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The Paradox of Disruption - CMA B2B Innovation Conference

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Bo Pelech
Bo Pelech

The Paradox of Disruption as presented at CMA B2B Innovation Conference Toronto Nov 12, 2014 by Bo Pelech and Grayson Bass of the Mayor Wilson D-Institute Initiative at Rotman. Audio available at http://bit.ly/1s666L1

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! Disruptive Innovation: The Paradox of Disruption
! POWER AND CONTROL THE WHOLE HISTORY OF ORGANIZATION AND MANAGEMENT THEORY IS BASED ON THE IDEA THAT IT IS POSSIBLE TO ORGANIZE, PREDICT, AND CONTROL.
! DIALECTICAL OPPOSITES Innovate Avoid Mistakes Think Long Term Deliver Results Now Cut Costs Increase Moral Reduce Staff Improve Teamwork Be Flexible Respect the Rules Collaborate Compete Decentralize Retain Control Maintain Focus Be Opportunistic Low Costs High Quality
–Ben Horowitz “By definition they are not obvious. In fact, they seem insane. If they didn’t seem insane at the time, they wouldn’t be breakthroughs” Source: http://ilovefaygoslushies.deviantart.com/art/Insane-Base-415796210
PETER DRUCKER, “BECAUSE THE PURPOSE OF BUSINESS IS TO CREATE A CUSTOMER, THE BUSINESS ENTERPRISE HAS TWO – AND ONLY TWO – BASIC FUNCTIONS: MARKETING AND INNOVATION. MARKETING AND INNOVATION PRODUCE RESULTS; ALL THE REST ARE COSTS.”
"What new and different things do we have to do, and when?" –Peter Drucker
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption Disruptive Innovation 80% Sustaining Innovation Disruptive Innovation 20% New Markets /! New Revenue! Optimizing ! Existing Markets / ! Revenue Streams! New Markets /! New Revenue!
! “SO ASK YOURSELF THREE QUESTIONS.” ! WHAT KIND OF INNOVATION DO I WANT? ! HOW MUCH INNOVATION DO I WANT? ! WHEN DO I WANT IT?
“FINANCIAL MIS-DIRECTION” Projected cash stream from investing in Innovation & Marketing More likely cash stream resulting from doing nothing DCF and NPV methodologies implicitly make this comparison Companies should be making this comparison B Assumed cash stream resulting from doing nothing A C
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! ELASTIC ! • FLUIDITY TO ADAPT AND RESPOND http://www.bluefinsolutions.com/Bluefin/media/Bluefin/PDFS/Bluefin-Solutions-Elastic-Innovation-Index-2014-Global-top-50-most-innovative-companies-(2).pdf! ! • ABILITY TO CREATE DEMAND
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ELASTIC Adaptive Cloud Infrastructure and Device Centric Developer-centric / Computational Ideas Economy Radical Adjacencies Social Communications Ecosystems Mass Differentiation Creative Independent Talent Continuous Strategy Multiple Options Management http://www.bluefinsolutions.com/Bluefin/media/Bluefin/PDFS/Bluefin-Solutions-Elastic-Innovation-Index-2014-Global-top-50-most-innovative-companies-(2).pdf!
ARIE DE GEUS, “RESILIENT, LONG-LIVED COMPANIES ARE THOSE THAT EXHIBIT CERTAIN OF THE BEHAVIOURS AND CHARACTERISTICS OF LIVING ENTITIES.” ✤ Strong sense of community and collective identity around a set of common values ✤ Community where all members know that they will be supported in their endeavors to achieve their own goals – as well as the global goals of the community ✤ Openness to the outside world, tolerance for the entry of new individuals and ideas – in essence a manifest ability to learn and adapt to new circumstances
A “ THOSE THAT EXHIBIT CERTAIN OF THE BEHAVIOURS AND CHARACTERISTICS OF LIVING ENTITIES ! “INNOVATE OR DIE”
! EXPERIENTIAL WORKSHOPS WHERE YOU CAN PRACTICE “DOING DIFFERENT”
! THE LEARNING & INNOVATION LOOP Directional Knowledge Identity & Motivation Conceptual Knowledge Understanding & Organization Experiential Knowledge Skills & Awareness Source: Knowledge System (Artistry Unleashed - Hilary Austen) Mastery: Applying Developed Knowledge Recognition, Effectiveness, Expertise, Purpose, Focus Guides Guides Informs Informs Originality: Generating New Knowledge Perception, Creativity, Innovation, Flexibility, Openness
! WE HAVE ALREADY MOVED FROM MANAGEMENT TO LEADERSHIP – AND NOW WE’RE GOING BEYOND LEADERSHIP TO INSPIRATION… ! LEADERS MUST HELP PEOPLE ACCESS THEIR SOURCES OF INSPIRATION, INTUITION AND IMAGINATION… ! TO FACILITATE SO THAT MY TEAM CAN SENSE AND SEIZE EMERGING OPPORTUNITIES AS THEY ARISE IN TODAY’S FAST PACED ENVIRONMENT
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption Drucker 7-Sources Christensen Disruption The Unexpected Success Failure Outside Event (Eureka Moment !) Incongruity in Reality Asymmetry in Experience Innovation on Process Need Bridging a Gap Change in Market Structure Demographics Changes in Perception Society Bites Back New Knowledge What: 1) Simpler, Cheaper, & Good Enough ! 2) Micro-Market Underserved & Uncontested ! How: 1) Job-to-be-Done 2) Combinatory 3) Adjacencies 4) Trade-offs !
