Disruptive Leadership for Business Strategy
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Sharing the knowledge with JPS leaders of how to be the disrupter and avoid being the disrupted. To unchain the mental model and free the thinking necessary for disruptive thinking and leadership.
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Disruptive Leadership for Business Strategy
- 1. Disruptive Leadership BETTER TO BE THE DISRUPTER THAN THE DISRUPTED! EXECUTIVE LEADERSHIP TEAM MEETING PRESENTED BY: RICK CASE PMP, P.E. SYSTEM OPERATIONS July 3, 2017
- 5. Let’s Disrupt! – Change the Mental Model! "If you are a car mechanic, you don't want to stick your hand into a working engine in order to change the fan belt.“ CEO Polaroid Your business model is your FAN BELT (mental model). Disruptive Innovation is essentially a Business Model Challenge. Complacency is the toughest thing for a company to overcome – it’s the most natural and dangerous aspect in leadership. Most companies only have a spot & react policy. This leads to non-disruptive, slow change, but it keeps the institution afloat. No industry is immune from DISRUPTION!
- 6. Disruptive Leadership • Discontinuity – not the run of the mill • Slower Thinking – Illogical at First • Counter Intuition – unafraid to kill what you love/created • Opportunity is born from Technology • Thinking of the Future Effect • Return on Learning (idea generator) All these innovations will become new products/services create new values and modify the business organization. A new future for Apple which will save the company. Business as usual is 3% growth in the market through 2021, the Planned Disruption is expected to hit 198% through 2020 Disruptive Leadership is their Strategy
- 7. DISRUPT – Think the Unthinkable to Spark Transformation in Your Business! DISRUPTIVE LEADERSHIP is about doing the work of crisis without the crisis! DISRUPTION significantly alters or destroys the structure of a society and creates new values! – e.g. Crest Whitestrips! Often times only way to save the “right model at the time” is to destroy (or at least rethink) it. IDEAS are the fuel for DISRUPTION, the more the BETTER! Wherever there is a CONFLICT or RESTRICTION (pain points), there is are the richest opportunity for Innovation and DISRUPTION DISRUPTION is not about workarounds! DISRUPTIVE LEADERSHIP can be learned! Think about what usually gets ignored, pay attention to what’s not obvious!
- 8. The Skinny! Disruptive thinking is about looking at what is working correctly in your organization and intentionally disrupting it. About 98% of your job is about putting out fires, solving major problems – clearing to-do lists The problem with problems they are seductively clear, they are the only things getting all the attention The richest thing in your future are the seemingly unbroken aspects of the situation – Why does your smart phone need a headphone jack? Disruptive innovation is to bring attention to those things that are normally ignored and not obvious and nothing appears to be wrong. Disruptive leadership is directing other peoples attention to those things. “Where attention goes the organization energy flows”
- 10. Popular Examples of Disruptions International RCI - vacation ownership (timeshare) Apple - affordable computing power iTunes - affordable and convenient way to acquire music Local Paymaster - Paying Bills and Sending Money JMMB - Personal Broker, invest in your name Knustford Express - Luxury Public Passenger Coach Service GoGSAT - Online GSAT Student Preparation
- 12. DISRUPTION – Think about what no one else is thinking, and do what no one else is doing! 1. Disruption is not about incremental updates to your business model or service; – many companies tweak their current offering because it supports their current business model – it’s complacent, it’s easy! 2. Many companies are reluctant to make new things that will compete with their old things – Prius vs Corolla 3. When a business makes only incremental changes, they find themselves on a path that gets narrower and narrower. Eventually, their customers forsake them for a new offer that no one saw coming – They are disrupted. 4. Getting better at analyzing data results (BI) is only 50% of Disruptive Thinking 5. Surface the clichés then disrupt them!
