This video addresses the question: How can the pharmaceutical industry reskill representatives to be knowledgeable consultants to physicians?
Today, sales expertise is not enough. The pharmaceutical representative needs to be a broker of information. Physicians now have very limited time – and dictate when they can meet with representatives, from whom they need comprehensive information that they can pass along to their increasingly educated patients.
In this video, Jo Ann Saitta, Chief Digital Officer of the CDM Group, Stephan Klaschka, Innovation and Healthcare Consultant, and moderator, Richie Etwaru, Chief Digital Officer at Cegedim, examine this shift and the challenges pharmaceutical companies may face in properly retraining their people. These challenges include: adopting a culture of learning agility; integrating silos of information; having the ability to serve up dynamic content; and training representatives to utilize technologies that will maximize their brief but demanding visits with physicians.
Use this linkto watch all 10 videos in the series on YouTube directly – enjoy!
10 Inevitable Changes in Pharma 2015 – Communication moving to Collaboration
10 Inevitable Changes in Pharma 2015 – Content moving to Context
10 Inevitable Changes in Pharma 2015 – Care moving to Cure
10 Inevitable Changes in Pharma 2015 – Compliance moving to Culture
10 Inevitable Changes in Pharma 2015 – Supply Chains moving to Supply Constellations
10 Inevitable Changes in Pharma 2015 – Customization moving to Configuration
10 Inevitable Changes in Pharma 2015 – Customer moving to Consumer
10 Inevitable Changes in Pharma 2015 – Calls moving to Consults
Jo Ann Saitta
10 Inevitable Changes in Pharma 2015 – Cloud moving to Crowd
10 Inevitable Changes in Pharma 2015- Charity moving to Cause
Read this insightful “Taking the entrepreneurial approach” interview conducted by Eyeforpharma on the impact of hierarchy and how executive mindset inhibits adapting to the rapidly changing commercial landscape. It outlines how “intrapreneurs” and internal “angel investors” can get large, mature organizations moving again!
The traditional world of corporate Diversity and Inclusion (D&I) is being disrupted by a new take on D&I and combining it with innovation and talent management. What some perceive as a threat to the D&I establishment may just be the next step of evolution that could invigorate and drive D&I to new heights.
Though not an entirely novel approach (see also How to create innovation culture with diversity!) the new thinking gains traction. As this could play out in different ways and only time will tell what worked, here are my thought on where we are heading.
Struggles of the Front Runner
Many traditional D&I programs, let’s call them “version 1.0” of D&I, struggle transitioning beyond a collection of affinity groups, tallying corporate demographics and competing for D&I awards to post on their webpage. In these traditional D&I programs ‘diversity’ is often understood to be reflected by more or less visible differences among individuals at the workplace while ‘inclusion’ translates to supporting defined sub-populations of employees through, for example, establishing affinity groups.
The United States is seen as the front runner of the D&I movement. D&I has been around in the U.S. corporate world for decades. For historic and demographic reasons it hones in on removing obstacles for minorities at the workplace supported also by strict legislature and execution; exercising Affirmative Action, for example.
This legacy in the U.S. lends itself to an inside focus on organizations that became the backbone of the traditional D&I programs. It comes down to the question ‘what can or should the organization do for specific groups of people’ defined by ethnicity, gender, age, sexual preference, faith, disability, war history and so on. Apparently, it still is work in progress as, for example, Silicon Valley just recently got on the public radar, which stirred up the debate afresh along the lines of D&I 1.0; see Google releases breakdown on the diversity of its workforce.
Stuck in the ‘Diversity Trap’?
The inside focus and minority messaging of D&I 1.0, however, can be limiting when D&I erodes to a process of ‘doing things right’ by pushing for quotas, ‘checking boxes’ and inflating variations of terminology perceived as ‘politically correct’. This can in fact be different from ‘doing the right thing’ for the company overall, its employees as well as the affinity groups and their constituency. It should not surprise that Affinity groups can be (and often get) stigmatized and perceived as self-serving and self-centered social networks without significant and measurable business impact.
