A PRESCRIPTIVE GUIDE TO ANTICIPATING AND CAPITALIZING ON DISRUPTIVE INFLECTION POINTS SHAPING THE MARKETPLACE
Though seemingly sudden, inflection points are not random nor unexpected. Every “overnight” shift is actually the final stage of a process that has been subtly building over time. Armed with the right strategies and tools, smart business leaders can learn to spot inflection points before they hit—and use them to gain a competitive advantage.
Paradigmatic shifts in the business landscape, known as inflection points, can either create new opportunities (see Amazon and Netflix)—or they can lead to devastating consequences (e.g. Blockbuster and Toys R Us). Only those individuals who can “see around corners”—that is, spot disruptive inflection points developing before they hit—can position their organizations (and themselves) for success.
Columbia Business School Professor and corporate advisor Rita McGrath contends that inflection points, though they may seem sudden, are not. Every seemingly overnight shift is actually the final stage of a process that has been subtly building over time. Armed with the right perspectives and tools, smart leaders can anticipate inflection points and leverage them to create a real competitive advantage.
Seeing Around Corners is the first hands-on guide on how to anticipate, understand, and capitalize on the key inflection points that shape the constantly shifting marketplace.
Who should read this book?
It takes incredible observation and analysis to spot an inflection point happening in real time, which is why I feel everyone at every level within a company could benefit from reading it. Business today is dynamic, complex, global, ever-changing and it’s extremely hard for companies to survive the long-run, which is why all employees need to contribute with a heavier leaning on senior level managers to be agile and keep their eyes on the prize.
How I will use this book.
My corporate role requires me to drive exceptional service levels of our 5 brands. This includes reducing the turnaround time of submittal packages, reducing tech support ticket cycle times, reducing quality claims, reducing supply chain lead times, etc. Where I can help contribute is by continuing to keep my pulse on where technology will go in terms of using blockchain, AI, robotics, VR/AR, etc. and utilize that in my role, but also ensuring that our cross-functional business partners are also aware and keeping their pulse on things as well.
Snow melts from the edges
If snow melts from the edges, it behooves you to have mechanisms in place to see what is going on there.Consider, then, the following eight principles that can help you make sure there isn’t something brewing at the periphery of your organization that could have an explosive impact on the company before you realize it.
- Create Mechanisms That Direct Information Flow from the Corner Office to the Street Corner
- Deliberate creation of information flows that reach directly from leaders’ offices to the front lines of the business; deep-dive sessions regardless of hierarchy.
- Level-skipping conversations; provide a methodical but organizationally safe way for those with decision rights to get exposed to what is changing at the interface between the organization and its external environment.
- Watch out for the narrow circle and the sycophant followers of leadership like that of Facebook’s Mark Zuckerberg who think just like him.
- Make Sure You Are Leveraging Diversity of Thought
- Ask yourself: Am I inviting diverse viewpoints into our discussions?Are we listening to people whose life experiences and views are different from our own?Are we all homing in one scenario to the detriment of even being able to imagine others?
- Avoid the blind spots: lack of imagination and the inability to see how other people might take advantage of a situation in a way that you never would have.
- Balance Type 1 and Type 2 Decisions: Empower Agility but Create Balance
- Type 1 decisions, as observed by Jeff Bezos of Amazon, are those that have huge implications for the organization, are potentially highly risky, and are irreversible.
- Type 2 decisions are reversible, low risk, and rich in learning potential.Use delegating authority in making these decisions.Teams should be empowered.
- Avoid conventional bureaucracy – be agile.
- Jeff Bezos follows a ‘two pizza rule’ meaning that no team should be so large that it could not adequately be fed by two pizzas.
- Story on the difference between an agile, connected team and conventional corporate action:John Donahue, the CEO of eBay regularly convened meetings with employees who were under 30.One of them was Jack Abraham, who had an idea for a major redesign of the company’s web page.Donahue told him to figure out what resources he needed to make it happen.Abrahams took the five best developers out for drinks one night and convinced them to take a two-week trip to Australia the next day to work on a prototype.Donahoe was blown away.“Had we asked a normal product team, “he said, “I would have gotten back hundreds of PowerPoint slides and a two-year time frame and a budget of $40 million.Yet, these guys went away, worked 24/7, and built a prototype.
