Do You Explore for Disruption?

In a world where competitors, strategic partners and customers are focused on innovation and how it will improve their lives, it makes sense for leaders to do the same thing in our companies. However, we need to recognize the differences between different types of innovation – and commit not just to the low hanging fruit but also the transformative changes.

Generally, innovation focuses on people, products/services and/or processes. Today’s car-sharing services (e.g., Uber Lyft, etc.) affects all three customers order differently and the drivers operate differently (i.e., their own businesses). The process is involves using an app to have transportation come to you rather than you go out to where cabs travel. The product differs in the quality of the transportation experience, including knowing how much it costs before entering the vehicle. Innovation come in two styles: incremental and disruptive (transformative); ask any yellow-cab owner, and you’ll hear that car-sharing services are transformative.

What’s important to understand is that innovation creates an inevitable tension for company leaders. They are responsible for building and executing a strategy.  Execution means cascading the goals from one level down to the next and creating a supportive culture to enable each member/team to achieve their objectives, especially when the inevitable speed bumps and road blocks get in the way.  If at the same time they want to be innovative, they can’t be disruptive, because that would disrupt the elements that make for success. So leaders resolve to focus on incremental innovations – and put their energies in helping creative an innovative, incremental culture. People’s skills ae upgraded, products improved, processes made efficient and/or effective.

But transformations require disruptive thinking. Henry Ford realized that people wanted faster transportation than was available with existing horse and carriages. Incremental innovations would take the form of lighter carriages, faster wheels, superior horses; a disruptive “horseless” carriage meant an automobile.  The key to such disruptive thought is for leaders to be curious and explore options outside the current frame-of-reference. They know that these innovators cannot be concerned with executing the current business strategy.

Leaders need to be self-aware of the conflict between growing through innovation while maintaining the status quo. It takes a commitment to explore for disruption and develop a structure where they are separated from the day-to-day activities and supervised by someone who nurtures and protect their efforts (often referred to as the “skunk-works” project.)

Are you committed to exploring all your opportunities?  Share how you launch disruptive technologies.

Follow Steve Jobs’ Example to Achieve More

Looking for ways to increase your productivity (and that of your colleagues)? Tom Koulopoulos recently shared a habit used by Steve Jobs, that is easy to use.

To put it into perspective, “being busy” does not mean you’re “productive”.  Ask people what they did on an average day, and you’ll get answers like “A lot, it was a busy day; non-stop action, meetings, phone calls, the usual!”  It tells you nothing about what was actually achieved – which is the real reason we work.  (A sales management expert said that most sales people spend less than 25% of their time actually “selling to customers”.)

Today, distraction is running rampant. The “tyranny of now”, things we think we should do – from meetings-without-agendas to emails and social media distract us from focusing on what we are paid for: to achieve a strategic company objective.

Steve Jobs understood that there is one question that will instantly address productivity: “What did you achieve today?” And if the answer isn’t consistent with your purpose of working, then you need to change how you spend time. And your accountability partner can help you do it.

Here’s a simple process to follow to improve productivity.

  • Before going home, identify what you want to achieve tomorrow – write it down and leave on your desk, so it’s the first thing you see. (In a prior blog, we shared a double-entry time management system you can use to accomplish ongoing goals.)
  • When you come in the morning, it takes only seconds to sharply focus on what you want to accomplish by reviewing the list and making any edits based on what’s urgent/important.
  • Monitor the time it takes to do each project; make adjustments as needed so priorities are met. Note how much time is being spent on distractions and build systems to reduce their interference with achievement. Many tactics are available for reducing distractions; find the one that works best for those that interfere with your work.
  • At the end of the day, (1) write out the achievements and time management plan for the next day and (2) list your achievements for the day and take pride in them!

If your achievement rate isn’t high enough, accountability partner/coach to help you see where you can do better.

Ready to give it a try? After two weeks, share with us how these ideas are helping you achieve more and feel greater satisfaction for doing so.

It’s Your 168 Hours: Use Them Better

How am I going to find time for that?

When I speak to CEOs who want more success for themselves, their companies and employees about Vistage Worldwide’s ecosystem of leader development services*, they inevitably get the value of leader development learning, but wonder how can they afford the time?

At that point, we discuss reality: all of us have the same 168 hours per week. the issue is how we use it. The difference between Richard Branson, who runs dozens of companies under the Virgin Brand, Elon Musk who runs countless different companies (Tesla, Solar City, SpaceX, the Boring Company, DeepMind, etc.) and all the other leaders of Conglomerates, is that they’re mastering effectiveness leadership. Instead of being the “Chief Problem Solver” for all companies, they manage their time by hiring the right people, delegating responsibilities, avoiding mistakes and capitalizing on opportunities by listening to other people, and managing their time.

That’s why the first thing we do at Vistage is focus on time management: where is your time best used and how can we build an effective team and strategy to use others’ time well also. Indeed, Vistage has great ROI: you invest 7% of your month in learning how to be more effective – and you can grow your company, as other CEOs do – 2-3X faster than competitors!

Indeed, Maura Thomas, in a recent Harvard Business Review article, noted that the key is attention management: “the practice of controlling distractions, being present in the moment, finding flow, and maximizing focus, so that you can unleash your genius. It’s about being intentional instead of reactive… Rather than allowing distractions to derail you, you choose where to direct your attention at any given moment, based on an understanding of priorities and goals.”

In other words, instead of being the full-time “fire-fighter” – solving problems that could have been avoided and/or resolved by others – you should be mastering how to improve company performance, by mentoring and coaching your team to constantly improve company strategic performance and increase satisfaction at work.

It’s time to build your “time management muscle”. If you want to learn more about Vistage, call me at 646-290-7664.

