Disruption Is Now Business-As-Usual

From https://chiefmartec.com/2016/11/martecs-law-great-management-challenge-21st-century/

Given today’s accelerating pace of change, if your company does not have agility, it will fail.

Everyone in business is aware of the disruption of the recent pandemic, and how the companies that flourished were those that were able to seize the moment and pivot quickly to take advantage of the change.

Zoom is a great example: before the pandemic, it was one of many web conferencing tools. Early in the pandemic it became popular very quickly, but then there were reports that it had security issues, and Zoom was at risk of being labeled as “the insecure tool” that no one should use. But they quickly responded and fixed the issues, and today the word “Zoom” is almost synonymous with “meeting”. Who would have thought, four years ago?

Today there is a truly watershed disruption that was largely unforeseen by most people in business: AI that actually seems to work. It has been predicted for a long time, but many thought it would “always be ten years away”. But now it works so well that scientists can hardly tell which content is AI-written and which is human-written.

Right now organizations around the world are scrambling to assess what this means for their own work. Who will it replace? What new capabilities will be possible? And who will prosper from this sea change, and who will vanish the way that MySpace quickly vanished when Facebook took over? Or the way that internal combustion engine producers will be replaced by electric vehicle system producers? – something largely unforeseen 20 years ago. Or the way that ArianeSpace now unexpectedly finds that its new Ariane 6 launch system is obsolete before it arrives on the market, because a competitor (SpaceX) has shown that rockets can reliably land and be reused and thereby be 100 times cheaper for launching satellites.

The coming year will see myriad ideas for how to use these large network AI models that now work so well and are getting better all the time. Many of these uses are obvious but many we cannot guess at today. This year and the next few years are going to be extremely disruptive.

No company is secure.

And then there is the debacle of Southwest Airlines. Yes their strategy of direct connections instead of hubs was a handicap for finding crew when there were a lot of cancellations, but what if their systems had been more robust? What if they had been prepared for chaos, with systems that could handle the logistics of moving crew to where they are needed quickly? Their core infrastructure did not provide agility – their systems. As a result, Southwest’s reputation now has a huge black eye, especially given that everyone knows that weather will continue to be unpredictable and that this could happen again – maybe when you travel next. Do you want to book with Southwest now?

Disruptions are the norm. They are inevitable. If your business is set up to operate well only when there is no external disruption, then failure is just a matter of time.

How Things Are Becoming More Dynamic

It depends.

In a recent PWC whitepaper, Retired USMC General John Allen writes very astutely that,

“the range of threats is becoming more varied and unpredictable”.

He also points out that the profile of threats has shifted such that the largest threats increasingly come from the poorest sources – not the big and strong ones. We see this today with Al Qaeda, and even Russia, now at its weakest in recent history, is proving to be more and more aggressive.

“the range of threats is becoming more varied and unpredictable”

— General John Allen

The same is true in the business landscape. It is possible today for new innovations that seemingly come out of nowhere to disrupt an entire industry. There are lots of Internet-centric examples, but we prefer non-Internet ones to show that this is not limited to the Internet: Who would have thought in 2000 that a Web programmer named Elon Musk could reinvent how rockets are launched, and turn an entire industry on its head, and do the same for the entire transportation industry?

Indeed, while sources such as the Wall Street Journal focus on the mild recession we are seeing, and warns us that “Big Tech Companies Prep for a Tough Year”, there is actually immense innovation happening in biotech, computing, materials science, and others; and these will have a profound impact. Entire industries are going to be created, and others turned upside down. Innovation creates growth, and so while we might see some level of recession now, the future is one of unprecedented opportunity – for those who are paying attention and are able to pivot quickly.

What Does This Mean For Leaders?

It’s all about people.

For those people, it’s all about (1) knowledge and (2) behavior:

Assume that every plan will need to pivot.

You can’t do it on your own. You need help to make 1 and 2 happen.

Be generative: don’t dictate – instead, ask for ideas.

Let people try things – don’t punish them when they courageously try something and it does not work out. People need to be cautious, yes, but trying things that are innovative is risky. If you require success at every turn, no one will want to try anything innovative.

Develop people. Set the expectation that people will move around, learn new things, and advance their breadth of experience. Domain experts are extremely important, but game-changing ideas tend to come from people who know many areas well.

Accept that people leave. It is normal today. They leave, but if your place is a place where people can learn and be innovative, then people will come too, in droves. Turnover is an inseparable aspect of an innovative ecosystem. Studies of why Silicon Valley became a tech mecca while the Boston area did not revealed that it was the legal climate of Boston that held it back: enforceable non-compete agreements prevented people from leaving and starting new companies. That sounds appealing to an employer, but it also means that there is less innovation happening – and if people want to innovate, they will not go to work in a place that stifles innovation. They will go to Silicon Valley instead of Boston. They will go to an innovative company instead of one that demands absolute loyalty.

Remember that while having low turnover saves money, there is an opportunity cost in not having people arriving with fresh ideas and fresh expertise. Some turnover is actually a good thing. In fact, perhaps the more innovative you want to be, the more turnover you should have, to a point.

Above all, focus on creating a culture in which people feel that they are expected to try things before they are sure. And that if something does not work out, even though they were reasonably careful, they will not be punished: instead, it will be seen as “business as usual” that some things that you try do not work out. And create a culture in which it is safe to voice unconventional ideas – that ridicule of unconventional ideas is seen as counterproductive. Ideas should succeed or fail on their merits – not on how conventional they are.

To achieve these things requires “walking the talk”. Leaders cannot just say “be this way” – they have to be that way themselves, consistently, over time, in a visible way. It needs to be seen as “how we are expected to be”, and “how our leaders behave”. It needs to become the culture.