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Riding The Tides of Change

There are five disruptive forces that will reshape your industry in the next decade. Learn how to be innovative and exploit them to the advantage of your business.

Graeme Codrington

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The recent financial crisis caused more than just an economic downturn. Major shifts are taking place in almost every industry around the world as new rules for success and failure are written. History tells us that the major winners and losers of a recession actually emerge only in the aftermath of the downturn – as the upswing begins. We therefore need to prepare ourselves for a decade of turbulence as we live with the after-shocks of the “Great Recession”.

The most successful companies will be those that find ways to be strategically responsive. To do this, it is important that everyone – at every level in the organisation – has an understanding of the forces that shape the next decade. Only then can they contribute meaningfully to your company’s success. You can develop these insights through regular analysis of your environment and strategic conversations with all of the people throughout your organisation. Their understanding will help them buy into your vision and strategies. And it is also essential for problem solving, creativity, innovation and the proactive identification of opportunities and threats in your industry and marketplace. Here’s a helpful framework: consider, on an ongoing basis, five key disruptive forces that will reshape the world in the next decade. These are the tides of change. Use this framework on a regular basis in your team meetings and informal conversations to make sure that everyone is ready for the next few years of turbulent change. Let me explain. There are five tides of change, each one outlined below.

1. Technology

Continued increases in computing power and the rapid development of digital tools to enhance and simplify our lives will dominate the next decade. The workplace has never been so far behind the technology curve as it is now. When I first started work (at KPMG in the early 1990s), the office had the best technology (the latest computers, mainframes, fax machines, colour photocopiers and more). I arrived early and left the office late in order to spend more time on the Apple SE/30s KPMG Johannesburg had just purchased (they’d make good doorstops now). But today, instead of trying to take things out of the office, young people are desperate to smuggle technology into the workplace. They’re frustrated at the out-of-date hardware, old software and restrictive IT policies that characterise many office environments. Companies need to catch up quickly and take advantage of the most important technology trends for business in the next decade: social media, augmented reality and mobility.

Social Media
This is being driven not by teenagers who want to tell the world what they had for breakfast, but by our human desire to connect and interact. At last, computers have stopped creating space between us and are providing ways to connect us. This will change how you communicate – if your website is just a brochure and does not encourage interaction, feedback and conversation, you’ll be left behind. But it has even more potential to change your entire business structure, with collaboration at every level. For a detailed look at what social media might do to our industries, see http://tr.im/socialmedia2.

Augmented Reality
This is our ability to see the data associated with the physical objects around us. We’ll quickly get used to doing this, and your organisation could be left behind if you don’t make all the data anyone might like to see available to them in visually stunning ways.

Mobile Devices
And all of this will need to be done in such a way that it can be accessed and interacted with via mobile devices. Cloud computing will drive our ability to access any (and all) information anywhere, on any device or platform, all the time. In this world, geography counts for nothing and competition is everywhere. How mobile can your staff and customers be? How mobile is your offering? The next steps in the technology revolution are all about how we use technology to connect us and help us interact. Don’t be left behind.

2. Institutional Change

Almost every sector is in the midst of a period of disruptive change where the old rules for success don’t seem to hold true. This is because many industries are currently experiencing deep structural changes, including changes to the nature of relationships, the means of producing profit, how companies are structured internally, their risk profiles, where and how capital can be accessed, the basis for success – and failure, and the structure of the industry itself. Kenichi Ohmae foresaw this in his 2005 book The Next Global Stage: “Over the last two decades, the world has changed substantially. The economic, political, social, corporate, and personal rules that now apply bear scant relation to those applicable two decades ago. Different times require a different script.”

