Transcript

Disruption's call for action | Shahar Larry | TEDxINSEAD

in april two thousand and eight former nokia CEO called the iphone a niche product this is about a year after the iphone launched the headlines in the newspaper weren't nokia CEO is crazy or blind you know why and during that time nokia was selling more phones every week then apple had sold in the year since it launched the iphone i remember a few years ago whether my friends started talking about bit forget about talking when they started buying and selling Bitcoin I thought to myself they're crazy Bitcoin it has no intrinsic value not true neither does any of our paper money but still isn't that the money they use the geeks used to buy drugs blockchain I never heard of it about a month ago I read that the hotel industry is still debating whether or not Airbnb is a significant threat to their business right uber lyft come on seriously blah blah car none of us saw this coming how is it the talented people keep on missing and being surprised by these events this is how both pictures are me of course it is the overconfidence that comes from being as blind as a bat in my case also a little bit drunk and being convinced that we can see just fine you know I I talked to business leaders before I prepared this talk and ask them what do you guys think about disruption and how it affects your business and they consistently said that the disruption is a serious phenomenon and that we should all be very worried about it or at least address it but they also said basically the same thing I am not worried because my industry is incremental disruption is not really my problem not yet at least right again good luck with that in the next 15 minutes I'm going to talk about innovation disruption and what we can all and must what we all must do together in order to address it head-on manage it and engage it are you ready let's go so my name is jaha lari and in 2005 I became an innovation consultant it was pretty awesome from a sandal wearing philosophy student in the Tel Aviv University I found myself in a suit flying all over the world working with fortune 500 companies on amazing innovation projects I led a team of international experts in 2010 in the catastrophe the BP catastrophe in the Gulf of Mexico I helped invent new products in pharma medical devices consumer product goods food and beverages you name it did I mention it was awesome and then I had a moment of clarity about a year ago jun 8 2015 former CEO of cisco john chambers said in 10 years over forty percent of Fortune 500 companies would no longer be here now i have to tell you a small secret this a quote the statistics that is off quoted I researched it and it's made up like many statistics but but that didn't matter what mattered was that I believed him and two very serious things became clear that morning the first one was that my clients the corporation's were hopelessly flow I would help invent products amazing products really that would take two long years to reach the market by the time they reached the shelf they were already obsolete the second thing I realized is that I could not remember a single project out of many many dozens that resulted in anything that was significantly different from what the company was already doing when sometimes radical disruptive ideas did come up they were buried as one of my clients Ed's a true story with a graceful funeral I thought maybe it's me maybe I'm not a very good consultant so it turns out it wasn't just me the famous harvard professor clayton christensen wrote about it in 1995 the innovators dilemma then publishes a book in 1997 then wrote about it in the innovators solution in two thousand in fact he hasn't stopped talking about it since and he isn't the only one many serious people consistently described corporate innovation as practically unable to focus on anything but improvements to their existing offering now I'm not saying that corporations cannot ever come up with disruption I mean clearly my life changed forever after I had my first cherry tomato what I am saying is that since the invention of the first modern cherry tomato in 1973 two years before I was born 17 other groundbreaking totally radical disruptive looks about the same iPhones sorry cherry tomatoes were invented including these two these are real products corporate innovation is similar to inventing a new type of room with a private gramophone on board the Titanic certainly adds to the experience but it does very little for avoiding icebergs at night so let's take stock it's a little bit depressing i know but everything is changing really really fast corporations are way to flow chances of them becoming super agile speed boats are basically slim to none they consistently underestimate disruption because first of all they either think they're immune to it and let me tell you a secret nobody's immune or they think they'll be able to adapt fast enough if it hits them and I don't think they will so with this dark picture thank you very much this is my talk didn't fool you huh about a year ago this is where I would end my talk I was really depressed my wife is in the audience you can tell you about it I thought about changing career again but there's a famous joke maybe you've heard it what is the difference between a Jewish mother and a Rottweiler the Rottweiler lets go of the kid in the end so my mother taught me well and I decided not to let go and find a way to help organizations deal with disruption and actually harness it in order to create value but before you go into that we should probably understand what we're talking about when we say disruption because disruption is a very confusing name if you think about it disruption feels like something that we can surmount something that we can just skip over and maybe transform but actually disruption means very many different things to many different people this is my definition a surprise change of the rules that make existing value creation strategies ineffective now I know what you're thinking I am special I will not be surprised my strategy is flexible I'm connected to the startup scene right wonderful you're very clever so I asked a young but very senior innovation manager executive in one of the world's largest banks how do you select candidates to your famous open innovation program it's a true story and she said I look for companies I think we'll add the most value to our current business now I suggested that if disruption is always surprising perhaps what you should be looking for are actually companies