When things around you change, doing the right thing might be the wrong thing. Plus the gravity pull of the well established.
The innovator's dilemma
By Leonardo Murillo
- 9 minutes read- 1904 words
The innovator’s dilemma by Clayton M. Christensen is another one of those books that have become obligatory reading in Silicon Valley circles.
The author looks at a handful of industries that have gone through multiple cycles of technological disruption, and attempts to identify what was it about some companies that allowed them to survive, while the majority, once exposed to such dramatic change, failed to adapt and succumbed.
There were quite a few concepts exposed by Christensen that triggered my curiosity in terms of technological evolution, regarding organizational elasticity, and of course the controversial concept that doing the right thing might be the cause of your demise.
I deal with digital transformation. Most of my clients and the projects in which I participate are in one way or another eliciting change, accelerated evolution, in the organization.
Think of DevOps as an example, fundamentally a cultural movement, one in which success hinges only partially (some would argue, if at all), from technological factors, but exposes the organization to a usually disruptive change in terms of processes, dialogue and mindset.
To me, the commonality between market and organization disruption is evident. I’ll elaborate on how cultural and organizational change can be sustaining or disruptive, and that regardless of whether it’s about a technology product or service, or the adoption of new ways for an organization to operate, the challenges to overcome -as well as the usual pitfalls- are similar.
Two types of change
Christensen proposes that there are two fundamentally different types of change - two ways in which technology can develop:
Sustaining change: These are developments that occur within an already established paradigm. They improve what already exists, and usually happen incrementally over time.
Disruptive change: These are changes that create new markets and value networks, and eventually disrupt existing ones. They are driven by significant alterations in a product or service in ways that users did not expect.
It takes a dramatically different approach for an organization to be able to succeed in developing either, and for all practical purposes they are mutually exclusive: the progress indicators, processes and culture required to be effective in either type of development are so fundamentally different from one another, that they can’t coexist.
The implicit choice of everything you will not do
When a company builds its internal culture and processes, leaders are usually laser focused in a very specific set of objectives.
There is an implicit, much broader decision happening at the very same time, and one that is usually outside the line of sight of the leader: by choosing what you want your organization to reliably and predictably do, the choice of everything the organization will not be good at is also being made.
As time progresses, the established mechanisms solidify, and the elasticity required to follow any alternative path reduces.
Interestingly, it’s hard to argue with this pattern - it makes total sense, particularly as you look into scaling an organization. You want everything to be explicit, clearly defined and reproducible.
The problem is though, this approach blinds you from alternatives that may be creeping below your radar, that represent dramatic opportunity if they’re seized within the right time window, or become existential threats if left unseen.
Even in the scenarios where you do spot the creeping disruption before it’s too late, the gravitational pull of the established patterns in the organization will sabotage the efforts in taking advantage of it, because for it to be seized, the mindset would have to pivot 180°.
The customer is always right… sometimes you need a different customer
As companies mature and grow in size, their structure becomes ever more solid. There are many factors that drive this process, a process that is arguably indispensable towards maximizing the potential to scale.
A leader wants to build an organization with such strong culture and such clearly defined decision-making criteria that she can trust that the choices made across all levels align with overarching executive objectives, the larger the organization the more important for those patterns to solidify and become autonomous.
One of the common patterns in decision-making that is frequently ingrained in organizational culture and processes, which when looked at in isolation and inside the context of well established markets makes sense, is the idea of “customer driven decision-making”.
The old adage of “the customer is always right” extends itself to most strategic decisions of the organization.
This concept also applies to internal “clients” within a company.
As an example, for IT groups in most enterprises, other units within the organization are its clients, and they are used to a way of doing things which is precisely what they’ll demand, further reinforcing established and perhaps incrementally obsolete and inefficient practices.
The task here however is not to attempt to sell something to uninterested buyers, they will definitely misguide you - either by providing false proof that what you’re selling does not have value, or encouraging you to change in a way inconsistent with its true, disruptive nature. In the least, they will simply waste your time.
The key here is to rather identify the likely small amount of internal clients to begin with, those that are able to take advantage of the rising opportunity brought about by the disruptive change you are promoting.
They will represent your new market, and will help you establish a new value chain.
