"Seeing Around Corners": Ensuring Dominance from Disruption ?? ??

Its hard to believe that it was nearly five years ago that I first encountered the concept of Strategic Inflection Points (SIPs) through Rita McGrath’s Seeing Around Corners - a book that has since become my go-to guide for navigating the ever-shifting landscape of modern business and our connected global economy. ???? ??

The ability to anticipate and respond to SIPs is not just a competitive advantage; it’s a necessity for survival and growth in today's unpredictable environment. ????

Inflection points can create growth opportunities and render entire industries obsolete. Foresee and take advantage of the next inflection point with?"Seeing Around Corners: How to Spot Inflection Points in Business Before They Happen"?by world-renowned expert on innovation Rita McGrath. McGrath distills decades of consulting expertise to provide the lowdown on how to anticipate disruption, build organisational resilience, and thrive when competitors are caught off-guard.

Learn how to spot signals early, think beyond industries, and innovate for the future with risk management in place.

Here's just a sample of SIPs from the last 5 years:

1. Remote Work Paradigm Shift ??: The COVID-19 pandemic was the catalyst for the remote work revolution, turning Zoom into a household name and changing the very nature of workplaces forever.
2. e-commerce Surge ??: The shift to online shopping was turbocharged by the pandemic, leading to massive growth in e-commerce and the decline of traditional brick-and-mortar retail.
3. Rise of the Creator Economy ??: Social Media adoption and platforms like YouTube and TikTok have empowered individuals to monetise their passions, leading to a massive shift in how content is consumed and created.
4. AI and Automation Revolution ??: From ChatGPT to autonomous vehicles, AI has surged from hype to real-world applications, transforming how we work, communicate, and interact.
5. Environmental, Social, and Governance (ESG) Investing ??: ESG criteria have moved from niche to mainstream, driving companies to rethink their strategies and align with sustainable, socially responsible practices.

Lets face it we could go on, and on here!

What exactly is a Strategic Inflection Point? (SIP) ??

Simply put, an SIP is a change in the environment that shifts the very fundamentals of business. Inflection points can be caused by factors such as technological advancements, regulatory changes, and demographic shifts. They can disrupt entire industries, render existing business models obsolete, and create vast new opportunities. While they may appear sudden, these inflection points often have been gestating beneath the surface for some time. The challenge lies in spotting these shifts early enough to take strategic action.

The Importance of Seeing Around Corners ?? ??

Understanding and navigating SIPs is critical for business leaders who want to ensure the longevity and success of their organisations. The world is changing faster than ever, with significant inflection points that have reshaped industries and created new opportunities. From the AI and Automation Revolution to the Remote Work Paradigm Shift, the last five years have shown us that those who can anticipate and adapt to these changes are the ones who will thrive. ??

Understanding how to navigate these inflection points requires a deep dive into the strategies and insights that leaders can use to stay ahead of the curve. Here are some of the most critical insights from Seeing Around Corners:

The Four Stages of Inflection Points

Inflection points follow a predictable pattern.

1.??? Hype ?? :?After some early promise, there is a sudden buzz about how a paradigm shift is imminent. Believers invest heavily, hoping for massive growth. It inevitably ends up in disaster.

2.??? Dismissal ?? :?At this stage, few of the initial entrants who survived would have begun to find viable business models and customer needs. This is the time to make small investments to explore opportunities.

3.??? Emergence ????:?At this stage, it becomes clear to industry watchers how the inflection may change things. This is the time to deepen investments to generate multiple future options.

4.??? Maturity??:?The inflection has happened, and its implications are quite clear. The organisations that are not prepared by now face decline. This is the stage to take advantage of growth opportunities.

Early Detection: Recognising the Signals of Change ??

One of the most crucial capabilities for any organization is the ability to detect early signals of change. These signals are often subtle and not immediately apparent, requiring organisations to engage in environmental scanning—systematically collecting and interpreting information about trends and events outside the organization. Leveraging data analytics and big data tools can provide real-time insights into consumer behaviour, market dynamics, and competitor activities, enabling businesses to anticipate and respond to shifts before they fully materialise.

