Keep Moving Forward - Apple, Microsoft, Google, RIM, Hearst

by Adam Hartung

Did you ever notice how often a large company will introduce a new solution (often a new technology), but then retrench from promoting it? Frequently, the market is developed by an alternate company that captures most of the value. We can see that behavior looking at smartphones.


Source: Silicon Alley Insider

In 2008, three early leaders were Microsoft, RIM and Palm. But Microsoft chose to invest in Defending & Extending its PC software business - with updates to the operating system in Vista and OS 7. As the market has shifted toward mobile computing, Microsoft has been clobbered. But largely because it remained stuck trying to protect its "core" while the market shifted away. Palm also tried to Defend & Extend (D&E) its early position with updates, but because it did not follow the pathway to greater usage with new applications it also has seen dramatic share decline.

Meanwhile, RIM has promoted new uses within the corporate world for mobility, and thus grown its market share. And Apple has made a huge impact by bringing forward dozens of new mobile applications, closely followed by Google. What we see is a classic example of the early entrant fading largely because they decided to Defend the old market, rather than investing in the new one. Really too bad for shareholders in Microsoft (losing 20 share points) and Palm (losing 10 share points), while good for shareholders of RIM, Apple and Google.

And in Apple's case we can see that the company continues using White Space to grow revenues by expanding the new marketplace. The iPad is off to a very strong start, with tens of thousands of units ordered last week. But of greater importance is how Apple is promoting the shift to mobile devices from traditional PC devices. At SeekingAlpha.com, in "How the iPad, Slates Will Evolve the Next Two Years," the reporter projects how demand for all laptop products will decline as more capability and functionality is added to mobile devices like smartphones and these new slate products.

Microsoft can keep trying to Defend & Extend PC technology, but it won't be long before their efforts largely won't matter. Don't forget that once Cray computers was a rapidly growing super-computer company. But increasing performance from much alternative products eventually made Cray irrelevant. Same for Silicon Graphics and Sun Microsystems.

Today the market capitalization of Microsoft is about $250B, about 4x sales. Apple's market cap is just over $200B, about 6x sales. Google's market cap is about $180B, about 8x sales. All reflect investor expectations about future growth. The D&E company is simply not expected to grow - and in fact is much more likely to disappoint than the companies growing share in growing markets toward which customers are shifting.

And any company can choose to participate in growth, versus Defend & Extend. While Tribune Corporation is trying to find a way out of bankruptcy, and struggling to figure out how to deal with market shifts away from newspapers, Hearst is taking positive action. The Wall Street Journal reports in "Hearst Jumps Into the Apps Business" how the old-line newspaper company has set up a White Space project, complete with dedicated people and its own funding, to begin developing mobile applications for news!

Even when business leaders see a market shift, far too many choose to Defend & Extend the "core." Unfortunately, that leads to disappointments. Keep in mind Microsoft and its rapid loss of Smartphone share as users move increasingly to mobile devices from PCs. To succeed leaders need to drive their organizations in the direction of market shifts, and growth. Like Apple, Google and even Hearst.


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Adam Hartung, author of "Create Marketplace Disruption", is a Faculty and Board member of the Lake Forest Graduate School of Management, Managing Partner of Spark Partners, and writes for "Forbes" and the "Journal for Innovation Science."

Dear Cable TV Executives,

by Steve McKee

I don't want 300 channels. I only want 18 channels. OK, the average person wants 18 channels. I really only want six. Why can't I have just six?

I know, I know, it's the economics of the industry. But industries change, don't they? I mean, look what has happened to the music industry. I used to have to purchase an entire CD just to get the one or two songs I want, but now I can buy and build my own playlists song by song. It's funny, but I'm sure I spend more on music now than I used to.

You should know I just bought an Apple TV box. That's not your fault - since the Blockbuster Video stores near me closed (and RedBox, while cool, doesn't exactly offer a huge selection) I didn't really have a good option for renting movies. So I thought it was worth a try. Now I can select from a huge selection of movies and TV shows, and when I'm not in a buying mood I can use it to watch YouTube on my HDTV. I'm beginning to think of YouTube as the ultimate TV network - there's so much on-demand entertainment there. (Hmm. You might want to make a note of that.)

Speaking of entertainment, I've held off on getting a Kindle because I knew Apple was coming out with a similar device. I'm excited to get my iPad, not only to check my email and surf the web but to download books. I guess Apple is shaking up the book publishing industry just like it did the music industry. "Saving it" is probably a more accurate description; I'm sure my book purchasing behavior will mirror my new music buying habits. I wonder if they're thinking along the same lines when it comes to TV. I guess time will tell.

So if you don't mind, I'd like to subscribe to individual cable channels. For that matter, I wouldn't mind subscribing to individual programs. I know you won't get as hefty of a monthly fee from me, but I'd be willing to pay more per network than you're getting now. And I suspect other people would be too.

Anyway, it's something to think about. But no pressure. If you don't do it, I'm sure I can find other things to do with my time and money.


Editors Note: I'm with you Steve. I've got limited cable because I don't have much time to watch television. When I really want to watch something specific I can get it online. Cable TV is going to face much the same problem that fixed line phone service faces now (declining subscriber #'s). And, if more and more networks develop their own 'apps' for a variety of mobile or IP platforms (Apple TV, iPhone, Blackberry, iPad FloTV, etc.), it's only going to accelerate.


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Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of "When Growth Stalls: How it Happens, Why You're Stuck, and What To Do About It." Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

Apple's Hidden Disruptive Innovation

by Braden Kelley

People often think that disruptive innovation happens overnight, but often it happens one step at a time. Before the iPod was an innovation, Apple had to not only launch the device, but also the iTunes Store for music, and the Microsft Windows version of iTunes. Apple also expanded the iTunes Store to include audiobooks, movies, and television, but by then it had already become a mass-adopted disruptive innovation that has changed the music industry forever.

Apple then launched the iPhone and changed the power paradigm in the mobile industry around mobile applications publishing - resulting in the App Store.

Apple is about to do it again, but nobody is writing about it.

In retrospect I believe we will look back and point to January 27, 2010 as the day that Apple changed the power paradigm of mobile data plans and subsidies in the mobile industry.

Up until now, the mobile postpaid market has been defined by mobile phones subsidized in exchange for two-year contracts (at least in the United States), and mobile data plans that also often require a two-year contract. Even when Google announced the Nexus One as an unlocked device, T-Mobile (or any other carrier) is still going to charge you the same monthly cost as someone who bought the subsidized phone. Meanwhile, The carrier partner announced for the iPad, AT&T, has two regular 3G data plans:

1. $35 per month (200MB limit)
   
2. $60 per month (5GB monthly limit)

AT&T sells two 3G data cards - free or $49 - both requiring a two-year contract. But Apple yesterday announced that AT&T will provide 3G service to iPad users WITHOUT a two-year contract (or any contract for that matter). Pay as you go data access that is actually CHEAPER than their regular 3G data plans:

1. $15 per month (250MB limit)
   
2. $30 per month (unlimited)

To my knowledge, this is the first time (at least in the United States) where a carrier has given a cheaper price for service to a customer bringing an unlocked, unsubsidized device onto their network. This is of course how it should be, but still this is a watershed moment. If other carriers adopt this model with the iPad, then eventually some carrier may start to do this with other devices, and it may open the door for a different subsidy to emerge.

