13 Dec Disruptive innovation needs disruptive leadership
The notions of playing to win and playing not to lose are a world apart. At the face value, there does not seem to be any difference; however, when dissected further, the differences become evident.
Original article appeared on Forbes.
The greatest element of winning is strategy. According to A.G. Lafley, author of Playing to Win: How Strategy Really Works, strategy is “an integrated set of choices that uniquely positions an organization to create sustainable advantage and superior value relative to the competition.” While teams that play to win have a well-defined strategy that they constantly adapt, the teams that play not to lose typically are in a reactive mode trying to optimize what they are already doing in their routine game plan.
Another key difference is in being a leader versus being a follower. There are many organizations that are leaders in their own vertical that always play to win. Apple is a great example. When incumbent companies were busy optimizing their status-quo trying to evolve their product line, Apple took the revolutionary path of innovation by introducing the iPhone as the next-generation smartphone, and the industry is aware of Apple’s unprecedented success story.
Yet another key difference is in terms of constant and consistent focus on innovation. Great organizations that play to win have consistently embraced innovation and change as key pillars to their success. Organizations that are busy keeping the lights on either have no appetite for innovation or have developed apathy as they perceive innovation to be overly risky and cost-prohibitive.
So, what is “disruptive innovation“? There are two types of innovations: transitional innovation and transformational innovation. For any business, there is an underlying business case. The business case is a very well-thought-out artifact that business pundits would research and design. What business services to offer, what products to sell, which customers to target, what specific markets to focus on, etc., are the core ingredients of any business case.
While almost all of the business cases take into account known knowns of market conditions, there are a few that account for known unknowns at that point in time. However, all of them ignore unknown unknowns simply because they are unknowns, to begin with. But the beauty of time is that unknown unknowns become known unknowns over time, and soon enough, known unknowns become known knowns. The critical reality is that such changes introduce new dimensions to the meaning of business and thereby disrupt the incumbency of the marketplace, causing ripple effects on the performance of established businesses.
Many businesses react to such ripple effects and try to optimize their business case in a very reactive manner to sustain the business, while others constantly foresee and proactively adapt their business case to exploit such shifting dimensions. Whereas innovation is an instrument to proactively keep pace with time and adapt to such changing market conditions, optimization creates momentary efficiencies that won’t be sufficient for sustainable advantage in the marketplace.
Transitional innovation changes business case tapping into new known knowns. Transitional innovation simply transitions the business mostly by retaining incumbent business outlook and system structures but by incrementally optimizing ways of how business is conducted. Transitional innovation is also called as sustaining innovation primarily because it sustains incumbent business outlook. However, if market dimensions shift considerably, it may not be sustainable anymore and organizations would have to rely on transformational innovation instead.
Transformational innovation changes business case by not only tapping into new known knowns and new known unknowns but also exploring what could futuristically become known unknowns. Transformational innovation is also called “disruptive innovation.” It is transformational because it fundamentally transforms the business case, and it is disruptive because it disrupts the business-as-usual outlook.
The disruptive innovation journey would pose tough challenges. The biggest challenge would be in decommissioning obsolete business processes with zero impact to ongoing business, while also incorporating intrinsically new processes. That is when leadership plays a game-changing role. Disruptive innovation needs disruptive leadership. Disruptive leadership can be characterized through four V’s: voracity, valiancy, variety and veracity.
Voracity: disruptive leaders are voracious for information about changing trends in the industry and constantly ask people the toughest questions about incumbent processes that may be contrary to changing market needs. Most of the time, disruptive innovation takes birth from those tough questions.
Valiancy: disruptive leaders are valiant because they bravely lead people and organizations through uncertainty. Unlike traditional leadership, disruptive leaders think differently, dumping an incumbent mindset and always recognizing that the only thing constant in a business setting is change, and the only thing that is certain is uncertainty. Rather than retaining unrewarding patterns in operations, incumbency in processes and ways of thinking that no longer serve any business purpose, such disruptive leaders constantly monitor changing needs of business context and thereby prepare the organization to embrace the change.
Variety: disruptive leaders encourage variety in thinking and open-mindedness about creating new products, processes and services that will either disrupt the market or even the business from within to make it better. Everyone thinks, acts or performs within the constraints of what they know — essentially within their own known knowns. Variety in thought leadership breaks such barriers of incumbency to incubate new thoughts, ideas and notions to pave the way for innovation.
Veracity: disruptive leaders are veracious of everything about them. They are fair, credible, dependable, factual, high-principled and full of integrity. That is how the entire organization can gain credibility and thereby follow such leaders’ direction toward innovation with great aplomb.
History says that companies that invest in innovation, particularly in disruptive innovation, as a continuous growing exponential function of time are bound to succeed. If companies have zero innovation, they are not too far away from the abysmal global minima of their growth function from where it is almost impossible to rise.
Industry is riding a wave of many innovations in this first quarter of the 21st century, and the foreseeable future is a green field for success-seeking, passionate and visionary leaders who can lead and drive disruptive innovation.