The ?Disruption Itch

Disruption. The word sounds negative, dark and foreboding. It’s the opposite of what most perceive to be the ideal state of being – harmony.?Yet disruption in reality is a force of good. It has positively enhanced our daily lives as people and consumers of goods and services, with spectacularly augmented, more fluid, and even in some cases, more meaningful experiences.?

After using an iPhone would you ever go back to your basic cell phone? Which gave you a better holiday experience, Airbnb or the last hotel you stayed at? And don’t you enjoy having a taxi come to you and knowing before you get in the cost of your trip? They were all made possible because someone disrupted the status quo, the harmony.

Now from the perspective of a business leader, disruption can be rather challenging as new innovative products, services and business models emerge to challenge the current establishment.?

As privileged outside observers, we see first-hand how most companies rush to try new ways to counter disruption – like changing the organizational structure, engaging with startups, reallocating resource – without giving it enough thought, and more often than not, without achieving much in term of business impact.

Why is Disruption so difficult for established companies to embrace successfully??

By its very definition, disruption challenges, and quite often contradicts every single convention, belief, perspective, asset, process, KPI and organizational structure that made these companies successful in the first place. It is indeed changing, without advance notice, the rules of the game one has finally mastered to the point of becoming a world-class champion.?

As the pace of disruptive innovation accelerates, the rules of the game also evolve, transforming once innovative companies like Nokia, Motorola, and Kodak into dinosaurs literally overnight. The rise of the ‘amateur’ – Google, Amazon, Facebook, Uber – now dominates. Some established companies have survived however – notably IBM and Apple – only by reinventing themselves radically and continuing to do so.?

So, for companies committed to changing, is there a more effective, organized way to do something about it, and achieve greater positive impact??

Let us start with a new roadmap for disruption, which makes it smarter, swifter, safer and more effective.

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A 4-step roadmap for successful company reinvention/disruption

1. Changing the way we think
2. Changing the way we work
3. Experimenting with new models
4. Scaling to success

This journey is a non-linear exploration, across “unchartered territories”. Companies or leadership teams, dreaming about the quickest shortcut will probably feel and become lost.?

The true value of the Disruption Roadmap is its ability to both identify new territories and subsequently choose the most relevant route, among carefully surveyed multiple choices.

1. Changing The Way We Think

This is the obvious starting point and yet the most overlooked. Using the same old frame of reference to look at the world will not help you see, understand and leverage, what has changed and/or needs to change in your environment and what your company wants to do or could do about it.?

This is actually the biggest paradigm shift – “reframing” – because it takes a conscious effort against all inclination, experience and expertise to manage to do so successfully.

Changing one’s perspective about the world, also questions immediately our role in it, both as individuals in a leadership team and as a company. It is like leaving certainty and predictability for the fuzzier realm of possibilities and yet this is one of the key triggers for successful innovation of any kind to happen.

The need for a meaningful purpose

In reframing our thinking, we need to first start with a clear and meaningful purpose, which provides both a filter and an ‘eye opener’ to explore and sort through opportunities.?

This is the equation for changing perspective for an established company and/or sector: how do we see our world evolving, but more important, what are the early signals of potential discontinuities, new drivers and disruptors, even more important, what would we love to change about it, if we had total freedom (…because we actually do)?

As conceptualized so inspiringly, yet simply, by Simon Sinek in his book “Start With Why”, companies always tend to rush to the “what” and “how”, before thinking and getting progressively clearer about their WHY and WHAT FOR.

Changing the way we think demands that we are clear about the company purpose, the role it wants to have in shaping the future and making the world a better place, for which positive outcomes ultimately.

Disruption is essential and has always been a key enabler of human progress.

It is true that we tend to see and find out only what we are looking for. It is therefore relative and subjective, specific to each individual and company. Emulating others will get you nowhere – you need to focus on XYZ that truly matters to you! Waiting for the opportunities to be obvious, before leveraging them, is the surest way never to outperform your peers.

This is where family-owned companies, with a living founder, or startups, or NGOs tend to be so much clearer, passionate and sincere about their purpose, than big established companies, managed by generations of “mercenaries”, with no taste, nor reward or pressure to articulate, or be driven by a purpose.?

Enjoying their current business success should not prevent companies to change their perspective about the ecosystem they belong to. They should, at the very least, aim to identify alternative models for future success.