If carriers finally start to acknowledge that people who bring unsubsidized devices onto their network should pay less, then it opens the door for someone like Google to start paying people to use their device. Google could leverage their ad-serving platform and Google Checkout to launch a phone that effectively gets cheaper the more and longer you use it, regardless of which carrier you use and whether you're using pre-pay or postpaid (standard monthly service).

This is the innovation that I thought Google would launch with the Nexus One, but they didn't. Can Google now lean on T-Mobile and others more now to offer differentiated pricing for owners of unsubsidized devices?

The data plans offered by AT&T for the Apple iPad may have not seemed very interesting on January 27, 2010. But, I think looking backwards we may very well see this as a defining moment for the mobile industry.

Thank you Apple.


To see what I think of the Apple iPad, please go here.

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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

The Decade's Top Performing CEOs

by Adam Hartung

I was intrigued when I read on the Harvard Business Review web site "Do we celebrate the wrong CEOs?" The article quickly pointed out that many of the best known CEOs - and often named as most respected - didn't come close to making the list of the top 100 best performing CEOs. Some of those on Barron's list of top 30 most respected that did not make the cut as best performing include Immelt of GE, Dimon of JP Morgan Chase, Palmesano of IBM and Tillerson of Exxon Mobil. It did seem striking that often business people admire those who are at the top of organizations, regardless of their performance.

I was delighted when HBR put out the full article "The Best Performing CEOs in the World." And it is indeed an academic exercise of great value. The authors looked at CEOs who came into their jobs either just before 2000, or during the decade, and the results they obtained for shareholders. There were 1,999 leaders who fit the timeframe. As has held true for a long time in the marketplace, the top 100 accounted for the vast majority of wealth creation - meaning if you were invested with them you captured most of the decade's return - while the bulk of CEOs added little value and a great chunk created negative returns. (It does beg the question - why do Boards of Directors keep on CEOs who destroy shareholder value - like Barnes of Sara Lee, for example? It would seem something is demonstrably wrong when CEOs remain in their jobs, usually with multi-million dollar compensation packages, when year after year performance is so bad.)

The list of "Top 50 CEOs" is available on the HBR website. This group created 32% average gains every year! They created over $48.2B of value for investors. Comparatively, the bottom 50 had negative 20% annual returns, and lost over $18.3B. As an investor, or employee, it is much, much better to be with the top 5% than to be anywhere else on the list. However, only 5 of the top best performers were on the list of top 50 highest paid - demonstrating again that CEO pay is not really tied to performance (and perhaps at least part of the explanation for why business leaders are less admired now than the previous decade.)

Consistent among the top 50 was the ability to adapt. Especially the top 10. Steve Jobs of Apple was #1, a leader and company I've blogged about several times. As readers know, Apple went from a niche producer of PCs to a leader in several markets completely unrelated to PCs under Mr. Jobs' leadership. His ability to keep moving his company back into the growth Rapids by rejecting "focus on the core" and instead using White Space to develop new products for growth markets has been a model well worth following. And in which to be invested.

Similarly, the leaders of Cisco, Amazon, eBay and Google have been listed here largely due to their willingness to keep moving into new markets. Cisco was profiled in my book Create Marketplace Disruption for its model of Disruption that keeps the company constantly opening White Space. Amazon went from an obscure promoter of non-inventoried books to the leader in changing how books are sold, to the premier on-line retailer of all kinds of products, to the leader in digitizing books and periodicals with its Kindle launch. eBay has to be given credit for doing much more than creating a garage sale - they are now the leader in independent retailing with eBay stores. And their growth of PayPal is on the vanguard of changing how we spend money - eliminating checks and making digital transactions commonplace. Of course Google has moved from a search engine to a leader in advertising (displacing Yahoo!) as well as offering enterprise software (such as Google Wave), cloud applications to displace the desktop applications, and emerging into the mobile data/telephony marketplace with Android. All of these company leaders were willing to Disrupt their company's "core" in order to use White Space that kept the company constantly moving into new markets and GROWTH.

We can see the same behavior among other leaders in the top 10 not previously profiled here. Samsung has moved from a second rate radio/TV manufacturer to a leader in multiple electronics marketplaces and the premier company in rapid product development and innovation implementation. Gilead Sciences is a biopharmaceutical company that has returned almost 2,000% to investors - while the leaders of Merck and Pfizer have taken their companies the opposite direction. By taking on market challenges with new approaches Gilead has used flexibility and adaptation to dramatically outperform companies with much greater resources - but an unwillingness to overcome their Lock-ins.

Three names not on the list are worth noting. Jack Welch was a great Disruptor and advocate of White Space (again, profiled in my book). But his work was in the 1990s. His replacement (Mr. Immelt) has fared considerably more poorly - as have investors - as the rate of Disruption and White Space has fallen off a proverbial cliff. Even though much of what made GE great is still in place, the willingness to Defend & Extend, as happened in financial services, has increased under Mr. Immelt to the detriment of investors.

Bill Gates and Warren Buffett are now good friends, and also not on the list. Firstly, they created their investor fortunes in previous decades as well. But in their cases, they remained as leaders who moved into the D&E world. Microsoft has become totally Locked-in to its Gates-era Success Formula, and under Steve Ballmer the company has done nothing for investors, employees - or even customers. And Berkshire Hathaway has spent the last decade providing very little return to shareholders, despite all the great press for Mr. Buffett and his success in previous eras. Each year Mr. Buffett tells investors that what worked for him in previous years doesn't work any more, and they should not expect previous high rates of return. And he keeps proving himself right. Until both Microsoft and Berkshire Hathaway undertake significant Disruptions and implement considerably more White Space we should not expect much for investors.

This has been a tough decade for far too many investors and employees. As we end the year, the list of television programs bemoaning how badly the decade has gone is long. Show after show laments the poor performance of the stock market, as well as employers. We end the year with official unemployment north of 10%, and unofficial unemployment some say near 20%. But what this HBR report tells us is that it is possible to have a good decade. We need leaders who are willing to look to the future for their planning (not the past), obsess about competitors to discover market shifts, be willing to Disrupt old Success Formulas by attacking Lock-in, and using White Space to keep the company in the growth Rapids. When businesses overcome old notions of "best practice" that keeps them trying to Defend & Extend then business performs marvelously well. It's just too bad so few leaders and companies are willing to follow The Phoenix Principle.

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Adam Hartung, author of "Create Marketplace Disruption", is a Faculty and Board member of the Lake Forest Graduate School of Management, Managing Partner of Spark Partners, and writes for "Forbes" and the "Journal for Innovation Science."

