Why small changes with people and process lead to big things

A good reminder for small- and medium-sized business (SMB) owners: growth is never generated by playing it safe. Failing to experiment with new innovations poses a huge risk to success. When markets, customer needs, and competitors are evolving at lighting pace, there’s no room for complacency.

SMBs are more than capable to make high-velocity and high-quality decisions that drive crucial breakthroughs. For many, this is easier said than done as it requires the right mindset, organizational structure, tools, and services. According to a study by McKinsey, only 20 percent of respondents felt that their organizations excel at decision-making. With that in mind, I’m sharing some tools, ideas, and activities that have helped other SMBs confidently make decisions that lead to innovation and growth.

Step through that two-way door

SMBs can find innovation uncomfortable due to the risk and effort involved. Fear of potentially damaging the organization can stop many from seeking new ways to streamline solutions and operations and enhance customer services and offerings. This is only natural, but it comes from the misconception that innovation means massive change. It doesn’t. It can lead to big changes, but most often it means implementing small and ongoing incremental changes that have the potential to be transformative over time.

To put it into perspective, Amazon refers to these scenarios as one-way and two-way doors. A one-way door does require heavy consideration before crossing the threshold. It signals a major business decision that might prohibit the organization from making a nimble pivot once it’s been made. A one-way door often involves a major capital investment and could significantly impact the bottom line, depending on the eventual outcome of the decision. These are things like deciding to add another location to the business, constructing a new building, or replacing infrastructure. For obvious reasons, stepping through a one-way door requires great study and signoff from leadership.

Two-way doors, on the other hand, are meant to be opened. They’re intended to inspire experimentation, which can lead to innovation because they operate in both directions. It’s easy to return from a two-way door decision. They’re reversible, so they don’t require the extensive study necessary for a one-way door. Two-way doors can involve something you might test, such as website and branding changes, and other things you don’t necessarily have to commit to for the long term.

A good rule of thumb behind two-way door decisions is if you’re 70 percent confident about the outcome, open the two-way door and step through it. If it doesn’t work? No harm, no foul. Just return to what you were previously doing or using. But calculated risk-taking should be encouraged and pushed to the edges of your organization to thwart potential analysis paralysis.

The luxury watch retailer Ethos Limited is testament to the power of an organization-wide culture of risk-taking. Working with Amazon Web Services (AWS), their technology and marketing team participated in Culture of Innovation training that helped them shift from a change resistant mindset to an openness to explore new technologies. By rethinking their approach, they were able to see the generative AI disruption as an opportunity to streamline time-consuming workflows, rather than another operational overhead to deal with.

After working together to uncover three use cases, Ethos made a one-way decision—undertaking research and analysis to choose the right generative AI AWS Partner to deliver results. Once they aligned on HolboxAI as the right partner to meet their needs, the team used two-way decision-making during the testing phase. By making iterative changes to use cases, they were able to optimize workflows. Ethos also used escalation mechanisms productively throughout to reach desired outcomes and keep project delivery on track. As a result of the product display page automation use case alone, they reduced product launches from 15 days to just one day and expect to drive approximately $500k in incremental sales.

No matter how you slice it, team organization matters

Nothing slows decision-making—and subsequently, experimentation, and innovation—like having too many voices involved in the process. Too many players lead to competing priorities, unclear ownership, and unhealthy silos. But how do you prevent this? Let me use Amazon’s team structure as another case in point. The organization has a concept of single-threaded ownership, where one person is the decision-maker at the end of the day. Each single-threaded owner has a team, which is usually no bigger than what you could feed with two large pizzas (10 or fewer people). It’s why we call them Two-Pizza Teams. Although, these days it seems our teams need three pizzas to satiate their hunger. Inflation?

Each Two-Pizza Team has everyone needed to bring innovation to life and is typically responsible for a single part of the business. Having fewer “cooks in the kitchen” inspires quick, autonomous action. And by asking a team to focus on one service or customer segment, it can operate with speed, particularly in matters involving experimentation and innovation, which ultimate benefits the customer.

Escalations can be beneficial

Even within single-thread Two-Pizza Teams, however, there is room for productive disagreements (we like to say “disagree and commit”). That’s why a strong escalation culture is also key. It’s important to note that in this scenario, escalation is not considered a negative word. It’s fast and friendly escalation done in a constructive way, without pointing fingers. This is another core element of Amazon’s culture of innovation, and it’s widely accepted by employees. I’ve seen firsthand how there are rarely hard feelings and everyone on a team remains committed to the decided outcome.

How do they manage that? Well, if perhaps you wanted to do something but you were not getting traction or support within your team, you begin an open escalation process. You provide data and rationale for why you feel strongly about this matter to a designated higher-up above your team, which begins a review process of the background, data, and all of the reasons you think your option should be chosen. The leader determines if there’s alignment to move forward with your presented option, or if the team will be sticking with the original decision. Either way, the entire team agrees to support the judgment.

The escalation concept can be helpful for SMBs because this approach creates a system that handles them in a professional and data-driven manner, eliminating the possibility of perceived favoritism or the loudest in the room always getting their way. This process also ultimately leads to the highest value for your customers by ensuring that potential biases are reduced, allowing the SMB to remain laser-focused on customer outcomes.

Minimize risk and maximize rewards with the right foundations

As I’ve just outlined, how an organization operates can greatly affect if an SMB is positioned to innovate. The infrastructure SMBs deploy can be just as vital. As an example, the AWS pay-as-you-go model helps reduce risk and defray the costs of innovations by only paying for the cloud computing capacity and services used. It therefore significantly reduces the upfront costs and risks associated with experimentation. This allows businesses to explore new ideas, validate hypotheses, and iterate on prototypes without the burden of substantial upfront investments in a large set of expensive operating tools or platforms.

AWS cloud computing also helps organizations rapidly spin up or spin down resources as needed, aiding agility and scalability that is crucial for SMBs that have limited resources but still need to move quickly to capitalize on emerging opportunities. And in this era of remote work, it also provides an environment for collaboration and knowledge sharing, allowing teams to work together, regardless of where they are located.

Make it work for you

As I’ve mentioned before, innovation isn’t born in a vacuum. It’s the result of a vibrant ecosystem of people and teams who are empowered with a mindset to think differently. Remember, almost all of Amazon’s businesses began like startups and grew into SMBs before becoming major entities. I hope that sharing some of the mental models and mechanisms that allowed us to accomplish this will benefit your organization. Consider which ones you can institute at your SMB and adapt them to help you stay ahead of the curve and accelerate innovation.

Learn more about putting people, culture, and process at the heart of your strategies by exploring on-demand insights in the AWS Connected Community. Free to join, it’s a one-stop shop to learn about the cloud and digitization, with support from AWS experts and fellow business leaders.