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For illustration, if L’Oréal new purpose would indeed be – “to help every women or man, on earth, to feel beautiful, every day, in every circumstance” – this might be quite a stretch from L’Oréal previous model, which was more about promoting/imposing onto all women a universal standard of western beauty, to aspire to… by selling chemically engineered molecules, packed in daily routine products, aimed at improving skin or hair perception temporarily, with the endorsement of world-renowned brands, advertised every day and everywhere and widely distributed in modern trade channels.

Now, if we were to be literal about the new hypothetical purpose rather than the old model, and adjust our new frame of reference accordingly, we would discover a much broader and complex ecosystem of what beauty can be about, for different people, in different cultures and geographies. There would be different beauty routines and rituals and a much wider range of dimensions and drivers to beauty redefined. We would find inspiration and solutions, in new and different scientific research areas, technologies, brands and business models, to service men as well as women and truly help them, for all their paradoxical various need-states. This is independent of the fact that L’Oréal is indeed successful so far, with its current business and operating model.?

The same reframing can be applied to the healthcare ecosystem (see example below), hospitality, or any product or service industry, literally, with a different perspective hopefully, for each company operating within.

So changing your company perspective in line with its clearly articulated true purpose will help describe and understand better the future ecosystem your company might belong to and the future opportunities, threats and partnerships, which could be further leveraged because of the new frame of reference, you are now considering.?

2. Changing the way we work

This is critical for 2 reasons:?

• The first reason is inherent to any innovation process, if you work the same way you always did, even with different inputs, you are unlikely to get significantly different outcomes, which contradicts the whole objective of reinvention.
• The second is actually directly related to changing people’s perspective and managing change within the organization. Only by working as a team in a different way, do people truly realize that change is both necessary and actionable. It is a well-known model – KUBA – in change management, that one has to: Know first, then Understand, then Believe before one can Act successfully. Only by working (smart), in a different, yet effective way, can the team go through these necessary steps and reassure themselves that there are indeed workable solutions to any issue, or viable executional solutions to any new disruptive business opportunity. By solving difficult challenges successfully and getting effective tangible relevant outcomes they are proud of, members of the team and their peers and sponsors will eventually trust the new “way of working” and make it their own quicker, with less resistance to change.

The team set-up

By the same token, working within the current organizational structure, offices, reporting lines and conflicting demands, will not allow the kind of reinvention, we are considering. So here too, change must be made, before even starting the journey.

We recommend a proven set-up, which has been used many times, with great success: the SKUNKWORKS. The US Ministry of Defense, DARPA, Apple, Google, Lockheed Martin and many other companies are using Skunkworks teams to achieve radical, disruptive or transformational innovation, alongside their focus on their day-to-day objectives and operations.

We’ve added a new twist to this model. It has been typically only internally driven, but we recommend a dedicated core-team comprising of people from the company who have both the personal credibility against the current model of success and the intellectual & cultural flexibility to embrace new thinking and new opportunities, with the addition of outsiders that have specific expertise and a broader knowledge of other sectors, ecosystems and alternative models.

Without expert outsiders, it is almost impossible for a company to change its perspective enough and to acquire the missing skills, that could prove so crucial to its future.

Without recognized insiders, there cannot be enough initial traction to considering new opportunities and exploring new ways of thinking and working. The early adopters of change must indeed come from within the very organization, that needs reinvention.

The SKUNKWORKS team needs to be aligned and committed to a clear charter and purpose, must be well resourced, accountable to the CEO and the leadership team, with defined deadlines and a clear process of work and reporting. Once this exists and is accepted by the company, how the team operates on a daily basis, within its charter and budget, is entirely the team’s decision. Confidentiality and insulation from other company operators are actually critical factors for such teams to operate successfully. Moreover, it avoids management distraction, change of heart and early skepticism or destructive behaviors, at the company.

The SKUNKWORKS team’s main objective, is to define the new ecosystem the company might (want to) be part of in the future, identify comprehensively the opportunities that exist within the ecosystem, as well as the potential threats to the current company model, which it should not ignore (think Uber vs. Taxi companies, or Airbnb vs. the hospitality & travel business).

Then firstly select those opportunities, which serve the (newly reinvented) company purpose better. Then secondly design the holistic strategies that will allow the company to leverage these successfully.?

These strategies will also leverage the redefinition of the company itself as an ecosystem, as well as the new links it wants/needs to build with its redefined environment.?

Finally, all these strategies have to be detailed also at the next level of granularity (e.g. brand portfolio, geographies, product categories…) until single-minded value propositions can be conceptualized, communicated and validated.