Battlefield Innovation Lessons for Business Leaders

by Paul Sloane

Let's be clear, business is not war. But if you are operating in a fierce marketplace then it can feel like it. Many of the methods we use in our sales campaigns, marketing strategies and competitive tactics are based on military analogies. So what lessons can business leaders today learn from the history of warfare? Here are some that seem particularly relevant.

David vs. Goliath - 1000 BC?

Goliath was a giant and the Philistine's champion at man-to-man combat. David was a young shepherd boy. Goliath expected to overwhelm his opponent in a sword fight but David chose to fight on different terms. He defeated Goliath by using an unusual weapon, the sling, with pinpoint accuracy.

Lessons: It is no use going up against someone who has an 8-ft spear with a 4-ft spear. You need a different weapon. If you are smaller you have to be agile and different. If your competitor is the giant in the market, you need a radical approach so that you can strike rapidly and accurately. This is what Direct Line did when they used telephone technology to sell car insurance directly while the major players were using brokers.

Battle of Crecy - 1346

The English army of about 14,000 men under Edward III had ravaged northern France. They were finally confronted on August 26, 1346 by an army of some 40,000 Frenchmen under Philip VI. Battles were normally fought by knights on horseback and the French, with such a numerical advantage, felt confident. But the English had a new and superior technology, the longbow. Their archers were trained in rapid fire and could sustain a rate of over 10 arrows per minute. Each arrow could penetrate armor. It was the first time that such a mass volley of arrows had been used in warfare. The French attacked in waves and they were cut down relentlessly by the power, speed and range of their opponents' archers.

Lessons: One of the best ways to beat an established competitor is with a new technology. Innovation can overcome a strong opponent. Focus your firepower on the target. Amazon used internet technology to directly address the needs of book buyers and to run rings around the established high street vendors.

Battle of Trafalgar - 1805

Traditionally, naval battles were fought by lining up two fleets in parallel line so that they could deploy the maximum firepower from their canons. At the battle of Trafalgar, Villeneuve, the French admiral, formed his fleet of 33 ships into a line. But Nelson did not line up in parallel. He split his 27 ships into two squadrons and attacked at right angles to the French line. In the hectic battle that ensued Nelson died but the British were victorious and established a naval supremacy that lasted over 100 years.

Lessons: If you do not have a superior force or superior technology then try a different tactic. Surprise your opponent with a fresh approach. Virgin, Benetton and Body Shop are examples of businesses that used surprise tactics to disrupt incumbent market leaders.

First World War - 1914 to 1918

The scale of the slaughter of soldiers in World War I was appalling. Over 8 million military personnel died. The main tactic on the western front was to repeatedly attack strong defensive positions with waves of men. They were massacred. It was believed that with sufficient artillery bombardment and pure weight of numbers a breakthrough could be achieved. But the way to overcome barbed wire defenses and machine gun posts is not with lines of infantrymen. What was needed was the rapid development and effective deployment of the tank.

Lessons: Effort, courage and hard work are not enough. If you are competing with a well-entrenched opponent who has a strong defensive position then you need a new technology or approach to achieve a breakthrough. A long war of attrition debilitates both sides. Retail banking was a stodgy business until Egg, First Direct and Cahoot came along to shake it up and take millions of accounts away from the big players.

Maginot line - 1940

The British and French high commands assumed that the new war with Germany would be similar to the First World War, with huge static armies facing each other. The French built a massive defensive line along the entire border between France the Germany, the Maginot line, consisting of enormous fortifications. But when the Germans attacked in May 1940 they did some lateral thinking. They used fast-moving armored divisions and paratroops. They swept through Holland and Belgium and around the Maginot line. The British and French were outmaneuvered and France fell in five weeks.

Lessons: Assuming that new contests will be similar to previous ones is dangerous. The best way to combat an opponent who has a strong defensive position and barriers to entry in a market is to go around those barriers and find a new way to the market. This is what Direct line, Amazon, Netscape and Easyjet did.

Battle of Britain - 1940

After the fall of France, the British retreated across the Channel, leaving most of their equipment behind. The German army, having raced across Europe was rampant while the British army was demoralized and under-equipped. The Germans planned an aerial assault followed by an invasion, and many thought that Britain would fall as quickly as France, Holland or Poland. But the British had some things that the others had not - the channel, the Spitfire, radar and Winston Churchill. Churchill gave the people a vision, purpose and belief that enabled them to sustain the blitz, oppose the might of Germany and eventually triumph.

Lessons: In tough environments, winning CEOs are those who have a clear vision, can communicate it to their people and motivate them to achieve the goal. Sir Arnold Weinstock, Bill Gates and Jack Welch are recognized as this type of visionary leader.

Defeat of Hitler - 1945

After his great successes in the early part of the war, Hitler was convinced that he was a military genius and the German Wehrmacht could overcome any obstacle. When he attacked Russia in the summer of 1941, he was so confident of victory that there were no plans for a winter campaign; no winter coats for the soldiers and no winter oil for the tanks. He ignored the advice of his generals and pushed his forces down towards Stalingrad and then refused to allow them to withdraw or regroup when the communication lines became overextended. His arrogance and overconfidence built a barrier to criticism and meant that he never used the full talents of his team. Eventually Germany was overwhelmed by the weight of Russian, American and British forces.

Lessons: A narcissist CEO will lead the business to disaster. Plan a fallback scenario. Strong vision and belief are essential but a leader who blocks constructive criticism, ignores the input of his team and fails to build consensus is doomed. To mention them by name would be libelous but take your pick from the CEOs who have led mighty companies to disaster in recent times.

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Paul Sloane writes, speaks and leads workshops on creativity, innovation and leadership. He is the author of The Innovative Leader published by Kogan-Page.

Four Quadrants of Innovation

Incremental versus Disruptive

by Hutch Carpenter

I recently wrote up a post, "Innovation Perspectives - No Shooting Stars." In it, I discussed the issue of organizations myopically focusing on only disruptive innovations to the exclusion of more incremental or sustaining innovations.

In doing more research on the subject, I began thinking about the dynamics that apply when a firm pursues different kinds of innovation. A post by Venkatesh Rao, Disruptive versus Radical Innovations, was very useful for distinguishing between disruptive and radical innovations.

Building on that, I wanted a framework for delineating innovations based on their technology and business impacts. Because they're not necessarily the same. The four quadrants below describe the dynamics for innovations according to their technology and market impacts:



In each quadrant, there are different rationales and issues that apply. Let's take a look.

Existing Tech, Manage Existing Market

The lower left quadrant represent innovations that leverage existing technology, and service existing customers. This is every day innovation. The block-n-tackle innovation that keeps companies nimble and operating at rates above industry averages.

Example? See how Wal-Mart improved the fuel efficiency of its vehicle fleet:


"Wal-Mart has taken a number of steps, including the installation of diesel Auxiliary Power Units on all its trucks, and applying aerodynamic skirting. On the tire side, Wal-Mart is working with super single tires. and is testing nitrogen-filled tires and an automatic filling process to maintain constant tire air pressure."