Consider Netflix, which transitioned from a DVD rental company to a leading streaming service by closely observing shifts in consumer preferences and technology. Their proactive approach allowed them to dominate the entertainment industry, while those like Blockbuster, who missed these early signals, faced a steep decline. ????

An inflection point is preceded by a period of ambiguity with multiple conflicting weak signals. Catching the right signals early helps the organization take advantage of the coming inflection. To do this, we need to understand the types of indicators.

Three types of indicators

1.??? Lagging Indicators ??? :?Lagging indicators measure what has happened before. This includes business metrics like profits, return on investment, and earnings per share. Relying exclusively on lagging indicators for strategic decision making can blind leaders to inflection points.

2.??? Current Indicators ??♀?:?Current indicators provide real-time data on the state of things. They are devised based on past conditions for success. Since inflection points change the basic assumptions underlying key metrics, these indicators cannot help you prepare for the future.

3.??? Leading Indicators ??♂? :?Leading Indicators are conjectures that have the potential to become facts in your business. They are usually qualitative. While this might make executives wary of taking them seriously, these indicators are central to understanding the future. When Satya Nadella replaced Steve Ballmer as Microsoft CEO, he shifted his focus from lagging indicators like revenue to leading indicators like customer usage.

The Strategist's Dilemma ??♂? ?

At the initial stages of an inflection point, the signal strength is low, and it would be a mistake to commit to a big strategic move. However, if an organisation waits too long for clarity, the inflection would have become mainstream, making it too late to act.

Simple scenario planning exercises can help organisations identify significant inflection points early enough to enable strategic action. For each scenario, identify specific outcomes that represent the inflection point. Identify early warning indicators for each of these outcomes and track them systematically.

Consider the scenario of a shift from conventional energy sources to renewables. One specific outcome that represents the inflection point could be when 75% of all energy investments are made in renewables. Early warning indicators to track would be battery prices becoming cost-effective at least six months before the inflection and capital budget allocations shifting from conventional to renewable technology at least twelve months before.

An inflection point brings two simultaneous challenges: 1) to ensure efficiency and revenue generation in the core business, and 2) to invest in capabilities for the future. It is essential to focus on both challenges simultaneously. They require different teams, management approaches, key metrics, and incentive structures.

Listening to the Edges To Encourage Innovation ???

Snow melts from the edges. Inflection points are rarely visible from the corporate boardroom.

Often, the first signs emerge at the "edges" of the organisation—among R&D teams, salespeople, or customer-facing employees. Executives need to create mechanisms for receiving feedback from these edges to capture early warning signs. Regular, direct communication with employees who are close to the action, such as through level-skipping conversations or feedback sessions, can ensure that critical insights from the front lines reach top management.

Bureaucracy can stifle innovation. Leaders must find systematic ways to expose themselves to the interfaces where the customer interacts with their organization. This involves not only listening to the edges but also creating incentives for employees to offer uncomfortable but crucial information. By doing so, leaders can reveal awkward information and avoid the denial that can blind them to impending changes.

Here are the 8 key mechanisms for listening from the edges.

1. Create Information Flows From Office Corner to Street Corner ?? ???

Leaders need systematic and safe ways to understand what is changing at the front lines of business. This can be done through level-skipping conversations, where leaders invite employees for breakfast or ask them to report one insight they learned directly from the customer that month. These mechanisms ensure that the early warning signs of an inflection point are captured and acted upon before it's too late.

2. Leveraging Diversity ?? ??

In a rapidly changing world, the ability to see how others with different lived experiences may perceive a situation is crucial. Leadership blind spots often arise from a lack of diverse perspectives. In an environment of constant change, it’s essential to include voices from different backgrounds and experiences. This diversity of thought can help organizations see around corners by identifying opportunities and threats that may not be visible to a homogenous leadership team.