The key to understanding this disruptive trend is that we are finally being forced to deal with the implications of the shift from the industrial to the information age. We should not be surprised that it has taken nearly half a century for the implications of this transition to be fully felt. It took longer than that for the first motor vehicles and steam trains of the industrial revolution to mutate into the consumer economy epitomised by Henry Ford’s assembly line. By “institutional change” I mean that the very rules of an industry are changing. Most industries have these “rules” – the unwritten laws for success. It is inherited wisdom that everyone in the industry accepts as gospel. It’s hardly ever questioned. As we emerge from this recession I suggest two things:

  • That the rules have changed – not all of them, but enough of them to make your industry feel like an unfamiliar place
  • That competitors will question the rules and make changes that would have been unheard of just a few years ago. It would be better for you to be ahead of this curve, than behind it.

Each industry will be affected differently, but there is no doubt that institutional change requires new thinking from you and your team. Our default reaction to such seismic change is to protect ourselves. This will happen in your industry too. But now would be a good time to go against the flow, and question the assumptions that threaten to constrain you and your competitors.

3. Demographics

The third of the five tides of change is demographics. There are many trends we could consider as we look at the study of changing populations, but the most important ones that will impact business in the next three to five years are: an ageing population (and changes in retirement), rising life expectancy, plummeting fertility rates, the potential for generational conflict, migration and diversity.

We took nearly a century to reach one billion consumers (roughly defined as the middle class people around the world who have disposable income and can purchase appliances). It will take us less than a decade to grow that number by another billion (or more). And almost all of these new consumers will come from the developing world – they will have different mindsets, languages, cultures and worldviews. At the same time, the developed world will get older, and migration from rural areas to cities, and from poor, overcrowded countries to rich, ageing countries, will increase. This points to a very different looking world in ten years’ time. A key part of management’s role in the years ahead will be to manage conflict between competing worldviews and demographics, and to find ways to release the wealth locked up in true “mindset” diversity – in both staff and customer pools.

4. Environmental Issues

You can’t walk past a newsstand these days without a host of magazine covers shouting something “green” at you. More often than not, it seems the articles are trying to fuel debates about whether climate change is happening or not. But, regardless of what you or I think about these issues, the governments of the world have made up their minds and are instituting policies and programmes to deal with carbon emissions and energy usage.

Energy will cost more, and therefore so will transport. Input costs will rise. Money will be made – and lost – in carbon trading schemes. But it’s more than just global warming we need to be worried about. As James Martin points out in his excellent book, The Meaning of the 21st Century, there are at least 16 major issues facing the world in the next few decades – each one of which could ruin the planet and change life on earth forever. These include pollution, extreme poverty, pandemics, runaway computer intelligence, dwindling water and food supplies, increasing violence and weapons of mass destruction, and more. Not only must you consider the possible threats of these issues to your business in the next decade, but you should also anticipate where potential opportunities will emerge for you. With activists and ethical consumers becoming ever more vocal, this issue has game changing potential in the next decade.

5. Shifting Social Values

If the previous four trends are changing the world as I have suggested, then it should not be surprising that people’s values, their dreams and aspirations, their expectations of what a good life looks like, their desires for their lives, work, families and careers are all changing, too. Many companies are hoping that we will soon get “back to normal”, but it isn’t going to happen.

The downturn has been more than economic – it has served to catalyse many social, political and values changes that had already been underway, and will now change the world forever.You need to consider how your staff, customers and business partners have changed their own expectations – not just in relation to you and your offerings, but to their entire lives and how what you do for them fits into these. This trend has the most potential to surprise you. Therefore, it is also the key to gaining access to the hearts and souls of your stakeholders – and that’s where the new sustainable competitive advantage in your industry is to be found.

Facing the Future

It’s not just the short-term challenges caused by the recent economic difficulties that have made business more complicated. Over a period of time, competition, the speed of change, globalisation and the technology that we’ve implemented have simply led to greater complexity. One of the ways that businesses have responded is to reduce layers of management and bureaucracy, passing responsibility and authority further down the line into our organisations. We thus expect people at all levels to act with the type of understanding, critical thinking, initiative, agility and responsibility that just a decade or so ago were largely reserved for people in the executive suite.

