How do you grow your business? That is a question that occupies the minds of most business owners. Especially during these uncertain times with the effects of the COVID-19 crisis everywhere.
When you are the person in the foxhole and the bullets of everyday operational issues are flying all around its hard to
Starting a company is hard. Growing it is harder. A lot conspires against a business that makes growth hard.
However, some of the main reasons for business difficulty are self-induced.
Here are 7 avoidable ways that a growing startup can turn into a shrinking shutdown.
Every product has a life-cycle.
Every product has an end date.
Markets move along.
Customer needs evolve.
Competitors improve.
Regulations change.
Disruptive ideas challenge the way things are done.
Keeping your product the “same old same old” in a dynamic market environment is like leaving the milk out overnight. It spoils and nobody wants it. Customer interest wains. Sales dwindle. Revenue decreases.
Certainly, you can extend the life of a product by adding new features and making customer requested changes. But, astute owners understand no matter how good your product is now, or how much market share it commands, you should be planning for its decline.
Companies that create a market leading product become susceptible to ‘market arrogance’. In your own little microcosm of success, you ridicule new entrants to the market, dismiss competitors, and ignore potential disruptors.
During my time with Motorola, market arrogance (among other things) led to ignoring the move digital cellular. Motorola was the analog cellular king and didn’t believe digital had a future. Nokia did and became a market leader in a few short years. Motorola eventually recovered for a time with the introduction of the RAZR but later declined due to missteps in the smartphone category.
Market arrogance blinds you to the very thing that will unseat you.
Wise market leaders understand that humility and a little paranoia are 2 keys to inoculate a company against market arrogance.
Your strategy is the high-level plan to achieve corporate goals. It is the activity that maps direction to vision.
Companies who choose to ignore strategy are abandoning achievement and giving up on goals. They are adrift.
Leaders who ignore strategy have abdicated their responsibility.
Companies who ignore strategy can only hope for random results at best. The more likely result is consistent decline.
Perceptive business leaders know that strategy sharpens focus, provides direction and helps align the organization for achievement.
Hand in hand with strategy is the vision.
Vision is the destination, strategy is the map to get there.
When a company abandons its vision, the purpose degrades to simply making money. We all need money to live. However, as author Dan Pink writes in his book Drive, money in and of itself, is not a sustaining motivator, especially in today’s culture.
Smart owners understand the vision has to be re-communicated regularly, refreshed as needed and it has to be the driving motivator for the organization.
The most important asset of any business is the employees who show up everyday and do their job. You don’t see this asset listed on any balance sheet. But without them, the company won’t be able to operate.
Employee development is the way to care for that asset. It is the way the company invests in its future. It is a long play for your employee base.
Abandoning development is akin to saying ‘there is no future here’.
Intelligent owners know that investment in employees through training and development pays dividends back to the company in many ways.
In today’s business environment, customers expect a dialog.
Many customers have a lot to say and can provide excellent feedback regarding your products or services. Customers whose feedback is heard and understood can be wonderful advocates for your company. However, if customers feel ignored they will migrate to your competitors.
Companies that engage customers and value feedback gain insight to markets that is otherwise unavailable. Companies that ignore customer feedback miss important clues as to where the market may be going.
Adroit leaders know that customer engagement builds loyalty, advocacy, and improves results.
Thinking the same means you and your organization have stopped learning.
Same thinking is stale thinking. Same thinking blocks insight and dampens learning. Same thinking is fragile. Same thinking won’t allow you to continue to grow and succeed.
One of the only truly sustainable competitive advantages is an organization that can learn and learn fast and apply what they learn in the marketplace.
Great leaders know that both success and failure should lead to learning. And learning changes thinking.
Disruption is a buzzword these days. It’s pretty much everywhere in the popular business media today. As a theory, it’s great to debate but as a business owner, being disrupted can mean serious consequences to your survival.
In spite of the seriousness, as a business leader we get busy and success can make us complacent regarding competitors. So what can we look at in our own business to see if you are vulnerable to disruption?
Here are 7 signs that you are on the path to being disrupted.
Markets shift, competitors change, customers can be drawn away. If your business at one point did have the magic recipe your customers wanted you can rest assured that what they want will change. This attitude can cause you to miss key indicators that could result in missing disruptive forces.
