Jeff Bezos has famously said that what keeps him up at night is a new and better Amazon that emerges out of nowhere and disrupts the one he now leads.
Bezos has good reason to be concerned. The average lifespan of a Fortune 500 company has fallen from 75 years in the 1950s to under 15 years today. Why? Because the pace of change is accelerating and entire sectors are being disrupted by innovation. Disruption represents the clear and present danger for those companies that are unable to change fast enough or neglect to keep a close eye on the threat landscape.
Clayton Christensen, the Harvard professor, anticipated this phenomenon in the mid-nineties when he postulated ‘Disruptive Innovation’ as an emerging phenomenon. Here, he was referring to a bottom-up process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses.
So who is in charge of innovation that prevents this disruption in your organization? Should this task be centralized – the lone lookout at the top of the ship’s mast – as in a Chief Innovation Officer; or decentralized, with all hands on deck? Not making a deliberate choice can be disastrous with obsolescence as the reward.
The CEO often has trouble leading this effort because disruption often comes from the low end of the market – a segment that CEOs generally spend little time on because they are more focused on their most lucrative endeavors. The strategic planning department tends to project current processes into the future by analyzing the past. They are thus not oriented towards changing the process itself. The rare company “innovation executive” too often lacks the associated P&L responsibility, and is therefore marginalized.
Rather than naming a new position title or department to raise the siren of pending disruption, perhaps a different approach is recommended: “Disruptive Innovation” as a pervasive state of mind, not a question of who is in charge.
‘Disruptive Innovation’ reflects a culture that challenges the status-quo and encourages dissent. It is agile and constantly encourages bench-testing new ideas, particularly those that require meager resources because that is the breeding ground for many disruptive newcomers. It requires a diversity of ideas and should be completely decentralized so that every person is vested in it.
When organizations transition to new models, they do so with a staff prepared to come up with innovative ideas and capable of disrupting everything, including themselves. It is not something left to a few “self-starters” to do on weekends. In fact, it is integral to the daily work. And yes, ‘Disruptive Innovation’ must be taught as well as demanded.
What does this skill set include? It includes a leapfrogging mindset focused on creating completely new value. Peter Thiel, cofounder of PayPal, put it best when he said: “Doing what we already know how to do takes the world from 1 to n. But, when we create something new, we go from 0 to 1. Unless companies invest in the difficult task of creating new things, they will fail in the future no matter how big their profits are.”
In this paradigm, there are no ‘sacred cows’ and boundaries are pushed at every level and with every process. By definition these skills are entrepreneurial, riskier and come with heavy doses of uncertainty. Integrating the lack of good data – which is inevitable for disruptive endeavors – with common-sense intuition is necessary. These are processes that seldom work to plan and have unexpected trajectories and outcomes. Such an environment requires design-thinking, resilience and swift pivots – elements that can be contrary to a ‘no-surprises’ organizational culture.
Businesses don’t innovate. People do. So in the end, ‘Disruptive Innovation’ is about people and their ability to be successful with innovative experiments at every level of the organization. It is only successful where every individual is constantly rethinking the boundaries of their own jobs, their products and their company.