Under this paradigm these D&I 1.0 programs struggle to get serious attention, support and funding from executives beyond operating on a minor level to ‘keep the lights on’ more for public image purposes than business drive. The fundamentals seem to get forgotten: in the end, a business exists to generate a profit, so less profitable activities are likely to be discontinued or divested. It’s a symbiosis and to say it bluntly: without healthy business there is no D&I program and no affinity groups. When this symbiosis get lopsided, D&I 1.0 gets stuck in the trap.
“Diversity” is catching on beyond the United States in Europe, for example, where many countries do not have share a highly heterogeneous demographic composition, for example. Here, companies can start with a fresh approach jumping straight to D&I 2.0 – and many do! It reminds me of developing countries installing their first phone system by skipping the landlines and starting right away with mobile phones.
The 2.0 internal focus corresponds to hiring workers that truly think differently and have different backgrounds and life experiences some of which overlaps with D&I 1.0 affinity roots. In addition, there is also an external focus putting the staff to work with a clear business proposition and reaching even beyond the organization. So here a candidate would be hired or employee promoted for their different thinking (2.0) rather than more visible differences (1.0).
While need remains for affinity groups to tend to their members needs within the organization, the “new” D&I 2.0 opens to shift focus to go beyond the organization. It goes along the lines of a statement President John F. Kennedy became famous for and that I tweaked as follows: “Don’t ask what the COMPANY can do for you ask what you can do for the COMPANY AND ITS CUSTOMERS.”
D&I 2.0 gears towards actively contributing and driving new business results in measurable ways for the better of the employees as well as the organization and its customers. A visible indicator for D&I 2.0 affinity groups helping their constituency beyond company walls is affinity groups identifying and seizing business opportunities specific to their constituency. They translate the opportunity and shepherd it trough the processes of the organization to bring it to fruition. For example, affinity groups are uniquely positioned to extending and leveraging their reach to relating customer segments in order to identify ‘small elephant’ business opportunities; see How to grow innovation elephants in large organizations.
The D&I 2.0 approach demonstrates sustainable business value which is why D&I 2.0 sells much easier to executives. It makes a compelling business case that contributes to new business growth, the life blood of every company.
U.S. companies stuck in D&I 1.0 are hard pressed to keep up with the D&I 2.0 developments and overcome their inner struggle and resistance. With decades of legacy, D&I 1.0 programs in many organizations lack the vision and ability to make a compelling business case, to develop a sound strategy as well as capability and skill to implement it effectively. This is the requirement, however, to truly see eye-to-eye with senior executives and get their full support. This can become a serious disadvantage in the markets relating to products and customers but also in attracting talent.
In the end, the saying holds true that “talent attracts talent” and all organizations compete over talent to compete and succeed. Therefore, a D&I 2.0 program combines business focus and talent management while tying it back to the core of diversity and inclusion: Fostering diverse thinkers and leveling the playing field for all employees. This requires a level playing field that offers the same opportunities to all employees, which is the real challenge.
How do you level the playing field effectively in a large organization? How this will be implemented becomes the differentiating success factor for companies transitioning to D&I 2.0!
Here is a example 2.0-style for a level playing filed that has its roots in the D&I affinity group space yet opened up to include the entire workforce. It empowers and actively engages employees while leveraging diversity, inclusion and talent management for innovative solutions with profitable business outcomes. It may take a minute or two to see the connection between D&I, talent and disruptive innovation but it is at work right here in the School for Intrapreneurs: Lessons from a FORTUNE Global 500 company.
Previous posts relating to innovation and employee affinity groups / employee resource groups (ERG) / business resource groups (BRG):
It a strange question. Isn’t it astonishing how many people say “I am not creative” or believe “innovators” are so much different from themselves. As if innovators are an enlightened lot of geniuses that come up with breakthrough innovations that nobody else could have thought of or made happen but them. Icons such as Steve Jobs (Apple), Elon Musk (Tesla) or Jeff Bezos (Amazon) stand out. They apparently think differently and changed the world.
The question for the rest of us is: could I be a Steve Jobs too? Or do have to be born gifted to be able to innovate in ways that “make a ding in the universe” like Steve Jobs?
You can learn creativity!
If you ask kids in kindergarten or preschool if they are creative, they enthusiastically respond “Yes!” At that age we are convinced we are creative and express our views, thoughts and ideas in many ways. We design rockets to Mars or create new animals, nothing is out of bounds or out of reach.