3. Agility and Balance ?? ??

Jeff Bezos has highlighted the importance of distinguishing between two types of decisions:

• Type 1 Decisions: High risk, irreversible, and with considerable consequences. These require careful deliberation.
• Type 2 Decisions: Low-risk, reversible, and rich in learning potential.

Empowering small, trusted teams to make these decisions can lead to rapid innovation and adaptation.

4. Instrument The Edges ???

Creative ideas are strangled by corporate bureaucracy. When Adobe was transitioning from on-premise software to a cloud offering, Chief Strategist Mark Randall introduced the Kickbox. This small innovation kit comes with a $1000 grant that any employee can request. For the price of funding a $1million innovation project, Adobe fostered a thousand ideas from the edges.

5. Getting Outside the Building ????

To gain a clear view of the future, leaders must actively seek out interactions with customers and the broader market. This means stepping outside the comfort zone of the corporate office and engaging directly with the world where the future is unfolding. Whether attending conferences, talking to next-generation customers, or exploring emerging technologies, these experiences are invaluable for gaining early insights into upcoming inflection points.

6. Create Incentives to Reveal Awkward Information ??

Business incentives can reduce the willingness to absorb uncomfortable information. Leaders have to counter this by creating incentives for employees to offer uncomfortable but crucial information.

7. Avoiding Denial ?? ??

Organisations often fall into the trap of ignoring uncomfortable truths. Leaders need to create incentives for employees to share awkward but critical information and ensure that denial does not blind them to necessary change. This transparency can be the difference between seizing an opportunity and facing decline.

8. Talk to the Future ???

Leaders need to identify places where the future is unfolding to get an early vantage point. This could mean attending conferences to understand cutting edge developments or even talking to a younger generation who will become customers in five years.

What does not change?

While technologies and market conditions shift rapidly, human needs are remarkably stable. The human need for communication has been stable while the modes have evolved from letters to landlines and now instant messaging. Therefore it is essential to think in terms of "job to be done" to understand the customer needs.

STEP 1: Define Your Arena ???

It is essential to think in terms of?arenas?and not industries because disruptions may occur due to shifts in other industries as well. Define your arena by looking at the job to be done, pool of resources your business relies on and what players target the same resources, even if they don't make products similar to yours.

The shifts that can lead to an inflection point include:

·?????? Change in resources contested

·?????? Change in parties competing for the resources

·?????? Change in situations where competition occurs

·?????? Change in the consumption experience

·?????? Change in the kind of capabilities embedded in the value chain

???? Can mobile phones change the apparel industry? In 2007, the spending power of American teens was estimated at $80 billion, with an additional $110 billion spent by parents. Retailers built business models based on the "back to school season". This was embedded in metrics like sales per square foot and store sales compared across periods. These metrics failed to capture the shift in consumption experience caused by mobile phones and social media. By 2014, mobiles had strongly shifted teen attitudes to clothing. Teens cared little for brands. There was also a need to be seen in fresh attire in every social post. By the time a product hit the stores, teens had seen it online for months and felt it was dated.

??? ??These trends have shifted the arena with customers seeking faster online purchases and frequent outfit changes. This inflection point has led to the rise of a new breed of fast-fashion companies. Brands like Zara make designing a continuous process informed by customer inputs. Some companies even use social media to pick up new trends and use local sourcing to make them available within hours.

In another example, Netflix thinks through arenas and not traditional industry boundaries. Its investor message says, "We compete with all activities that consumers have at their disposal in their leisure time." Activities include social media, video games, and general socializing, etc. This approach prepares Netflix for potential competition across industries and widens its growth potential.

Create an Arena Map by analysing what are today's assumptions for each of these factors, what potential shifts could happen, and what are Future Possibilities that could emerge because of these shifts. An Arena is ready for inflection when a change in any of these factors changes a key metric or creates an entirely new category with different key metrics.

STEP 2: Jobs To Be Done ??♀? ??

