Be a Disrupter (Before Someone Else Eats Your Lunch!)

Among the many newsletters I receive each day there was one that caught my eye this morning.  Freightwaves posted an article on Amazon, and how their ambitions on the supply chain should have logistics companies worried.  E-commerce has been steadily gaining market share from traditional brick and mortar retailers, now accounting for 9.5% of the entire US retail market.  Another article I read last night talked about how grocery stores are facing tighter margins, and reduced earnings because of things like Amazon buying Whole Foods and selling more groceries online as well as the rise of online services that make it easy for any small restaurant to allow for internet or app based ordering and pooled deliveries.  Millennials are just not buying cars the way other generations did, but they are more comfortable with the idea of ordering what they want from their phone.  Some traditional retailers are turning to offering delivery to meet this trend.  Some retailers will innovate, but others will follow in the fate of retailers like Sears, Toys R Us and Circuit City into massive store closures or bankruptcy.

Let’s face it, most of us are busy enough trying to meet our short to medium term business objectives.  Who has time to find the next big technology or trend in our industry? Besides, being the leader can be a risky thing.  It’s never fun to put your career on the line for a relatively untested idea. What if you guess wrong?  Why not let those small start-ups live on the bleeding edge while you sit back and wait to see what ideas gain traction?

We need to make sure that there is a culture of Intrapreneurship in our organizations.  We all have red tape and redundant processes that are “the way we have always done things”.   Our managers and staff need to be empowered to question those processes, and be encouraged to come up with alternatives that we support and allow to be experimented with.  I don’t mean letting them just try anything – customers can not be negatively impacted.  At the same time, front line managers must be given some leeway to green light ideas that can be quickly executed.  Nothing stifles creativity more than having a drawn-out process where all changes need to work their way up to senior management and then back down again.  Give your functional managers the ability to approve experiments within a reasonable boundary so that these trials can happen quickly.  Some projects will have impacts across the organization or be capital intensive enough that senior management needs to be involved but look at ways that the process can be shortened.  Smaller companies with a flatter structure will be acting on these sorts of ideas more quickly and start taking your customers away as a result.

Intrapreneurship needs to be something that we build into the recruiting process.  Offering the ability to create new businesses can give you a significant advantage when it comes to hiring the best and the brightest.  This is a strategy that companies like 3M and Google have used for years.  Offering the freedom to have ideas supported (and later rewarded) can provide a way to attract better new hires than just throwing more money at them.

One thing to keep in mind is most of these ideas and improvements will not be big, especially not at first.  How many start ups get to huge valuations within the first year?  Almost none of them!  And many that do become successful probably would not get approved in the typical corporate review process.  Think of many of the great baseball teams – how many of them rely solely on the home run to win pennants?  If that was the way to do it, then this year’s New York Yankees should be miles ahead in the AL East with their new incarnation of the Murderer’s Row.  Unfortunately for them, they are sitting 4.5 games back of the Red Sox.  You are going to get better results relying on small ball to get runs and then when a home run does come around it is just a bonus.  And don’t to try to force things.  In Thursday’s game between the Yankees and the Royals, veteran KC player Alex Gordon ignored the stop signal at third, tried to create a run and got gunned down at home for the final out of the game.  The same thing can happen to your business when it only tries for the next “big” thing.  The reality is that none of us know what that will be (and if you really do know what it is, why aren’t you already doing it?) Encourage those smaller improvements – streamline your billing process, find a way to do routing better.  Those smaller things will add to the bottom line and give you the resources to fund the big ones when they appear.  Besides, having several smaller bets means that failure on any one of them will not threaten your business but going all in on a potentially big one could.  At the end of the day, innovation is like portfolio theory.  By diversifying your holdings, you reduce the overall risk profile.  Most disrupters stated as a small idea that ended up growing beyond what it’s creator hoped for.  So, encourage that innovation within your company and pay attention to what’s going on around you.  That way you remain nimble enough that if someone else does start to eye your lunch you can create and implement solutions that allow you to remain differentiated from the rest of the market.  It’s not going to be easy to give up some of that control, but it will be significantly less painful to give it up on a small initiative than it would be to have to bring in something big because that’s the way the market has gone while you stood pat.

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