Their core objective was to offer the best customer experience, ensure they were not “ripping people off”. This meant simplicity. In terms of pricing, this translates as one tariff only. In an industry where each provider offered tens of tariffs, a single one based on use was true innovation. Since billing was outsourced, the first opposition came from the third party managing it, who couldn’t make this concept would work, yet Virgin Mobile pushed for the one-tariff launch and worked to find solutions to these blocks. It took one person to solve the challenge, someone who could provide a different perspective, yet aiming to provide the best customer experience. Having diverse minds to solve a problem is key. However, before that, the problem needs to be defined exactly: clarity for each project, joint vision and diversity of angles to approach the issues.

Staying innovative when pressing deadlines start daunting the company is a constant challenge for leadership and the company’s culture. There needs to be a balance between the structure (big picture, alignment) and the culture of freedom of thinking; to manage the tensions between ongoing work and checking the company is moving in the right direction.

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4 — Technology — managing investment and resources

• Build the tracks while the train is coming — Virgin Mobile ran into a problem with their end-to-end testing: it was not working, and this was a breaking point, as it was a critical element that could make the launch fail. The team conducted and external audit on the technology, and the conclusion was that launch had to be postponed several months. Here, the team decided to refocus on the main issue: launching or not launching by the planned date (Christmas) and decided to work it through. They conducted a risk assessment to understand what it would take to recover in case of the end-to-end testing not working by launch date, and established how long it would take to rebuild it after receiving the first order. A risk that was acceptable to take, but it was done always thinking about the main objective
• Keep it going — One of Virgin Mobile’s innovations, being an extremely customer service focused company, was their PAYG model, that would charge the user at the end of the month, against a credit or debit card. The rest of the industry was using pre-pay or voucher-based models. Virgin Mobile’s solution required the user to call in and set up their details. Given that most users received the phone as a Christmas present, on the 25th and 26th of December, Virgin Mobile’s call centres were swamped with the sixty thousand users trying to activate their services. In February, after the launch in December the company experienced an outage that affected their approximately ninety thousand customers. This had an extremely bad impact on the company, which almost went out of business. In both instances, the company worked through the crisis, ensuring everyone was focused on solving the customers’ problems, as fast and as efficiently as possible. Ensuring a timely and honest response. Loyal to their brand positioning and core business objectives rather than starting with technology considerations.
• Growth is good. But growing well is difficult — The opposite problem to the crisis mentioned above is overgrowing the systems. Virgin Mobile experienced issues with system availability; they had to retrofit each bit of technology and rebuild it. By making small investments with flexibility to amend, costs can be kept low and corrections can be made faster.

Conclusion

Cultural and technical aspects are paramount, but the business leaders must always keep the customer experience in mind — and the company’s goals: how the values of the brand and business objectives are achieved.

The main lessons from YLD Innovate are:

• Move fast, allow for flexibility: don’t block resources but always keep the customer experience first.
• Don’t think about what is not possible: think how you can achieve your objectives in time and what you need to do differently in order to achieve them.
• Assess your risks, but don’t give up on your vision: never compromise on the customer experience.
• Keep it lean: it is easier to manage and allows for extraordinary profit levels once growth starts.

CIOs must remember to raise above the noise, think what is needed to continue disrupting. Companies need to systematically innovate, and this means CIOs cannot ever lose perspective.

Focus on what technology does for people, not on the technology itself. Find and select the best technology to deliver that best experience now and for the future.