Improving the customer experience is also a critical opportunity. In an era of social-media empowered customers impacting your brand, the consequences of failing to improve the customer experience are higher than ever.

But this quadrant is the one often pooh-poohed by many in innovation. I like the way PriceWaterhouseCoopers puts it in this blog post:


"An unintended consequence of the Innovators Dilemma has been that companies have begun believing that unless they were pursuing a strategy of seeking disruptive innovations, they were somehow losing out."


Wal-Mart's efforts have paid off. The retailer has held relatively strong during the Great Recession, as seen in its stock price. And Toyota famously gathered over million ideas a year from its employees to emerge as a global leader in the automotive industry.

Existing Tech, Create New Market

In this quadrant, existing technology is leveraged to create a new revenue streams. This is the quadrant where the following phrase applies:


"Good artists borrow. Great artists steal."


The simple application of a technology that serves one purpose toward a different purpose can be disruptive from a market perspective. It's not a large technological leap. It's the intelligent application of what's already at hand.

Twitter is a great example. The technology itself is...simple. Web form. Subscription model. Limit to 140 characters. Yet it's revolutionized the way people share and find information, causing Techcrunch's MG Siegler to compare it to a modern day Walter Cronkite. All for a simple little web app. Here's what WordPress founder Matt Mullenweg says about Twitter:


"Whether the Twitter team intended it or not, they've built a killer and highly addictive reader platform with dozens of interesting UIs on top of it."


The thing with these innovations is that they are very much a market-determined disruption. This isn't some sort of EUREKA! the moment the technology is rolled out of the labs. It takes the market to say that it's disruptive.

Clayton Christensen (Innovator's Dilemma) types of innovation will often fall in this quadrant. Existing technologies applied in new ways to address the lower end of the market.

Venkatesh Rao has a great perspective on this quadrant:


"In fact, in most documented cases of disruption, the disruptive innovation was a minor/incremental change and well within the technical capabilities of the incumbent (and was often taken to market by a renegade spin off from the original company)."


This quadrant is the best one for producing organic growth for companies. It has lower risk, but produces meaningful revenue growth.

Radical Tech, Create New Market

If any one quadrant defines the popular view of innovation, it's this one. And that's not without good reason. In the previous quadrant, existing technologies are applied to new markets. Well, existing technologies have to come from somewhere. That's this quadrant.

This is the cool stuff that the press writes about. Check out AT&T's Technology Showcase for a great example of some of these new technologies.

Amazon's Jeff Bezos has done well in this quadrant. His latest innovation, the Kindle, is an example. It includes a new "electronic ink". Ability to read text aloud. It's incredibly thin profile.

And it's paying off. Amazon reports that the Kindle set a new sales record this November. Which points to the Kindle as a strong new revenue stream down the road, and a new source of sales for Amazon's book sales. A home run in this quadrant.

These types of innovations are important for maintaining the long-term growth rates of companies. They provide needed growth, replenishing changes in existing markets.

Which leads us to the final quadrant...

Radical Tech, Manage Existing Market

There are times a company's business is under attack, and it needs to address changing behaviors in its market. Innovations in this quadrant share the high risk profile of the previous quadrant, but they have a defensive nature to them. They don't seek to find new opportunities, they seek to address changes in customer behavior.

Hulu strikes me as an example of this. A joint venture of NBC, Fox and ABC, Hulu lets users view shows on computers. This initiative addresses the emerging market shift away from televisions to viewing on all sorts of devices. It's a better answer for this shift than the music industry initially had for the proliferation of MP3 songs on various P2P sites.

Gary Hamel has noted the increasing volatility of markets across the globe. Customers have better access to information about new options, and are willing to shift their spending more quickly. With this dynamic, expect some increase in activity for innovations in this quadrant.

Companies Need a Portfolio of Innovation Opportunities

In a recent Accenture survey, 58% of executives said their organization is looking for the next silver bullet rather than pursuing a portfolio of opportunities. When I hear that, I think first of the upper right quadrant (radical tech, create new market). These types of innovations are incredibly important, and should be part of a company's innovation efforts.

But there's really a good basis for expanding that view to look at the other types of innovation: technology vs. market, disruptive vs incremental.

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Hutch Carpenter is the Director of Marketing at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

Challenge Your Assumptions

by Paul Sloane

Every time that we approach a problem, in any walk of life, we bring to bear assumptions that limit our ability to conceive fresh solutions. Brilliant thinkers are always aware of assumptions and are always happy to confront them.

There is a story told about a northern pike, a large carnivorous freshwater fish. A pike was put into an aquarium, which had a glass partition dividing it. In the other half from the pike there were many small fish. The pike tried repeatedly to eat the fish but each time hit the glass partition. The partition was eventually removed but the pike did not attack the little fish. It had learned that trying to eat the little fish was futile and painful so it stopped trying. We often suffer from this "Pike Syndrome" where an early experience conditions us into wrong assumptions about similar but different situations.

The way that we see things is often circumscribed by our assumptions. In the middle ages, the definition of astronomy was "the study of how the heavenly bodies move around the Earth." The implicit belief was that the Earth was at center of the universe. In 1510 a brilliant Polish astronomer, Nicolai Copernicus, postulated the idea that the sun was the center of the solar system and that all the planets revolved around the sun. He was able to explain the motions of the planets in a way that made sense but was totally at odds with convention.

The atom was originally defined as the smallest indivisible unit of matter. The assumption was that an atom could never be subdivided. This belief hampered the advancement of science until eventually J.J. Thomson discovered the existence of a sub-atomic particle, the electron, in 1887.

In business we make all sorts of assumptions. For example, you might hear people say:

• Competition sets the price level in our industry


• We must constantly raise our quality and service delivery


• Our largest customers are our most important customers


• We should hire people who fit in well with our team


• Each of these notions needs to be challenged.

Often it is up to a newcomer to an industry to break the existing orthodoxies. For example:

• Henry Ford challenged the assumption that automobiles were expensive, hand-built carriages for the wealthy.


• Anita Roddick challenged the assumption that cosmetics had to be in expensive bottles. Her retail chain, the Body Shop, sold products in plastic containers.


• IKEA challenged assumptions by allowing customers to collect their furniture from the warehouse.


• The low-cost airlines like Southwest and Easyjet challenged the assumptions that you needed to issue tickets, allocate seats and sell through travel agents.


• Apple challenged the assumption that a personal computer was functional and not aesthetic.

Brilliant thinkers know that assumptions are there to be challenged and they relish defying them. How can you do this? Here are some tips:

• Start by recognizing that you and everyone else have ingrained assumptions about every situation.


• Ask plenty of basic questions in order to discover and challenge those assumptions.


• Write a list of all the ground rules and assumptions that apply in your environment and then go through the list and ask, "What would happen if we deliberately broke this rule?" and "What if we did the opposite of the norm?"


• Pretend you are a complete outsider and ask questions like, "Why do we do it this way at all?"


• Reduce a situation to its simplest components in order to take it out of your environment.


• Restate a problem in completely different terms.

