Five new operating principles for the age of disruption

Five new operating principles for the age of disruption

No matter what industry you work in, disruption is coming. These five principles will help you remain nimble and competitive no matter what comes your way.

As many of us remember distinctly, the 2013 Boston Marathon quickly turned from an exciting community event celebrating athleticism and perseverance into a tragedy when two homemade bombs detonated near the finish line of the race at 2:49pm. 

When the bombs went off, huge amounts of shrapnel blew into the large mass of spectators, instantly killing three people and injuring hundreds of others. Most of the crowd ran away, terrified; but one, Alexander Arredondo, stayed. Instead of fleeing, after witnessing another spectator’s legs be catastrophically injured, he ran into the plumes of smoke to help, administering first aid and applying pressure to the other spectator’s injuries. Arredondo’s courage and quick reaction in the face of confusion and terror saved his fellow spectator’s life. Even more, he was not the only race spectator to react with such bravery. Many other bystanders ran into the smoky, cacophonous blast zone to help others, even as many expected that a third bomb might go off at any second.

The result of these heroic actions? Of the 264 people injured during the bombing, not one perished. It was the willingness of the fearless few to enter disruption and take action that mitigated the impact of the bombing.

Leading in the age of disruption

For all of us navigating the day-to-day complexities of today’s age of disruption, there is a powerful lesson in the Boston Marathon rescue effort: exceptional leaders, both today and in the future, will be those who run into the chaos and uncertainty. They accept ambiguity, and act with courage, speed, and conviction. And these will be leaders in all walks of life.

The question is this: what are the major disruptions going off around us? And how will we respond? Disruptions can be technological, geopolitical, economic, and even climate related. We could talk about incoming disruptions, such as artificial intelligence, robotics and cryptocurrencies. These will have, and are already having, a profound effect, no question. But from a management and leadership standpoint, what is more important are the tumultuous dynamics that these technologies unleash on us strategically and operationally.

These undercurrents impact everything – from our relationship with our customers and partners, to competitive posturing and threats, all the way to the culture within our own teams and organizations.

Getting ahead of disruption

To stay ahead of disruption, we must understand the effects these forces have throughout our entire business ecosystem. And we must understand this from a global perspective, as the business environment becomes ever more borderless.

How can we leverage these forces to gain advantage, instead of wandering down the path of irrelevance? How can we gain clarity in confusion? How can we find the Alexander Arredondo in ourselves, and take specific and decisive action to make a crucial difference at a very difficult time?

Understanding five key lessons can help us in our ability to succeed in the age of disruption:

1. We all compete with Amazon

This first insight is all about real-time immediacy and ultra-personalization. What used to amaze us about Amazon, Google and Lyft (in the West) or Alibaba, DiDi or JD.com (in the East) is now normal. Our patience is lower, our attention span is shorter, and our expectation for frictionless interactions is higher.

Lesson We must be willing and able to provide real-time intimacy and ultra-personalization. 

2. We don’t need to own anything

Ownership of every asset impedes the flexibility required in a world where opportunities must be quickly seized, pivoting is vital, and speed is everything. The wealthiest companies in the world today collaborate with third parties to increase the value of their platform. They form loose, yet powerful networks in robust ecosystems that increase value in greater ways than going it alone.

Lesson We must be willing and able to access needed capabilities, whether we own them or not.

3. We have no secrets

The digital culture is available to everyone around the globe. Big business, small business, governments, individuals – anyone can use Reddit, BitTorrent, Digg, StumbleUpon, Slack or others to cooperate and collaborate. The hardest thing today is not accessing information, but keeping it under wraps so competitive advantage can be increased.

Lesson Behave as if your daily diary is on the front page of the Wall Street Journal.

4. We must avoid the echo chamber   

Nothing will get in the way of learning, adapting and changing more than believing only in our own assumptions. Our past experiences and outdated mindset should not act as powerful gatekeepers keeping us from doing the best thing.

Lesson Constantly open your ideas and assumptions to scrutiny from outsiders.

5. We are being virtually tracked   

Try getting off the grid and see how impossible it has become. Shed your smartphone and your credit card; lose your e-wallets, e-banks and e-retailing relationship; throw Alexis and Siri in the bin; get off the web entirely. You’ll still be trackable in cities on CCTV and in the country by drones. But the good news is this – tracking technology can make it much easier to focus on crucial activities in our businesses, and make it much easier to complete them through automation.

Lesson Learn to embrace technology accelerators in your quest to stay competitive.

Challenging our beliefs and assumptions

The questions to ask in the age of disruption are not: is our competition using robots, and how good is their AI? The better questions to ask are:

Competition Are we at risk of being eclipsed by a competitor that creates greater and better customer immediacy and intimacy?