she least expects will add value to her business she immediately agreed they hired me within three weeks we changed their entire open innovation program they actually reached out to a couple of startups that they rejected the year before I just gotten used that they recruited them back in their doing amazingly they're super happy no actually something totally different happened after a disturbingly long pause in the phone call she said he understands re I understand what you're saying and it makes perfect sense but i can't imagine i'll ever be able to do that it will just not fly I think the tough questions we must all ask ourselves is how committed are we and exploring what we are confident is either highly improbable or completely stupid this is the complete opposite of the corporate innovation state of mind think about corporate innovation like this moving from what we know we know which is basically what we're doing now into what we know that we don't know which is better performance more features cheaper price samsung for example constantly wants to improve its battery is smartphone battery it always looked for a way to create a smaller you know better capacity thinner battery it knows it might not know how to do it today but the minute they find a clever way of doing that the launch is slightly better product and we will all rush out and buy it disruptive innovation is different disrupted disruptive innovation comes from the much bigger space of what we don't know that we don't know which is basically why it's so surprising McKinsey advised AT&T now to enter the mobile market in one of the greatest blunders ever because they projected that by the year 2000 there will be only a million users there were over a hundred million Gardner predictive in 2009 that by 2012 symbian will become the leading mobile operating system Simbi what you see the problem if corporations can't see disruption coming how can they prepare for it now the simple answer is that they can't but it is still possible over the past year I've been developing a framework called elastic innovation you might be able to see it's not a typo there is no trademark it's open source available online if you want to see it reach out to me and i'll send you a lake it's actually also adapting and people are changing it all the time it has four simple steps to it and i'm going to go over them right now yeah we had a project on Saturday so the first step is called to know it is about creating a small benevolent NSA an intelligence unit people that are focused on exploring and mapping potential sources of disruption not only companies could be researchers communities could be a kid in Ohio it doesn't matter in this case the intelligence officers are called Cheyenne's Eve and there are also a little bit of disruptors the next step is called Tibet in betting what we do is we clear the map and only leave on the map the ones that we want to work with we select them and we connect to them that's shy she is not shy we select these organizations and the reason we do this is basically the same reason you guys have life insurance nobody buys life insurance because we think we're going to die we buy life insurance because we know not from personal experience I hope that people do tend to die every now and then and sometimes unexpectedly and this is basically the same thing only for businesses but we are protecting ourselves is a sudden potentially deadly change in our business environment by betting on potential disruptors the next step is called to grow we invest in the disruptive that we've selected and we help them grow we help them develop we invest small amounts and few resources so we keep them hungry and driven we connect them to each other and we control the information flow from into the mothership this stage includes incubators accelerators membership POC packages anything that you need to grow an idea from a nascent idea into a proof of concept and all the way to accelerating it into the market not all of the disruptors will survive this stage the final stage is called to realize by this point the corporation the mothership should have a significant stake in the few disruptor that survived now disrupters act slightly differently or maybe very differently from the way the corporation does so some of them we can integrate and absorb into the organization while some of them we might be able to we might need to allow to accelerate independently so now for the secret solace for this to work the Intelligence Unit the betting process the work done with the disruptors and the disruptors themselves all have to be autonomous and insulated from the mothership this is what I meant when I said they can't do it but it can still be done the reason corporations can't do it is because they lack perspective they lack the ability to see into what they don't know that they don't know but these organizations have a different perspective and they know different things so by externalizing the management of disruption to organizations and people outside the organization we insulate them from the biases of the corporation so to sum up what you need to remember is this it's a fairly simple recipe you surround your organization your corporate with a diverse network of disruptors you connect them to each other you insulate them from the mothership you control the flow of information into the mothership and from the mothership the mothership is free to continue on its current trajectory innovating and milking its existing market the disrupters will try some will succeed when they do they will either buy time for the mothership to circle back or they will grow so fast the mothership won't matter anymore know this we are all ideally positioned to miss disruption when it hits our organization the people that missed it before us they too went here they too were smart and confident we are not special if we have to transition into disruption we first of all must acknowledge our limitations I know it is not easy to act from the position of not knowing but I believe that we all must I want to end this talk with a quote of one of my favorite philosophers Ludwig Wittgenstein who said if no one ever did silly things nothing intelligent would ever get done we set out to transition organizations into disruption we can't do this alone I am calling you if this speaks to you you should speak to us and join the first-of-its-kind community and open source database for practical tools and frameworks that will help organizations ride the dragon that is disruption thank you very much