Ken Olsen was CEO of DEC, a company that was a great innovator in the days of the mini-computer (during the pre-PC era). He said:

"The best assumption to have is that any commonly held belief is wrong."

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Paul Sloane writes, speaks and leads workshops on creativity, innovation and leadership. He is the author of The Innovative Leader published by Kogan-Page.

Innovating for Fun and Social Good

by Braden Kelley

I came across this on sitsite.com's blog and had to share it. After all, we could all use a little more fun in our lives, and if some social good can be achieved in the process, all the better!

It is from a Swedish site advertising a contest that will award a 2,500 Euro prize for the idea that best exemplifies the premise that:

"something as simple as fun is the easiest way to change people's behaviour for the better. Be it for yourself, for the environment, or for something entirely different, the only thing that matters is that it's change for the better."





To see more examples or to enter the contest, please visit The Fun Theory site. The campaign and competition are sponsored by Volkswagen - Smart move!

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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

Are you in denial?

by Rowan Gibson

Sometime over the next decade (if it hasn't happened already), your company will be challenged to change in a way for which it has no historical precedent.

Look around the world today and we see entire industries whose business models have gone belly up. The pharmaceutical industry has a fundamentally broken business model. The global grocery business has an imperiled business model. The traditional airline industry is struggling with an out-of-date business model. The insurance industry, the travel agent industry, the music industry and the movie industry have anachronistic business models. This is a situation that most companies have never faced before.

Whilst some firms may have become adept at reinventing their products and services over the years, very few organizations have any experience in completely reinventing who they are, who they are serving, how they are serving and what their industry is. They simply have no history of that kind of fundamental innovation. That's why - almost in a heartbeat - a lot of companies come unstuck. When the need for deep, fundamental change arises, most industry incumbents are simply not ready for it.

For example, was Detroit ready for the Japanese back in the 80s? Was Xerox ready for Canon? Was Coke ready for Red Bull or Starbucks? Was the BBC ready for CNN? Was Kodak ready for the digital camera - and the camera-phone? Was Microsoft ready for Linux, or Google? Was Barnes & Noble ready for Amazon? Were the world's telecom companies ready for Skype?

The burning question you therefore need to be asking yourself right now is, Will our company be ready? Will we be able to make a radical shift from where we are to where we could or should be? Have we developed a slew of promising new strategic options from which we can choose? Are we already experimenting with alternative sources of profit on which to build our company's future? Do we have the kind of people in our top management and throughout our organization who are open to these new possibilities?

In other words, are we already committing enough of our energies to deep innovation and strategic renewal? Or are we going to sit there in denial for a decade and go through some "Valley of the shadow of death" experience before we wake up and say, "Okay, maybe we have to change here?"

Don't wait till your industry has been turned on its head, your business model has been undermined, and powerful competitors - either aggressive newcomers or innovative incumbents - are already eating your lunch. Instead, you need to be thinking seriously, right now, about developing a deep capability for radical innovation and ongoing strategic renewal. It's the only way to guarantee any hope of surviving - and winning - in the new Innovation Economy.

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Rowan Gibson is widely recognized as one of the world's leading experts on enterprise innovation. He is co-author of the bestseller "Innovation to the Core" and a much in-demand public speaker around the globe. On Twitter he is @RowanGibson.

What's Your Blockbuster Strategy?

by Steve McKee

Six months ago the Blockbuster Video store a mile from my house closed. Last week, the store three miles from my house closed. I don't even know where the next closest location is, so I guess my family has rented its last Blockbuster video.

While I was surprised that both locations near me were shut down, I had read that Blockbuster recently announced it would be closing up to 40 percent of its locations in order to shore up operating profit and reallocate its growth capital. Whether or not the move will save the company is an open question, but it does offer a good case study of the never-ending cycle of creative destruction that continues every day in a free economy.

The video rental business has always been a game of distribution. A generation ago Blockbuster put thousands of mom-and-pop video stores out of business by offering better selection, efficiency and convenience. Today, Blockbuster is a victim of those same forces via a host of competitors, from premium cable to pay-per-view to Netflix to Redbox. As technology rapidly evolved, Blockbuster's bricks-and-mortar strategy increasingly looked like an anachronism.

The company is trying to evolve by experimenting with its own mail-order, online, kiosk, and even cellphone download options. But it may be too little too late. The lesson for those of us in other industries isn't if you live by the sword you'll die by the sword--in business, we all live by the sword. The lesson is no matter how big, strong and successful any of our companies may be, there are always competitors out there honing their blades. And their advances may not come from the avenues we expect.

Stay sharp.

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Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of "When Growth Stalls: How it Happens, Why You're Stuck, and What To Do About It." Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

Scenario Planning Back in Fashion

Developing Robust Strategy with 'Wild Card' Scenarios

by Idris Mootee

Every executive wants to know what the future will be like or what will likely to happen to their industry and what the most disruptive forces are that will impact their bottom line or even survival. That's why we use 'Wild Card' to paint scenarios. Wild card scenarios are in theory, things that are not likely to happen, but most likely to create the highest impact and disruption should they occur. The idea of wild card scenarios is not to predict or calculate which scenario will occur, but to identify, where possible, important surprises that could occur.


I wonder how many banks had the current financial crisis as part of their wild card scenario. Did someone paint this scenario in advance of the actual financial crisis? Or did anyone ever paint a scenario of an African American US President the last 20 years? Or the influence of social networks? Any good forecasters and long-range planners recognize that there are innumerable plausible futures to consider in any industry context. No finite set of future scenarios can ever hope to completely cover all possible surprises. You can develop a set of wild cards, but might be missing the 'wild wild cards'. So how do we do this? Here's a 5-minute crash course.



The art of generating scenarios must include assumptions about what will (and won't) occur - what trends are likely to continue, what changes are likely to occur, what events are not likely to take place, etc. From a small, reasoned set of assumptions, a set of scenarios can be developed to address the remaining uncertainties and can be used for their intended purposes. Whether you apply it in the media industry or auto industry, it is by nature a strategic creative exercise. In the long range planning arena, assumption-based scenario exercise is basically built on the notion that a set of wild card scenarios should be developed for purposes of making more robust the plans that have been developed. It is a mechanism to test your strategic plan. Those plans have made assumptions about the future, not all of which are certain to come depending on many external factors.



The number one purpose of the wild card scenarios is to help strategic planners develop signposts for indicating that an assumption is being violated, shaping actions to keep the assumption from failing (to the extent possible), and hedging actions to prepare the organization in the event an assumption fails. Remember that wild card scenarios are highly unlikely to happen. But, what makes a wild card scenario useful is when the future it describes would produce disproportionately dire consequences. The classical case of an unlikely scenario with dire consequences is H1N1 pandemic virus mutates into a 'Superbug' and killing millions of people. The combination of its extreme unlikelihood and horrific consequences make its risk worth worrying about and planning for. It is not a dry academic exercise but an effective way to plan for the future. Most people don't realize there is an opportunity side of the equation, and that these exercises usually help unfold a lot of new opportunities too. So it is not only for planning for the big disasters.

