Having the Courage to Challenge the Status Quo
Challenging the status quo is a big challenge for any CEO. There are a number of areas we try to explain to CEOs. It’s not just about challenging the status quo but challenging it in a big way. We often think in terms of modifying a widget on the factory line. We need to be thinking about is, “Do we actually have a factory line?” We really need to step back and say, “If I’m starting from scratch, what would I do?”
It’s a real challenge. Take Microsoft. Microsoft has Microsoft Office; it’s a flagship product. It brings in billions of dollars of revenue. Imagine a scenario where the CEO comes in to the board and says, “We’re going to cannibalize our flagship product. We’re going to have an internet-based office.” It is not going to pull in the same revenue but they had to do it because organizations like Google are bringing in internet-based office products. So they had to cannibalize their own business. That is big, tough decision making that you have to do.
The Boiling Frog Syndrome
Another problem companies have is what we call the boiling frog syndrome. This is where a problem arises, everybody red flags it and everybody’s focused on solving that problem. Sadly the situation is that a big problem is actually a series of smaller problems. It’s called the boiling frog syndrome because basically if you drop a frog into boiling water it jumps out but if you leave the frog in the water and slowly heats it up, by the time it realizes the danger, it’s too late. That’s where a lot of companies find themselves.
A very good example of this is Kodak. A lot of people don’t realize Kodak invented the digital camera. It was an unusual product for its day, but it was the first digital camera. The irony is Kodak went out of business because of the digital camera. Kodak thought it had time to react to the digital camera industry, but were too slow in changing and responding to the market, and their competitors overtook them.
There are a number of areas about challenging the status quo that CEOs really need to step back and really look at and not just think about fiddling around the edges. We’re talking wholesale significant change about what the business is that you’re reacting to. What is going on with the competitors? How your customers are changing?
Successful companies don’t have smart innovations; they’re smart about how they innovate. This is the big challenge; it’s not about my competitors rushed out and introduced this new product so we’ve got to duplicate them.
Innovation, Not Replication
As CEOs pointed out the problem of always following is that you can’t drive price because by the time you’ve caught up, you’re basically and remarkably everybody else is copying that same innovation. Your other problem is your competitor is driving your business plan.
It’s very important that, yes, you recognize that innovations keep changing. But don’t focus on following. Think about how you can leapfrog.
The big issue that’s probably difficult for a lot of people to think about is you don’t innovate one product. You have to create an environment where you’re constantly replacing innovation.
If you look at Apple coming up with the iPod and iTunes model, it’s a great idea. How many years did it take to get replaced by technology like Spotify? And now it’s being leapfrogged again.
The problem is you can’t have an innovation and expect you’re going to live on it for the next 50 years. Within 3-to-4 years that technology is going to be replaced. That innovation is going to be replaced.
If you’re going to spend three years innovating, think about how you could get a jump on your competitors rather than spending that three years trying to copy your innovators. Competitors, sorry.
If you’re going to spend the next three years innovating, think about how you can get a jump on or leapfrog your competitors with that three years rather than actually spending that three years just trying to be the same as them.
One of things that I would like to be part of the innovation mindset is when we think about the customer. When we’re thinking about all this technology and innovation we often have a complicated scenario. It’s really important to shift our thinking and simplify, to really understand what the problem is that you’re trying to solve.
Stuck in a Maze
A very good example was a university competition for robotic students. The competition was to rebuild a robot that could never get through a maze. It’s really an exercise on how to work out why the robot had gone down this wrong path and how that was unsuccessful, so we don’t want to go that path again. They worked out all this logic.
Then this group came along. They created a robot that got through the maze. All it did was to follow the wall of the maze. If you follow the wall of the maze, all the way around, you’ll eventually come out. It might be a long way of doing it but you’ll eventually come out of the maze. And they won the competition.
Everybody cried foul, saying that it wasn’t fair. But it was simplicity. It’s really important with innovation, to keep it simple, really work on what are you doing to solve the problem. It was a very good example to get people to actually step back and really think about, “Hang on a second, we’re over complicating it.”
The Falling Baby
Another example is a scenario that I raised before of a baby falling out of a 20-story building. How did it survive? As soon as I asked that and said there was a 20-story building, everybody thinks straight away that it fell from the 20th floor. The actual way I’ve said it was to take you to that path. When you look at people like mind readers, that’s their whole skill: To actually lead you down a path of thinking that will get you to think of a number by suggesting words, etc., to lead you to it. It’s a trap of human nature.
When I said how did it survive a fall out of a 20-story building, the baby fell out of the ground floor. But as soon as I said that, people are stuck on the idea it fell out of the 20th floor and then we’re trying to solve that problem in that way.
This is where lateral thinking is very important because lateral thinking is about trying to break that vertical process where I’m following a path than actually just shifting sideways to look at things from an angle; look at things from different perspective.
So that’s very important and that’s what the CEO Blueprint is trying to challenge at the moment. It’s to try and get people to step back and see how we can do it in a different way.
Integration Is the Future…And the Present
One of the problems that we’ve seen since the global financial crisis is that before it happened, people were very focused on the 80/20 rule – the 20 percent of work to deliver 80 percent of the revenue. Focus on the lower hanging fruit.
After the global financial crisis, really the scenario is that the low hanging fruit has been picked. So how do I create business now? It’s all about integration. It’s about dealing with the complexity. We don’t have a situation of solving this specific scenario for our customer. We need to look at the whole flow, form point A to point B.
Integrated thinking is not just trying to understand a problem beyond just the simple situation, it’s look at what the whole overall scenario is.
Integration is trying to look at things from a more complex scenario, so don’t look at that low hanging fruit and say we can solve that simple problem. It’s actually looking at a whole scenario.
One of the companies that is coming out as a competitor is Uber, helping taxi industry looking at the whole payment process, ordering the taxi, getting the payments sorted out before the taxis arrive. It’s about dealing with a whole range of scenarios. If you look at what’s happening at the moment, the taxi industry is only focused on “booking” a taxi and Uber is more focused on maybe “ordering” a taxi.
So, these are all the issues where we’re starting to say we actually got to look at a little bit more complexity of the problem that we’re solving for the customer. It’s not just one component. It could be two, three, four or five components.