Surveys? Focus Groups? Customer Interviews? Customer feedback forums? Oh you stopped doing those?
If you are ignoring these and the other avenues of available customer learning, your business is quickly becoming blind to customer changes and evolving needs.
Because of the changes that are constant and increasing in pace in any market, your business must actively seek customer involvement and insight. One of my takeaways from Big Bang Disruption was the sheer speed that a market can change. Your customer can change direction quickly and if you aren’t engaged with customers, you will miss the bus.
Are you neglecting sources of intelligence regarding your market, competitors and products? If you don’t participate in industry forums, conferences and other events you will have difficulty knowing what’s happening. You will miss clues and potential changes that could impact your business. And, you could miss potential opportunities for partnering and other collaborative growth strategies.
The barriers to entry in many markets are lower that at any other time in history. It is easy and quick for new market entrants to introduce new Minimum Viable Products(MVP) directly to your customers. These MVPs may be lacking features or the polish of many iterations, thus inviting ridicule from you or your staff. However, it is the learning that comes from engaging markets with new MVP’s that enable new entrants to learn and overtake market leaders with fast iterations.
Your business may have entered the market as the low price alternative. As you grew and claimed market leadership you had pricing flexibility. Fast forward a few years and now, new lower priced entrants have invaded your market. Now your value proposition is not as clear to customers who are being courted by lower cost alternatives.
Are you getting consistent feedback from customers that your products or services need some changes? Have you decided that those changes are not possible or viable? Or have you chosen to add other features or offerings? Are you ignoring the feedback altogether?
Is your product not as convenient to use as competitors? Is your interface not quite as polished? Does your site take 5 clicks to do the same thing your competitors do in 2? Choice, ease of use, personalization are all required in todays interfaces and products. If you neglect this important aspect you are inviting your customers to court other vendors.
If you as a business leader, take a moment and assess your business.
Do you see these signs?
Do you see several of them in your business?
If so, let that be the wakeup call to make changes proactively before your competitors force it on you by disruption.
What are the real fundamentals of success? What are simple, small things everyone can do that will set the stage for larger success? In our technology drenched and dependent lives here are 7 non-technical, simple things that can help pave the way for true success.
If your job requires you to be in the office you should be in the office when you are supposed to. If you are required to be at a remote office, or call on a client or prospect then SHOW UP. If you have an online webinar or conference call, SHOW UP. Be there, on time, prepared and ready. As the old saying goes, “You can’t win if you don’t play”. And you can’t play if you don’t show up.
This also means being mentally engaged with your team, customers and company. Checked out, isolated team members are worth little. They waste everyone’s time and don’t help row the boat. Show up fully engaged and ready to contribute, physically and mentally.
Everyone in the company has work together. Make it a better experience by being nice to others. You need to treat other employees, customers and vendors with courtesy, respect and decency. Treat others with the same courtesy and respect you want from them. It helps communication and improves the working environment and enhances collaboration. Some companies have a “no jerks” rule. Some companies use stronger language to say the same thing. Don’t be a jerk.
Being nice doesn’t mean you won’t have debate and disagreement. It doesn’t mean that issues are not confronted. It means you need to resolve those situations in a civil, calm, mature and professional manner and move along. Anger, frustration, name calling, back stabbing, gossip, outbursts, tantrums, passive aggressive behaviors and the like create more problems to solve, slow down communication and create resentment if they continue over time. Show caring and concern for your team, fellow employees and customers.
Rules are there to protect the individual and the organization. They help maintain order and define interactions, boundaries and expectations.
Image if everyone driving cars in a large metro area suddenly went anarchist with respect to the rules of the road. Can you image the mess? The wrecks, injuries, property damage and time lost? It just wouldn’t work. But with proper rules, traffic flows (usually) and people get to and from their destinations safely.
Every business needs rules. I know, sometimes the dress code or attendance policies may not be what you would design. If you want to be a rebellious cowboy, go work on a ranch. If there are serious problems with rules talk to your leader. Otherwise man (or woman) up and respect the rules. It will make the entire workplace flow better.
