By Laurence Buchanan | Woody Driggs | Tony Qui | Ernst & Young
Resolution 1: Instill a sense of urgency
Yes, the word disruption is likely overused, which could explain why some executives might be covering their ears each time the word comes up. That’s a mistake, because the potential to disrupt or be disrupted is a clear and present danger for businesses in every industry, and every part of the world. Changes that could disrupt your business are happening now, so you need to instill an organizational mindset that helps you sense and respond to them. The businesses that get disrupted are the ones that fail to act — so don’t leave it too late.
Resolution 2: Embrace a mindset of duality
Of course, businesses need to continue to operate effectively in the here and now while keeping an eye toward the future. No wonder so many businesses are focused on using digital to optimize rather than transform their businesses. In 2018, digital leaders will need to do both — simultaneously — and make 2018 the year of peaceful coexistence between optimization and transformation.
Resolution 3: Establish an overall purpose to align direction
If an organization is looking to engage in a program of radical innovation and transformation, it has to know where it’s going. To know this, you need to create a shared sense of purpose to focus your efforts and align stakeholders and partners to meet changing customer needs. Research backs this up — in an EY survey of executives, 84% of respondents said a shared purpose improved a company’s ability to transform.
Resolution 4: Look end-to-end
Truly disruptive innovation is not limited to small improvements — it considers the whole experience of the end user, and works to improve that experience, not just parts of it. The innovation might be a product or a business model. Whatever it is, it should be driven by a holistic vision that considers its dependencies and knock-on effects. From the back end through the muck-in-the middle to the front end — all parts of a business need to be involved in the transformation process.
Resolution 5: Cultivate a culture of yes
Innovation is about opening up and exploring new possibilities, and the best way to do this is to create a culture where people say yes to new ideas. Nor should businesses just consign failed projects to the dustbin, but explore what worked and use this to build towards future success.
Resolution 6: Reassess your business model
With the current pace of technological change, just because today’s business models have worked for years, or even decades, doesn’t mean that they’ll still be working in a year’s time. Are there signs your industry is converging with another? Which parts of the value chain are these newcomers moving into? Is your core business still your main growth driver? Which peripheral activities have the most potential to fill the gap? Ask the question posed by Resolution 16, and answer it honestly, and then revisit Resolution 1.
Resolution 7: Obsess about your customers
Today’s biggest disruptors didn’t get there by waiting for customers to come to them. They put customer experience at the heart of their product and service offerings. In 2018, any business looking to swim rather than sink needs to do the same. Seek to truly understand the jobs your customers are trying to do and find ways to help them do them better. In a time when brand loyalty is falling in the face of rising choice and competition, those who obsess about their customers will win.
Resolution 8: Hire to foster cognitive diversity
How can a business expect to be able to pursue, adapt and respond to disruption if the same heads keep knocking over the same old ideas? Hiring talent with diverse backgrounds and experiences is key to breathing new life into business — EY has found companies with at least 30% female boards outperform competitors by 6%. But diversity also means clashing together different skill sets, for example creatives, technologists and cyber specialists to generate fresh perspectives.
Resolution 9: Ensure the CEO owns the disruption agenda
A recent EY study classified businesses as caterpillars, chrysalides or butterflies, according to how ready they were to embrace disruption and innovation. In the most innovation-ready butterfly companies, CEOs were most ready to lead the innovation agenda, setting standards of leadership and vision for the rest of the company to follow.
Resolution 10: Turn the C-suite into the D-suite
While the CEO should own the disruption agenda, the entire C-suite needs to be in lockstep. To truly transform, digital needs to be woven into the fabric of the organization’s everyday activities, not simply bolted on as an optional extra or as a thing needed to improve on operating efficiency. The C-suite needs to lead this thinking.
Resolution 11: Engage with investors
Business leaders often feel investors want them to play it safe — but the opposite may be true. A recent EY survey found 67% of investors want companies to press ahead with potentially disruptive innovation projects — even if they are risky and may not deliver short-term returns. Engaging with these interests to explain your innovation agenda can help create trust and confidence in long-term growth strategies.
Resolution 12: Allow your change champions to self-select
Even when CEOs succeed in defining long-term goals, strategies and purpose, communicating these throughout an organization can be difficult. Businesses often rely too heavily on identifying people in the “frozen middle” to try and get them on board. Today, digital leaders enable every level of the organization to participate, and self-select. Give the resources to the early adopters and enthusiasts and watch them go.
Resolution 13: Pursue outcome-based innovation metrics
Instead of tying your innovation metrics to your annual budgeting process, focus instead on outcomes — not timelines. Whether you’re trialing a new business operating model, product or service, think more about the outcome you want to achieve and less about the time it takes you to get there. You want to see an outcome that proves either that a product or service is working, or that there is demand for it. Then you can either stop a project quickly, or give it further funding.
Resolution 14: Make decisions faster
Understanding what outcomes you want to achieve is one thing — but you also need to pick your battles. To stay on top of rapidly changing trends in business, politics and technology, organizations need to adopt a start-up mentality of testing and learning from mistakes, and rapidly pivoting to new approaches. Fail fast and move on.
Resolution 15: Avoid the theatre of innovation
So you’ve created an open-concept office, toured Silicon Valley and established an innovation team, now what? The “innovation theatre” is all about creating high-visibility initiatives without making them part of a comprehensive enterprise-wide innovation strategy. Don’t be a part of this act.
Resolution 16: Ask “what parts of my business are already dead?”
It’s easy for companies to have difficulty letting go of their failures, particularly parts of their business that have been around for some time. But learning to identify and shed failures is key to freeing up the resources to embrace innovation and disruption as it emerges.
Resolution 17: Connect innovation teams back to the business
Fewer than half of CEOs have invested in establishing a specific team to monitor potentially disruptive external trends. Businesses need to not only create these teams but also ensure they’re not operating on the periphery of the core business. Connectivity across the business is key to scaling products and services, and realizing their true potential.
Resolution 18: Look for cross-sector partnerships
Established organizations can look beyond their own industry walls for opportunities to team up with potential partners and find new technological approaches and business models that can help them better meet their customers’ needs. Partnerships — especially ones that transcend industries — can bring together diverse sets of expertise, and unlock previously hidden value and opportunities.
Rising to meet the demands of disruption will be a career-defining challenge for many business leaders. Those who effectively embrace the innovator’s duality of optimizing existing business while identifying new game-changing opportunities will be those that thrive through this transformative age to establish long-term success.
Compliments of Ernst & Young, a member of the EACCNY