- 13. Surfacing the Clichés Clichés are widespread beliefs that govern the way people think about and do business in a particular space Interaction Clichés – what are the steps a customer experiences when buying and consuming their products and services. • Is the interaction face-to-face? • How frequently do customers purchase or use? Example rental car • Face-to-face interaction with a service agent • Completing a lot of paperwork • Renting vehicles by the day! What Can I Invert, Deny, Scale (What if, Hypothesis)? • Don’t see the customer • No paperwork • No cars by Day
- 14. Surfacing the Clichés Clichés are widespread beliefs that govern the way people think about and do business in a particular space Interaction Clichés – what are the steps a customer experiences when buying and consuming their products and services. • Is the interaction face-to-face? • How frequently do customers purchase or use? Example rental car • Face-to-face interaction with a service agent • Completing a lot of paperwork • Renting vehicles by the day! What Can I Invert, Deny, Scale (What if, Hypothesis)? • Don’t see the customer • No paperwork • No cars by Day DISRUPTION: ZIP CAR!
- 15. How do we approach thinking in a DISRUPTIVE way? What can you invert? What if what you were doing was the complete opposite of what you are doing? Red Bull flipped traditional soda clichés. It’s expensive, it tastes bad and it’s functional What can you deny? What can you take away from what you are doing? Zip Car denied traditional rental car clichés. Don’t see the customer, skip paperwork, no cars by the day What can you scale? What can you distort or exaggerate? What is free that you can make expensive or vice versa Little Mismatched sells socks in sets of three that are mismatched. Socks are sold in Threes not Pairs and they are mismatched
- 16. Surfacing the Clichés - Practice Interaction Cliché – We “Check-In” to a Hotel • What is the interaction? • Describe the touch points • What can you Invert? • What if what you were doing was the complete opposite of what you are doing? • What can you Deny? • What can you take away from what you are doing? • What can you Scale? • What can you distort or exaggerate?
- 17. Crafting a Disruptive Hypothesis A hypothesis is a reasonable prediction A disruptive hypothesis is an intentionally unreasonable provocation Provocative “what if” questions prepare you to recognize things you didn’t notice before and put research and observations together in new ways Hypothesis: If you hit a button on a remote and it doesn't do anything, the battery is probably out. Taking past data to predict the future Disruptive Hypothesis: Why does a remote even need batteries? It's taking what you have and creating something new – breaks the pattern of expectation
- 18. The Disruptive Idea Your DISRUPTIVE IDEA is the novel solution to a specific need that is unique to your business concept. It is important that you emphasize the difference between your DISRUPTIVE IDEA and any competing offerings that may be floating around in the same industry or context Your DISRUPTIVE IDEA must be different in a way that is valued by potential customers, there must be a value Being different means making tradeoffs DISRUPTIVE IDEA Example: A centrally coordinated network of full-line discount stores to serve regional towns with less than 100,000 people. Sam Walton was the only one to believe that you could profitably serve small towns. Nothing kills a new idea faster than common sense
- 19. Five Stages of Disruptive Thinking Craft a disruptive hypothesis Define a disruptive market opportunity Generate several disruptive ideas Shape them into a single, disruptive solution Make a disruptive pitch that will persuade internal or external stakeholders to invest or adopt what you have created. Be Wrong at the Start to Be Right at the End Explore the Least Obvious Unexpected Ideas Have Fewer Competitors Novelty for Novelty’s Sake is a Resource Killer Under Prepare the Obvious, Over Prepare the Unusual
- 20. Your Disruption Exercise You are given an example/idea and you are to find an opportunity to put your hypothesis into action by carefully observing your customers and their needs Example: “Energy – Too Cheap to Meter” IDEA: BROADBAND INTERNET 1. Identify the clichés: Product, Price, Interaction 2. Craft a disruptive hypothesis 3. Define a disruptive market opportunity 4. Generate several disruptive ideas 5. Shape a disruptive solution 6. Make a disruptive pitch
- 21. Worked example Disruptive Hypothesis: What if, energy was too cheap to meter, customers never have to pay an electric bill ever again and had “bandwidth like energy” that they subscribed for and where unused bandwidth could be rolled over each month or traded for other goods or services. Disruptive Market Opportunity: Shift from utility customers to energy subscribers with varying subscription features and bundles. Disruptive Usable Ideas: No meters at the premises. Customers can customize subscription and manage unused energy in trades. Shape a practical solution: Tell Me > Show Me: An online energy subscription service that allows members to use unlimited amount of power based on their energy plan and where any unused amounts can be traded for goods and services on a platform. Pitch to someone who is going to invest or implement it.