To be successful in the coming decade of turbulence and opportunity will require the involvement and commitment of everyone throughout your organisation. Nothing can guarantee your success. But by using the tides of change framework to guide your formal meetings and informal conversations, and to help focus your team on the forces that will disrupt your industry and change your market considerably, you can be off to a great start. The point is to make the most of turbulent times.

Dr Graeme Codrington is a presenter, author and future trends analyst at TomorrowToday, a global strategy consultancy. He helps companies make the most of their multi-generational workforces. He speaks internationally to over 100 000 people every year and was recently voted 'Speaker of the Year' by the Academy for Chief Executives.

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Innovation

3 Strategies To Implement A Culture Of Innovation In Your Business (Without Blowing Billions)

Learn to think differently, encourage your team to do the same, and innovative disruption could become a part of your company’s DNA.

Douglas Kruger

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You’re seeing it everywhere. Disruptive innovation is becoming the new norm, and you’re concerned that your business is merely going through the motions, missing opportunities.

How can you join the Elon Musks of the world, without the corresponding bulging budget?

It turns out that many of the techniques of today’s top innovators don’t require vast outlay. They’re simply about different ways of thinking.

Here are three strategies for enhancing the culture of innovation in your organisation without blowing billions.

1Use ‘Ignorance as strategy’

You’ve encountered the aphorism, ‘To a man with a hammer, everything looks like a nail.’ Similarly, to a banker, the only imaginable approach to banking is ‘the way banking has always been done’. When bankers try to think of innovative new ways of banking, they invariably think of greater complexity.

Along came PayPal

In the April 2016 edition of Harvard Business Review, Reid Hoffman, one of the founders of PayPal, said, ‘All the banking people knew the rules. That prevented them from trying anything that looked remotely like PayPal.’

PayPal was not invented by a bank, just as Uber was not invented by a taxi driver.

Related: Demanding Customers Are The Ones Who Motivate Innovation

To make use of ‘ignorance as strategy,’ try this. Gather a group of strategic thinkers and set the rule: ‘The old way of doing it has been outlawed. How else might we serve the same need?’

Or: ‘We are now our competitors. We have half the budget, but our hearts and souls are invested in one purpose: To topple the original company. We can’t do it the way they do it. So how could we go about it?’

Or: ‘The company has burnt to the ground. We’ve lost everything. We need to keep serving our customers but we need a new, cheap, fast way to do it right now that doesn’t rely on any equipment or systems we used before. What have you got?’

2Use commander’s intent

military-commander

Imagine: You’re a military commander. You need to move a convoy of trucks through a dangerous canyon. Your intelligence tells you that there is a sniper on one of the escarpments.

There are two ways you could issue an instruction to a soldier:

The first way: ‘Go take out that sniper.’

That’s very clear, and very good. But there’s something surprisingly important missing from it. The ‘why’ is not overtly stated, and for that reason, the mission could actually fail.

Let’s try it again the second way: ‘Go take out that sniper because we need to ensure safe passage through the canyon for our convoy.’

That may sound like a ridiculously obvious addition. Here is why it’s not: In a real, dynamic scenario, things change constantly.

Let’s say your soldier breaks off from the convoy and heads up into the mountains. Very quickly, three things go wrong:

  1. He can’t find the sniper
  2. Enemy forces start firing at him, making it difficult to look for the sniper
  3. His own weapon fails to fire so that he can’t shoot back.

If our soldier thinks only about the literal instruction — ‘shoot the sniper’ — he is now unable to carry it out. But if he bases his actions on the commander’s intention — ‘secure our convoy’ — other options open up to him.

Related: Reel Gardening Warns That Innovation Is Never Easy

He might draw their fire. He might set a bushfire. Or he might cause a commotion in a different canyon, disguising the movements of his convoy. He might, he might, he might… But only if he is absolutely clear on Commander’s Intent, and not working according to an explicit tasked item only.

Managers love to create detailed rules and procedures. But these can actually stifle innovation. Commander’s Intent is the life hack by which we get the upper hand again, freeing up leeway for creative potential.

3Instead of rules: Imaginative debate

Organisations accumulate rules over time. Problematically, rules can become a form of culture. And there is a better way.

