Riding the Dragon that is Disruption

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[The following is an adaptation of a TEDx talk I gave, on May 29th, at TEDxINSEAD2016 – I will share the video once I have it :)]

In April 2008, about a year after the launch of the first iPhone, NOKIA CEO called it: “a niche product”

How could he have been so blind?

I mean, at the time Nokia was selling more phones every week than apple sold since it launched.

A couple of years ago when my friends started talking, forget about talking, buying and selling, bitcoins, I thought — they’re crazy — it has no intrinsic value.

Now true neither does any of our paper money, but still…bitcoin? It’s geeks money used to buy drugs. Blockchain? Never heard of it!

There is still a debate to in the hotel industry if they should consider Airbnb as a serious threat.

Uber,

Lyft,

BlaBlaCar

Seriously? BlaBlaCar? (I mean, hello? Serial Killers!)

None of us saw it coming.

Why do so many capable people — keep getting surprised all the time?

This is why:

It’s the overconfidence that comes from being as blind as a bat and at the same time convinced that we can see just fine….

When I asked business leaders, what they thought about disruption? They all said disruption is a serious threat. They also said “I am not worried — my industry is incremental — disruption is not my problem.”

Right — good luck with that.

In the following paragraphs I’ll write about innovation, disruption and what we can all do together to avoid death-by-disruption by engaging and managing it, head-on. Ready?

My name is Shahar Larry. In 2005 I became an innovation consultant.

It was pretty awesome — from a sandal wearing philosophy student in the Tel-Aviv university I found myself In a suit, traveling the world helping fortune 500 companies innovate. I worked with a team of international experts on the Deepwater Horizon (BP) catastrophe in the Gulf of Mexico in 2010, I helped invent new products, services and processes in pharma, telecommunications, medical devices, consumer product goods, food and beverages — you name it — did I mention it was awesome?

And then about a year ago I had a moment of clarity.

On June 8th, 2015, Retiring Cisco CEO, John Chambers, said:

It turns out that this statistics, which is often quoted, is totally made up — but that didn’t matter. I believed him.

Two things became clear that morning:

The first was that my clients, the corporations, are hopelessly slow. I helped invent amazing new products that took two long years to reach the market — being obsolete the minute they hit the shelf. 

The second thing was that I could not remember a single project that resulted in anything radically different from what the company was already doing. 

When potentially disruptive ideas did come up they were buried, as one of my clients said with a “graceful funeral”.

I thought — maybe it’s me — maybe I’m not very good consultant.

It turns out, it wasn’t only me.

The famous Harvard Professor Clayton Christensen wrote about it in 1995, 1997 and 2003 — in fact he hasn’t stopped talking about it since….

and he isn’t the only one — many, serious people, consistently describe corporate innovation as unable to focus on anything but improvements to their current offering.

Now, I’m not saying corporations can’t ever come up with disruptive innovation. Clearly trying cherry tomatoes for the first time changed my life forever.  I’m saying that since the invention of the modern cherry tomato -2 years before I was born in 1973, 17 other “totally new”, groundbreaking, “looks-about-the-same”, iPhones — sorry — cherry tomatoes were invented

— including these:

The fact is that most corporate innovation is similar to adding a new type of room with a private gramophone on-board the Titanic. It certainly adds to the experience, but it does very little for avoiding icebergs at night.

So let’s take stock: everything is changing really fast, corporations are too slow and chances of them transforming into super-agile speedboats are slim to none. They consistently underestimate the risk of sudden death by disruption either because they think they are immune — and they are not — no one is — or because they think they can adjust fast enough when it hits them — they will not. 

The future is not looking very good…

Thank you. that’s it, that’s my piece.

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Truth is that a year ago — this is where my article would end.

…. I was seriously thinking about changing career.

There a famous joke — what’s the difference between a Rottweiler and a Jewish Mother?

The Rottweiler let’s go of the kid in the end…

My mother taught me well…I decided not to let go and find a way to help organizations not only avoid death by disruption but actually find a way to ride it and fly.

But first, I should tell you what I mean when I say “disruption”. There are many definitions. I like to define it as:

Now, I know what you are thinking — “I will not be surprised!” “I am special”, “I am connected to the startup scene”, “My strategy is Flexible”, “Disruption — I can handle”

Great — you’re very smart.

