Since Clayton Christensen introduced the theory of disruptive innovation in the 1990s, many organizations have transformed to create a better future and avoid disruption — but numerous others have failed.
The main factors why many leaders struggle with innovating for impact to meaningfully improve outcomes are because they –
1. Allow selected or positive data to lull them into a sense of security – which reflects past performance …. and typically doesn’t indicate the effects of disruption in the making
2. Rationalize their own inaction on shareholders’ desire for short-term results – versus thinking long term. To help with understanding – share the vision, educate people about opportunities and the future, provide a road map with milestones and proof points, etc.
3. View their people don’t have the necessary skills, mindset, motivation, etc. to do innovation, don’t want to address the challenges to change culture, there is no vision or strategy to better position the organization for the future, etc. To get past these blockers, provide innovation education and workshops, bring in Innovation Practitioners with experience in doing disruption, ensure all Executives buy-in to changing the culture and effecting change, etc.
4. Think innovation is risky. While disruptive innovation is riskier than incremental or sustainable innovation, the key is to find a balance and create a learning environment to increase the appetite for “ the new” – with rewards for results, learnings, etc. Further, realize not innovating to meaningfully improve business outcomes is even riskier ! While recognizing if an innovation initiative failed the investment is lost, there were learnings to be more aware of how to identify and make good on new opportunities going forward
Many successful companies are good at incremental and sustainable innovation to better serve customers and improve operational efficiencies. However, with disruptive innovation requiring a different mindset, it’s critical to toggle between the different forms of innovation, plus still effectively run the current business as the organization evolves. Basically, you need to be able to walk and talk at the same time ! While recognizing having multiple mindsets is difficult, it’s needed to get past conscious and unconscious biases as well as having a more forward thinking and open culture to expand comfort zones, change traditional processes, update company values, etc.
To increase the rewards from innovation, Christensen recommended having disruptive initiatives in separate entities – where people can operate based on entrepreneurial values and practices. With this, leaders need to embrace and internalize the different mindsets. To do that, leaders need more than intelligence and intention; they need self-awareness and must be prepared to face the challenges of stepping outside a familiar context, looking at things in new ways, collaborating with people having new capabilities (ie: extensive digital / technology knowledge as well as accomplished business skills, strong look ahead, venture investing experience, an understanding of how to – deliver a great User experience / create value / monetize value creation / etc.)
Many tools and programs exist to help leaders develop the ability to develop new mindsets and shift from one to the other. Join or create a team that is dedicated to self-transformation to hold yourself accountable. Mindfulness can help leaders develop self-awareness, be more present, and foster a malleable mind. Bob Kegan’s immunity-to-change framework can identify the habits and beliefs that hamper your efforts to change and reach your goals. The capabilities that leaders develop be good at disruptive innovation and managing disruptive change will serve them well during crises, navigating paradigm shifts, identifying and making good on new opportunities, etc. For example, during the COVID-19 pandemic a common view is to focus on the immediate concerns and de-emphasize or back burner other things (ie: innovation). But leaders must always lead for the present and for the future – simultaneously. Those who can do this better position their companies to identify and seize opportunities during times of change. For confirmation of this, during the 2008 global financial crisis, Adobe and other established companies succeeded in transforming themselves. As well, many new companies emerged from the crisis, including approximately 100 unicorns (companies with valuations of more than $1 billion) – with basing their future on the new business landscape, changing expectations / behavior and other aspects of the downturn. Stripe and Square, for example, are two companies that built on people’s loss of trust in traditional financial services providers. Downturns and unsettled times also allow disrupters at the edge of the mainstream to push ahead.
From this it’s clear the need is to innovate for impact – if the goal is for the organization to increase relevance and revenue, attract talent and more Customers, create wealth for stakeholders, meaningfully improve outcomes, etc.
Summary
A. Companies often overlook the imperative of
- responding to disruptive change
- developing the competencies to be good at disruptive innovation
B. Leaders need to develop the “ Mindset “ and form the “ Brain Trust “ to be accomplished at the different forms of innovation
…. like having ball players who can hit singles, doubles and homers
C. The capabilities that leaders develop for creating the future and managing disruptive change will serve them well during crises, paradigm shifts, getting past uncertainties, etc.
By – Scott D. Anthony (@scottdanthony) is a senior partner at growth strategy consultancy Innosight and coauthor of Dual Transformation: How to Reposition Today’s Business While Creating the Future. Michael Putz is a strategy and business development executive with two decades of experience driving growth through disruptive innovation and business transformation. Paul Michelman (@pmichelman) is editor in chief of MIT Sloan Management Review moderated the session at Disruption 2020.
Related Reading – S.D. Anthony and M. Putz, “How Leaders Delude Themselves About Disruption,” MIT Sloan Management Review, March 10, 2020.
June 18, 2020 CAIL / Innovation industry insights info@cail.com