- 22. Key takeaways & opportunities Disruption is HARD and Uncomfortable for Executives - a Business Model Challenge Be WRONG at the Start to be RIGHT in the END – you may even discover a new path or opportunity Your Ideas are Investments in your Growth, if you are investing in Growth, you should be interested in Disruption Current Business Model only Sustains Innovation – It doesn’t Create Disruptive Innovation required for Growth Most of leaders time is spent on existing problems, it’s what get’s their attention – JPS may need a new organization for Disruption Disruptive Leadership results in economic growth – uses capital, creates employment – A big opportunity for Jamaica Can we Disrupt our finance model!?! IRR & NPV (time, cashflow) Ongoing Disruptive Innovation Development for JPS Leaders An Economic Engine for Jamaica INNOVATION Disruptive Sustaining Efficiency JOBS Creates Little Eliminates CAPITAL Uses Little Frees As long as Disruptive > Efficiency the Economic Engine keeps turning
- 23. Recommended Reading 1. The Innovator’s Dilemma – Prof. Clayton M. Chritstensen 2. DISRUPT – Prof. Luke Williams 3. Clean Disruption – Tony Seba
- 24. 01 Discussion I thought I knew about disruption until I attended this class…, Thanks to Tishan for discovering it and Gary for this wonderful training opportunity. And Luke Williams…,
Editor's Notes
- Thank you for this opportunity, my goal today is to show you that you can be the DISRUPTER! You may not avoid being DISRUPTED, but you will be better prepared to save the company. Please have a look on the following three slides which set a part of the framework that I will speak to today.
- There is always going to be a tug-of-war and resistance to innovation and especially, disruptive innovation. The biggest restriction is the mindset grounded in fear!
- POLAROID declared bankruptcy in 2001 when they were disrupted by the shift from analog photography to digital photography. Why didn’t they recognize the disruption? Polaroids business model was based on selling film! Not the cameras, but on the continuous consumption of film! They made huge profits! Just like Gillette, they make huge profits on the continuous consumption of razor blades. BLOCKBUSTER had the chance to purchase NETFLIX for $50M and ran the two guys and their proposal out of the boardroom, We’re Blockbuster! The rest is history Typically, the only time an organization changes is when it's backed into a corner – usually that’s too late! SPOT & REACT, Keeping your eye on new and emerging trends is not enough for a strategy, YOU have to be on the unconventional as the norm, YOU have to be the disrupter, accept that you don’t know the outcome or answer. There needs to be a balance between Continuity (Past) and Discontinuity (Future). The organization has to blend and synchronize the ideas from the Discontinuity (future) into the Continuity (Past). Sustaining Innovation makes existing products better or more efficient (efficiency innovation), it doesn’t create a new product. Most of the new jobs in the last 10 years may have been the result of disruption. Focus on the Return on Learning (ROL) (Illogical)(Slow-Thinking)(Effect) vs ROI (Logical)(Fast-Thinking)(Utility)
- DISRUPTION is happening everywhere around us, everyday. Workarounds doesn’t affect the problem only the symptoms Without new IDEAS you can’t have growth – everything in the physical world has diminishing returns, IDEAS continue with increasing returns. How can an IDEA fail? IDEAS are innovative capital! How do you organize JPS to generate IDEAS? How do we capitalize on those ideas?
- How many of our decisions are made from a model created in the past? The absence of the headphone jack did now slow iPhone 7 sales and it allowed a major shift in the digital offering for wireless speakers and quality in the product itself.