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption Christensen Horowitz
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Customers Refusing Soon to be Non-­‐Customers Non-­‐Customers Unexplored Non-­‐Customers
TOGETHER OBptEim OizPaEtNio nA N D SLuISsTtaEinNing Breakthrough Disruption Optimize Differentiate Value Prop. ! Customers Refusing Soon to be Non-­‐Customers Non-­‐Customers Unexplored Non-­‐Customers 20% 80% Problems, Needs, & Use Cases Degrees of Doing Things Differently
! MARKETING MIS-DIRECTION
PROUST ““THE REAL ACT OF DISCOVERY CONSISTS NOT IN FINDING NEW LANDS, BUT IN SEEING WITH NEW EYES” ! WHAT BUSINESS ARE WE IN AND IS IT THE RIGHT BUSINESS?! ! CAN WE CREATE FUNDAMENTALLY NEW PRODUCTS AND SERVICES?! ! CAN WE REDEFINE THE BOUNDARIES BETWEEN DIFFERENT INDUSTRIES AND SERVICES SO THAT NEW NICHES EMERGE? ! ! CAN WE STRUCTURE OUR ORGANIZATION AROUND BUSINESS PROCESSES THAT REFLECT A CUSTOMER VIEWPOINT RATHER THAN THE INFLUENCE OF TRADITIONAL DEPARTMENTAL STRUCTURES?! ! CAN WE REDESIGN BUSINESS PROCESSES IN A WAY THAT WILL INCREASE THE QUALITY OF PRODUCTION AND REDUCE COSTS?! ! CAN WE REPLACE OUR ORGANIZATIONAL HIERARCHY WITH A NETWORK OF SELF-ARRANGED TEAMS?!
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption Sustaining Innovation Problem is Understood! Existing Market (red ocean) Improves Performance Lowers Cost ! Incremental Change! Customer is Known! Market is Predictable! Traditional Business Model! Talk to Mainstream! Market Research! Disruptive Innovation Problem is Undefined New Market (blue ocean) Innovation is a dramatic game changer Customer doesn’t know Market is Unpredictable Traditional Models Fail Talk to Early Adopter Customer Development Gaps/Biases Overshoot in Sustaining Innovation ! Status Quo / Extrapolated Financial Forecasts ! Understated / Invisible Threats ! Commitment to Sunk Costs ! Lack of empathy
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption More Options & Possibilities Order Chaos More Insights & Patterns
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption Launch180: GTA Incubator/Accelerator
! INNOVATION CHALLENGES ! FOOD AND NUTRITION BEHAVIOUR ! SENIORS AGING AT HOME ! AFFORDABLE / SOCIAL HOUSING ! EARLY CHILDHOOD DEVELOPMENT ! EXPERIENTIAL EDUCATION ! INNOVATION & INCUBATION ! HACKING TRADITIONAL MEDIA ! LEADERSHIP & CULTURE
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers SOLUTION UNINTENDED CONSEQUENCE
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers SPECIALIST GENERALIST
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers EXPERT CROWD
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers FINITE INFINITE
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers REALITY PERCEPTION
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers FIXED CAPITAL HUMAN CAPITAL
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers INFORMATION KNOWLEDGE
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers PLANNED SURPRISE
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers COMPLICATE COMPLEX
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers BIG DATA STORIES EMPATHY
TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers ARROGANCE EXPERIMENTS
LIBERTÉ ÉGALITÉ
LIBERTÉ ÉGALITÉ FRATERNITÉ
LIBERTÉ, ÉGALITÉ, FRATERNITÉ
THANK YOU

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The Paradox of Disruption - CMA B2B Innovation Conference

  • 1. ! Disruptive Innovation: The Paradox of Disruption
  • 2. ! POWER AND CONTROL THE WHOLE HISTORY OF ORGANIZATION AND MANAGEMENT THEORY IS BASED ON THE IDEA THAT IT IS POSSIBLE TO ORGANIZE, PREDICT, AND CONTROL.