According to Meyer and Miller:

• The world moves into the future as a result of decisions (or the lack of decisions), not as result of plans


• All decisions involve the evaluation of alternative images of the future, and the selection of the most highly valued offeasible alternatives


• Evaluation and decisions are influenced by the degree of uncertainty associated with expected consequences


• The products of planning should be designed to increase the chance of making better decisions the result of planning is some form of communication with decision makers

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Idris Mootee is the CEO of idea couture, a strategic innovation and experience design firm. He is the author of four books, tens of published articles, and a frequent speaker at business conferences and executive retreats.

Will Your Strategy Kill Your Company?

by Rowan Gibson

Many companies once believed - and some of them evidently still do - that business models were essentially immortal. The prevailing attitude was that while product portfolios might need to be refreshed every now and again, successful strategies would remain successful for the rest of time. Shell would suck oil out of the ground, General Motors would make cars, Xerox would make copiers, and that's the way it would always be.

In a world where nothing much changed - or where things changed very slowly - the assumption was that a company could pretty much do the same thing forever. Innovation therefore became a calm, unhurried exercise in developing "new and improved" versions of existing products, funding ongoing technical research and filing industry patents. How many firms thought there was ever going to be a need to innovate more deeply and more strategically - at the level of the business model itself? Or to fundamentally rethink and re-earn their company's right to exist on a year by year basis?

Go back a few decades and the focus was generally on developing increasingly efficient processes for delivering more of the same. But, today, with the sheer underlying speed of change in the external world, "more of the same" can very quickly lead to strategic obsolescence.

For some companies, it's a technological discontinuity that causes all the trouble. This is what happened to Wang in word processing, and to Atari, and later Sega in videogames, when the next wave of technology superseded the old. The same fate befell Schwinn, the original leaders in the U.S. bicycle market, when their business was destroyed by the disruptive advent of the mountain bike. Remember, too, that the venerated Encyclopedia Britannica was knocked off its proud pedestal almost overnight by something as banal as Microsoft Encarta, when a simple CD-ROM displaced a shelf-filling set of printed volumes.


"What got you where you are today is seldom what will keep you there."


For other firms, the disruption might come from a market discontinuity. Suddenly, they find themselves facing new and very aggressive competitors who have a more effective business model than they do. Remember Xerox in the early 80s, for example. The company didn't even notice the threat from the Japanese until its earnings dropped 50% in one year alone - 1982. Or it could just be a sudden shift in consumer tastes. In the U.S., for example, Krispy Kreme doughnuts were doing just fine until lowcarb diets reshaped the food industry. That's how quickly and mercilessly the market can change.

These days, strategies can have a very short shelf life. Their underpinnings are being regularly shaken and they die much more quickly than in the past. "This company will be going strong 100 and even 500 years from now," said C. Jay Parkinson, president of U.S. based Anaconda Mines - just three years before Anaconda was bankrupt.

The bottom-line message here is that linear thinking is useless in a nonlinear world. The things that got your firm where it is today are seldom going to be the things that will keep it there. The challenge, therefore, is to routinely consider the unthinkable - to regularly rethink everything about your company and the business you are in, even when things appear to be going well. To illustrate the point, Meg Whitman, president and CEO of eBay, holds strategy meetings not once or twice a year - but several times each week!

Quite frankly, the line between success and failure has never been finer. Hence the imperative to continuously reinvent your success with radical new product concepts, new ways of doing business, new markets, new capabilities, new customers and new sources of profit. Unless you are taking deep, strategic innovation very seriously, your company's days might already be numbered.

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Rowan Gibson is a global business strategist, a bestselling author and an expert on radical innovation.

Will the Flip be Flipped by the iPod?

by Braden Kelley

Apple's September 9, 2009 media event came and went with what most might call a whimper. There was no highly anticipated Apple iTablet, and the event served to mostly refresh the iPod line.

Lost in the disappointment over the lack of an Apple tablet computer introduction was a small, but potentially huge change to the iPod Nano.

A lot of other authors have written about how great the Flip video camera is, and how it disrupted the video camera market by introducing a smaller, simpler video camera that was 'good enough' at recording video, but made it much easier to get video onto the PC and onto the Internet. Today at Office Depot I saw an 8gb Flip for $199.

Now, the 8gb iPod Nano is $149.

So the iPod Nano is cheaper and a lot smaller. The iPod Nano also has an FM radio, pedometer, voice memo capability, built in special effects, and this thing called iTunes you might have heard of. Want 16gb of storage instead? A 16gb iPod Nano is only $179 (still less than an 8gb Flip). And if you're a Mac user you've also got iMovie and iDVD to edit and burn the videos when get to the Mac. Oh, and you can post them to facebook and YouTube too.

The video quality of the sample videos look 'good enough' and with its cheaper price, smaller size, and wider solution set, I would expect iPod Nano sales to rise and Flip sales to fall.

Sorry Cisco. It looks like you bought into the cheap, simple video camera space a little too late. But then Cisco wins even if the iPod Nano beats out the Flip because they'll sell more networking gear, so they are happy either way.

What do you think?

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Braden Kelley is the editor of Blogging Innovation and founder of Business Strategy Innovation, a consultancy focusing on innovation and marketing strategy. Braden is also @innovate on Twitter.

Innovation - Elite Unit or Crowdsource?

by Hutch Carpenter

A classic dilemma for companies is determining the best way to foster innovation. There are many good books with different approaches. Clayton Christensen's "Innovator's Dilemma" has influenced a generation's thinking about innovation. He focuses management and entrepreneurs' attention on the Big I: 'disruptive innovation'.

One outcome of the popularity of Christensen's book is the awareness people have that entrenched business practices can inhibit companies' ability to recognize and address discontinuous innovations from new market entrants. Motorola, for example, is often held up as an example of this. The company continued to develop only analog cell phones even as the digital phones were getting traction. In clinging to analog, which it dominated, it fell far behind in the mobile phone market.

A key practice espoused by Christensen is for companies to tackle discontinuous innovations by creating separate divisions. These divisions have an R&D profile, meaning they are funded without requiring a financial return. They do not have to prove themselves to sales or other parts of the organization. This gives them the room they need to figure out how to approach the impending market shift.

The issue with the popularization of this framework is that it sets up a binary approach to innovation. You're either addressing disruptive or discontinuous innovations, or you're executing on yesterday's business. It's this dichotomy that obscures the value of innovations that move organizations forward, competing to increase market share and profits.

To that end, let's examine two ways companies create work structures for innovation.

Integrated or Separate Innovation

The graphic below highlight two very different ways to approach innovation. And that's a good thing.


Separate Division

• As advised by Clayton Christensen, this approach is best for companies that need to address disruptive innovations. And all companies need to address disruptive innovations.These days, it's not a matter of if, but when. For fundamental market shifts, too much is invested in the current operations for companies to address changes. Freeing a group of people from these constraints is critical, if the corporate culture is not open to big-bet innovations.

