By Lance Vaughn, CEO of CabForward℠
Anyone who keeps track of current business and technology news would be hard-pressed to disagree with the fact that we live in very interesting times with all the digital transformation that is happening. Technology is advancing at breakneck speeds and new tech startups are emerging daily to challenge incumbent businesses that have for so long gone unchallenged. As CEO of CabForward, a digital transformation development agency for web and mobile, I am frequently asked to provide mentorship on how to perceive and navigate these turbulent times. In response, we have developed the TIDE model to provide a lens through which we can examine current and historical trends, and better understand how technology (T), innovation (I), disruption (D), and entrepreneurship (E) affect our daily lives and business decisions.
With so much talk of disruption, it can be difficult to discern the source and nature of the catalysts that are capturing so much of everyone’s attention. In this brief article, I will suggest a plan that you can implement immediately that will both help you stay relevant and prevent you from tumbling in the wake of a catastrophic wave of disruption.
Let’s begin with a review of each of the four TIDE elements.
The world of technology is exploding with exponential growth. Our perception of what the very near future holds will soon be contradicted by reality. While the Internet makes the world smaller and flatter, technology continues to arm innovative entrepreneurs with the ability to disrupt complacent or oblivious incumbents in every marketplace.
Cloud computing has matured significantly over the last few years, enabling business to leverage on-demand computing platforms and Software as a Service (SaaS) to dramatically expedite all aspects of business while driving costs down. Mobile computing is changing the way we work and play — we now spend half of our Internet time on mobile devices. When these two major tech trends are combined with social and big data analytics, we have what is being called the third platform of computing, and it’s transforming Information Technology much faster than the first (mainframe) or second (client/server) platforms ever did. Wireless microcomputers are being embedded in our thermostats, lives and homes. Robotics and self-driving cars have become a present day reality. 3D Printing is evolving at an extraordinary pace and promises to disrupt traditional manufacturing and supply chains in nearly every industry.
The way we run our lives, our business, the way we talk to our friends, the way we see possibilities, is entirely different than ten years ago. Twenty-four hours a day, computers are talking to computers at speeds beyond our comprehension and massive amounts of data are being produced under the premise that machine-to-machine communication will provide us with a better quality of life. We are now able to use this data to accurately predict future outcomes in nearly every industry. These predictive capabilities will continue to improve over time and our dependency on them will increase.
To be successful in business today, we must continuously study technology trends and practice predicting capability leaps. Industry after industry has been impacted by this tremendous, unprecedented growth in technology.
The recent acceleration in tech advancement is triggering an equally explosive resurgence in innovation. With every transformative technology comes possibilities. The concept of innovation is as old as the human race. It’s a deep and complex topic and has been the focus of endless research. There are innovation truths, frameworks, stages, types, strategies, methods, funnels, tests, exercises, and so on. To save you the research time, I recommend using just the “Ten Types” and “Seven Truths” to get started.
While studying the characteristics of successful innovations, researchers at Doblin, a global innovation strategy consultancy, discovered 10 distinct types of innovation that form the basis of their “Ten Types” framework.
Ten Types of Innovation:
Profit model (how we make money)
Network (how we connect with others to create value)
Structure (how we align talent and assets)
Process (how we use signature or superior methods to deliver offerings)
Product performance (how we employ distinguishing features and functionality)
Product system (how we create complementary products and services)
Service (how we support and enhance the value of offerings)
Channel (how we deliver offerings to customers and users)
Brand (how we represent offerings and business)
Customer engagement (how we foster distinctive interactions)
The different innovation types can work like a playbook. Pick one that addresses a specific need and take it for a spin. Perhaps you have already identified an area in your business that is in trouble, or an area that you believe is ripe for innovation.
The way we approach innovation has evolved significantly over the years. Innovation is now more about focus and discipline than raw creative thinking. The famous toy maker Lego learned this the hard way when, in 2003, it found itself hurtling towards disaster. It had failed to keep pace with the revolutionary changes in kids’ lives, and began sliding into irrelevance. When the company’s leaders implemented some of the business world’s most widely espoused prescriptions for boosting innovation, known as the Seven Truths of Innovation, they ironically pushed the iconic toy maker to the brink of bankruptcy.
Seven Truths of Innovation:
Leverage diverse and creative people
Build an innovation culture
Be customer driven
Explore the full spectrum of innovation
Foster open innovation
Focus on blue ocean markets
Practice disruptive innovation
Individually, the “Seven Truths” had worked extraordinarily well for other companies. But collectively, they almost broke Lego once and for all. Following these truths boosted sales but also led to skyrocketing costs. Because Lego lacked an effective system for monitoring its innovations and swiftly alerting management when an initiative took a wrong turn, the company was completely caught off guard.