We are all professionals. We get paid to do a job. Do your job like a professional. Don’t leave problems for others to clean up later. Don’t do your job half way. Don’t finish late. Don’t deliver half the results. Your work products should demonstrate competence, excellence, and be professional in quality and implementation. This includes your personal and professional growth and continued learning. Ultimately only you can control that.
No one can read your mind. What you don’t say or communicate, your other teammates and employees can’t know. Talk. Write. Inform. Repeat. Ask clarifying questions. Over communicate. Effective organizations communicate well, clearly and continuously. When you have clear, consistent communication the team can move faster and provide better results.
Serve the customer as if your business depends on it, because it does. Customers fund the operation of the business. Customers pay your salary. Customers can help you sell and market. It doesn’t matter if they are Internal or external customers, you are there for them, and not the other way around. Always remember that. Customers can quickly tell if they are really cared for and are being served properly. They will move to businesses that show genuine care for them in a heartbeat.
Always carry your share of the load. Slackers can move along. You should always promote an “I have your back” culture. Support your team with your help, assistance, learning, sharing and collaboration. Be a consistent example re-inforcing the behavior you want your team to replicate.
These are 7 simple actions that, if you implement as habits, will yield results and build the foundations for your success.
Layoffs are incredibly difficult on companies and the employees left behind. They sap corporate momentum and drain employee morale. They result in questioning the viability of the company and diminish hope for the future.
Layoffs usually happen in difficult business situations. Letting go of good people simply adds insult to injury during an already tough time. It is hard to say goodbye to friends and valued colleagues, especially when it was no fault of their own. Layoffs alter the workload, add uncertainty, cause upheaval in working arrangements and can contribute to lessened commitment.
So what can a company leader do to regroup and move on? Here are 9 things a leader can do to help regroup after a layoff.
Compounding the pain of layoffs are the feelings of uncertainty, isolation and being alone. Silence from leadership now is deafening. As an employee, when you are isolated and alone you tend to worry more and make the situation worse, losing objectivity. And, in the absence of clear, proactive communications from leadership, employees will invent the reality that fits what they can see and feel. Leadership silence and isolation fuels the rumor mill.
It is important to counteract these feelings in the remaining employees. It is important to communicate openly and clearly to keep the morale situation from getting worse.
Get them together. Have a state of the company lunch or a morning coffee together. Getting together and sharing food or drink can help sooth raw emotion, provide a venue for dialog, re-establish shared connections and begin the process of moving on.
Losing good friends and valued employees is sad and emotionally tough. As an owner or manager, acknowledge the pain. Its tough on everyone. The loss, the uncertainty, the anger and frustration, and the reality of more work for everyone left all make for a raw situation. Unless you are a leader with no feelings it is tough for you too. Let the employees know that. Oh and you can’t be a phony. Employees can see insincerity in a leader a mile away and it stinks, especially during a tough time like post layoffs. Not much can cause employees to write you off as a leader faster than insincerity during such a time.
Don’t hide. Don’t be a emotional robot. Don’t read a prepared statement. Don’t pass the buck to some HR person. Don’t joke around and don’t ignore the issue. Stand up and be a leader. Your employees work for you. They need to see you as a real person connected to them in a real way. They need to see you working through this with them. Speak from your heart. By being real you can gain trust and begin to restore credibility with those employees who may internally blame you directly.
According to Dan Pink in his book Drive, appreciation, acknowledgement of contribution and purpose are important motivators, in some situations more important than compensation. Thanks, acknowledgement and appreciation is like a spoonful of sugar that helps the medicine go down. Express genuine thanks for the efforts of the group. Appreciate them individually, publicly and sincerely. Acknowledge the hard work and sacrifice that has occurred and how important that will be to move forward.
As the owner or manager you should be able to explain, in straight forward language, why this action was necessary. Avoid jargon, and veiled terms. No buzzword bingo here. Use simple language like “sales were off 2x our projections” or “we lost the Jetson contract” (or whatever is appropriate for your situation). This will help employees understand the bigger picture they may not be fully aware of. Discuss the other actions that leadership took to help mitigate the necessity of layoffs. Unless you just like whacking folks, there should a decent list of other actions the company did to try to prevent having to lay off employees.