Consider the jobs that customers are trying to get done in their lives and consider what obstacles get in their way. A barrier in the customer job to be done, the frictions and barriers that interrupt customer experience can be leveraged to create powerful inflection points.

Never Enrage Your Customer ??

Customers will tolerate negative features as long as they don't have alternatives. When an inflection point allows them to complete their job to be done without the negative feature, customers "escape" and begin doing business with a new player. When Netflix was launched, Blockbuster had millions of customers, stores across America, and a revenue of $6 billion at its peak. However, its "late fee" was a negative feature that Netflix took advantage of to transform the entire industry.

Moving Too Soon on Inflection Points ????

According to Jeff Bezos, it's not very hard to identify key trends, but what's more important is for leaders to decide when to make a move and ensure the organization puts its weight behind the move. Reed Hastings saw the arrival of video streaming in the late 90's. However, he did not anticipate that it would take over a decade to become a reality.

STEP 3: Practice Discovery-Driven Planning ??? ??

As signals grow stronger, the organization must begin to explore possibilities. This is a stage of decision making under uncertainty, and it is impossible to guarantee their correctness. Instead of making a big bet on an inflection point, organisations can adopt a discovery-driven approach to test multiple possibilities and convert assumptions into knowledge quickly.

The first step in discovery-driven planning is to articulate why the initiative could be worthwhile. Next, specify benchmarks to check viability and explicitly write down the assumptions involved. Break monolithic plans into smaller checkpoints that can test critical assumptions. At each checkpoint ?, check if the new learning is worth the cost and if it makes sense to continue or shift approaches. Thus value is created at every stage of the development process.

STEP 4: Mobilising Your Organisation ??? ??

It can be hard to galvanise the entire organization to act on a strategic inflection point. This requires a critical mass of employees to believe that this is an inflection point that needs immediate action. The role of leadership is to listen to insights from the edges, empower them to act on their ideas, and create a shared point of view about the future. The shared vision enables the organization to act without confusion, resource wastage, and flip-flops on critical decisions.

Effectively responding to an SIP requires the entire organisation to move in unison. Leaders must create a shared vision of the future and empower employees at all levels to act on this vision. This shared commitment reduces confusion, prevents resource wastage, and enables rapid, coordinated action when it’s most needed.

When Satya Nadella took over as the CEO of Microsoft in 2014, the company was infamous for its infighting and had missed the mobile revolution. Microsoft needed a rapid turnaround to remain competitive and leverage the Cloud and AI inflections.

Nadella placed a key emphasis on culture and building products that customers love. He focused on a shift in culture from a fixed mindset, which valued knowing things, to a growth mindset where keeping an open mind to information and willingness to learn are emphasised. He put in place formal mechanisms to ensure that employee voices are taken seriously. Every leadership meeting began with a research team presenting their work to the entire executive team. Even when projects like an AI-powered chatbot failed, he was quick to provide air cover and encourage the team to continue taking risks. Microsoft shifted from metrics that rewarded the number of units sold to metrics measured how much users use the product. These moves paid off, and Microsoft created a presence in Cloud and AI.

STEP 5: Building Innovation Proficiency ??? ???

Since an inflection point changes the critical constraints that an organization operates within, it may require a change in the very structure of the organization and how it functions. The key challenge for leadership is to orchestrate an inflection within the organization to take advantage of the inflection outside. This might mean shifting resources from the central business to support next-gen enterprises or creating new growth vectors.

The Innovation Proficiency Scale measures the ability of an organization to innovate in response to an emergent inflection point. Building innovation proficiency is an organisational endeavour and takes time.

Eight levels of Innovation Mastery ????

Level 1: Bias Toward Exploitation ??

Organisations have a strong bias towards sustaining existing advantages. The challenge for an innovation champion is to create a sense of urgency and convince decision-makers that the status quo cannot work.

Level 2: Innovation Theatre ??

The desire to innovate exists in some pockets and may lead to measures like innovation workshops. But there is no sustained effort. Small initiatives like the Adobe Kickbox program can get more people involved in innovation with minimal resources.