The dilemma for innovators lies on the fact that, to seize the opportunities presented by disruptive technologies, there usually is no market to listen to, and the requests from your customers, which naturally reinforce well established patterns, will misdirect your efforts.
The thing here is, as innovators you will need to swim against organizational current and create your market, by hand picking clients that are experiencing a problem that your still immature or evolving solution provides.
Do not take the idea of swimming against the current lightly - don’t let it discourage you either.
You have to be cognizant of the fact that your proposition is likely against many of the patterns that the organization has dedicated tremendous effort in building.
Considering you’re starting from scratch with a new disruptive paradigm, you likely will not be able to satisfy the full range of use cases that may exist across a wide majority of the established “market”, and likely those users will consider you are solving a problem that they have already otherwise solved or never really had.
How do leaders take advantage of disruption
So what is a leader to do, to support this disruption?
I think the first component to drive the successful advancing into disruptive terrain is executive leadership buy-in.
There are many reasons for this being of paramount importance.
Topmost, the executive leadership must share the vision into the future value of the disruptive proposition, if there isn’t such executive participation, the organization will constantly starve the disruptive initiative from resources, and the team or business unit looking to explore the new paradigm will spend a huge amount of its already scarce resources fighting the pull from the currently accepted.
Once the executive leadership has clear sight onto the future value of the disruptive approach, then she will have to make some controversial decisions, and stand by them:
Allow those teams that are either building, developing or promoting the disruptive practices, mindset, tools, culture or products, to be autonomous in their decision-making, and not driven by the cemented culture of the organization. The metrics, processes, tolerance for failure and experimentation, and overall means to evaluate progress should not echo those of the more established groups.
Support the team’s ability to find or create a new market. A lot of your current market (be it internal or external) will not be ready nor looking for what is being offered, and that is to be expected, but there will be new use cases and early adopting teams that do see the value, they will be the targets that should get focus and leaders should enable that discovery and communication.
Understand that as the disruption takes hold and starts becoming or advancing into the main stream, there will be successes and failures - and that the new processes or mindset may not be able to fully satisfy the entire spectrum of expectations coming from more established patterns. This is to be expected and metrics and objectives should be aligned accordingly.
Disruptive change inside the organization
I hope you see by now how the patterns in disrupting markets by developing disruptive technology also apply to implementing paradigm-shifting change within an organization:
Just as markets are expecting developments to follow their existing paradigms, so will the teams inside your organization expect evolution to follow their accepted and cemented path, and will have difficulty -and sometimes even lack a real need- for the disruptive changes as they are evolving.
The successful development of a new disruptive process is highly experimental, and will require balance between the discovered needs of an evolving user base, and the success or failure of new, relatively experimental approaches.
Once the disruptive change has evolved to a point where it does satisfy the need of later adopters that, for one reason or another, had no need for the new patterns in earlier cycles, there will be a resulting impact in deprecating or displacing others.
What are some examples of disruptive transformation
As I mentioned at the beginning, in my role I participate in many digital transformation projects. The name alone implies disruption of existing paradigms, what else would a transformation be right?
I think there are multiple recent developments, that are disruptive in nature, that would benefit from the guidelines I’ve shared above - to name a few:
Even today, organizations many times struggle to adopt a DevOps mindset.
The “organizational main stream” has spent years building processes to keep production environments safe, the leadership gauges progress from the various participants in the lifecycle of a product using disconnected metrics given specific groups, and all documentation, processes and culture are strongly focused on separation of responsibility and a technology specific (not product and value) perspective.
I just talked about DevOps, now let’s add Security to the mix, and you have a perfect storm for disruption. Security is historically one of the most tightly controlled aspects of organization processes, and the security organization is usually heavily siloed. On the other hand, developers have a tendency to not want to have a lot to do with security.
DevSecOps is highly disruptive in terms of status quo and established processes, but the future value it enables is tremendous.
Cloud Native Architecture
Last but not least, building solutions natively for the cloud is also disruptive as it exposes teams to whole new paradigms on how to architecture software and infrastructure.
What are next steps?
Embrace disruption, but let it evolve and mature by its own rules. As leaders, don’t let the pull of the established limit disruptive opportunities, it may represent the difference between long term success or failure. For those building or promoting disruptive change, find your market, and if you can’t find it, create it.
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