Lego leadership had promoted creativity but never sufficiently channeled it. They brazenly pushed into new markets but failed to instill sufficient focus to ensure that their innovations harvested substantial rewards. Lego eventually made the right adjustments to save the beloved brand. They chose two of the “Seven Truths” and got them right before graduating to the other truths. Lego was eventually able to implement all seven into one larger innovation system, but it’s an extraordinarily delicate balancing act that only the largest of teams can pull off.
Embracing and implementing innovation is both necessary and challenging. Assuming you don’t have billions to invest in doing innovation poorly, I recommend getting started slowly and carefully, integrating innovative practices into your existing work habits.
Disruption is what occurs when an innovation dramatically impacts an industry or competitive landscape. To the lay person, we know something is disruptive when it appears in the headlines outside of the technology section. Almost every day we hear of an industry that will never be the same again. Our favorite method of completing a common task is suddenly deemed so utterly insufficient that it is abandoned with full force in favor of something shiny and new that does it better, faster, and cheaper than ever before.
Disruption alters how we think, behave, do business, learn, and go about our day-to-day activities. Harvard Business School professor and disruption guru, Clayton Christensen, says that a disruption displaces an existing market, industry, or technology, and produces something new, more efficient and worthwhile.
The automobile was a revolutionary technological innovation, but it wasn’t a disruptive innovation. Early automobiles were expensive luxury items, so the introduction of the automobile didn’t disrupt the market for horse-drawn vehicles. The market for transportation essentially remained intact until the debut of the affordable Ford Model T in 1908. This mass produced automobile completely transformed the transportation market.
Not all disruptions are so highly impactful. Smaller disruptions can cascade like dominoes into a larger, catastrophic disruption. Like a rogue wave, the right conditions exist to trigger the perfect storm. Today’s entrepreneurs and business owners must track these smaller disruptions and determine whether they are silo disruptions or a part of a larger whole.
Only the most learned students can identify when a rogue wave is mounting. Transformational technology seems to appear overnight. An innovative entrepreneur will have a vision of how that technology can be leveraged to launch a new product or service that disrupts existing ways of operating. The new business prospers and the old ways of doing things crumble and vanish.
According to the authors of Big Bang Disruption, conventional wisdom once held that new markets were created from the top down. Innovators created differentiated goods targeted to customers who could afford to pay more and were willing to do so. Like all of the luxury items initially available only in the most expensive automobiles, these items over time began appearing in more affordable models.
In Clayton Christensen’s 1997 book The Innovator’s Dilemma, the author argued that disruptors work from the bottom up. Newer less expensive technologies eat away at a market, doing the smaller jobs that required, perhaps, less quality or speed, but did so at a significantly better cost.
Innovation experts more or less agree that we are entering a new stage of innovation that is made possible by emerging technology. New disruptors attack existing markets from all angles, leveraging not just one, but all of the aforementioned strategies. Thanks to the exponential growth and falling costs of technology, new products can be simultaneously better, faster, smarter, and cheaper. What’s more, these new offerings include powerful features and customizations that were never before imagined.
The iPhone is probably the most commonly used example of a disruptive technology. Steve Jobs and his teams at Apple were able to leverage the explosive growth of technology to put the world’s most powerful portable computer into the pockets of millions of consumers. If there is one great truth to take from the continuum of time is that nothing lasts forever. The same is true about disruption. Within a few short years, the iPhone was being challenged by similarly capable mobile phones from Samsung and others.
So, whether we have experienced a great win or great loss, we should all be watching the innovation landscape with an eye for disruption. We can’t expect markets to stand still while we slowly, surgically tweak our product or services to improve quality or price. A disruptive landscape suggests a different mode of operation is required. A heightened sense of alertness is mandatory at this stage in the game. Every business, large or small, needs to adopt a startup mindset. We cannot afford to let healthy profit breed complacency. Rather, we must continuously survey the horizon for new opportunities and new competitors. The new rule of thumb is ‘disrupt or be disrupted.’
With all of these environmental changes, entrepreneurship is now more important than ever before. Professor Howard Stevenson of Harvard Business School defines entrepreneurship as the pursuit of opportunity beyond resources controlled. Entrepreneurs, according to Stevenson, have an orientation toward seeing opportunities and acting on them.
The psychology of entrepreneurship is much more fascinating than what is seen at first glance. While research suggests that there is no entrepreneurial personality per se, there are a variety of traits entrepreneurs seem to have in common. One central trait of entrepreneurship is self-efficacy, which is the extent or strength of one’s belief in one’s own ability to complete tasks and reach goals. Research has shown that those with high self-efficacy are more likely to take on challenging tasks, whereas those with low self-efficacy may tend to write them off as impossible. Quite simply, the entrepreneur acts on a perceived opportunity because she believes that it can be done and she can do it.