Level 3: Localised Innovation ????

Innovation activity happens sporadically and is often entirely dependent on critical sponsors. A change of executive can derail the entire effort. Empower small teams to secretly work on new projects without attracting undue scrutiny.

Level 4: Opportunistic Innovation ??

As initial efforts pay off, there is a recognition that innovation is essential. Some processes are put in place with resource allocation to go after growth opportunities. But the core focus remains on the traditional business. At this stage, promising ideas must be incubated—prototyped, tested, and customer-validated. If favourable, the idea must be accelerated by mainstreaming both the product and integrating the team into the formal governance structure.

Level 5: Emergent Proficiency ??

There are clear processes and governance to manage innovation, along with dedicated resources for the same. Innovation-related metrics are used. Employees receive training in innovation practices.

Level 6: Maturing Proficiency ??

There is strong organisational commitment and resource allocation. Teams have clear processes for innovation. Innovation metrics become a crucial part of executive compensation and promotion. The best people begin to focus their attention on innovation projects.

Level 7: Strategic Innovation ??

Innovation is now a part of the organisation's central strategic vision. There is robust measurement, governance, and funding. Employees feel empowered to innovate. At this stage, there should be a pipeline of innovations, clear funding processes, and sound governance of the same.

Level 8: Innovation Mastery ??

The organisational commitment to innovation results in wins and highly skilled practitioners. The organization is cited as an example of best practices for innovation. The challenge is to preserve this culture and prevent going back to short-termism.

STEP 6: Enabling Decentralised Innovation

Robots ?? and Pencils ?? help teams navigate technological inflection points. The company FunLabs, encourages decentralised, collaborative innovation. Each FunLabs cycle begins with a report identifying three technologies or themes.

Employees make project proposals, and the entire organization votes the top three ideas. The winning idea is developed for 16 weeks. The team shares learnings through demonstrations reports. This is a classic example of reaching to the edges of the organization to gain insights and enable a culture of bottom-up innovation.

Strategic Scenarios and Discovery-Driven Planning ?? ???

Navigating an SIP is a strategic balancing act. If an organisation moves too soon, it risks making costly mistakes; if it moves too late, it may miss the opportunity altogether. To manage this dilemma, organisations should engage in scenario planning, where they identify potential outcomes of an SIP and establish leading indicators for each. These scenarios help organisations make strategic decisions at the optimal time.

Discovery-driven planning complements this approach by allowing organisations to test multiple possibilities in a low-risk manner. Instead of committing to a single, large-scale initiative, discovery-driven planning breaks down projects into smaller checkpoints that can test critical assumptions. This iterative process ensures that decisions are based on the latest, most relevant data, allowing for flexibility and adaptation as new information emerges.

Transforming Challenges into Opportunities ????

Strategic Inflection Points represent both challenges and opportunities. Organisations that can see around corners—anticipating these shifts and responding with agility—are the ones that will not only survive but thrive in the modern business landscape. As Rita McGrath’s Seeing Around Corners teaches us, the key to navigating SIPs lies in early detection, embracing diverse perspectives, fostering innovation at the edges, and maintaining a culture of continuous learning and adaptability.

In an era characterised by exponential technological advancement and rapid societal change, leaders must stay ever-vigilant to avoid strategic blindsides. The takeaway is clear: organisations must integrate these practices into their culture to stay ahead of the curve. As McGrath stated, "The future is already here; it’s just not evenly distributed."

To be a nimble and responsive business I recommend putting some smoke detectors in place in your metrics, developing an agility strategy to improve your response times to leading indicators or disruptive events. These situations can be either good or bad, the point is to respond appropriately and quickly. Taking steps today and making this a part of how you run your business will make you more responsive and ultimately more successful.

When change is the only constant, those who master the art of seeing around corners and reimagine tomorrow - will lead their industries into the future. ??

Until next time... stay agile,

C.

Carrie Mott

Founder & Managing Director, Flywheel Marketing

www.flywheelmarketing.net