The challenge with managing through change where innovations disrupt our traditional systems of thought and management is that what disrupts what we know and what we do is often a mixture of things. Innovation is not a linear pursuit that occurs in a straight line or through the “production-line” thinking where a single unit of input guarantees a single unit of output.
What is a blindspot? The classical definition for it is “an area where a person’s view is obtsructed”. For organizations there are in the main four forms of these obstructions:
1. What we know
This is a chronic illness of the past holding the future prisoner. When you hear people say things like,”this is how we do things” or “what had worked in the past is” or even “remember when” then you know that people are using the past as a reference for the future. The challenge with this thinking is that it makes the assumptions that the forces acting in your industry are exactly the same force today (and in equal measure) as was the case in the past.
Evidence: Bongani Mqababa, former CFO of Amplats, recounts an interesting story of how they dealt with the extreme forces of the 2012 trading period when platinum prices declined sharply & labour productivity dropped close on 10%. They had to rethink their business by migrating from a volume player to a value player so they devised a strategy to move from being the largest producer of platinum in the country to being amongst the highest grade outputs with lower volumes but higher earnings in the world.
Remedy: What they did was acquire more rights to open-cast mines & mechanise the mines which meant they had higher outputs per unit labour but richer tonnage extracted as well. In this world, they had to leave behind what they knew and embrace a new reality.
2. What we believe
Here lies the Achilees of many leaders that rise through the ranks. They think that the world they rose through the ranks in, is the world they are now called to lead in. Why do you think you are finding more businesses recruiting leaders externally than through their own leadership pipeline? Because at the top tier of leadership ‘Competence is not the question’. What is at question is the objectivity and the ability to see things as they are not as they used to be.
Evidence: When Don Thompson took over McDonalds and was advised that the growing health trend of the 21st century would threaten his business model, he believed that cosmetic menu changes would abate the approaching sea of disruption that he soon face. Soon, the Shake Shack franchise was growing at a rate of 412% per annum (CAGR) whilst McDonalds was beginning to lose market share and worse year-on-year revenues and overall throughputs.
Remedy: leaders can longer hang-on to their deeply held beliefs of things as they used to be but must rather deal with the world as it is now. This also emphasizes the need for an organization to have a strong and independent board and board chairperson.
3. False positives
Budgets, revenues, market share are all too often false positives. We must never mistake our ability to attract a customer for our ability to build a business that helps the customer create a more effecient and sustainable future for himself and what he cares for. We must mistake our ability to succeed today as a measure for how significant we are tomorrow.
Evidence: In 1964, even with the knowledge that the computer would be the technology of the future Smith Corona grew typewriter sales 67% y-o-y. In-fact they had a record sales year by releasing a version of the typewriter that was sleek and easy to use.
Remedy: measure what matters not what moves. The obsession of management accountants to measure what moves must be shifted or complimented with a strong and external ability to measure what matters.
4. Like for Un-Like Comparison
Smith Corona believed that their version of the typewriter was better than the world’s best version of a computer at that time and they were right: the mistake they made was they were comparing their v100 of the typewriter to v2 of a computer. This is common mistake leaders make when they are invested in a path or direction, they make unlike comparisons in the quest to prove that their direction or strategy is the correct one. If you look hard enough for a chicken that flies then you will find it.
Evidence: when Google was experimenting with the early versions of the Android platform, Nokia believed that this would not affect their ubiquitous and highly favored Symbian platform. Android of old was patchy, unstable, fraught with inconsistencies and unreliable. But the design-philosophy was stronger: Pull the best developer minds together, give them a platform and access to a market and let them thrive. When Nokia awoke to the reality of a world being dominated by Android it was too late.
Remedy: what is required is building a set of outputs or results that speak to being significant in the customers’ life.
Leaders are challenged to realize a single truth: what we are seeing is not a blip in the system. It is re-imagine of the world of work as we know it & those of us who lead are called on to lead in the new world.
Lead at the edge of chaos.
Speaker. Investor. Disruptor.
Check this interesting video from Jeremy Gutsche, a US based TrendHunter who speaks about why businesses that know they need to change, don’t change.