Due to the lack of support for the notion of an underlying entrepreneurial personality, the study of entrepreneurship has shifted away from the study of why entrepreneurs are different psychologically, toward a study of how entrepreneurs think differently than non-entrepreneurs. Thus there is increasing emphasis on the cognitive processes of entrepreneurs.
If you’re a successful entrepreneur, research suggests that you do this already. But, for many, it helps to have a framework, or lens, through which we can examine situations. That lens is what the TIDE model attempts to provide. If we can accurately perceive the opportunities and determine their feasibility, we are well on our way to hatching an actionable plan.According to Eli Mercer, Lecturer of Entrepreneurship and Marketing at the University of Texas at Austin, time and efficiency have become the most important focus for today’s entrepreneurs. “Time and efficiency become the next big focus once things are getting done. Time saved frees up creative minds and skilled hands to devote more mindshare to crafting something new or improving what they do.”
But efficiency isn’t where it starts and ends for entrepreneurs. If we focus entirely on tweaking the details, we can miss the larger opportunity that is usually disguised as something entirely different. Ultimately, innovation beats efficiency. We must improve the current process while continually looking for and trying out new methods of delivering value to customers. We have to keep an eye on emerging technology and consider how these new tools could change the way our customers work and play.
Mercer’s remarks highlight the fact that the days of wild abandon in the startup community are gone for good. Investors demand validated products, markets, and teams. The aforementioned focus and discipline that is so rampant in the innovation community is just as relevant, if not more relevant, for entrepreneurs. For we are, in fact, the ones behind the wheel, accelerating, decelerating, turning and tuning our vehicles of innovation until something clicks.An entrepreneur’s job doesn’t end once she has developed an understanding of today’s playing field. The landscape constantly shifts, and thus entrepreneurs must be optimistically persistent; we must recover and learn from failure; we must continue to analyze the short-term playing field and make necessary adjustments while continuously assessing the long-term.
The TIDE Continuum
If we plotted the individual elements of TIDE on the continuum of time, we would see that today’s business landscape is turning upside down and inside out. Understanding the nature of the TIDE continuum and our place in it is critical to success. Let’s review.
Technology – Continuously study technology trends and practice predicting leaps forward
Innovation – Implement disciplined and focused scientific approaches to innovation
Disruption – Seek to understand what markets are being disrupted, how and why
Entrepreneurship – Develop our antennae to see opportunity while focusing on efficiency
The TIDE model enforces a behavior of analysis of each of the four elements within the perspective of time. It provides a lens through which we can identify areas that need more discovery. This model is still very early in its development, but it is already helping me look at my business, guiding me toward asking the right questions and developing a better understanding of what opportunities exist within my industry.Once we’re asking the right questions, we’re able to predict possible future scenarios. These scenarios can either help or hurt us depending on our level of preparedness. At this point, we’re able to implement simple or complex scenario planning methodologies to make flexible long-term plans. Scenario planning is an adaptation and generalization of classic methods used by military intelligence.
Five Steps of Scenario Planning:
Brainstorm a list of possibilities
Determine which possibilities are most critical
Construct future business environments
Construct alternative business plans
Devise action items
Methods similar to scenario planning are employed in chess and other strategy games. Strategies are higher level plans that have flexibility baked into them and can be executed using a number of different tactics. Studying the game of chess can teach us how to move quickly in the face of incalculable complexities and unexpected change. In business as in chess, we must move in accordance with an overall strategy while actively making mid-flight corrections as needed.
Still not sure how to get started? Review the Ten Types of Innovation and identify one innovation type to focus on. Ask yourself (or, ideally, your trusted innovation team) which of the Seven Truths of Innovation is best used for your selected innovation type. Your goal should be to have an immediate and measurable impact on your business. Be prepared to practice discipline and focus to keep your costs at a minimum.
Study up on the scientific method and practice running experiments. This will force you to validate assumptions with real data. Engage your customers, employees and partners in a methodical way. If you haven’t done so yet, read The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses by Eric Ries, and Running Lean: Iterate from Plan A to a Plan That Works by Ash Maurya. Draft a lean canvas for every scenario to understand the opportunities and analyze their strengths and weaknesses.
Don’t skirt around the technology topic. Technology is the number one force pushing innovation and disruption today. It simply cannot be ignored. If you’re convinced that you don’t have what it takes to understand and predict technology trends, then expand your team. Find someone who shares your passion for prediction and scenario planning. The same rule applies to every one of the TIDE elements. The deeper your understanding of each of them and their implications on your business, the better you’ll be at deducing future scenarios.
TIDE may not be a perfect model for predicting the future — you won’t know exactly when your phone will ring with news of changing customer habits or new competitors appearing out of nowhere. But if you make the investment to prepare for these future scenarios, you’ll have a much better idea of what needs to be done after you hang up the phone. – click –