Are you one of those “lucky” CEOs who sleeps well at night, secure in the knowledge that your industry is disruption-proof? After all, you’re well-established, and you have the bulk of the market share. No one could be clever enough to crack your monopoly, right? Or perhaps you’re a singularly fortunate founder, with a growing start up that’s so unique, so awesome, and so widely-adopted that there’s no way anyone could disrupt your action.
Well, that’s probably just how the CEO of Blockbuster felt ... before Netflix hit the scene. And the higher ups at the big hotel chains probably weren’t sweating it either … until AirBnB came along. And tech founders aren’t immune to upstarts either. As investor and entrepreneur Marc Andreeson told the a16z podcast, “The way that people perceive disruption is the tech industry attacking other industries .. But in in reality it’s tech start ups attacking tech incumbents. And the amount of time you get to call yourself a start up before you're a target to get disrupted is shortening, so the disruption cycle is playing out earlier.”
Okay, so maybe you aren’t burying your head in the sand. Instead … you’re up all night, tossing and turning, because the thought of being disrupted fills you with an icy dread in the pit of your stomach. And we’re not going to sugar coat it: If you aren’t thinking about your business model correctly, you *should* panic.
The fact is, any business is disruptable if -- and if is the key word here -- someone finds a much better way to do the job you’re doing for your customers. And preventing that very thing is the key to being as disruption proof as you can be in this world. The good news is, if you understand and apply jobs theory to your product or service, and have a willingness to break commitments and change processes that don’t serve that job, you can protect yourself against disruption.
Eye on The (Job) Prize
Clayton Christensen, Harvard Business School professor and author of Competing Against Luck, has said that, “It’s hard for a disruptive company to go after someone who keeps nailing the job better and better and better.”
But you can only nail the job better and better if you truly understand it. Netflix understood that Blockbuster was doing the job of providing people with home entertainment -- and they figured out how to remove existing struggles and obstacles and make that experience much better. AirBnB understood that a hotel was doing the job of providing people with a home away from home -- and they too found a way to do that job better.
Or take the case of Kodak. People tend to look back on the failure of Kodak and think they went down in flames because they stuck their head in the sand and refused to acknowledge the encroaching power of digital photography. But that’s simply not the case.
In fact, Kodak actually invented the first digital camera, and developed a technology that allowed people to easily move their pictures from a camera to the computer. They also bought a photo sharing site, Ofoto. And what did they do with it? Well .. they focused on getting people to print digital photos. Ruh-roh.
So while it’s easy to chalk their failure up to stodginess and a lack of understanding about the new technology and its implications, that simply isn’t true. They knew they were in danger of disruption .. but they didn’t understand the job they were doing for people — or how to approach the problem.
Let’s step back and consider: What problem was Kodak solving for their customers? What were they doing (at one time) better than anyone else? Well, their tagline was once “Share memories, share life.” And therein lies the answer: They were helping people make and share memories, as evidenced by the once well-known tagline, the “Kodak Moment.” And digital photography was an opportunity that could have allowed them to do that job even better. They could have improved the user experience and removed obstacles … like having to print digital photos. Facebook and Instagram grasped the power of digital tech to do the job better .. and left Kodak in the dust.
The logical question then, is, with all of the resources at their disposal, why couldn’t they be nimble and insightful enough to understand the job they were there to do and successfully respond to the disruptive threat they faced? One reason is that CEOs and decision makers (and yes, that can include founders) tend to make what feel like unbreakable commitments. And these well-intentioned commitments can become a trap, as we’ll see.
The Prison of Commitments
Andreessen, in the same a16V podcast mentioned above, opined on the connection between CEO failure rate and the commitments they make. “They end up overcommitted,” he said. “Then, to address disruption, it would mean breaking promises.”
How does this look in practice? Well, according to a Harvard Business Review article, then-Kodak CEO George Fisher and crew “were so worried about the threat posed by the new technology that they spent much of [their allocated] money before they knew how the market would develop. They committed to price points and product specifications that later proved difficult to change, and they hastily installed 10,000 digital kiosks in Kodak’s partner stores.”
It’s just as easy to imagine that the higher-ups at Kodak made many other business-killling commitments. For example, maybe they committed to hitting certain metrics on digital photo printers. Then they stayed fixed on those targets -- ultimately at the expense of their company.
It's easy to be a Monday morning quarterback. But this counterproductive rigidity isn’t due to some simple minded self-delusion. In fact, it’s a natural response to a perceived threat. The HBR explains that research supports the fact that, in general, “Executives who perceive threats are rigid in response; those who see opportunities are expansive.”
The key here is knowing that, no matter the size of your business, as a decision maker you are empowered to break commitments if those commitments don’t serve the job you're doing for your customers. You can resolve to practice a thoughtful expansiveness rather than knee-jerk rigidity. As Andreeson puts it, “CEOs make a lot of promises and make a lot of commitments, but founders have the ability to break all the promises. And that’s a good thing … But CEOs with a founder mentality can do it if they know they can.”
The Trap of Processes
A self-defeating urge to cling to old business processes -- ones that worked once upon a time -- is another piece of the puzzle when it comes to understanding how otherwise smart, successful companies can get disrupted. It’s understandable: Change is hard and humans are by nature averse to it. And when faced with an outside threat, we tend to cling even harder to the comfort of the familiar -- including those processes we know and love. In practice, this means that all too often, higher-ups fall into the Kodak Trap and try to make the new business or endeavor fit their old model, rather than the other way around.
HBR describes three main facets of this change-aversion:
When the motivation to change comes from feeling threatened, managers and teams usually respond not just aggressively but also rigidly: They focus on defending the existing business model (as opposed to creating a new one); they commit resources in large lump sums (rather than in staged investments); and they tighten the existing organization’s authority (instead of giving the new venture autonomy).
The lesson here is that you aren’t married to your established processes at all costs. And if you’re facing the threat of disruption, it’s in your best interests to create and embrace new processes that will effectively address the threat and turn it to your advantage.
Simply put, all decisions must flow from the job that you’re doing for your customers. If a disruptive technology comes along, instead of reacting with rigid aggression, embrace the opportunity to discover processes that could improve your own customers’ experience. Don’t be afraid to break commitments that don’t serve that end. As Christensen says, if you “get” the job, you can get to the next level. Or, as he puts it, ask yourself: “What do we need to integrate and how to provide these experiences? … That combination makes it very hard for someone to disrupt you and defines what you uniquely can do.”