Businesses naturally focus on return on investment (ROI), which is a key performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. ROI measures the amount of return on an investment relative to the investment’s cost.
However, this singular focus on ROI can be short-sighted and ultimately detrimental.
Delivering a new product or feature that improves ROI might not be as advantageous as delivering a new feature that improves the rate of growth of ROI for future deliveries. Making this trade-off intelligently can make the difference between linear and exponential growth.
Experience has shown that, over time, new products and features move from being positive growth drivers to becoming minimal requirements. As Professor Noriaki Kano put it, “delighters” which initially excite customers eventually become basic expectations.
This means that new products or features (product enhancements) generally have initial positive growth which flattens off over time.
So how have companies like Apple grown so spectacularly over the years, apparently at odds with this observation? One of the keys is that they consistently release new products and features which enables them to “stack” growth to create exponential rates of return.
This video from Peter Merel (XSCALE Alliance CTO) contrasts Kodak with Apple, and Exo with Kano, to investigate the first principle of XSCALE and an essential product design strategy called “extropy”.
- Simple Design
- Continuous Optimization
- Autonomous Teams
- Triple Loop Learning
- Ecosystems Thinking