A layoff is tough but can be more bearable when there is reason for hope. Explain the reasons the employees should hope in the company. Don’t rely on generic platitudes like “We have a good pipeline” or “the fourth quarter always picks up”. Give the specifics of the strategy to improve revenue, profit or expenses. Discuss upcoming product plans, launches, campaigns, key contracts or joint ventures. If you can’t spell out a reason for hope with the plans you have (or you don’t have any plans at all), then this will surely be a direct invitation for your employees to update their linked in profile. Their attitude will be “why stay if there is no hope?” You must show tangible reason for hope.
Don’t promise the moon or paint unrealistic possibilities for the future to manipulate emotions. That will come back to bite you. Employees have good memories. Be positive but acknowledge the work needed. Remember the Stockade paradox, be realistic, facing the brutal facts, but also express your faith that the company will prevail. You also have to believe your message. If you come across as shaky, doubtful, uncertain or absurdly optimistic you will send the rest of the folks running for the exits.
While the group meetings are good, many employees may want to have individual conversations with the owner or manager. Support that. Sit down and take the time to look people in the eye, answer questions, explain, reassure where you can and connect. This will pay dividends in re-committment and hope if you do it in an honest and authentic way.
Direct action is one of the best antidotes to fear. So make sure that the whole company is involved in the implementation phase of recovery. Discuss the strategy for improvement. Review the tactics. Make sure everyone is clear and working toward moving the boat forward. They need to see the leadership doing the same thing. This is the time to roll up your sleeves and push forward as a team. If the employees see you energetically working toward the new objectives they will get on board.
The actions, attitudes and interactions of the leader will make or break the turn-around effort of the company after a layoff. As a leader you set the tone. Employees will key off of your attitude and demeanor. They will make renewed commitments (or not) based on what they see and hear from you. So be authentic. Use this time as a rallying point for the future. These 9 ways can help move the process forward. If you do these things as a leader you have the potential to get everyone on board to go solve the real issues that still need to be dealt with in the business. Without this, well, you may get to do it all over again.
As an investor, you want the companies you buy to be vibrant and heading toward a shared better future.
As an employee, you want to know that the company aspires to something more and has plans to get there.
In either case there are signs you can observe in the corporate environment to help discern whether things are looking up and there is hope or whether things are in a spiral and it may be a dead end.
If the company has these signs it could spell trouble:
Learning, adapting and growing is the only antidote to a rapidly changing workplace landscape. It is a crucial way to retain the ability to be competitive in the future. Corporate training, personal development and the encouragement to pursue growth are signs a company is looking to the future and has hope. Without training and development your skills will slowly become irrelevant. Without a corporate growth culture, the company will stagnate, and be ripe for disruption from more forward-thinking and engaged competitors.
Vision and strategy to get there are also forward looking. A clear and well communicated vision of the future is a unifying force in a company, getting everyone on the same page. Strategy and goals allow you to focus the energy of hope in the areas that best achieve the vision. Goals and strategies allow you to say “no” to the other, potentially good activities, that don’t most fully help the company realize the vision. If the company has no vision casting, or strategy discussion, it is a tacit admission that the future looks dim. For no company can continue to exist by simply repeating what they have done in the past. Jim Collins covers this and other corporate killing behaviors in “How the mighty fall“.
Every failure is an opportunity to learn. If your company is not taking the time to ask the why questions surrounding any company ‘failure’ it is neglecting one of the most direct sources of learning and growth available. As the folks over at isixsigma.com state:
“By repeatedly asking the question “Why” (five is a good rule of thumb), you can peel away the layers of symptoms which can lead to the root cause of a problem. “
By understanding root causes, we can make changes to correct, improve and grow. When this process stops, improvement, and growth stop as well.
Experimenting, and the the learning that takes place from it, are paths to future products, services and improved customer experiences. Experimentation is the path to discovery. Experimenting is planting seeds for future ideas. Without experimentation you eliminate a key source of corporate learning. Without corporate learning is will be impossible for your company to keep up and competitive in a fast changing market. The market you serve will evolve and change leaving you behind with your antiquated products and services and no one wants to buy.