What has happened to us that we believe as grown-ups and employees we can no longer create and change the world? I heard “I could never do that” and “nothing will change anyway” too many times.
Good news is that genetic predisposition only attributes one-third to your creativity and innovative-ness (if this is a word), while two-thirds are skills that can be learned, as research confirmed many times over (see Marvin Reznikoff et al, Creative abilities in identical and fraternal twins, Behavior Genetics 3, no. 4, 1973).
Therefore, innovation can be taught, “nurture trumps nature.” So, you can learn it too!
Are you an intrapreneur or entrepreneur?
However, not everyone wants to take the risk and uncertainty to make an entrepreneurial dream come true by starting a new business on their own. Many of us work in large organizations and would like to improve the company from within somehow.
This is where intrapreneuring comes into play. Intrapreneurs are also called corporate entrepreneurs, since they apply entrepreneurial methods within the organization to create intraprises. (See also The Rise of the Intrapreneur)
What innovators have in common
So is there anything that great innovators share and which we ‘mortals’ can replicate or do similarly to succeed? – In fact, there is!
In his iconic book “The Innovator’s DNA,” famous disruptive innovation guru Clayton Christensen (who is also known for coining the term ‘disruptive innovation’) identified four common catalysts that sparked the great ideas:
“a question that challenged the status quo,
an observation of a technology, company, or customer,
an experience or experiment where he was trying out something new,
a conversation with someone who alerted him to an important piece of knowledge or opportunity”
This comes down to the four following behaviors, as Christensen found out: questioning, observing, networking, and experimenting.
While, typically, the underlying information is not unique, the innovator’s associative thinking combines information and connects dots that seem random or unrelated to others. They create a picture or vision of a need or opportunity to pursue.
Now, on your way to become an intrapreneur (or entrepreneur), how can you get to these insights, find a suitable target and make it happen?
There are two basic steps:
Don’t work alone
Seek a fertile environment.
1. Don’t work alone
An African proverb says “If you want to walk fast, walk alone; but if you want to walk far, walk together”. Developing and bringing a disruptive idea to life takes time, work and -more than anything- collaboration. It’s not a fast shot and you will need help. What you can do is tapping into more brains: ask others and bring together a diverse team around an idea. You want to get as many different perspectives to see the fuller picture, risks, needs, opportunities to tackle the problem you are working on.
You may be blindsided or unaware of things critical for your success including much needed political cover, validating your assumptions or technical aspects outside your expertise. If you try to do everything yourself, you are setting yourself up for failure for a simple reason: you are not an expert in everything! Stick with what you are good at and let other experts help you with what they are good at.
2. Seek a fertile environment
If you want to start your own business as an entrepreneur, you may want to move where you find the best condition for a supportive business environment, an ecosystem. For entrepreneurs, for example, Stanford University and Silicon Valley remain a major tech magnets with ample and easy access to top talent and money. Also accelerators can serve this purpose. Comparable conditions for an innovative ecosystem exist at the US-East coast in the Boston area. Depending on your business idea, other locations and ecosystems may be more suitable – do your homework and find the right one for you.
As an intrapreneur, your available ecosystem seems more limited: it typically is the company you work in that defines the perimeter of your freedom to navigate. Your advantage here can be that you already know the environment and who could be supporting or funding your idea. If not your, you could more easily ask colleagues for help than people outside your company could, which significantly lowers the bar for access to resources.
Let’s continue by focusing on intrapreneuring. Compared to the entrepreneurial world out there, within an organization you may have more opportunities to help shape the fertile ecosystem for breakthrough ideas if none exists yet.
Open offices are not a new invention. They have been around for a long time as hallmark of start-up companies that simply cannot afford glitzy corporate skyscrapers with plush corner offices (yet). Open offices emerged less by deliberate design than driven by need.
Start-ups typically run on a vibrant culture of passionate people wanting to spend time together to create something great, everyone works together closely in the tight space available. Information flows fast and freely. Recreational elements and other services offered remove the need or motivation to leave. Employees hang out to work maximum hours as a team in a fun, inspiring and supportive environment. Productivity is up and work gets done.