Do Potential Customers Really Want Your Product?

Since the 1960s, Everett Rogers introduced the concept of adoption-of-innovation, there have been some excellent examples of what works and what doesn’t. (He applied it to the adoption of corn by farmers; I used it to explain the use, and non-use of birth control by teenagers as part of my doctoral dissertation.) This week I used it to discuss two electric car companies – Tesla’s success and Better Place’s failure — an observation also noted by Greg Satell in his Digital Tonto blog. Peter Drucker was right: the key to any business is creating a (profitable) customer.

Over a decade ago, Shai Agassi led a team to create a pioneer electric care company – Better Place. Recognizing the limit of battery charges, he envisioned a world where people could drive in relatively inexpensive electric cars, by adopting the idea of “gasoline-filling stations” and creating “battery switching stations”. Drivers would drive into the station on the way to their destination and it would remove the old battery and switch it for a fully charged battery quickly. He raised money to test the idea in countries and states with defined travel limits (e.g. Israel, Hawaii and Denmark) and build enough stations so local people could travel.

However, it failed because the business model didn’t take into account the need of customers – partners and end-user) for this venture. The goal was to have a car company manufacture and sell cars to-end-users who would get the batteries from Better Place. This meant that the car manufacturer was not selling a totally workable vehicle! This presented a problem for insurance companies and discouraged car manufacturers from investing in building vehicles that weren’t self-sufficient.

As a result only one company (Renault) agreed to manufacture the car and less than 2000 small cars were produced. Most people didn’t want them, so they didn’t rush to buy, and the company failed.

There are two analogies worth noting. Almost two decades ago, Webvan raised billions of dollars to create a food delivery service where people could order on-line and have it delivered within 30 minutes. The company invested in warehouse infrastructure, when it should have spent more time understanding customers’ buying patterns. By creating no minimum size purchases with almost on-demand delivery, almost empty delivery trucks were delivering unprofitable purchases. The company closed within a few years. (Its operation was folded into Amazon!)

Similarly, TATA, an Indian conglomerate realized that families with 3-4 people were taking motorcycles to work and school – creating a safety hazard for the passengers. They created a small, basic feature care called the Nano; it was slightly more expensive than a motorcycle (e.g., $2500 vs. $1800), and provide safer transportation. In its first year it only captured 10% of the anticipated customers! Why? It offered almost no “comfort-features” (e.g., glove compartments). Since then it has raised its price almost annually adding more features…and still is failing. One reason is that other companies started offering cars people liked and bought, even though they cost $6000+.

In contrast, Elon Musk took a customer-focused, adoption-of-innovation approach with Tesla. He did not focus on the mass market, but the limited number of early adopters: people who love new ideas, can afford them, and when satisfied serve as role models (e.g., celebrities and high net worth individuals committed to showcasing sustainability). His first model, Roadster, was designed to attract this audience; he priced it at $100,000, which enabled him to listen to customers, and improve it for future growth. Second, because batteries have limited distances, he focused on customers who already had another (gas) car that they could use for long distances or who only needed it for short distances. Now, Tesla offering a model for “the rest of us”, priced, like GM’s Bolt, at under $40,000.

In sum, to develop an innovation and have it successfully adopted, you need to address the needs of all the initial customers/partners. Never lose sight on the business goal: to create a profitable customer. What’s your experience? Share it.

Understand 80 vs 8: Do You REALLY have a Competitive Advantage?

McKinsey & Company’s February 2018 magazine included an important article, Strategy to Beat the Odds, with interesting implications.

Most CEOs know the fundamentals of business strategy, including Michael Porter’s “5 Forces” model and the concept of Competitive Advantage which arises from a set of conditions that makes your company superior to rivals and facilitates greater profits.  The article notes a study which found that “80 percent of executives believe their product stands out against the competition – but only 8 percent of customers agree”.

WOW! Peter Drucker said that “the purpose of a business is to create a (profitable) customer”; therefore, it’s their opinion –not that of the executives – that really counts!

Why the discrepancy?  The reason that the article focuses on is what they call “the social side” of strategy. First, when people make decisions, there are inherent biases, such as overconfidence and cognitive biases, (e.g., anchoring, loss aversion, confirmation bias and attribution error), as Daniel Kahneman described in Thinking, Fast and Slow. While they help us filter information in our daily lives, they can distort the outcomes when we make big, consequential decisions infrequently and under high uncertainty – as we do with strategy. Also, affecting the process is the “agency” challenge: presenters who want to get a “yes” to their proposal may exclude contrary information; knowing that proposals are compromised often, executives may overstate requests; and people’s decisions are often influenced by other factors including their own egos and career aspirations.

Another reason stems from Drucker’s perspective: who are your customers? Do you really know who they are and what they want? For instance, what’s really important to potentially-loyal customers who:

  • Use the product infrequently because they are not enamored with it
  • Choose not to use it for reasons the company may not know
  • Never even considered it.

We all know the limits of what rivals can do selling similar customers, similar products for which none have a real Competitive Advantage: (e.g., McDonald’s, Burger King and Wendy’s who fight over “dollar” meals.) Kim and Mauborge propose executives get out of the “bloody” red ocean and service new customers with a “Blue Ocean Strategy” (e.g., Shake Shack). Using value innovation, companies like Cirque do Soleil, NetJets, Curves, Salesforce and Lyft) companies can deliver REAL competitive advantages to targeted new customers.

What does all this mean for you?  Check whether your current customers really perceive your service/product as having a Competitive Advantage. If not can you fix it? If not, does it make sense to:

  • Identify the needs of potentially profitable new customers
  • Build new profitable service/product models that can offer a (sustainable) Competitive Advantage.



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