Every leader wants to be the disruptor, but not the one facing it. They want to be the industry leader enjoying the first-mover success. They really do not want to be known as that leader disrupted by the competitor they didn’t see coming.
The need to focus on disruptive innovation is become ever more acute. How you used to work no longer cuts it, and if you’re honest, how you work now is no longer really cutting it either. Increasingly impatient consumers will not endure low standards. They’ve been spoilt, by their eyes being opened to better ways and they want more.
As the demand to transform increases, the harsh reality is that the way most companies approach transformation means that they will never achieve the transformation sought. With hindsight it’s easy to scoff at the executives at Blockbuster when they turned down the opportunity to buy Netflix, but if we’re honest, we probably would have made the same decision too.
If you want to be a disruptor, you have to be a risk taker, and that’s the crux of the problem. Risks and unknowns are really unhelpful to organisations as it makes planning really hard and creates extra work. Unknowns are disliked; there is too much to lose. Money, reputation, personal bonuses, jobs; it is all on the line. Over time mechanisms to reduce risks occurring have been created, and if a risk does occur, ways to mitigate the impact of that risk are in place. Unfortunately, the trouble with disruptive innovation is that you can’t predict with certainty what will work and what won’t. Why are startups more successful at disruption? Because they have less to lose and have been created for one purpose – to disrupt!If you want to be sure of success before you commit, you will only ever go for the safe option.
Disruption is not safe.
So how can an existing company survive? It has to start at the top with the leaders of the organisation. They are responsible for the company’s direction and performance and must set the example and lead the change.
If transformation is desired, leaders must be willing to change. Different results cannot be expected if nothing is done differently. Leaders must find a way to create space to come up with the “new ways” of operating and not kill them immediately, which tends to be very hard to resist. Be aware that you can’t expect disruptive innovation from people who are focusing on today’s operations if you don’t give them time to think differently.
To have a chance of being disruptive, a risk or two must be taken. Provide your people with the resources and budget to make those different things happen. Just telling people to change won’t work; you need to enable these different ways to happen.
This does not mean haphazard and random process of throwing money in any direction and at anything. You can still maintain visibility and control, but understand that not everything will succeed – that’s ok – but your organisation will learn from everything.
Start by deciding on the proportion of disruptive innovation you want, compared with the standard or sustaining innovation that improves the current business. Think of it like a pension portfolio, split into low, medium and high-risk categories, where the level of overall risk is chosen, which decides what investments are chosen to meet that risk appetite. In the same way, innovation projects can be categorised into core innovation (low risk), adjacent innovation (medium risk) or disruptive innovation (high risk) or Horizon 1, 2 and 3 as first termed by McKinsey & Co.
Once you’ve decided on the portfolio balance you need, take a look at what you actually have in your portfolio by mapping the projects against these three horizons. It won’t match your desired state, so you have to make some decisions:
- What projects in one horizon need to be de-prioritised to enable projects in another horizon to be prioritised?
- What must you to stop as it’s not going to help?
- What must you start to have more innovation projects in the desired horizons?
Let’s just revisit the control aspect. By encouraging innovation, it’s going to lead to some duplication of ideas and efforts. As uncomfortable as this will feel, duplication not a bad thing in the innovation space. Allowing different teams to focus on solving the same problem is healthy as diverse approaches will give better outcomes; it becomes unhealthy only when it becomes competitive or secretive. Nobody knows what the right answer is, so you need to let multiple projects run; the key is to stop those projects quickly when they hit dead ends. Celebrate the efforts of the unsuccessful teams as much as the successful team, as their combined efforts enabled the answer to be found.
If you want disruptive ideas, you must reward people when they try new things and take risks. Don’t just reward when there is success, and it goes without saying that you mustn’t punish them for failing, rather reward them for sticking their neck out. If you don’t celebrate the failings, or more helpfully, the learnings, nobody will ever want to fail and you’ll be back to that safe world you are attempting to leave behind.
You want to be on the right side of disruption, and you need your people to take risks and that starts with you. Make risk-taking more attractive than sticking with the safe option. Yes it’s a risk, but is there is a bigger risk in doing nothing?