- Disruptive innovations transforms complicated expensive products into simpler and more affordable ones – Professor Christensen
- Companies that try to differentiate themselves by focusing on incremental innovation instead of game-changing, disruptive innovation will differentiate themselves right out of business. What Do You Want to Disrupt? To meaningfully differentiate yourself from everyone else in the same space, you have to define the situation in the industry, segment, or category that you want to challenge. Here’s what a list of what you want to challenge might look like: This is an area in which everyone seems to be stuck in the same predicament and nothing has changed in a very long time. This is an area where profit performance is average? it really should be more successful than it is. This is a category where growth is slow and everything seems the same. Once you have a situation to focus on, describe it in one sentence: “How can we disrupt the competitive landscape in [insert your situation] by delivering an unexpected solution?”
- Cliché’s in most organizations are labelled BEST PRACTICES! Clichés are ideas/processes that keep us doing what we are doing. What makes people think in the same way they've always been thinking? It’s a mental trap! Incentivize disruptive thinking first, then look at data. This will cultivate a culture that challenges cliches and enjoy the possibilities.
- Similarly, there are Price Clichés – people pay cash, people, products and services are bundled, discounts for bulk buying, it should be cheap! Product Clichés – example soda, it’s inexpensive, it tastes sweet, advertised as aspirational
- BE WRONG at the START to be RIGHT in the END, Free the mental thought Similarly, there are Price Clichés – people pay cash/credit, people, products and services are bundled, discounts for bulk buying, it should be cheap! What about the resources/inventory relate to the price of your cliché? Product Clichés – What ideas about your product exist? example soda, it’s inexpensive, it tastes sweet, advertised as aspirational (an American ideal) > RED BULL, It’s expensive, it tastes bad, it’s functional Example ZIP CAR: Don’t see the customer, skip paperwork, no cars by the day Example: Little Mismatched: Socks are sold in Threes not Pairs and they are mismatched. – What was the problem that Little Mismatched solved? – There was no problem! That’s the point. At some point, clichés were great ideas. It is the strength of the idea that keeps it protected and never looked at. Disruptive thinking is looking at these "non-broken" ideas and realizing there is innovation that can be had there. How many of those decisions/ideas/processes still have value and which are there because of neglect of thought?
- Similarly, there are Price Cliches – people pay cash, people, products and services are bundled, discounts for bulk buying Product Clichés – example soda, it’s inexpensive, it tastes sweet, advertised as aspirational
- The objective is to find an opportunity to put your hypothesis into action, by carefully observing your customers and their needs. Crafting a Disruptive Hypothesis Hypothesis: If you insert a headphone into your smartphone you can enjoy listening to anything on your phone, if you hear nothing, something may be wrong with the jackk. Disruptive Hypothesis: Why does a phone even need a headphone jack! Nothing kills a new idea faster than common sense.
- Write your Disruptive Hypothesis
- Crafting a Disruptive Hypothesis: Be Wrong at the Start to Be Right at the End It all starts with a wild question. In simple terms, a hypothesis is the fill-in-the-blank part of the question, “I wonder what would happen if we .” Discovering a Disruptive Opportunity: Explore the Least Obvious The next step is to take the hypothesis you just crafted and hone it to something usable. You’ll start by looking at the real-world context your hypothesis will exist in. Who lives there now? What do they need? What motivates them? Defining a disruptive opportunity is designed to be quick and informal, intuitive and qualitative, and above all, accessible. Generating a Disruptive Idea: Unexpected Ideas Have Fewer Competitors Opportunities by themselves don’t lead to profits or lasting change. So, the big question is: How do you transform an opportunity into an idea? Well, the first thing to realize is that any old ideas won’t do. We’re looking for disruptive ideas—ideas that have the power to influence and to shape behavior. Ideas that stir the imagination and inspire a sense of possibility. Shaping a Disruptive Solution: Novelty for Novelty’s Sake Is a Resource Killer Disruptive ideas are great, but they’re only half the story. Unless you can make those ideas feasible, they can’t deliver value. How do you know whether an idea is workable? Well, you don’t, unless you actually see how it plays with your target market. Without testing your ideas with prospective end users and consumers, you’re in danger of coming up with really terrific ideas that will completely flop when they hit store shelves. In this chapter, we change our focus from conceiving ideas to transforming them into practical solutions. Remember: There’s a simple but critical difference between an idea and a solution: A solution is always feasible. If it’s not, it’s not really a solution. Making a Disruptive Pitch: Under Prepare the Obvious, Over Prepare the Unusual At this point, you’ve got a bit of a sales job on your hands. No, I’m not talking about selling to customers. Long before you get to that point, you’ll need to sell your disruptive solution to the people within your organization or the external stakeholders who control the purse strings. So, be prepared: Most people don’t embrace a disruptive solution because it’s disruptive; they embrace it because they believe it will deliver value. And you’re going to need a lot more than a basic presentation to earn that confidence. That’s why the final output of this process is a 9-minute pitch that takes your audience from their initial, pre-presentation, “Why should I care about this?” through the midpresentation, “I’m curious to see where this is going.” attitude, to a post-presentation, “Hey, this is great! How do we implement it?”