When NASA faced two separate, well-known challenges, their culture at each stage was very different.

In 1970, Apollo 13 was two days into its mission when an explosion knocked out one of their oxygen tanks. The ensuing creative scramble to get the astronauts safely home is the stuff of legend. The creative trial and experimentation that went into rescuing them was formidable. New procedures were made up back on earth, then tested in the simulator, then relayed to the astronauts 200 000 miles away, almost in real-time.

Through this process of creative trial and experimentation, of collaborative inter-disciplinary debate, one by one the issues were resolved and the crew was brought home safely.

At this point in time, NASA’s culture was ruled by imaginative debate. It was an exploratory culture, an experimenting culture, a culture based on learning and evolution.

By contrast, at the time of the Columbia disaster of 2003, the culture of experimentation had given way to one of formalised rules, regimented procedures and rigid hierarchy. NASA had stopped being a learning organisation. It had become a bureaucracy instead.

As Columbia re-entered the earth’s atmosphere, a large piece of foam fell from the shuttle’s external tank and broke the wing of the spacecraft. The shuttle broke into pieces. NASA recovered 84 000 pieces from a debris field of over 2 000 square miles.

The investigation revealed some damning insights about the culture that led to the problem.

Related: Howard Blake Stays Hungry With His Innovation Strategy

During a post-launch review, a group of engineers actually saw this foam dislodge from the rocket. They tried to pass on this information. NASA’s management, which by this stage liked to manage everything ‘by the rules’, had seen dislodged foam before, and, according to their institutionalised perceptions, deemed it to be unimportant.

The engineers tried to argue that it seemed like a lot more foam than usual. It was a qualitative argument, based on human insight and intelligence. But NASA was unable to listen. Dislodging foam was a known quantity, and the voices of dissenters went unheeded.

NASA by this stage was so bound in rules and procedures that, in important ways, it had ceased to be a learning, experimenting culture. And that made it incapable of hearing an idea, to its great detriment.

Situational awareness

Imaginative debate allows situational awareness to pass up and down the chain of command. It promotes the opportunity to see innovation possibilities. It shows up problems that fall outside of the capacity of norms and guidelines.

The Israeli Defence Force uses an examination of these two cultures within NASA as a way of perpetuating a learning culture within its own organisation. In Start-Up Nation, Israeli air-force pilot Tal Keinan is quoted as saying that if NASA had stuck to their experimental culture, the way his own air force and military do, they would have identified and seriously debated the foam strikes at the daily debrief.

Debating everything isn’t tedious. It’s illuminating.

Putting rules in place of debate isn’t clarifying. It’s dulling.

Rigid rules enforced by unlearning authority are a recipe for real danger. The use of strenuous debate helps to overcome these blind spots.

Cultures of learning are far more idea-friendly than bureaucracies. And it costs nothing to become one. Merely a little willingness.

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Innovation

To Have An Innovative Company, Let Your Employees Take The Reins

‘In order to clean, they need to get messy,’ serial entrepreneur Justin Klosky tells Entrepreneur’s editor-in-chief Jason Feifer.

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Related: Demanding Customers Are The Ones Who Motivate Innovation

An innovative company starts with an innovative team. And what’s the best way to innovate? Give your employees the freedom to run with their own ideas, then manage the chaos later. At least that’s what Reid Hoffman believes.

“If you want your company to innovate, your job is to manage the chaos,” says the co-founder of LinkedIn, partner at VC firm Greylock and host of Masters of Scale, a podcast series examining counterintuitive theories to growing a company.

Hoffman’s theory doesn’t seem too far-fetched either. In fact, he’s not the only person who thinks giving employees the freedom to think and create on their own triggers innovation.

“When [people] have that ability to explore and innovate without the pressure of failing, you’re setting yourself up for a ‘win’ situation, because you’re going to get the best out of somebody,” Justin Klosky, founder of professional organizing company O.C.D. Experience, tells Entrepreneur’s editor-in-chief, Jason Feifer, in a video.

