Structuring Disruption: The disciplined approach

How do you go from being a Nintendo to being a Netflix? Many companies today engage in innovation activities. However, they are not always focusing their efforts in the right areas. Typically, companies prioritize the low-hanging fruit associated with sustaining and adjacent innovations.

Astro Teller, Head of Moonshots at Google X, has a different view on where to focus. He says, “It’s often easier to make something 10x better than it is to make it 10%.” Companies need to rebalance their innovation portfolios to include the “disruptive” types of innovation along with traditional sustaining and adjacent bets.

Although companies find it riskier to make disruptive investments, in a time of widespread disruption, it may, in fact, be riskier to prioritize sustaining and adjacent innovation. Companies that only operate in the sustaining/adjacent zone leave the door wide open for start-ups or other competitors to come in and disrupt them.

To flip the risk curve and achieve sustained levels of disruptive innovation, we recommend an approach we call Structuring Disruption. Used to enable the disciplined execution of DIPs, Structuring Disruption drives moonshot thinking, creates more impactful innovation by minimizing misses and maximizing the upside of innovation, and provides a way to systematically hedge against disruption.

Three pillars of Structuring Disruption

Drive

Drive embodies the force required to propel new innovations into existence, onto the shelf and into consumers’ shopping carts. Drive emanates from a charismatic and motivating leader. Companies looking to drive disruptive innovation will want a powerful visionary at the helm who can inspire people to bring their vision to reality. This type of leader will define a purpose that acts as a guiding star, and a culture that facilitates innovation across the organization. The most effective cultures not only drive innovation, but also are inherently competitive and ambitious. These types of cultures produce teams that believe in themselves and their work, and understand their role as owners and drivers toward a common purpose

Steve Jobs was known for handpicking engineers from various groups to create secretive teams to develop specific products. He even went so far as to call one of these teams the “Pirates of Silicon Valley,” created a pirate flag with the Apple, Inc. logo in the eye of the skull, and coined three maxims to inspire his team: “Real artists ship,” “Better to be a pirate than join the Navy,” and “Mac in a book by 1986.” This team delivered the first Mac just over two years ahead of schedule.

License

License gives the innovation team the “green light” to operate differently than the core business. The best environment suited to facilitate disruptive innovation exists outside of the company’s walls. Companies need to provide their innovation team with dedicated investment and the autonomy to operate with its own set of rules. This innovation organization should not be involved in supporting the day-to-day business. Rather, it should be relentlessly focused on coloring outside the lines.

We find examples of this dating back as far as 1943, when Kelly Johnson created the original Skunkworks at Lockheed Martin. Contemporary examples include Alphabet’s Google Ventures and X Labs. Google Ventures’ managing partners are encouraged to operate independently from Alphabet’s core businesses. One need only look at their investment portfolio to see they have full autonomy to invest in any company regardless of whether or not it is a direct competitor to one of Alphabet’s core businesses.

Velocity

Velocity is defined in physics as “speed in a specific direction.” Within a Structuring Disruption approach, velocity means intentionally operating to aid rapid product development, adaptability and reduced go-to-market time. Sometimes this means enacting a democratic governance process in which anybody can kill a project. Often it is just as valuable to rapidly shut down a failing project as it is to accelerate a successful one. Velocity is not merely about moving at breakneck speed. It is also about using the right metrics effectively to de-risk the portfolio and affirm that the bets that move rapidly forward are the right ones.