- Product clichés: What are the cliché features and benefits? What are the cliché product attributes that are advertised (convenience and reliability, for example)? Where are the cliché areas where the product competes (typical customers, typical geographies, and typical market size?). Interaction clichés: What are the cliché steps a customer experiences when buying and consuming their products and services? Is the interaction face-to-face? How frequently do customers purchase or use? In the rental car business, for instance, the prevailing interaction clichés include the following: face-to-face interaction with a service agent, completing a lot of paperwork, and renting vehicles by the day. Pricing clichés: What are the typical ways companies price their products and services and charge customers? Are they packaging products and services together or pricing them individually? Are they charging the customer directly or through a retail partner? Are they offering discounts or other incentives? What Are Your Disruptive Hypotheses? Now that you have a list of the clichés that are influencing the business situation you’re focused on, your next goal is to start provoking the status quo. To do that, you’ll take those clichés and twist them like a Rubik’s cube. You’re trying to find a way to rearrange the pieces, which in turn will provoke a different way of looking at the situation. What Can You Invert? If there’s an action, look at the opposite action. If something is happening over time, run the time scale backward. Whenever there’s a one-way relationship between two parties, try changing the direction 180 degrees. What Can You Deny? The denial method works by completely dumping key aspects of a cliché. Back to our rental car example for a minute, where the prevailing industry clichés include: See the customer. Complete a lot of paperwork. Rent by the day. What would happen if you no longer needed to see the customer, you got rid of the paperwork, and you started renting by the hour? Well, you’d end up with something very much like Zipcar. The disruption? Don’t see the customer. No paperwork. Rent by the hour. What Can You Scale? What is scarce that could be made abundant? What is abundant that could be made scarce? What is expensive that could be free? After going through these steps, you should be able to generate several hypotheses that will challenge your established way of looking at an industry and help you imagine radically new scenarios, ask unconventional questions, and discover unexpected advantages. The general rule is that the bolder your “What Ifs,” the fresher the perspective they offer.
- Values denote a conflict with what is important to them vs what they are getting, time, money, speed, convenience, efficiency, what customers want and what is actually available Inertia speaks to how comfortable people are in their habits, the higher the inertia, the less likely they are to change. If they feel trapped in a situation they find less than desirable, that is where you will find tension. Keep an eye out for situations where customers will act out of habit – e.g. skipping a procedure Wants are momentary cravings, should are things that are good for you in the long run Opportunities to Ideas – Observation: People in a Mac store like to touch computers Insight: you are rarely intimidated by something you want to touch and if you are intimidated, you don’t want to touch it Opportunity: give people an immediate sense of control over the technology by establishing an immediate physical connection between the user and the computer. Concept: Tell me – a digital music system that allows people on the move to carry 1000 songs in their pocket by synchronizing a portable device with an online music store Show me: Solution, the disruptive idea
- DISRUPTIVE Innovation pays off in 5 years, Efficiency pays off in 1-2 years, Creates more Capital which gives you more to invest in Disruptive innovation