Large companies are attracted by this powerful value-proposition for open offices – or so it seems. Mature organizations struggle with their increasing size that, over time, entails increasing specialization and complexity with a stifling system of red tape and inertia.
While jobs are large in small companies and come with broad scope and high accountability, which are diluted when jobs narrow in large companies by increased specialization over time. Functional silos emerge and sub-optimize often to the detriment of other business functions.
The reasons for large organizations moving to an open floor plan are often glorified and communicated as a measure to increase creativity and productivity in an appealing modern working environment: employees connect casually and spontaneously at the ‘water cooler’ to network and innovate together again.
The true and paramount driver for tearing down the office walls, however, is often more sobering: it comes down to simply cutting costs by reducing the expensive office footprint. Fitting more people into less space comes at a price for the workforce.
Cost savings only get you so far. It’s an easy approach but not a sustainable business model for productivity. What do you really save if productivity goes down? How sustainable is your business then? Sacrificing productivity for cost savings is a narrow-minded approach lacking long-term perspective and, therefore, not worth it. That is unless your goal is to achieve short-term gains without consideration for the future of the business, which is a disqualifying business perspective altogether.
The popular phenomenon in large companies is a move for the wrong reasons (the better driver being increased productivity) and entails serious consequences that jeopardize the company’s productivity, workforce satisfaction, and even the bottom line.
It gets even worse when the new environment is retrofitted space with structural limitations, founded in the legacy of existing buildings and investments, and if no flanking measures taken to enable effective collaboration needs.
A design from scratch has the potential support the collaboration needs and flow of the workforce best. This is an advantage start-ups have when they can shape and rearrange loft space to their immediate needs without limitations carried forward.
Controlling cost is necessary and reducing office footprint is an effective business measure. Aetna, for example, has nearly half of their 35,000 employees working from home already, which saves ~15% to 25% on real estate costs – that’s about $80 million saving per year.
Do not get me wrong, there are undeniable benefits to open office spaces – when applied for the right reasons in the right context, with right priorities and proper execution. The point I am making is that cost reduction alone is not a worthwhile driver if it sacrifices productivity. There comes a point where a hard decision has to be made and if you prioritize cost savings, you sacrifice productivity and other aspects automatically.
What does it take?
Unfortunately, the start-up company model with open office space and its agile and enthusiastic does not scale for large organizations. The corporate one-size-fits-all approach does not do the trick for several reasons.
Let us look at aspects that make the open office work:
Tear down cost center walls
Make presence easy
Level the (remote) playing field
Embrace work style differences
1. Tear down cost center walls
Proximity favors who needs to work together closely. In a start-up company, staff is few and jobs are big. This ratio flips in large organizations where many employees work in highly specialized functions. With increasing specialization comes complexity that leads to functional silos. The employees become separated by every rising departmental and organizational walls.
In large organizations, work space is typically paid for by department and charged to cost centers. Staff gets corralled this way and kept separated in functional clusters that are easier to administer but counteract productivity, streamlined workflow, and diverse collaboration cross-functionally. After all, it wouldn’t make sense to have any department operating completely independent from the rest of the organization.
These artificial and structural boundaries make no sense (unless you are an accountant, perhaps). Therefore, trade the urge for financial micro-management for what makes the workforce more productive, as this is the most important aspect of collaboration and, ultimately, the bottom line.
2. Make presence easy
Make it easy for your employees to go the extra mile. Now here is where large companies can learn from how start-ups: offer incentives for employees to hang out and remove reasons for them to leave to maximize time to work and collaborate.
The list seems endless: free beverages and food, services such as laundry, hair dresser, spa or receiving deliveries, exercise equipment, healthy snacks, child and pet care, and other useful perks that cost-cutting companies often omit.
Sounds like a waste to many large companies. But is it really? You get more out of your employees’ carefree working along longer than by pinching the free coffee and have them leave during the day or early to run their necessary errands.
3. Level the (remote) playing field
It may sound counter-intuitive but when cost saving rules, the open office space often only works when not all employees are around at the same time. If all employees showed up on the same day there may not be enough room and resources (seating, access to power and networks, etc.) to fit and accommodate everyone, since the physical office footprint is now too small ‑ a Catch-22.