With today’s search capability, social sharing and ubiquitous smart phone presence consumers can instantly access real time information about your product or service. This can include reviews, comments, social shares and other information. It is easy for a consumer to find out more about your product than you know. The users of products and services are willing to share feedback as well. This feedback is extremely valuable in product development and service adaptation. Customers will reveal what they need and will pay for if you ask the right questions. Companies that stop this process (or ignore it) are refusing to set themselves up for future success with their customer base. Opening the door wide for competitors who will.
The real asset most companies have, that doesn’t show up on the balance sheet, is the employee base that shows up and do their job in a competent, efficient manner. The consistent commitment to show up and do their job is what moves a company forward. If all the employees stopped doing that, any business would fold like a garage sale lawn chair. Recognition of this fact, and the commensurate application of retention programs for key positions is important to the future continuity and growth of any company. Companies who don’t value the employee base are not valuing their own future prospects.
As Peter Druker is famously remembered as saying “Culture eats strategy for breakfast”. A great workplace culture is the lubricant of employee commitment and engagement. If the culture is poisonous or corrosive, or just simply ignored, it will impact engagement, commitment, and implicitly, business results. Culture has to be nurtured and maintained. Stopping the care-taking of the culture is akin to not cleaning the fish tank. Pretty soon it gets unbearable (and kills the fish).
Sincere thanks and appreciation from company leadership can be more motivating than monetary reward. We all want to be appreciated and recognized for the contributions we make. In companies where this is not the practice it makes the grass look a lot greener elsewhere.
Disruption can happen at astounding scale and speed. I talked about my take-aways from Big Bang Disruption where whole industries can be disrupted with breath-taking speed. A company must be always on the lookout for up and coming technologies and companies that would potentially pose a threat. This examination must be part of their planning cycle and strategy discussions. If you stop the vigilant examination of your industry and its periphery you invite the surprise of your industry changing underneath you and your company having no response.
If your company leadership is not engaging in communication and re-iterating the vision and culture and discussing openly the challenges and opportunities of the business, that is a clear sign that something is amiss. Either it means they have nothing to communicate, or what they have to communicate is bad and they can’t bring themselves to deliver the message. Both are huge red flag indicators.
Most of these are easy to spot and all of them are correctable with diligent, committed and wise leadership. Without that, you may be on the way to another dead end.
The impact of workplace automation can be dramatic. Small business owners can improve their bottom line, improve employee morale and increase competativeness by implementing automation projects.
The real question is how do you start?
Here are 5 steps to approach implementation of automation projects in your business.
To find good candidates for automation in your business, look for the pain points in your business processes and systems. Look for bottlenecks, repetition, manual tasks, data that doesn’t flow or reports that are manual in nature. Analyze your systems, find those that don’t integrate, where data has to be re-entered. These pain points are opportunities to automate.
On one project we had employees manually re-entering shipping information because two systems didn’t communicate the data. We were able to spend a little software development time and automate the whole process saving hours each day and improving quality.
Ask the employees for their input. You will be surprised at the insight they have to where the candidates for automation are.
Rome wasn’t built in a day. Analyze your business and pick small, tactical implementations you can afford. Choose projects that give your organization easy wins to build implementation skill and momentum. Projects as simple as the automation of a simple excel report, or a web site plugin to eliminate redundant data entry are excellent candidates to start with.
As the organization improves their skill at automation projects you can plan to tackle future larger, more impactful situations.
Automation projects can worry employees. It can cause fear and doubt about their future. They need to know the plan beyond what they do now. They need to see the future purpose of their position and the types for work that they will migrate to.
No one likes change when it removes tasks they measure their value to the company with. Owners and project managers need to navigate automation implementations with open and consistent communication to re-assure employees.
When I discuss automation changes with employees, I stress that we should be continually trying to elevate our tasks to the highest value possible. This means delegating menial, repetitive automate-able tasks to the machines. Automating those tasks frees up the employee to provide higher value to the business.
One additional way to help employees is to provide strengths finders, how to fascinate or similar assessments. Assessments like these help identify strengths and latent skills. This self-knowledge can help motivate a transition to higher value proposition tasks and assignments that align with their profiles.
Many types of automation changes, especially with software based processes, can be incrementally implemented. Iteration allows organizations to try, learn and improve their processes and systems in small engagements.
Incremental implementations lessen the organization disruption and allow employees time to learn and adapt to new processes, tools and responsibilities. When the employees see the benefit of small iterations they are motivated to continue the automation improvements.