I asked a senior, yet young, innovation officer in one the world’s largest banks — how do you select candidates for your famous Open Innovation program. She said: “we look for those most likely to add value to our business.” I suggested, that since disruption is surprising, perhaps she should look for those she least expects to add value…

She immediately agreed — I was hired and within 2 weeks we realigned their entire open innovation program to address disruption — 3 of the startups they rejected several months earlier, were recruited and I just heard that they are doing great. Super happy.

I wish — In fact, what really happened was that after a disturbingly long pause she said “what you say makes sense — but I can’t imagine I will ever be able to do that….”

The tough question we must ask ourselves is:

This is the complete opposite to the corporate innovation state-of-mind. Think about it like this:

Corporate innovation is all about moving from what we know we know — which is what we already do — to what we know we don’t know — which is usually better performance, cheaper price, more features. 

Samsung, for example, knows it always needs a better smartphone battery. It wants to make a smaller, thinner battery at the same price point — but it does not know how. When Samsung finds a clever way, it launches a slightly better model and we all rush to buy it.

Disruptive Innovation is different. It comes from the much bigger space of what we don’t know that we don’t know.

Which is why its surprising. McKinsey advised AT&T not to enter the mobile market because their projections were of less than a million users by the year 2000. There were over a hundred million. Gartner projected in 2009 that by 2012 Symbian will be the leading mobile operating system. Symbi-what?

You see the problem? If corporations can’t see disruption coming, how can they prepare for it?

The simple answer is that THEY can’t but IT is still possible.

Over the past year I have been working on a framework called — Elastic Innovation.

No trademarks here.

It’s all open source, available online — reach out to me and ill send you a link

The model has 4 simple building blocks:

The first part is called “to know”

— we setup a small team of intelligence officers. I mean exactly what you are imagining — a mini-benevolent — “NSA”, focused on mapping and exploring the sources-of-disruption — even the improbable ones.

The second step is called “To Bet” — we select several potential disruptors, at different stages going in different directions.

You can think about it like life-insurance for your company. Nobody buys life insurance because they think they are going to die. We buy it because we know, I hope not from personal experience, that people do tend die every now and then and sometimes unexpectedly. So in a sense this is the same thing. We invest in protecting our strategy from potentially deadly unexpected changes in our business environment.

In the third step — “To Grow” — We invests in these potential disruptors — small amounts and few resources according to need — keeping them hungry and driven. 

It is all about creating a growth eco-system that can help very early ideas to form and gel, more advanced — seed stage — ventures to demonstrate a Proof of Concept and accelerate market-ready ventures. It includes mentoring, incubators, ideation teams, accelerators, Scalerators, PoC packages and other tailored programs designed to mature innovation. During this stage some fail and drop out.

Finally, there is “to Realize”.

By this stage the corporation should have a significant stake in the few disruptors that survived. Since disruptors tend to follow a different path — integrating them, is sometimes not relevant — we should allow them to accelerate independently.

Now, for the secret sauce: for this to work, The intelligence unit, the betting process, the work done with the disruptors and the disruptors themselves all have to be autonomous and insulated from the mothership. 

This is what I meant when I said: THEY can’t do it — but IT can be done!

The corporate needs to externalize its disruption management to people and organizations that have a different perspective, that are not tainted by its biases.

So, to sum up — this is the recipe you need to remember:

Create a diverse network of disruptors around the “mother ship”.

Keep them autonomous and insulated — no badge, not using the same IT resources, not even the same wifi — and hungry.

The mother-ship will be free to “carry-on“ — milking and innovating in its existing market.

The network of potential disruptors will try. Some will succeed.

When they do, they’ll either buy time for the mother-ship to circle-back or they’ll grow so fast the mothership won’t matter.

Know this: We are ideally positioned to miss disruption when it hits us. The people before us who missed it — they too were smart and confident — we are not special. If we are to transition into disruption, we must first acknowledge our limitations. It is not easy to act from a position of not knowing — but I believe that we all must!

Ludwig Wittgenstein, one of my favorite philosophers, said: “If people never did silly things nothing intelligent would ever get done.”

We set out to transition organizations into disruption — we can’t do this alone. I am calling you — managers, leaders, teachers, facilitators, students, professors, consultants, closeted disruptors, even investment bankers — if this speaks to you — you should speak to us — join our first-of-its-kind community and open-source database for practical tools and frameworks that help organizations ride the dragon that is disruption.

Shahar

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By | 2017-11-12T09:46:56+00:00 October 25th, 2017|Uncategorized|0 Comments

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