When only a subset of employees can be present in the office at any given workday, the rest has to work remotely forming an –at least- virtual organization. Consequently, the random personal connection “at the water cooler” becomes less likely as does spontaneous cooperation by “pulling together a team” since your pool of physically available staff is limited.
Management needs to take deliberate and determined measures to level the playing field for remote workers by giving them the same opportunities as colleagues present in the office. Why? “Out of sight, out of mind” is a powerful and human nature. If not managed effectively, it only becomes worse when remote staff easily is continuously overlooked when it comes to projects staffing, development opportunities and promotions, for example. The resulting inequities undermine workforce cohesion, effectiveness, and talent development.
FastCompany recently came up with a list of reasons by workers arguing against open offices, which is a good indicator where the pain-points are. Representative or not, the list tends to resonate with people that experienced first-hand working in a corporate open office environment.
The key complaints are about
Distraction – hard to concentrate with surrounding noises of all sort; loud speaking coworkers; interruptions of coworkers stopping by at any given time
Discomfort – no privacy; by-passers looking at your screen and documents; food, bodily and other odors; white-noise generators blamed for headaches; spreading contagious illnesses; having to talk to people when you don’t feel like it; “hiding” by wearing earphones
Workflow obstacles – competing over quiet spaces, conference rooms or other rare resources; no place to store personal items or personalize the space.
One size does not fit all and it does not do the trick for large companies, in particular. So if you have to downsize office space or accommodate more employees, take a sound and sustainable approach by making productivity the driving priority and not cost.
After all, we are human beings that work best when we have control over our work environment and schedule. When we perform at our best, it is also for the better of the company as a whole. Flexibility, empowerment and inclusion go a long way – otherwise, mind FastCompany’s warning: “What was supposed to be the ultimate space for collaboration and office culture was having the opposite effect” – also for the bottom line.
Although all business functions are affected, corporate Information Technology (IT) departments often lend themselves as best examples for a “big elephant” world: they are critical enablers in a pivotal position of every modern organization. Even though the success of practically every business function hinges on IT, also IT is not immune to this silo-forming phenomenon in large organizations.
Over time and with ‘organizational maturity’, the IT department tends to end up focusing on what they do best: large back-office projects that cannot be funded or run by any business function in isolation, since they span across disciplines or impact the entire enterprise. Just one examples for a “big elephant” project is implementing a comprehensive Enterprise Resource Planning (ERP) system across multiple locations internationally.
This is the back-office domain and comfort zone of IT with technology know-how, big budgets, long duration, high visibility, rigid governance and clear processes to follow.
Small Elephants in the Front-Office
In contrast, the front-office typically comprises Marketing, Sales and Product Development. Here, a small tweak or agile change (that requires some IT input) can go a long way and have significant impact on organizational effectiveness and business results. – These micro-innovations are “small elephants” as recent Gartner research coined them.
These little disruptions to the slower-moving big elephant world easily trigger the “corporate immune-system” that favors large elephants and suppressing small emerging ones.
Typically, most projects in large organization aim to reduce cost in some way. Only a minority of projects address new business and growth opportunities that tend to come with uncertainty and greater risk.
While big elephants are typically incremental improvement project to save cost, it’s the small elephants that are more likely to be disruptive drivers of growth and future business opportunities: the much needed life-blood of sustaining business and future prosperity.
Barriers in the Big Elephant World
IT departments tend to struggle the farther they move away from their ‘core competency’ meaning leaving the big-elephant back-office and dealing with the myriad of small needs of the customer-facing units in the small-elephant front-office.
Many reasons contribute to say “No!” to emerging small elephants:
Small elephants are disruptive to the big elephant world, perhaps even threatening to the establishment
It is hard for the back-office to accept that there cannot be much standardization around these small small elephant solutions by the very nature of their scope and scale
It is cumbersome to plan and manage resources scattered across small projects that pop up left and right without significantly impacting big elephant projects. Unfortunately, pressure to save cost only fuels the focus on fewer, bigger elephants.
Gartner brings the dilemma to the point: “[..] the focus on optimization, standardization and commoditization that underlies IT’s success in the back office is contrary and even detrimental to the needs of the front office.”
