That we are in a huge era of change and disruption is a given. And there is no argument that creativity, innovation and talent are table stakes to survive and win. However, winning need not be a zero-sum game as Agility Update May finds. Our first article examines the root cause of disruption, and the second explores non-disruptive creation. The final article looks at how one company, IBM, re-imagined its performance management system to unlock its people potential. The message for May is clearly: Challenge your mindsets.
It’s not technology. Harvard Business School professor Thales Teixeira says it’s the customer. After eight years of researching startups, tech companies and incumbents, Professor Teixeira found that the changing needs, wants and behaviours of customers are the root cause of the huge shift away from large retailers into other startups and other online retailers.
Startups disrupt established companies by decoupling the customer value chain — picking one aspect of the business and doing it better than the incumbent to save the customer money, time or effort. An example is Uber, which in its early pre-automated days consisted of Uber employees who picked up the phone or looked at the text message and tried to call car operators to send a car your way. Uber customers saved money on cheaper rides, time and effort on securing a taxi, and better customer service.
Another finding is the domino effect across industries e.g. people who start buying on Amazon, using an Amazon app, are more likely to sign up for Uber; and those who are buying on Amazon and using Uber are more likely to sign up for and use Airbnb.
For incumbents, Professor Teixeira’s advice is to:
IBM’s research showed that between 90 and 97 per cent of the time, executives focus their time and efforts on their own industry; looking at partnerships, analysis, reports and therefore never see a wave of disruption that blankets multiple markets.
Professor Teixeira suggests executives examine seven industries to identify new waves of disruption. These are industries that provide products and services around basically what you eat, how you transport yourself, what you wear, how you educate yourself, how you entertain yourself, how you heal yourself or health care, and how you live. Read the Knowledge@Wharton article here or Professor Teixeira’s new book Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption.
Many companies are stuck in the mindset that in order to create you must disrupt or destroy. In contrast, research and analysis by INSEAD over the last three decades suggest that non-disruptive creation that broadens thinking about what’s possible generates new – not cannibalised – demand that expands the market for all. Contrast, for example online crowdfunding platform Kickstarter which estimates that as of 2016 the projects generated on its platform had created over 300,000 part- and full-time jobs and 8,800 new companies and non-profits, producing more than US$5.3 billion in economic impact for creators and their communities versus Kodak’s bankruptcy that cost 55,000 well-paid jobs just in one city, Rochester, New York.
Research shows that successful non-disruptive creators think about innovation in a distinctive way and follow three fundamental steps:
INSEAD’s research has also uncovered numerous areas ripe for non-disruptive creation using the three steps above. Many are in the social and human economy including mental and emotional wellness, cybersecurity, privacy, upskilling people most likely to be replaced by smart machines and meeting the needs of those at the bottom of the financial pyramid.
Click here for examples of the positive-sum approach of non-disruptive creation. Read also Strategy+Business article In Search of Ingenuity and explore the companies that senior-level executives surveyed by Boston Consulting Group ranked as the most innovative in this interactive guide.
This is a key article for any business leader whose organisational performance management system (PMS) follows a traditional approach that revolve around year-long cycles, ratings, and annual reviews. This is a case study of how IBM made a bold move in 2015 to re-imagine its PMS and – with crowdsourced feedback from its workforce – built a model that favours speed and innovation and cultivates a high-performance culture to match the new, reinvented IBM. In contrast to traditional PMS, the new system featured:
Launched in 2016, the new and more agile system named Checkpoint allows IBMers to revise their goals throughout the year. In response to crowdsourced input during the design process, employees are assessed according to their business results, impact on client success, innovation, personal responsibility to others, and skills. Managers are held accountable through pulse and mini-pulse surveys of the people they oversee, with poor results leading to training or, in some cases, removal from management.
Going further, IBM incorporated Watson, its supercomputer that combines artificial intelligence (AI) and sophisticated analytical software, to offer its workforce a personalised learning platform and a personalised digital career adviser. And IBM went further still to figure out how to use all the insights it was developing from its analytics and AI capabilities to ensure that useful insights could be accessible to both HR and the workforce. Results included both predictive and prescriptive insights to boost HR talent management capabilities. Going forward, it is anticipated that such insights could be transmitted directly to managers and employees at the moment they’re needed most, embedded in the workflow.
Concrete benefits have already resulted, including a 20 percent rise in employee engagement, nearly US$300 million saved via improved employee retention, and US$107 million from an upskilled HR team that not only reports but is able to predict and also prescribe recommended actions and solutions. Read the case study here.
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