By Simon Brooke
Reading time: 5 minutes
Simon Brooke is a personal finance journalist and copywriter. He also covers business for a variety of publications.
Disruption has become the hottest corporate buzzword in the business lexicon over the last few years with disruptors such as Amazon, Uber and Spotify grabbing the attention of consumers, the media and investors.
It’s easy of course, for tech companies and start-ups to be disruptive but how can larger, long established companies try to do the same? “Disrupt or be disrupted,” is the message to business leaders, in other words if your company doesn’t take a disruptive or innovative approach it will fall victim to someone else, however successful it’s been over many years.
Take the case of Blockbuster. In 2004 it was worth $5billion but nine years later it ceased trading, mainly thanks to the rise of Netflix and other video streaming services. The boss of Blockbuster turned down the opportunity to buy the fledgling Netflix which he regarded as a niche business. Ever faster change within industries means that today the average company can expect to be a member of the Fortune 500 for just 15 years.
Certainly, more larger companies are already thinking like disruptors and start-ups. According to a recent poll by Mercer, an HR consultancy, 96% of C-suite respondents are planning to redesign their company with a focus on increasing productivity. Boards also see flattening structures as a key way to drive greater profitability and increase agility, Mercer’s research found.
However, the challenge with a less hierarchical structure is how to ensure that everyone knows where the company is going. Internal communication is usually simpler in companies that have smaller workforces and it’s often easier to align people when the founder of the company is still running it.
In order to allow disruption and innovation this communication is essential, according to Mercer’s findings. “Flatter structures make it even more important to have a clear vision and bring people along on the journey,” says the report. “In fact, when we asked employees what would help them thrive, ‘leaders who set a clear direction’ tied for the top spot alongside ‘fair and competitive compensation.’ This request signals a rising imperative to focus on vision and communication.”
Effective communication involves better connectivity. Again, in start-ups staff might be able to connect and cooperate simply by shouting across the office at each other or meeting in the kitchen. Larger companies need to connect teams that might not traditionally interact with each other. For example, people from finance could work more closely with product development or those from the HR department might develop joint projects with marketing.
To create new, disruptive products and whole business models, people working for large companies need to be able to put together new and disparate ideas, capabilities or technology. The companies that they work for need to allow them to think differently but to do so together.
Start-ups fail frequently and fail fast – bringing new products and services to markets to see if they will work rather than devoting too much time to development, market research and testing that they’re overtaken by competitors. Large corporations need to nurture this culture.
Rather than blaming and shaming those who have failed companies should allow others to learn from their experiences. But, at the same time, business leaders should be clear about what is acceptable as a failure and what isn’t. For example, failing because not enough thought and planning went into creating a product is not a good failure. Teams should learn how to avoid this type of failure.
Similarly, larger organisations that often have long reporting lines and those with a blame culture, need to allow staff more freedom. This involves giving greater autonomy to small teams and saying “yes” more often while accepting the risks that this entails. The default position should be that it’s OK to try something rather than holding back from doing it. This new approach means supporting rather than controlling staff through lighter, more hands-off structures.
Mercer reports that millennials and younger staff members expect to engage in life-long learning. To improve innovation and disruptive capabilities employees should be encouraged to put what they have learnt into practice as soon as possible. Companies also have to help staff to avoid deep seated biases and to be aware of thinking “But we’ve always done it this way.” This means that even the most junior person and the newest arrival in the company should feel that their input is valid.
People need to be ready to watch the competition more closely in order to be able to learn from competitors’ successes – and their mistakes. They should also listen more carefully to customers and their suppliers and make more an effort to listen to what they need from the company.
Looking at what works in other sectors and using lateral thinking and imagination to see if it can be applied to their own business will inspire innovation and disruption. Jeff Bezos reportedly got the idea for the Kindle from Napster and iTunes – if you can download music onto a device instead of buying a DVD, he reasoned, then why not download a book rather than going to the bookshop or waiting for it be delivered in the post?
Businesses can develop incubators with teams whose size, philosophy and working practices mirror start-ups. They also need to ensure that these incubators are fully integrated into the business, rather than being hidden away in a remote location so that they have all the resources they need and can share ideas with others. Business leaders need to celebrate innovation with successful case studies. It’s not enough to talk about innovation in general terms, they need to be able to use examples to celebrate it.
Accelerating change and disruption are here to stay. Companies such as Blockbuster, along with Kodak, HMV and Clinton’s cards bear witness to how even the best loved, most successful brands can find themselves on the wrong side of history. The challenge and the opportunity for other large companies is to ensure that they empower their staff to innovate and disrupt – before they’re disrupted.