Insights in front-end processes and customer needs are essential (and not usual IT back-office competencies) to seize small elephant opportunities, which are often disruptive and driven by the agile intrapreneurial spirit that makes full use of the diversity of thought and understanding customers deeply.
– See also The Rise of the Intrapreneur
On top of it all, the challenge for IT is to understand the potential and pay-off for initiatives that rely on IT in a domain outside of IT’s expertise: In the mature world of big elephants, ROI projections are demanded upfront and based on models that apply to mature organizations. These models typically do not apply well to measure project ROI in the emergent worlds of small elephants, which puts the small elephants at a disadvantage; another disconnect that easily leads big elephant organizations to reject proposed small elephants.
As a bottom-line, for large IT departments it is simple and convenient to say ‘No!’ to requests for “micro-innovations” coming in from employees scattered across the front-offices. And, sadly, often enough this is exactly what happens. Despite the lasting impact of “No!” (see also How Intrapreneurs avoid “No!”), turning ideas and proposals down too fast also leaves out opportunity for huge innovation potentials (see also 10x vs 10% – Are you still ready for breakthrough innovation?).
What happens to IT without small elephants?
Ignoring the need for micro-innovations and notsupporting them effectively will not serve IT departments well in the long-run. With only big-elephant focus IT departments are at high risk to lose sight of the needs of their internal customers. Consequently, IT undermines and finally loses its broader usefulness, acceptance and footing in the business functions they intend to serve.
When small elephants are neglected or blocked, it practically forces the front-office to look for other resources sooner or later in order IT-services providing resources to get their needs taken care of. Over time, the big IT department drifts to become more and more obsolete, and finally replaced by agile and responsive agencies and contractors that deliver on their front-office customer needs.
After all, IT’s general role is one of an enabler for the core businesses rather than being perceived by its customers as a stop-gap.
How to raise Small Elephants
So, what can a mature yet forward looking IT organization do to support micro-innovations – or ‘balance the herd,’ so to speak, to include a healthy number of small elephants in the mix?
Brad Kenney of Ernest&Young recommends limited but dedicated resources (including time) for micro-innovations in Ernest&Young’s 2011 report “Progressions – Building Pharma 3.0”;
for example, dedicate 10% of the expert’s time to implement micro-innovations
Test changes in emerging markets first, if possible, where agility is high at a lower risk of jeopardizing the bottom line or threatening the established organization and its investments in mature markets
Establish effective collaboration platforms that make it easy for employees to openly and conveniently share content among each other as well as with external parties.
How Intrapreneuring helps
A systematic approach to Intrapreneuring can go a long way to help move these micro-innovations forward. It starts with systematic intrapreneurial skill-building for employees across all levels of hierarchy and includes:
Understanding how innovation happens in large organizations, i.e. large and small elephants and the need for both to exist
Helping employees become aware of and overcome their own mental barriers and silo-thinking
Attracting, inspiring and engaging employees to take their idea forward knowing there are obstacles in their way
Training skills that help to frame, develop and pitch ideas to potential supporters and sponsors
Building and presenting a business case for review and improvement by peers and management
Enabling and empowering employees to bring their small elephants to life and sharing the story of their success to inspire others
Working to gradually change the mindset of the organization, its culture, as needed, to become more balanced on the elephant scale, to unlock the resources within the own workforce and to seize opportunities for growth and the future of the business.
Just as out there in the wild, without raising small elephants the life-span of organizations with only big elephants is limited.
Google co-founder and CEO, Larry Page, continues to have big expectations for his employees: come up with products and services that are 10 times better than their competitors, hence “10x” – that’s one order of magnitude!
10X vs. 10%
Many entrepreneurs and start-up companies, they seem to ‘shoot for the moon’! Far more than 90% of these ventures fail within just a few years. Few, such as Google, succeeded and grew to dominate internet giants. The question remains though if they can maintain the innovative pace of 10x when the innovation rate tends to sink closer to 10% in matured companies.
