At this CEO Roundtable, we discussed disruption. I got tremendous feedback both from participants online as well as from the discussion summary that went out to my wider CEO private roster community.
One CEO commented last time that disruption is all fine and good, but getting staff to disrupt is an entirely different matter, particularly in incumbent, corporate organizations. He is right. So that was the topic of the morning.
Below is my manifesto and a summary the discussion.
Steve’s Entrepreneurial Disruption for Corporates Manifesto
- Disruption is an offensive weapon used to dominate a market. Allow for no compromise on this. Disruption is nothing new. The word has been bandied around the business vernacular, resulting in inchoate beliefs about what disruption means and the behaviors it implies. A senior vice president in charge of a major European brand of products in Japan told me privately after a workshop on the disruptive strategy I had just run that she found my approach to disruption (yes, as if it were just my approach) to be “too much in-your-face.” Instead, for her business, she preferred a “soft, evolutionary, disruptive approach.” I have no idea how she envisioned doing that, and she did not elaborate. After all, “evolutionary disruption” is an oxymoron! By definition, disruption is abrupt, immediate, and unapologetic! I asked her to point me to even just one example where a soft, evolutionary, disruptive strategy actually worked because I can’t think of any. I am still waiting to hear back, but I suspect she will change her view.
- Disruption is a behavior, not just a result. Conservatism is the result of fear of failure or overwhelming fear of non-performance. You overcome conservatism by rewarding the right behaviors, not just results. My most successful clients have a public award ceremony for “the best idea that did not work.” A CEO client of mine combatting conservatism in his business gathered his senior managers in a room and told all of them that he views failure as learning. “If you try a good idea that does not work, I will never hold it against you,” he told his staff. “However, I will fire each and any one of you for inaction, or if I end up having to do your job for you.” Three months later, four managers were no longer with the company.
- Disruption is a stabilizing force for your staff if you do things right. The head of a major product division whose company CEO wants to disrupt the Japanese market argued to me that his division should be exempt. He elaborated that his division had suffered a restructuring and layoffs just prior to his taking on the division head role. He reasoned that he wanted to provide stability to the remaining staff. Disruption would spook them, and he might lose people, or so he thought. Yet nothing could be further from reality. It is normative behavior that drives people away. A leader who keeps things as they were prior to a crisis broadcasts to the staff that he has learned nothing from the experience. The excellent will flee before the next inevitable crisis. A leader who instigates disruption in the market, however, broadcasts to staff, “We will never let what happened last time befall us again!”
- Disruption is charismatic for the best staff you want to attract and retain. A vice president told me that his company is having trouble attracting the best talent in Japan. He told me that he worried that a too disruptive strategy would further drive the best talent away. So I asked him, “If it were you, which company would prefer to work for? A company whose stated objective is to grow its apparel business by five percent, or a company whose leadership has vowed to kill Fast Retailing?” He did not have to answer me. His smile told me my point was made.
- You must scream in the customer’s voice if you want to disrupt. Tapping into highly charged emotions—love, hate, passion—enables disruption. Analyzing the customer’s mind is clinical. Speaking the customer’s voice is better, but staid. If you want to understand highly charged emotions, you need to scream in the customer’s voice, and so do your staff. And, yes, I mean really rant, rave, scream, jump up and down whether from overwhelming enthusiasm or intractable frustration. “I can’t stand it when I need to upgrade my mobile phone! I end up spending hours in a mobile phone shop, taken through myriad documents and options, am told to sign off on a contract with a fee structure that even God himself can’t fathom, just to get a phone that does more or less what the old one did, but with a new battery that doesn’t die after a half-day! Why can’t I just have an automatic renewal and a new phone in the mail every year!” Get your staff to ham it up as an exercise. Use humor. Whatever it takes. If you can credibly rant about something with real emotion, you probably have a pretty good candidate for disruption. Oh, and by the way. I’m looking at you, SoftBank!
- Limitation is the entrepreneur’s advantage so make it yours. Limitation is a driver of innovation. If you want to disrupt your market, you must impose a limitation on your corporate fallback. A Japanese entrepreneur I know was desperate to get his product into department stores, but the department stores refused to give him the time of day. Wholesalers shunned the product, as it was unknown. In any case, we all know wholesalers are fundamentally lazy. They don’t want products they have to sell and market. They want products that sell and market themselves. With no other recourse, the entrepreneur innovated ways to sell directly to consumers, succeeded, and in doing so, disrupted much larger incumbents. Meanwhile, managers in the larger, better-resourced incumbent businesses complain about how they can’t stand dealing with distributors and mock the stodgy and ineffective ways of Japanese department stores. Yet they continue selling through these channels nonetheless. It’s easy to tolerate them because they can—at least easier than innovating a way to cut them out. The entrepreneur does not have the same cushy compromising fallback. You might think that your corporate fallback is your advantage. It’s not. It only ties you down.
- Disruption is yours to make, not defend against. Every leader should also be a professional troublemaker for his industry competitors. Some years back I attended an Economist Corporate Network event in Tokyo on disruption. The members are primarily established corporate entities with some notable exceptions. To my astonishment, the entire event centered on defensive tactics to avoid being disrupted. I decided to disrupt the proceeding and made a comment. “You know, somewhere in Tokyo at this very moment there is a parallel event with a different set of business leaders who are all talking about how to disrupt the businesses of all of us here. Why on earth are we standing for that? We’re the ones who should be instigating disruption in their sandbox, not defending against their disruption in ours! The best way to defend against disruption is to be the disruptor yourself, and all of your businesses have ample resources to do so!” I did not make many friends that day. I did however win a few clients. How many of your managers think and behave like disruptors as opposed to hunkering down in fear of being disrupted? What have you done to cultivate a cadre of disruptors on your team? If you have not yet done so, I assure you that your competitors already have.
What the CEO participants have done to strengthen innovation and disruption capability among staff and managers.
- Hire people who have demonstrated entrepreneurship in the past, whether successful or not.
- Mix people up. Make the technical managers work in the business side and make the business managers work on the technical side.
- Seek out people how have demonstrated a passion for self-driven learning. One CEO talked about a manager who had taken it upon himself to master Mandarin Chinese.
- Hire the weird. Look for people with non-traditional experience backgrounds. Went to university overseas, spent two years volunteering with JAICA, started their own business, worked in politics for a period, etc.
- In formal ideation sessions, provide anonymity when soliciting ideas for people who might fear being identified of the idea does not take off.
- What was worked with your staff? What has not?
- Whose lunch do you want to eat? That is to say, whose business do you want to disrupt?
- What are your customers screaming about, or what will they scream about?
- What profitable business are you prepared to drop to make room for rapid, disruptive, business growth? Disrupting the businesses of others begins with disrupting yourself.