  • 3. ! DIALECTICAL OPPOSITES Innovate Avoid Mistakes Think Long Term Deliver Results Now Cut Costs Increase Moral Reduce Staff Improve Teamwork Be Flexible Respect the Rules Collaborate Compete Decentralize Retain Control Maintain Focus Be Opportunistic Low Costs High Quality
  • 4. –Ben Horowitz “By definition they are not obvious. In fact, they seem insane. If they didn’t seem insane at the time, they wouldn’t be breakthroughs” Source: http://ilovefaygoslushies.deviantart.com/art/Insane-Base-415796210
  • 5. PETER DRUCKER, “BECAUSE THE PURPOSE OF BUSINESS IS TO CREATE A CUSTOMER, THE BUSINESS ENTERPRISE HAS TWO – AND ONLY TWO – BASIC FUNCTIONS: MARKETING AND INNOVATION. MARKETING AND INNOVATION PRODUCE RESULTS; ALL THE REST ARE COSTS.”
  • 6. "What new and different things do we have to do, and when?" –Peter Drucker
  • 7. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption Disruptive Innovation 80% Sustaining Innovation Disruptive Innovation 20% New Markets /! New Revenue! Optimizing ! Existing Markets / ! Revenue Streams! New Markets /! New Revenue!
  • 8. ! “SO ASK YOURSELF THREE QUESTIONS.” ! WHAT KIND OF INNOVATION DO I WANT? ! HOW MUCH INNOVATION DO I WANT? ! WHEN DO I WANT IT?
  • 9. “FINANCIAL MIS-DIRECTION” Projected cash stream from investing in Innovation & Marketing More likely cash stream resulting from doing nothing DCF and NPV methodologies implicitly make this comparison Companies should be making this comparison B Assumed cash stream resulting from doing nothing A C
  • 10. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! ELASTIC ! • FLUIDITY TO ADAPT AND RESPOND http://www.bluefinsolutions.com/Bluefin/media/Bluefin/PDFS/Bluefin-Solutions-Elastic-Innovation-Index-2014-Global-top-50-most-innovative-companies-(2).pdf! ! • ABILITY TO CREATE DEMAND
  • 11. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ELASTIC Adaptive Cloud Infrastructure and Device Centric Developer-centric / Computational Ideas Economy Radical Adjacencies Social Communications Ecosystems Mass Differentiation Creative Independent Talent Continuous Strategy Multiple Options Management http://www.bluefinsolutions.com/Bluefin/media/Bluefin/PDFS/Bluefin-Solutions-Elastic-Innovation-Index-2014-Global-top-50-most-innovative-companies-(2).pdf!
  • 12. ARIE DE GEUS, “RESILIENT, LONG-LIVED COMPANIES ARE THOSE THAT EXHIBIT CERTAIN OF THE BEHAVIOURS AND CHARACTERISTICS OF LIVING ENTITIES.” ✤ Strong sense of community and collective identity around a set of common values ✤ Community where all members know that they will be supported in their endeavors to achieve their own goals – as well as the global goals of the community ✤ Openness to the outside world, tolerance for the entry of new individuals and ideas – in essence a manifest ability to learn and adapt to new circumstances
  • 13. A “ THOSE THAT EXHIBIT CERTAIN OF THE BEHAVIOURS AND CHARACTERISTICS OF LIVING ENTITIES ! “INNOVATE OR DIE”
  • 14. ! EXPERIENTIAL WORKSHOPS WHERE YOU CAN PRACTICE “DOING DIFFERENT”
  • 15. ! THE LEARNING & INNOVATION LOOP Directional Knowledge Identity & Motivation Conceptual Knowledge Understanding & Organization Experiential Knowledge Skills & Awareness Source: Knowledge System (Artistry Unleashed - Hilary Austen) Mastery: Applying Developed Knowledge Recognition, Effectiveness, Expertise, Purpose, Focus Guides Guides Informs Informs Originality: Generating New Knowledge Perception, Creativity, Innovation, Flexibility, Openness
  • 16. ! WE HAVE ALREADY MOVED FROM MANAGEMENT TO LEADERSHIP – AND NOW WE’RE GOING BEYOND LEADERSHIP TO INSPIRATION… ! LEADERS MUST HELP PEOPLE ACCESS THEIR SOURCES OF INSPIRATION, INTUITION AND IMAGINATION… ! TO FACILITATE SO THAT MY TEAM CAN SENSE AND SEIZE EMERGING OPPORTUNITIES AS THEY ARISE IN TODAY’S FAST PACED ENVIRONMENT
  • 17. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption Drucker 7-Sources Christensen Disruption The Unexpected Success Failure Outside Event (Eureka Moment !) Incongruity in Reality Asymmetry in Experience Innovation on Process Need Bridging a Gap Change in Market Structure Demographics Changes in Perception Society Bites Back New Knowledge What: 1) Simpler, Cheaper, & Good Enough ! 2) Micro-Market Underserved & Uncontested ! How: 1) Job-to-be-Done 2) Combinatory 3) Adjacencies 4) Trade-offs !