 

Ownership Are we accessing the best tools, ideas, skills and people, versus simply the ones we happen to own? Do we insist on building and owning everything?

 

Secrets Are we looking for the best ideas and practices to help us succeed? Or are we unimaginatively accessing only the sources we know and are familiar with?

 

Echo chamber Are we aggressively challenging our beliefs? Are we even aware of our own attitudes and beliefs that constrain us from being our best?

 

Tracking Are we doing everything we can to track information, goods and services? Do we synthesize data quickly into themes we can act upon?

 

Confusion in the ranks

We were recently asked to help a medium-sized pharmaceutical company recover from an epic new product-launch failure.

This company has been a highly profitable organization for many years due to the success of one drug. But like many other pharmaceutical companies, its cash cow was going off patent. Although this was known for years, it was never formally acknowledged or talked about. It was eventually decided that the cash flow from this one drug had to be replaced by a series of smaller launches in new therapeutic areas.

Despite being plain to see from an external perspective, senior leadership missed acting because of their limiting beliefs and assumptions in the five areas we presented above.

Competition While they dithered around wondering what to do, a new competitor jumped into the market ahead of them. They lost access to the payers for reimbursement for the first drug in this crucial new series.

Ownership They believed their installed base of resources to be sufficient (tools, skills, approaches and people) because they had, a decade previously, worked very well. And they failed to create significant new relationships in the physician community.

Secrets They had scant knowledge of the new market – doctors or patients – and did not have a way to find out. They could not adequately gather information externally or share information internally.

Echo chamber Even after the epic fail, the head of commercial insisted everything they needed to succeed going forward was in place. It was just a matter of working harder and following the approach that had been so successful in the past (which had anyway never been codified).

Tracking Monday meetings of the senior leadership team were about reviewing the sales figures of the previous week. Outcomes only. There were no conversations around developing new systems or capabilities for improvement.

Imagine the difference if senior leadership had met their challenge with open hearts and minds, instead of institutional arrogance built up from past successes.

Wisdom in the ranks

Consider, by contrast, the attitudes and actions of a different example, PASA, Mexico’s leading waste management company, currently taking giant steps to create a globally competitive, environmentally sustainable business. And this is despite operating out of a country that has little requirement for sustainability or environmentalism.

PASA is setting its sights much higher than its current situation demands, and is reinventing itself in the process.

Let’s examine the same five factors at this company versus the pharmaceutical company:

Competition Even though PASA is the largest waste management company in Mexico, it is taking huge steps to improve in big ways. It has converted its entire fleet of trucks to natural gas, built biomass facilities, captured natural gas from landfills, and is the first of its peers to expand internationally.

Ownership Even though it buys rather than rents, PASA quickly retires outdated assets to ensure it has the best technology. Recently, it converted its entire fleet of garbage trucks to natural gas.

Secrets The head of innovation is a Frenchman with deep knowledge of sustainability in the waste management business. Key members of the organization will soon visit world-class German waste reclamation firms to understand its best practices.

Echo chamber PASA leadership has organized a series of educational events for employees to gain their buy-in to new changes and collect their ideas. The goal is to help them innovate throughout the legacy business so that new ideas and practices can eventually be implemented.

Tracking It goes without saying that all executives are open to, and searching for, best practices external to PASA as they keep their ‘arrogance barometer’ lower than most.

Lessons from the edge of disruption

What are the lessons we can learn from the edge of disruption to help us better compete and win in the new digital economy? First, we must understand that disruption is coming to our industry. It is not a matter of if; it is a matter of when. And if we are unprepared, we could squarely launch onto the road to irrelevance. Imagine if Elon Musk announced he was targeting your industry. Are you prepared?

Next, we must embrace the five key age of disruption operating principles that are now in full force: 1) We all compete with Amazon; 2) Ownership is no longer vital; 3) There are no secrets; 4) Avoiding the echo chamber is crucial; and 5) We are all being tracked. Understanding these principles is important. But leveraging them is power.

Lastly, we can either lead through confusion or lead through wisdom. Our choice. One is arrogance-based, and the other embraces uncertainty and leads with humility and a willingness to learn. Let’s put into practice the astute words of Eric Hoffer, who said: “In a time of drastic change, it is the learners who will inherit the future. The learned usually find themselves beautifully equipped to live in a world that no longer exists.” How prepared will you be when disruption knocks on your door?

— Kate Sweetman is a member of Duke Corporate Education’s global educator network.  Kate and Shane Cragun are founding principals of the SweetmanCragun Group.

–– Illustration by Michael Kirkham

An adapted version of this article appeared on the Dialogue Review website