How big dreams changed the world
This challenge effects also other visionaries that changed the face of the world and transformed society in ways nobody has imagined, such as:
Apple building a micro-computer at times when mainframes ruled the digital world and only few could envision a demand for personal computing
eBay establishing a new online sales model that millions around the globe use every day
Google taking over the browser market through simplicity, by giving everyone control to use the most complex machine on Earth, the Internet
Microsoft cultivated software licensing to sell one piece of software millions of times over effortlessly at minimal cost.
As disruptive and transformative ventures grow and mature, the definition of what is perceived ‘innovate’ changes. Both momentum and focus shifts. With size companies struggle to continue innovating similar to their nimble start-up origins.
What happens? With size comes a downshift from disruptive to incremental change. Simplicity makes space for adding features. Adding features makes products more complex and ultimately less usable and appealing to the majority of customers.
Look at Microsoft’s Offices products, for example: Wouldn’t you wish they came out with a ‘light’ version with reduced feature complexity by let’s say 75%, so the software becomes easy to use again?
It also starts haunting Google, as their established products such as Search or Gmail need to be maintained. Additional “improvements” aka. features creep in over time. Perhaps you noticed yourself that recently Google search results seem to be less specific and all over the place while the experimentation-happy Gmail interface confuses with ever new features?
Even the most iconic and transformative companies experience the reduction of their innovative rate from 10X to an incremental 10% or so.
Funny thing is that -at least in technology- incremental improvement quickly becomes obsolete with the next disruptive jump. The current technology matures up along the S-curve (see graphics) and generates revenue, but the next disruptive technology emerges. Companies hold on as long as they can keeping revenue flowing by adding features or improvements of sorts to gain or maintain a marginal competitive advantage. Thus, incremental improvement and process optimization found their place here to minimize cost and maximize profit in a market where the product became a commodity, so the competition is based only on price.
The new technology does not yet make significant money in the beginning at the beginning of the next S-curve. The few early units produced are expensive, need refinement and are bought by enthusiasts and early adopters who are willing to pay a steep premium to get the product first. Nonetheless, development reached the point of “breakthrough,” becomes appealing to many and quickly takes over the market: the big jump onto the next S-curve gains momentum. Suddenly, the former technology is ‘out’ and revenue streams deflate quickly.
Large and matured organizations ride on an S-curve as long as possible. They focus top-down on optimizing operations. Little effort is made to address the underlying limitation of the current technology and seeking out risky new successors. Maturing companies tend to transform into a ‘machine’ that is supposed to run smoothly. A mind shift happens to avoid risk in order to produce output predictably and reliably at a specific quality level to keep operations running and margins profitable. Incremental process improvement becomes the new mantra and efficiency is the common interpretation of what now is considered ‘innovative’.
10X has turned into 10%. To keep up with the ambitious 10x goal, companies would have to constantly re-invent themselves to replicate their previous disruptive successes.
How Goliath helps David
Even our recent iconic ‘giants’ find themselves in a tighter spot today:
Google struggles to integrate a fragmented product landscape and maintain the ambitious 10X pace of innovation
Microsoft suffocates loaded with features that make products bulky and increasingly unusable while consistently failing to launch new technologies in the growing mobile segment successfully
Apple waters down their appealing simple user interface by adding features and clinging to defend their proprietary standards from outside innovations.
On top of it, all giants tend to face the stiffening wind of governmental scrutiny and regulation that influences market dynamics to protect the consumers from overpowering monopolies that jeopardize competition and innovation.
This is a fertile ground for the next wave of innovators, small Davids, to conquer markets from the Goliaths with fresh ideas, agility, and appealing simplicity. Where does your organization stand on the S-curve, riding the current curve with 10% or aiming high at the next with 10x?
Observing the down-shift
What can you observe when the down-shift happens? How do you know you are not on the transformative boat anymore? Here are just some examples:
Small Jobs – job descriptions appear that narrow down the field of each employee’s responsibility while limiting the scope by incentivizing employees to succeed within the given frame.
Safe Recruiting – practices shift to playing it safe by hiring specialists from a well-known school with a streamlined career path to fit the narrowly defined mold of the job description. They newbies are expected to replicate what they achieved elsewhere. To risk is taken to getting the ‘odd man out’ for the job, a person who took a more adventurous path in life and thinks completely different, as this may disrupt the process and jeopardize the routine output by shifting the focus away from operations.
