Sound familiar? It was written in 1991 by Professor Rosabeth Moss Kanter, in the Harvard Business Review. Change is not new. Transformational change wasn’t invented this year. Not even this century.
But, the imperative has increased. If there isn’t an obvious threat in their market, most business leaders assume that it’s only a matter of time. And not much time at that:
In 1937 the average time a company spent in the S&P 500 Index was 75 years. By 2011 it had dropped to 15 years. The Economist has predicted that by 2025 the average S&P Index life-span for a company will be a mere 5 years. Many large-scale organisational change programs take longer than that. (The Economist, 2011, 14 April).
If change is inevitable, the challenge is not to adapt, but to embrace its full complexity. In complexity and disruption lie new possibilities.
This is the theme of Peter Sheahan’s latest book, Matter. Sheahan is the author of Generation Y (2005), Flip, Making it Happen and now Matter, with co-authors Julie Williamson and Dom Thurbon.
His message may echo that of Rosabeth Moss Kanter, but his delivery is blunt and urgent: “Sitting in the corner, sucking your thumb hoping change will go away is not an option.” Change is happening. Act.
Become, Sheahan says, the business that matters most, “the obvious choice in the hearts and minds of your customers, employees, and community.”
But is there a plan? Sheahan has one to propose: turn towards disruption, head to its edges, lean in to complexity and create new value.
The edge of disruption is where the scary stuff – or the exciting stuff – is happening. It is where technology, demographics, economics, shifting human behavior and consumer expectations are creating changes today that will impact on how business (and just about everything else) will behave tomorrow. (And that’s almost literally tomorrow, not some figurative tomorrow that might never come.)
And it’s exactly where Sheahan suggests leaders take their thinking. Because where the scary stuff is “is where the existing capabilities, market preferences, brand equity, partner relationships, supply chain and value chain strengths enable you to create the models, markets and possible experiences of the future.”
Take Burberry. In 2006 Burberry’s CEO, Angela Ahrendts named the biggest threat to 150 year old Bristish fashion brand: “Burberry online”. Customers could buy genuine Burberry items through online discount retailers and even at Burberry.com itself. Why make the trip and pay the mark up at a bricks and mortar store? Digital technology, ubiquitous connectivity and changing buyer behavior threatened to make the instore experience – and the full retail price – redundant.
This was the edge of disruption. And that is where Ahrendts headed. Her vision was to embrace and integrate the best of online with the best of instore to create a seamless digital experience. Sitting in the corner sucking her thumb wasn’t going to cut it.
Burberry’s flagship store on London’s Regent Street is the outcome. So is a jump in share price from £441 in 2007 to £1724 in 2015.
The majestic backdrop of 1820s architecture now incorporates a digitally-enabled gallery, 500 speakers, 100 screens and the tallest indoor retail screen in the world, loaded with brand content designed to engage customers.
Tags that emit radio frequencies (RFID) are integrated into clothing and accessories. They trigger multimedia content specific to the item a customer tries. A mirror and can turn instantly into a screen with runway footage and exclusive video. Landmark fashion events are livestreamed into the store. Shop assistants, now ‘store associates,’ use apps that deliver customer purchase history and preferences. It is a truly tailored, luxury, personal shopping experience.
Equally important was a social media and digital strategy to target the fashion drivers of the future: millennials. As Ahrendts explained to Harvard Business Review in 2013: “When we began, we had a few regional websites, so we consolidated them and redesigned everything on one platform. (…) It has become the hub of all our marketing and branding, (…). The site is designed to speak to that millennial consumer through emotive brand content: music, movies, heritage, storytelling. More people visit our platform every week than walk into all our stores combined.”
Business survival today depends on courage and imagination – the courage to challenge prevailing business models and the imagination to invent new markets.
Where do you find the edge of disruption?
You find it, says Sheahan, by identifying the converging forces of disruption and how they impact on your customers. He lists social media, shifts in demographics and customer preferences, information transparency, video, user interfaces, sensorisation, data collection and analytics. This is not a static list. Artificial intelligence, robotics and nanotechnologies sit around the corner. And that’s for starters.
What do you do when you get there?
Once you have identified the edge of disruption, your mission is to interpret the forces there with all their complexity, and harness their potential to solve your customers’ biggest problems.
- What are the multiple forces that are impacting your relevance? Is there an emerging pattern and set of possibilities?
- What do your current capabilities lend themselves to that can offer the most value for your customers?
- Where do future business models exist that reflect these capabilities and these customer outcomes?
- What concerns your customers most? What is their biggest problem?
- Embrace the complex. Others will avoid it, giving you the advantage.
Nike is an example. Nike evolved as a leader in athletic footwear technology. But better shoe technology has its limits, and competition was growing. Nike focused its research on how behavior change drives positive athletic outcomes just at the time that technology was starting to play a pivotal role in consumers’ lives.
The biggest problem for fitness customers is the commitment to exercise: turning up and putting the shoes on. In partnership with Apple, they launched Nike+, combining digital technology with Nike shoes, allowing users to track and share performance. Twenty-eight million people now use Nike+ to compete against one another, and share achievements in thriving digital communities. Nike matters to its customers in an entirely new way.
How will you matter?
Embracing the complexity at the edges of digital disruption is an opportunity to solve important problems for your customers, and create an advantage that others can’t easily compete with.
But that isn’t all. Sheahan and his co-authors believe in the benefits of abundance. “Share everything you learn as you experiment with new solutions. People will see you as go to expert and invite you into the room where the decisions are taken,” he says. “When you put your organisational assets out in the world, when you are bold enough to create value for others, it builds you up in extraordinary ways.”
What is your role as a leader at the edge of disruption?
Leaders are a symbol of what’s possible. They model the culture and guide how people behave as the organisation embraces uncertainty and change. “If you believe there is a bright future for your market and your company, so will your people. That bright future might require some seriously hard work. You are the person responsible for providing the light to show the way.”
Because, as Rosabeth Moss Kanter said 35 years ago: “Nothing short of transformation will do.”
Peter Sheahan is Group CEO and Founder of global consultancy Karrikins Group. He has worked with some of the world’s leading brands, including Microsoft, IBM, Burberry and CommBank. Peter has been named one of the ’25 Most Influential Speakers’ by the US National Speakers Association.
Matter: Move Beyond the Competition, Create More Value, and Become the Obvious Choice, by Peter Sheahan and Julie Williamson, PhD.