- Instrument the Edges: Foster Little Bets
- Often the big problem was not coming up with interesting ideas, it was fighting one’s way through the bureaucracy to get the approvals necessary to move forward.
- Adobe uses its Kickbox program to solicit ideas and input from people throughout the organization who normally wouldn’t be heard at the strategy or innovation planning meetings.The program allows for anyone to grab the Kickbox, which inside contains a set of instructions to “beat” the box, a Bic pen, two sets of Post-it notes, a timer, a Staples mini-notebook for “bad ideas”, as well as a $1,000 prepaid Citi card that employees can spend however they like, without ever justifying any purchase to a manager or filing an expense report.For the price of just one $1 million project, Mark Randall, Adobe chief strategist and vice president of creativity could fund one thousand $1,000 little bets.
- Get out of the Building
- There are no answers in the building. – Steve Blank
- Don’t allow frontline employees to unintentionally hide information from their leaders in a misplaced effort to give a good impression.
- Put leaders in a position where running into customers occurs naturally.
- Imagine your organization was taken over by a different one, which can be immensely liberating.Ask yourself:What would they have you start doing?Stop doing?If you had vastly more marketing money to spend, how would they want you to spend it?
- Create Incentives That Reveal Useful, If Awkward, Information
- The lesson here is that powerful business incentives can thwart the willingness to take in and absorb uncomfortable lessons.
- Don’t be Enron who lavished massive rewards on executives, which in turn incentivized them to keep bumping up the stock price, which in turn ultimately led to not only unsavory but illegal behavior.
- Facebook has by now attracted so many lawsuits that it actually mentions them in a special note in its quarterly Securities and Exchange Commission report.
- Avoid Denial
- Leaders turn a blind eye quite deliberately because it is just more convenient not to take in news that things might be changing.
- Story on iconic mapmaker Rand McNally, in 2006, who basically dismissed the likely effects of the digital revolution, thinking people would always use old-fashioned folded maps.
- Talk to the Future That Is Unfolding Now
- The future doesn’t just happen all at once.It begins to unfold unevenly.
- If you want to know how the twentysomethings of ten years from now will be looking at the world, you can be absolutely certain that you could have a conversation with the ten-year-olds of today.
- Think about what it took for movies to become commercialized, or online education to be accepted, etc.
The upheavals created by major strategic inflection points usually take quite some time to unfold.They are also not “complete” when you first see them.But if you are paying attention, you can begin to see the implications of their trajectory early on, when it is still possible to influence them.Remember, snow melts from the edges.
“When the moment of crystal clarity arrives, that is the moment to mobilize the troops, to bring focus, and to bear down hard on preparing the organization for the post-inflection world.”
“In God we trust.Everybody else bring data!”
Lagging indicators are outcomes or consequences of some activity that came before.These would include: Operating margins, EBITDA, Revenue/turnover, Revenue growth, etc.Avoid the systematic bias to prefer lagging indicators in your strategic decision making.By the time an inflection point has handed you a new reality, it’s a tad late.Lagging indicators are not particularly helpful if your goal is to understand the future.
Current indicators give you data about the current state of things.Many current indicators are based on the proven recipe for success in a given business – that is, on conditions at one point in time.With employee incentives often tied to their performance with respect to driving current indicators, it isn’t surprising that many people don’t bother to look beyond them.Avoid the blind spots!
Leading indicators represent things that are not facts yet in your business and are often qualitative rather than quantitative.
The quality of the information you have to work with is inversely proportional to your ability to do anything to change the story. A way of increasing your decision-making confidence is to create a time zero event that represents something important that might happen in the future. Then you can work backward in time to see what could anticipate this kind of event.
Future chapters I will be writing about:
Customers, not hostages
Creating a plan to learn fast
Galvanizing the organization
Innovation proficiency defanging the organizational antibodies
How leadership can and must learn to see around corners
Seeing around corners in your own life