Weekly Research and Commentary on the Future of Business and Technology.
Disrupt Disruption / Business is Changing, So Must the Way We Set Strategy / Meet radical Ally, Daniel Epstein.
Jan 9, 2019
Welcome to the radical Briefing 0004. And Happy New Year! We hope 2019 has started great. We are truly excited about what we can and will achieve in this bright new year. We are even more committed to creating a year of radical impact and significance. We hope you are too! Here’s your first briefing to get us started.
Disruption has become one of the trendiest words in 2018 — it simultaneously instills fear and excitement and has become a staple talking point in every business presentation you hear or see nowadays. It is used to describe any company’s undoing, often with the aim to get said company to buy some service or product from the person who introduces the word in a meeting or on a stage.
In the process the word has become “tofu”—it doesn’t have a flavor of its own but takes on the flavor of whatever sauce you pour over it. That doesn’t mean the underlying concept is meaningless. Look beneath a well-used word, and you’ll find some truth accounting for its popularity.
In disruption’s case, I try to avoid one model or definition. The excellent model Clayton Christensen described eloquently 20 years ago in his seminal book, The Innovators Dilemma, describes one particular model of disruption and is often misused by applying it out of context. It’s also useful to go to first principles. For example, in my teams’ work interviewing hundreds of innovators, and borrowing from the fantastic analysis done by Ben Thompson, we’ve found a trifecta of forces which lead to companies becoming disrupted.
1. Innovation is never just one feature.
A disruptive invention like the smartphone is not a single thing—it is the ingenious combination of many features into a singular package. When the smartphone broke onto the market in the form of the Apple iPhone, it combined breakthroughs in microprocessor technology, an innovative multi-finger touchscreen, powerful batteries, and an intuitive operating system. It is often hard for incumbents to combine these individual features into a competitive package due to point two.
2. Your existing skills and processes are no longer relevant.
The biggest challenge for incumbent firms is the fact that their carefully honed skills and processes don’t fit the new reality anymore. Kodak famously had the best skills and processes to manufacture and develop beautiful film (a chemical process). These skills became obsolete in a world of digital photography. Nokia was excellent at making phones, but despite its name, the iPhone is not a phone, it is a tiny computer.
Worse, the existence of these obsolete skills typically provides a strong internal immune system to anything new and different. To compete, Kodak and Nokia would have needed swift, strong buy-in to overhaul entrenched processes and teams purpose-built for the film and phone businesses.
3. Disruption almost always reaches a tipping point at go-to-market.
Markets don’t flip from an incumbent solution to something new in the lab or boardroom or even due to the technical superiority of a particular solution. New solutions take the lead with an artful combination of the four Ps: product, price, place, and promotion. Selling the iPhone in Apple’s own, highly frequented stores, instead of the traditional sales channels (which tended to be little, dinky mobile phone shops in malls), signaled strongly that this was a new era, and the phone wasn’t a phone anymore. Stripe became a major player in the electronic payment space by making it incredibly easy for software developers to integrate Stripe into their applications—targeting an audience no other payment provider cared to cater to.
I strongly encourage you to look beyond the words and figure out what is real by applying first principles thinking yourself; going all the way to the root of the subject at hand and analyzing the primary factors. Get a handle on those primary factors, and you can get to work making your team more future flexible.
The good news is that almost none of this is complicated; it is just hard.
Business is Changing, So Must the Way We Set Strategy
It’s the start of Q1, and a new year is here. Are you already off to the races? We are guessing you spent the end of Q4 working on your 2019 strategy, and it was likely a painful process. Over the last few years defining and finding alignment on strategy has become an ever more arduous undertaking. Never mind trying to hit targets; first, we need to determine in which direction we need to aim!
As the future of business changes, so must the way we decide strategy, set goals and achieve results. Light-weight, easily monitored, easily adapted and easily communicated plans must become the norm. In a rapidly evolving environment, the ship must be steered with micro course-corrections. Some businesses might opt to use sprint models in everything from 2 to 3-month increments depending on team size and work at hand. Others are choosing to pay extra attention to strategic progress and market trends. In these uncertain times, all must work hard to create an open culture where feedback is given and received, and failure does not mean the end. Furthermore, there will be an impact on measuring human performance. It will require more connected, empathetic and coach-like managers capable of observing and guiding dynamic results from their people.
One thing is certain, having a strong mission is ever more critical. While the path forward maybe not always be clear; your true north keeps everyone focused toward the end goal. If that’s not yet clear to you, that would be our best recommendation for the first job of 2019.
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