  • 18. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption Christensen Horowitz
  • 19. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Customers Refusing Soon to be Non-­‐Customers Non-­‐Customers Unexplored Non-­‐Customers
  • 20. TOGETHER OBptEim OizPaEtNio nA N D SLuISsTtaEinNing Breakthrough Disruption Optimize Differentiate Value Prop. ! Customers Refusing Soon to be Non-­‐Customers Non-­‐Customers Unexplored Non-­‐Customers 20% 80% Problems, Needs, & Use Cases Degrees of Doing Things Differently
  • 22. PROUST ““THE REAL ACT OF DISCOVERY CONSISTS NOT IN FINDING NEW LANDS, BUT IN SEEING WITH NEW EYES” ! WHAT BUSINESS ARE WE IN AND IS IT THE RIGHT BUSINESS?! ! CAN WE CREATE FUNDAMENTALLY NEW PRODUCTS AND SERVICES?! ! CAN WE REDEFINE THE BOUNDARIES BETWEEN DIFFERENT INDUSTRIES AND SERVICES SO THAT NEW NICHES EMERGE? ! ! CAN WE STRUCTURE OUR ORGANIZATION AROUND BUSINESS PROCESSES THAT REFLECT A CUSTOMER VIEWPOINT RATHER THAN THE INFLUENCE OF TRADITIONAL DEPARTMENTAL STRUCTURES?! ! CAN WE REDESIGN BUSINESS PROCESSES IN A WAY THAT WILL INCREASE THE QUALITY OF PRODUCTION AND REDUCE COSTS?! ! CAN WE REPLACE OUR ORGANIZATIONAL HIERARCHY WITH A NETWORK OF SELF-ARRANGED TEAMS?!
  • 23. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption Sustaining Innovation Problem is Understood! Existing Market (red ocean) Improves Performance Lowers Cost ! Incremental Change! Customer is Known! Market is Predictable! Traditional Business Model! Talk to Mainstream! Market Research! Disruptive Innovation Problem is Undefined New Market (blue ocean) Innovation is a dramatic game changer Customer doesn’t know Market is Unpredictable Traditional Models Fail Talk to Early Adopter Customer Development Gaps/Biases Overshoot in Sustaining Innovation ! Status Quo / Extrapolated Financial Forecasts ! Understated / Invisible Threats ! Commitment to Sunk Costs ! Lack of empathy
  • 24. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption More Options & Possibilities Order Chaos More Insights & Patterns
  • 25. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption Launch180: GTA Incubator/Accelerator
  • 26. ! INNOVATION CHALLENGES ! FOOD AND NUTRITION BEHAVIOUR ! SENIORS AGING AT HOME ! AFFORDABLE / SOCIAL HOUSING ! EARLY CHILDHOOD DEVELOPMENT ! EXPERIENTIAL EDUCATION ! INNOVATION & INCUBATION ! HACKING TRADITIONAL MEDIA ! LEADERSHIP & CULTURE
  • 27. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers SOLUTION UNINTENDED CONSEQUENCE
  • 28. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers SPECIALIST GENERALIST
  • 29. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers EXPERT CROWD
  • 30. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers FINITE INFINITE
  • 31. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers REALITY PERCEPTION
  • 32. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers FIXED CAPITAL HUMAN CAPITAL
  • 33. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers INFORMATION KNOWLEDGE
  • 34. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers PLANNED SURPRISE
  • 35. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers COMPLICATE COMPLEX
  • 36. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers BIG DATA STORIES EMPATHY
  • 37. TOGETHER OptBimE iOzaPtEioNn A N DS uLsItSaTinEiNng Breakthrough Disruption ! Soon to be Refusing Non-­‐Customers Unexplored Non-­‐Customers ARROGANCE EXPERIMENTS