A couple examples of interest here. First, let's go back to Motorola. Yes, the company muffed it badly on the transition from analog to digital. But there was something that it did right years before. Motorola researcher Jim Mikulski could see in the 1960s that existing cellular technology was insufficient for the emerging uses of the mobile technology. He had a new technology to replace it, and asked the head of Motorola's communications division, John Mitchell to fund its development. Mitchell said "no,"


Arguing that 400MHz technology offered sufficient capacity and met consumer needs. The Communications Division current product line was the market leader, and a new product, which would likely cannibalize the current system, was deemed to be both unnecessary and potentially harmful to this business line.


So Mikulski found refuge in Motorola's Corporate Research Laboratory. He worked on the new technology there, receiving funding for its development. When his view of the coming changes proved to be true, Motorola was ready with its new technology.

In other words, he addressed innovation that affected the communications division in a completely separate division.

Microsoft, on the other had, has programmatically set up a separate division for innovation. The Microsoft Research group works on ideas that may never have commercial appeal. But some of their work has resulted in product features and direction for its new Natal gaming system, its Bing search engine, and an upcoming release of Outlook email.

They have a separate division, but the innovations arguably are of the sustaining variety, not disruptive.


Integrated into Daily Work

• In this work structure, everyone is involved in innovation. The company sets expectations, and encourages employees' to share ideas. Done right, this is in-the-flow stuff. Employees are encountering issues to be addressed daily, and they're hearing new customer feedback all the time. They are well-positioned to come up with innovative solutions and products, if senior management makes that a priority.

Whirlpool is a good example of this. In 1999, then-CEO David R. Whitwam made the determination that Whirlpool needed to stop competing on price, and make innovation its central strategy. Fast forward to today, and the results have been stellar. Whirlpool has escaped competing as a commodity vendor, with $4 billion in revenue (21% of total sales) generated from its innovation efforts. Are they satisfied? No. CEO Jeff Fettig stated that while participation in innovation from 5,000 employees is good, he's looking to increase it to 15,000.

That's integrating innovation into employees' daily work for sustaining innovation. In this case, sustaining innovation has been the source of growth and profits.

Another company where innovation is part of everyday work is 3M. The company is legendary for its innovation. And clearly, the encouragement of all employees to be part of innovation has taken hold. For instance, there was this story recently in Fast Company:


3M told a great innovation story at the ARF annual conference about a new product that started with a complaint call into customer care. The representative did his own research online, came up with a solution, filmed a video that he put on YouTube and re-contacted the customer to see if that is what he was looking for.


The sheer volume of ideas that employees have to improve companies' existing businesses puts a premium on crowdsourcing ideas. And inevitably, some of that culture and the ideas emerging from sustaining innovation will relate to discontinuous or disruptive innovations.

Why Not Do Both?

Google is a good example of a company that does both. Its 20% time for employees to devote to innovation is the stuff of business legend. And according to the company, half of its new products result from this employee time.

But then look at Google Wave. This project was done beyond 20% time. It was actually a completely separate project developed by a 5-person 'startup' team in Australia, far from the company's Mountain View, CA headquarters. Google Wave is transformative, and will likely usher new design principles into a host of software applications.

Google is a good example of an innovation-led company. They mix the elite unit approach to innovation with the everyday encouragement for employees to innovate.

There's not this dichotomy of "all disruptive/discontinuous innovation, or you're just falling behind." Rather, it's a smart blend of the strategies.

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Hutch Carpenter is the Director of Marketing at Spigit. Spigit integrates social collaboration tools into a SaaS enterprise idea management platform used by global Fortune 2000 firms to drive innovation.

Keep Your Cool. Speed Can Kill.

by Steve McKee

I recently came across an interesting quote from Michael Schumacher, the seven-time Formula One champion. He said, "To perfect things, speed is a unifying force. To imperfect things, speed is a destructive force."

Business, like auto racing, is a world of imperfect things. Always has been. But as the pace of change continues to increase, both the danger and the likelihood of a company hitting the wall grow exponentially greater. Strategic mistakes that in the past might have required a pit stop now could be fatal.

A lot of companies are learning this the hard way during the protracted downturn. We've all read about Lehman Brothers, GM and Washington Mutual, but a number of lower profile yet still well-known names have also joined the bankruptcy club, including Six Flags, Crunch Gym and Nortel. According to the American Bankruptcy Institute, business bankruptcies in the first half of 2009 are 64 percent higher than they were in 2008. More than twenty thousand corporations have gone belly up since the beginning of the year.

What does this mean to those of us that are still in the race? We have to stay calm, stay focused, and keep a tight but responsive grip on the steering wheel. The pace of change requires that we drive faster and faster, but bumps in the road and the inches that separate us from our competitors can change in an instant and send us careening into the wall. As Adam Hartung, author of Create Marketplace Disruption, puts it, "When a new technology can go from invention to market in weeks, adaptability becomes far more important than size."

Adaptability. The true test of today's environment isn't simply which companies have enough cash or market share to ride things out, but which can best adjust to the changing environment--both outside and within their organizations. While power has always been important, smart strategy is more vital than ever. This challenging race calls for cool-headed drivers.

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Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of "When Growth Stalls: How it Happens, Why You're Stuck, and What To Do About It." Learn more about him at www.WhenGrowthStalls.com and at http://twitter.com/whengrowthstall.

Real Reason Companies Must Innovate

Ask any group of senior executives why they think innovation has become such an imperative, and the answer is invariably, "Because it drives growth."

This is quite a reasonable and obvious way of thinking. Pushed into a relentless and never-ending race to grow earnings faster than the industry average, companies are increasingly turning to innovation as today's best bet for closing the "growth gap." Trouble is, by thinking of innovation almost solely in terms of growth, many executives are actually missing the bigger picture.

For most companies today, the real issue is not how to grow earnings by a certain percentage from quarter to quarter. It's how to avoid the big and unexpected downside. Because the thing that kills companies today is not whether they are growing by 8% instead of 12%; the thing that kills them is when they miss some turn in the road - some fundamental change in the external environment - that axes the share price by 50% and sends the firm into the toilet. This is what has wrecked so many companies in so many industries.

It might be a disruptive new technology that causes all the trouble, the way digital photography decimated Kodak's traditional film-based business. It might be a fundamental shift in customer preferences, let's say from gas-guzzling SUVs to economical, environmentally-friendly hybrid vehicles. It might be another company's game-changing business model; the equivalent of a Dell in computing, an Amazon.com in books, or an easyJet in air travel. It might be regulatory upheaval in the market, opening up the floodgates to a horde of aggressive new competitors, as we have seen in countless markets and in all manner of industries. Or it could be a lifestyle trend that suddenly turns millions of people off the food, or the drinks, or the clothes, or whatever else it is that you make.

So, yes, of course top line growth is important; nobody would argue with that. Maximizing the upside is all well and good. But the real issue is: how do you minimize the downside?

