Recently the head of a Colorado-based startup accelerator, working on the frontlines of disruption, said, “All big companies are startups that won.” The problem is once these companies win, they set up a game board and create rules so they can continue to defeat competing startups. They hide behind market share, their temporary competitive advantage, or even regulation—and think they’re safe.
These barriers are a false protection, because startups break the rules. They’re troublemakers. Uber literally defied laws, and if you were a taxi driver thinking your medallion was going to keep you safe, you had another thing coming.
Complacency sets in when we think that once we’ve set up the game board, all we need to do is play by our rules and we’ll keep winning. After an initial success—or perhaps after decades of success—we forget the need to constantly recreate and reinvent. As Bill Gates said, “The complacent company is a dead company.”
The idea that nothing fails like success is often attributed to the great historian Arnold Toynbee, as he chronicled the rise and fall of civilizations. He posited that when societies face challenges, they use creativity and innovation to successfully respond. But inevitably the nature of the challenge changes. And yet, they so often respond with their old approach. Their subsequent downfall is as certain as their newfound challenge—hence the expression, “Nothing fails like success.”
Likewise, in businesses today, we’re still trying to leverage our past successes to solve new problems. It didn’t work for Rome, and it won’t work for us.
Get real, take this head on, and recognize that disruptive change is the new constant. The pace of change is unprecedented. The amount of change is unprecedented. And the disruptive scale of change is unprecedented. Klaus Schwab, the founder of the World Economic Forum referred to the convergence of this constantly shifting upheaval as “the fourth industrial revolution” and said, “Change will not come in waves this time, like in the past. Change today is coming as a tsunami whose effect will be felt everywhere. You will have to show agility and entrepreneurship to survive the changes coming, because it will change everything. In the future, it’s not the big fish that will eat the small fish, but the fast one that eats the slow.”
This is our new challenge.
The need to be agile, innovative, adaptive, responsive, and entrepreneurial has never been more vital. We must resist the comforting call of complacency and not assume that our past approach will continue to work.
The need to constantly re-create and reinvent goes beyond continuous improvement. I offer three key principles in response:
Confront reality. Too many people are still in a state of denial. They don’t want to see it. But this is happening; it’s real. And as Jim Collins said in Good to Great , we have to confront the brutal facts without losing hope. It’s a constant process of reassessing, as opposed to giving lip service, or worse, pretending then kicking the can down the road, especially with these “fourth industrial revolution” aspects that are so heavily technology-oriented: artificial intelligence, augmented reality, robotics, autonomous cars, 3D printing, fintech, and on and on. You can’t solve a problem you don’t understand. We need to deliberately look for, and confront, the new reality, even when denial would feel much more comfortable.
Keep yourself relevant. I love the expression by the hockey player Wayne Gretzky: “I go to where the puck is going to be, not where it is.” It’s all about keeping yourself relevant and responding to these changes. Recreate yourself, reinvent yourself. Just look at Blockbuster and Netflix. Blockbuster survived the technology change from Beta to VHS to DVD just fine. But they refused to update their core model of physical stores and late fees when Netflix disrupted the industry with mail service and a subscription approach.
The Netflix story has become a classic business case around disruption, but what’s lesser known is how early they saw the opportunity. Netflix was not just one, but two steps ahead of the puck, so to speak. They chose the name Netflix because they knew intuitively that the Internet would factor into their business, even though the technology didn’t exist at the time. Back in 2005, Netflix founder Reed Hastings told Inc, “DVDs will continue to generate big profits in the near future. Netflix has at least another decade of dominance ahead of it. But movies over the Internet are coming, and at some point it will become big business. We started investing 1% to 2% of revenue every year in downloading…We want to be ready when video-on-demand happens. That’s why the company is called Netflix, not DVD-by-Mail.” Two years later, they debuted streaming content, dealing a deathblow to Blockbuster.
Make room for failure. Take calculated risks. Learn from your mistakes. Embrace the Silicon Valley approach of “fail early, fail fast, fail often.” To do that, you have to be willing to take a risk in the first place. Like Jeff Bezos says, “Failure and invention are inseparable twins.” Here’s the key: risk requires trust. Data from an LRN study showed that in a high-trust culture, people are 32 times more likely to take a calculated risk and 11 times more likely to innovate. In a low-trust culture, they won’t take the risk. They’ll cover their behinds, they’ll point fingers, they’ll blame. But what they won’t do…is innovate.
Everyone is being hit by change and disruption, and of the dozens of industries I work with, each one thinks that they’re getting hit the hardest. Yet we’re so deeply scripted in our old successful responses that we’re often afraid of disrupting ourselves. Use these three principles to create new responses to new challenges, again and again and again, as our society changes at an ever-increasing pace.