Be a phoenix. Wake-up, re-invent or fall foul of disruption

Pivot, reinvent, phoenix - whatever you call it, enterprises need to move with the times or face disruption and extinction. How do businesses stay fresh and keep relevant?

"We like having you over. It's like watching a zombie movie, getting really scared and then going back to work, as if it was all just a bad dream."

For Peter Hinssen, founder of nexxworks, author and lecturer at MIT and the London Business School (among others), this is just one of the more amusing responses he gets from one of his sessions on how to pivot and differentiate in business. Not all companies he talks to either understand what they need to do, or have the mental and physical capacity to actually change.

"Many large organisations have lots of people who understand that to stay relevant you have to constantly change but these organisations lack urgency, and that's a common problem," says Hinssen, who has just published his fifth book, The Phoenix and the Unicorn. "Those firms capable of re-inventing themselves understand the need for urgency, without panic."

So why would anyone want to re-invent, to pivot or phoenix? It surely costs money, eats up human resources and is not always guaranteed to produce results? Of course, we can point to countless business failures over the past few years, disrupted businesses that refused to change, as examples of what happens when you don't take it seriously.

Industries across the board are being forced to compete with new entrants and new consumption models, some more than others. Telecommunications, media, travel and retail have perhaps taken the brunt of digital disruption but now automotive, financial services, healthcare, pharmaceuticals, energy and agriculture are also experiencing rapid transformation. Investment in digital businesses within these sectors is growing fast - a recent Tech Nation report claimed that in 2019, Agritech, Healthtech and Cleantech received over £20bn in combined funding in the UK, US, China and France.

What is clear is that digital disruption is growing competition across all industries and that incumbent organisations are still struggling to meet the challenge, dismissing it as a hyped-up zombie movie and in many instances, burying their heads in the sand. It's someone else's problem. We're OK, we've got money in the bank.

Hinssen likens it to a weather map where thunder storms come and go with the early signs of trouble when it starts to rain. Businesses, he says, especially the more established ones, will need to constantly re-evaluate, to ride through those storms. He talks about Walmart and how CEO Doug McMillon has steered the business over the past two and half years towards being a more technology-driven organisation.

"Walmart never used to feel that Amazon would threaten its core business," says Hinssen. "If anything, Walmart felt it was the original disruptor and king of the hill when it came to retail but of course it wasn't long until Amazon did become a threat."

Walmart has since adopted a number of measures to try and drive innovation, using technology to solve customer pain points, as well as improve distribution centre efficiencies through automation. The key for Hinssen here is the speed at which the whole organisation was on board with the changes, as much as the innovations themselves. This is the common characteristic he sees across a number of successfully evolving organisations that also include Microsoft, Volvo, AT&T, McDonalds and Disney.

"Microsoft is an interesting case," he says. "It's one of the greatest transformations in recent times. About ten years ago you kind of felt sorry for Microsoft. It was a large company selling boxed software and hardware products and there was no real innovation and was really going nowhere."

Hinssen says that Microsoft's shift to a cloud-based model for products and its development of Azure has changed the company's fortunes and made it relevant again. This, he suggests, could only really have happened through strong leadership. The recognition and subsequent drive for change had to come from the top, otherwise it would have been laborious and piecemeal, and therefore unsuccessful.

The ‘one percenters'

One of the most common issues Hinssen sees is organisations isolating innovation projects.

"So many companies hire technology people and give them a ‘day after tomorrow' project, often isolating them from the rest of the organisation," he says, adding that this becomes a source of enormous frustration for the team, which can lead to project failure and loss of good skills.

The issue he suggests is that these sorts of isolated projects rarely scale. They are built to impress but lack companywide viability and are therefore reduced to marketing spin, where often large sums are wasted on painting a picture of innovation, whereas in reality, nothing has really changed.

The innovators become a minority within an organisation. They are what Hinssen refers to as "the one percenters" who want to change and recognise the value of new ideas and staying relevant. In a start-up the balance is usually different. Innovation is what drives a start-up so it tends to be that 99 percent of staff and not one percent, are actually innovators. For large organisations, this is of course more difficult but not impossible. It's about leadership, culture and organisational skills, as well as technology innovation and industry knowledge.

"Technology plays such a key role, so you need technology people, internally if possible, as you can only go so far with external support," says Hinssen. "It's not just tech skills, of course. You need more people with a different mindset and this is often a greater challenge. You can re-train people but they have to be open to change, to re-skill and think differently. Companies are really struggling with this."

What this really comes down to is attitude and energy, especially at CEO and CIO level. To what extent are business leaders setting the overall tone and how are they enabling organisations to evolve as a whole and not just in bit parts? Technology, it seems is only part of the solution.