3. Experimenting with new models

One challenge for companies in our new present and future world is the augmented, multi-dimensional and dynamic nature of emerging ecosystems and alternative models. It makes them harder to describe and understand, and also much harder to engage with the future ecosystem or to proof-test the alternative models.

Engaging with the new ecosystem

This is quite often where most companies attempting transformational innovation start without doing the proper homework beforehand. They merely emulate others and go for the quick solution, usually by writing a “shopping list” of startups and incubators, they like to keep an eye on or quite boldly even take over.

Of course, if they are not quite clear, why XYZ startup would make sense to them in the first place, there is indeed very little chance that all these new startups will bring anything useful and positive to the company.

However, once the team has gone through Steps 1 & 2, it becomes clearer which new building blocks/components from its redefined ecosystem are critical to the company’s future strategic opportunities and therefore the types of companies and startups shaping new value propositions, that would be relevant to the company’s future. Other valuable assets from startups could also be that they own a critical intellectual property or have built and nurtured a partnership with yet another startup of interest to the company.?

In this case not only can you easily identify teams and alternative business models of interest to the company, but also, you know “why” you are interested as well as “what for”. This in turn impacts how to measure success and which KPIs to use for monitoring the actual value created by the startup for the company.

However, this is only half of what matters in Step 3. It is also critical to be able to prove the viability and potential of the value-propositions and concepts generated in Step 2. In the case of disruptive innovation, the only way to validate this might just be actually doing it live!

Incubating and accelerating new disruptive ideas & models

So, experimenting with new models requires the ability to incubate and accelerate the development of your own ideas and concepts and literally do “whatever it takes” to prove with hard KPIs, their viability and potential, such as:?

• designing/formulating/patenting,?
• manufacturing small scale batches,?
• securing a distribution agreement,?
• testing promotional activities,?
• getting feedback from initial live users,?
• checking monetization hypotheses, etc.?

on a limited/safe/affordable and measurable scale, such as: a specific geography or sector or consumer/customer segment or trade partner.

The time needed, for this step to be conclusive, might be from a couple of months to more likely a couple of years and the set-up and the company dedicated resource must recognize, factor and accept this reality.

Managing a broader & different talent pool

Concurrently from an HR perspective, identifying and nurturing talent from the newly extended talent pool from the teams (Skunkworks, Startups, and strategic partners and outside experts…) might prove later to be the key to rebalance both the skill set and the culture at the company seeking to reinvent itself, once success is proven and scaling-up is initiated.

Learning and building new capabilities from the experiments

Take-outs from Step 1, 2 and 3 must be captured and distilled to the company leadership team, regardless of go-no/go decision about funding, going-live and scaling-up, as this will also be a critical way to iterate back to Steps 1 & 2 and prepare for the necessary diffusion of learning and change of culture required at the company beyond the 1st circle of people, directly involved with all three steps.?

Managing strategically and financially a structured, balanced portfolio of bets on the future

All the disruptive innovation “bets” at this stage need to be managed, as such, in a strategic portfolio-like approach, in term of balancing/hedging: resource/risk profiles, development/maturation lead-times, degree of the disruption anticipated/potential for scale for the company. That is what Step 4: Scaling to Success is all about, and the topic for a future conversation.

In Summary

Our conclusion at this stage on radical, disruption or transformation innovation is that like all innovation endeavors it requires both a new mindset and a structured process to create the conditions and roadmap for a dedicated mixed team of top outsiders & insiders to:

• envision possible futures for the industry sector(s) and adjacencies,?
• populate each of them with delineated ecosystems in fast reconfiguration,?
• identify the building blocks and opportunities within,?
• select, design and execute new value propositions and business models as mirror-ecosystems, with clear interdependencies and connections, which will ultimately, after success is proven, be candidates for integration, or added business streams to the company seeking reinvention and rejuvenation.

Our experience so far and those of other stakeholders in disruption that we have been working with or talking to, is that:?

1. Companies short-cut the critical steps – Step 1: Changing how we think and Step 2: Changing how we work – and rush to Step 3: Experimenting with new models.?
2. Without the clarity of purpose and the right conditions companies are quite expectedly getting increasingly frustrated about Step 4: Scaling to success.?
3. Thus, reinforcing the rising skepticism about the very need for reinvention.

Disruption is essential and has always been a key enabler of human progress. What is new though is the incredible pace at which, complex ecosystems appear and reconfigure themselves, as new technologies, as well as timeless, essential, human-nature-based values, shape new trends and infinite possibilities, for the discerning eye of people driven by a true purpose.

-?Oliver Dubray & Will Burke?, PINK: Partners In New Thinking