Keep track of the savings your organization gains from the changes you make. Calculate the ROI. Communicate the results to the employees. Discuss ways the process of automation can be improved. Feedback this newly gained information to the next interactions of improvements. This helps gain momentum and provides input for future decisions.
Follow these five steps and your business efficiency can improve substantially over time.
Is your industry beseiged by new startups and aggressive offerings from other competitors that leverage out of the box thinking?
Have you gotten into a rut of incrementalism when it comes to your product development?
Are your primary customers being wooed by next generation experiences while you deliver previous generation products?
Recently at the “Mind the Product” conference Ken Norton, Product Partner of Google Ventures, gave a talk entitled “10x Not 10%, Product Management by Orders of Magnitude” that will help.
The video presents ideas that can help break your product thinking out of the a rut and should be considered for your planning and strategy discussions.
In the presentation, Ken provides a framework of thinking to shift and broaden your mindset when it comes to future products and services. He makes a great case that incrementalism will get you totally disrupted. Using a rich tapestry of historical examples that many in the U.S. are familiar with, Ken makes a compelling case for integrating 10x thinking into our product development and management processes. I believe the framework can benefit companies that embrace these ideas. It can be one weapon in your aresenal to help deal with the rapid pace of innovation and change in your market. And, it may help your company be a disruptor, instead of a disruptee.
Martin Eriksson, over at MindtheProduct.com has a nice summary post of the presentation.
Ken’s own blog post is here if you prefer his written version.
The video is worth the 37 minutes.
Recently McKinsey and Co. released a research article on the impact of workplace automation. In the article the authors, Michael Chui, James Manyika, and Mehdi Miremadi discuss re-framing the discussion on workplace automation from one oriented around occupations to one oriented around workplace tasks.
When we argue automation of occupations we are essentially saying that “We won’t need mortgage brokers, or bank tellers” or “Lawyers will be obsolete by use of technology”. McKinsey’s insight allows a more nuanced discussion and application which focuses on what automation is available and how to best leverage it at a task level. Essentially it is asking what do people do best and what can automation do best and re-assigning tasks based on that mindset.
This is an approach that we have taken at my current job, looking at what tasks can be automated that were manual, repetitive, tedious or error prone. Tasks such as manual order entry, shipping data entry, video encoding and the like. By using automation to remove these tasks from the occupations they were associated with, we were able to allow those employees to spend more time focusing on exception cases, other improvements or new initiatives.
This concept isn’t something that is relying on far future technology either. McKinsey estimates that:
“…as many as 45 percent of the activities individuals are paid to perform can be automated by adapting currently demonstrated technologies.”
And this estimate doesn’t just cover the front line, lowest level employees, it goes all the way to the CEO.
In terms of economic value they further estimate that these tasks which could be automated represent
“about $2 trillion in annual wages.”
This suggests that there is tremendous latent improvement available to businesses willing to analyze and invest in appropriate automation. In fact the authors further report that:
“…the benefits (ranging from increased output to higher quality and improved reliability, as well as the potential to perform some tasks at superhuman levels) typically are between three and ten times the cost.”
Yes, that is a reported 300% – 1,000% ROI for these types of automation initiatives. That is an enormous impact on the bottom line of a small business. In my own experience I have not seen ROI that high yet, but we have definitely seen ROI levels that were very nice and justified continued investment in appropriate automation.
The authors go into much more detail about the impacts to business processes and the impact these changes have on traditionally high-wage occupations. They also hint at migrating the displaced employee time to more meaningful work and what that may look like.
The ability to automate and manage that process will become a key competitive differentiator. As the authors state:
“The magnitude of those benefits suggests that the ability to staff, manage, and lead increasingly automated organizations will become an important competitive differentiator.”
Workplace automation should be a part of every small business’ strategy discussion and planning. With objective analysis and appropriate implementation, automation can bring about significant bottom line improvements to most every business.
What is your business doing to take advantage of automation?
Disruption is not new.
We have all seen it occur in many industries and companies.
Clayton Christensen detailed it in The Innovators Dilemma.
In fact disruption is becoming one of those over-used buzz words.
However, to the owners and employees of affected businesses and industries, disruption is real and life altering.