A lot of people would reply that minimizing the downside is about being careful and conservative; it's about avoiding risks. In fact, it's precisely the opposite. Minimizing the downside is about continually experimenting with new things, recognizing that we are living in a world where the old things can quickly lose their value and become irrelevant.

In this new disruptive age, competitive strategies and business models don't last anywhere near as long as they used to. Therefore, unless a company is innovating deeply and strategically - at the level of the core business itself - economic growth can very quickly turn into economic failure, decay and even death.

Of course, the financial risks of experimentation have to be managed too. But, essentially, in today's turbulent times, the only long-term insurance against the downside is rampant and radical innovation. That's the real reason for the innovation imperative.

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Rowan Gibson is a global business strategist, a bestselling author and an expert on radical innovation.

Time for a Disruptive Business Model?

How disruptive is your business model? While much has been written about corporate vision, mission, process, leadership, strategy, branding and a variety of other business practices, it is the engineering of these practices to be disruptive that maximizes opportunities. Without a disruptive focus you are merely building your business model on a "me too" platform of mediocrity. As we move into the second half of 2009, nothing will be more critical to your efforts in increasing your revenue growth and corporate sustainability than understanding the value of disruptive innovation. So, in today's post I'll examine the power of disruption as a key business driver...

Disruptive business models focus on creating, disintermediating, refining, reengineering or optimizing a product/service, role/function/practice, category, market, sector, or industry. The most successful companies incorporate disruptive thinking into all of their business and management practices to gain distinctive competitive value propositions. "Me Too" companies fight to eek out market share in an attempt to survive, while disruptive companies become category dominant brands insuring sustainability.

So why do so many established and often well managed companies struggle with disruptive innovation? Many times it is simply because companies have been doing the same things, in the same ways, and for the same reasons for so long, that they struggle with the concept of change. My engagements with CEOs often focus on helping them to embrace change through disruptive innovation. As a CEO, I would strongly suggest you conduct a gut check during your next executive meeting by counting the number of times you hear your CXOs say things like: "That will never work," "We can't do that," "That's not my problem," or my personal favorite, "We've always done it that way." Don't allow your enterprise to adopt an attitude of complacency, because the simple truth is that complacency kills companies.

Let's just take a moment and look at what happens to companies that become complacent and fail to embrace disruptive innovation... Why didn't the railroads innovate? Why didn't Folgers recognize the retail consumer demand for coffee and develop a Starbucks-type business model? Why didn't IBM see Dell and Gateway coming? Why wasn't Microsoft able to keep Google at bay? Why have American auto-makers been relegated to inferior brands when contrasted to their European and Asian counterparts? How did the brick and mortar book stores let Amazon get the jump on them? I could go on-and-on with more examples, but the answer to these questions are quite simple... The established companies become focused on making incremental gains through process improvements and were satisfied with their business models and didn't even see the innovators coming until it was too late. Their focus shifted from managing opportunities to managing risk, which in turn allowed them to manage themselves into brand decline...

At one end of the spectrum take a look at the companies receiving investment from venture capital and private equity firms, and on the other end of the spectrum observe virtually any category dominant brand and you'll find companies with a disruptive focus putting the proverbial squeeze on the "me too" firms occupying space in the middle of the spectrum. With the continued rapid development of technology taking the concept of globalization and turning it into hard reality facing businesses of all sizes, it is time for executives and entrepreneurs to examine their current business models from a disruptive perspective. Ask yourself the following questions:

1. Why should anyone be led by you?


2. When was the last time your business embraced change and did something innovative?


3. When was the last time you rolled-out a new product?


4. Are your management and executive ranks void of youth?


5. Do people in your organization laugh at new ideas?


6. When was the last time you entered a new market?


7. Are any of your executives thought leaders?


8. When was the last time you sought out a strategic partner to exploit a market opportunity?


9. Does your organization focus more on process than success?


10. Are employees who point out problems looked down upon?


11. Do you settle for just managing your employees or do you inspire them to become innovators?


12. Has your business embraced social media?


13. When was the last time your executive team brought in some new blood by recruiting a rock star?


14. Does anyone on your executive team have a coach or mentor?


15. Has anyone on your executive team attended a conference on strategy, innovation or disruption in the last year?

If you're an executive or entrepreneur and you can't put forth solid answers to the majority of the questions referenced above, then your company is likely a market lager as opposed to a market leader. If you continue to do the same things that you have always done in today's current market environment you will see your market share erode, your brand go into decline, your talent and customers jump ship, and your potential never be realized.

Albert Einstein said it best when he noted "the definition of insanity is doing the same thing over and over again and expecting a different result each time." Bottom line... don't be the CEO who causes your management team to continually say "the boss won't go for that one." If you lead from the front by inspiring change, innovation, and disruption your business will surely prosper in 2009.

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Mike Myatt, is a Top CEO Coach, author of "Leadership Matters...The CEO Survival Manual", and Managing Director of N2Growth.

Social Media and Music - Ideal Partners?

Quiet Company - "It's Better To Spend Money Like There's No Tomorrow Than Spend Tonight Like There's No Money"

I recently became aware of TheSixtyOne, an online music community where "artists upload their work for review, but, rather than allow a stuffy suit in a boardroom to decide what's good, thousands of listeners do." Since I canceled my Last.fm account after they handed user data to the RIAA, I've found TheSixtyOne to be the best way to learn about new bands that you otherwise wouldn't hear about.

One band I've gotten into from TheSixtyOne is Quiet Company from Austin, TX. Their music is a kind of wonderful, melodic piano-pop with lyrics that are optimistic without feeling cheesy. With songs like "It's Better To Spend Money Like There's No Tomorrow Than Spend Tonight Like There's No Money" (above), you know they're not taking themselves too seriously.

After playing the track list multiple times, I just HAD to share them with my Twitter stream. The best way to share music on Twitter is Blip.fm. I searched, found the song, and sent this:

That was the last I thought of it, until this morning. When I opened TweetDeck, I found this reply from @quietcompanytx:

They followed up with another tweet saying I could share that link with anyone I think would like their music, so here you go.

I downloaded the sampler, happy to get free music, and played the three songs about four times over.

Then something funny happened.

I went to the Quiet Company site, and bought & downloaded their newest album, "Everyone You Love Will Be Happy Soon", directly from the band.

What's so funny about that? I almost never buy new music. With the plethora of online music sites - from Last.fm to Pandora, to Blip.fm to TheSixtyOne and more - I can stream just about anything I want. For free.

But because Quiet Company used the tools of the internet - first, to showcase their music; then, to find and reach out to those talking about it - they were able to gain a new fan, turn that fan into an evangelist, and see a return on the time and effort they've spent.

This isn't something that only applies to music. Whether you're a band, a business, or a nonprofit, how can you excite people with your offerings? How can you benefit from listening to online conversations and engaging with those that are talking about your product or service?

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Gradon Tripp is the founder of Social Media for Social Change, an organization that uses the tools of online media to raise awareness for nonprofits. He writes about ways organizations -- both non-profit and for-profit -- can benefit from using social media at GradonTripp.com.