Although, when you’re empowering employees with this much freedom, you’ve got to be hiring people you trust. This can be easier said than done. Rather than dissecting a person’s resume, Klosky recommends digging deeper and asking prospective employees questions that will really open them up – anything from who they are, where they’re going and what brought them here.

Related: Beyond Innovation – it’s Innovation Velocity That Really Matters…

After you’ve hired a group of honest, intelligent employees, now what? Don’t tell them how to innovate. Instead, let them figure that out on their own. Allow employees to do what they do best, return to you with their results and from there manage the chaos.

“In order to clean, they need to get messy,” says Klosky.

For more insights and advice about managing an innovative culture, check out the video.

This article was originally posted here on Entrepreneur.com.

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Innovation

Do You Know How To Stay Relevant?

In this tough economic climate, you need to start focusing on business areas you can control. The ability to stay agile and relevant is in your hands.

Ed Hatton

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We have seen huge changes in South Africa recently. Just five years ago, we had a thriving platinum mining sector, good exports of commodities, no e-tolls, a rand dollar rate of better than 8:1 and peaceful universities.

All that has changed, with a significant effect on our SME sector. Imports cost more, finance is expensive and socio-political and labour issues disrupt business frequently.

Customers have changed too; many buyers now complete over 60% of the sale by Internet research. They make comparisons, shortlist potential suppliers and only ask for quotations when they are close to deciding on their supplier.

You could’ve fallen off the shortlist and didn’t even know it

Your company could have been a potential supplier and then fallen off the shortlist without you ever knowing about the lost opportunity. Customers no longer rely on sales staff to provide information about products and applications, and even the least tech-savvy customer checks prices and specifications online.

24/7 availability is now expected, and long delivery times become unacceptable. Customers assume you will be able to slot in unplanned orders efficiently. Loyalty is no longer a given; buyers will move to suppliers who provide better value, even if that supplier is overseas.

Related: 10 Steps For All-Around Optimising Your Business

Lead through quality

Entrepreneurs should recognise that the way we have done business in the past might need modification; there is a risk of being overtaken by more agile competitors. Uber, Airbnb and Netflix are great examples of competitors changing the rules.

What is happening in your markets? What are your competitors doing? Do not just accept feedback from your staff — they are also in their comfort zones. Research competitors and new technologies; ask customers what they would like to see you change.

If you make a decision to update your business, there are several areas you could focus on to build a more agile business that gives better value for money. Technology, quality, customer service, IT, Internet presence, continuous learning and strategy review are among those. A few of the vital ones include:

  • Use available technology. Check prices and terms from alternate suppliers, investigate IT solutions to provide flexible manufacturing systems, optimise inventory and give better response times for customer enquiries.

A good CRM system can track complaints, give basic data to spot new market trends and identify customers starting to move away from you. Develop apps to improve customer convenience or optimise sales calls.

Related: When Innovating Beware The Blindspots

  • Increase quality in all respects, from your products to the accuracy of your invoices. Spend money on quality systems and business processes. You will get it all back in direct and indirect savings by having less comebacks of all types. Better quality in all respects increases your value proposition, and helps to justify your price.

Embrace agility

Overhaul your customer service. Set improvement targets for order fulfilment, right first time repairs, shorter lead times, more convenient customer interfaces and all the other elements of great customer service. Then put plans in place and implement them. Financial returns will follow.

You need an effective and integrated Internet presence, with rich content, which means useful short pieces, not lots of content. Your social media presence must be integrated and support your brand and value proposition. Do not follow trends blindly because everyone thinks they are cool.

Revisit your strategy

Your company must be agile enough to change strategies and tactics to take advantage of market and competitor changes, rather than seeing them as threats. An outside facilitator helps.

All of this sounds like a lot of work and expense, but right now you may be using large chunks of time and money fixing errors, working around old systems, losing customers you should not lose and not getting new customers you should get. Stop all that and you will have time and money to create the new agile and informed company you could be, and stay relevant in your markets.

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