Lots has been written about disruption but the distinction that Big Bang Disruption draws is the speed and completeness of an industry or corporate disruption that is now possible due to the availability of “exponential technologies”. Because of this, authors Larry Downs and Paul Nunes argue that there is a new product life cycle model that now exists they call “the shark fin”. This product life cycle is different from earlier product adoption cycles such as that described by Geoffrey Moore in Crossing the Chasm in that adoption can occur rapidly across entire markets, almost without warning, deemed “catastrophic success“. Similarly, as a new product saturates a market it can be just as quickly surpassed or abandoned, leading to rapid decline in market share. The authors lay out 12 rules that help govern strategic planning to help deal with big bang disruption both as disruptee and disruptor. Here are my take-aways.
If your business strategy or product planning cycle starts with what you did last year and tunes or tweaks from there, you are doomed. Startups, hack-a-thon participants or savvy accelerator participants can use combinatorial innovation and successive market experimentation to arrive at a new product or service, sometimes in plain sight, with a short time to market that can be rapidly adopted. Incumbents must tear themselves away from the false security of established products market share and begin using these same techniques to find new combinations of features, technology and business models that can gain future traction in their market place. The arrogance that accompanies market leadership can prevent an incumbent from believing that their current product is doomed. A humble approach will allow them to view the market and their products with more realistic eyes and begin asking the questions that will help reveal what experiments need to be executed. You can work to disrupt yourself, or some other company or hustling individual will do it for you.
To avoid ‘catastrophic success’ a business that has hit upon a big bang disruptor, must be able to scale their offering to meet the almost vertical demand that comes with ‘the shark fin’ model. This could impact computing resources, manufacturing capacity or actual head count or all of them. Similarly, when a business hits the saturation point it must be capable of scaling back quickly so that it is not caught with excess capacity, inventory or other resources that increase expenses during a time of rapidly declining revenue for that product.
Exponential technologies lower the barriers to potential disruption drastically. Market experimentation is also dramatically easier. The historical moats of market protection, such as high capital investment, intensive information or computing resources or large manufacturing requirements are gone. Social networks, crowd funding, contract manufacturing and big data as a service make product discovery more direct and fluid. Downs and Nunes lay out 12 rules to help adapt to big bang disruption that apply across the 4 phases of the ‘shark fin’ product cycle. They describe them like this:
“These are not rules that speak just to the CEO or any other individual member of the executive team. As these clear, though sometimes counterintuitive, imperatives suggest, creating and surviving Big Bang Disruptors requires substantial change throughout our organization. Every part of your business is affected from strategic planning to marketing and sales, design and manufacturing, finance, technology, research and development, human resources, even legal. The rules of Big Bang Disruption, in short, apply to every leader and every employee in your business.”
Just as they state the rules apply to everyone, the effects of being disrupted apply to industries, companies and individuals, leadership or rank-n-file. Although Downs and Nunes do not discuss the disruption of individual employees I believe that these concepts apply there too. Think bank tellers.
The advent of internet search with tools like Google or Bing, coupled with the power of user review and the personal sharing capability of social networks make large amounts of information about your product or service that you cannot directly control easy for a potential consumer to obtain. These days a prospect for your product is most likely to check review sites like Yelp, Amazon or forums like Reddit to check your product. And, as the authors note, most folks start with the negative reviews. They tap their social networks. They reads blogs and other independent reviews for information on your product. They check out affiliate marketing sites that do heads up comparisons on features and usage. In many cases, your potential customers know more about your product (or its perception) that you do as the business owner or manager.
As the authors note:
“Information barriers keeping consumers from determining price, availability, or the quality of goods and of post-sales support have also been disrupted. Companies can’t easily hide behind slick marketing campaigns or the strength of established brands. Each product lives or dies on its own merits, including that of it customer service and its fate is determined not in the past or future but right now.”
Following the 12 rules laid out in Big Bang Disruption will certainly help business be more aware and stay better attuned to the forces of disruption in their industry. Big Bang Disruption provides an actionable roadmap to adapt and be disruptive in their own right.
For business owners and executives, ignore the advice of Big Bang Disruption at your own peril.
Big Bang Disruption by Larry Downes and Paul Nunes