Homogenized workforce – as a consequence of hiring ‘safely’, the workforce homogenized thereby lowering the innovative potential that comes with the diversity of thought and experience.
Visionaries leave – with the scope of business shifting, the visionary employees that drove innovation previously lose motivation when innovation and creativity slows. Now they are held to operate in a business space where they do pretty much the same thing as their competition. Naturally, these go-getters move on, as it is easy for them to find a challenging and more exciting new job in a more dynamic place. – This ‘leaky talent pipeline’ gets only worse and costly when the talent management focus shifts to talent acquisition and leaving talent retention behind.
Procedures for everything– operating procedures regulate every detail of the job. The new ‘red tape’ is not limited to the necessary minimum but rather by the possible maximum.
Short-term focus – work output becomes mediocre and focuses on short-term goals and sales targets; the next quarter’s numbers or annual results take priority over following the big dream.
Sanitized communications – broader communications within the company become ‘managed’, monitored, ‘sanitized.’ A constant stream of (incremental) success stories pushes aside an open discussion to target the bigger problems. Opportunities are missed for open dialogue and creative disruption that fuels the quantum leaps forward to outpace the competition. Peer to peer communication is monitored to remain ‘appropriate’ and can even be actively censored. Trust in management and subsequently also among employees erodes.
Management fear of being the first
The real problem is the shift of mindset in top management that quickly works its way down: not wanting to take the risk of being first, which includes avoiding the risk to fail while chasing to next big opportunity or technology. Instead, they sail the calmer waters among more predictable competition fighting for small advantages and holding on to the status quo opportunistically as long as they can. In some cases, the management even acknowledges the strategy shift from ‘leader’ to ‘fast follower’ despite whatever the company motto proudly promotes – and thereby accepting 10% and avoiding to leap ahead of their competition by bold and game-changing 10x moves.
Interestingly, these same managers still love to look over the fence to awe the iconic leaders but steer away to take charge and work to become the leader again themselves. The nagging question remains if they could actually pull it off getting into first place.
Outside-of-the-box thinking may still be encouraged in their organization but is not acted upon anymore. Internal creativity or ideation contests become more of an exercise to keep employees entertained and feeling engaged, but the ideas are hardly being funded and executed. Instead, company resources are concentrated to run the incremental machine predictably and reliably at 10% as long as its profitable, no matter what. – They simply have no resources to spare and dedicate to 10x!
These businesses undergo a cycle of breaking through by successful disruption in a narrow or completely new segment, then continued growth to a size where the organization slows down to an incremental pace and somewhat stagnating innovation. It may then get driven out of business by the next disruptor or pro-actively break up into more competitive fragments that allow for agility and risk-taking once again to become leaders in their more closely defined space of business. This closes the cycle they are to go through next. There is a strong parallel between evolution and Charles Darwin’s survival of the fittest.
Keeping this cycle in mind, it becomes easier to see why management undergoes the mind shift to predictable and incremental improvement during the massive growth phase of the company in the center of the S-curve. It is also the time when the disruptive innovators have jumped ship to join the next generation of cutting-edge innovators and risk-taking disrupters that prepare to take the leap working on the next S-curve.
Which way to turn?
The question is where you want to be: the true risk-taker or the incremental improver? Understanding the trajectory and current location of your company helps to make the right decision for you. It can save you from frustration and be banging your head against corporate walls and be wasting your energy in a dinosaur organization that is just not ready anymore for your ‘big ideas’ and quick moves outside its production-house comfort zone.
This leaves some of us thinking which way to turn. If you are looking for predictability, longer-term employment (an illusion these days one way or another) and good night sleep, this is the place you will feel comfortable in.
Otherwise, dare to follow the risk-taking visionaries like Elon Musk (the brain behind PayPal, SpaceX, and Tesla Motors; see his recent great interview) to move on.
To say it with the words of Niccolo Machiavelli, the wise and sober realist: “All courses of action are risky, so prudence is not in avoiding danger (it’s impossible), but calculating risk and acting decisively. Make mistakes of ambition and not mistakes of sloth. Develop the strength to do bold things, not the strength to suffer.”
Shoot for the moon (or Mars, if you are Elon Musk), change the world no matter what and enjoy what you do!