There's a mantra in business today - disrupt or risk becoming disrupted. And while I personally believe that it's imperative for executives to continually disrupt their businesses to anticipate market shifts and changing customer behaviors, too many companies are going about it all wrong.
The problem with most digital disruption models, as my friend Jedidiah Yueh so eloquently captures in his new book, Disrupt or Die: What the World Needs to Learn from Silicon Valley to Survive the Digital Era, is that nearly all of the strategies being deployed by enterprise companies are based on dated approaches to innovation.
"Companies often refer to classic books such as Clayton Christensen's The Innovator's Dilemma or Eric Ries's The Lean Startup to help shape their digital transformation strategies. Unfortunately, the concepts in these books are increasingly anachronous," Jedidiah recently shared with me.
Jedidiah is also the Founder and Executive Chairman of Delphix, a Silicon Valley company that has changed the dynamics of managing and consuming data. Prior to that, he was the founding CEO of Avamar, which generated billions of dollars in product sales for its acquirer, EMC.
In The Innovator's Dilemma, Christensen talks about how disruptive entrants initially address niche segments of a market with simple products before they move up-market. "In reality, companies have to protect themselves from more than just bottom-up disruption," Jedidiah countered. "They also have to worry about over-the-top disruption from products like the iPhone or the Tesla, which target premium market segments and then move top-down."
"After Amazon acquired Whole Foods, they also have to worry about disruption by major acquisition," he added.
Meanwhile, companies that rely on Lean or Agile methodologies to drive disruption sub-optimize execution and planning, says Jedidiah. "The problem with Lean is survivorship bias. You're looking at the three winners who iterated their way to success, while ignoring the ninety-seven companies that failed. Trial and error is not a strategy."
Another shortcoming of The Innovator's Dilemma is how it advocates the formation of a special entity to drive innovation that is not beholden to the same resource and efficiency constraints as existing departments, what Jedidiah calls the "sidecar" approach.
"The problem with a sidecar is that it's not front-and-center. It's not at the heart of the company's priorities and the focal point for the company's leadership," said Jedidiah. "Contrast that with Apple, where the development of the iPhone was the central program managed at the very top of the company."
Other missteps that many companies are taking in their efforts to drive meaningful innovation is that they too often confuse process with progress, says Jedidiah. "When I work with large companies, they often say their top transformation programs include Lean, Agile, DevOps, and cloud migration. But these are the 'how' of fast development, not the substance, not the 'what.'"
Instead, companies should focus on inventing the products and services that will define the future of their industry or market, says Jedidiah. "Or in other words, they need to focus on the 'what,'" he summarized.
Finally, successful companies need to have investors and boards of directors that are transformation and growth-minded.
I strongly recommend reading Jedidiah's book to learn more about his visionary approach to disruptive innovation. In the meantime, you can also glean additional insights on best practices for tackling digital disruption via HMG Strategy's Resource Center.
Jedidiah Yueh will be speaking at the upcoming HMG Strategy 2018 Global Innovation Summit in Menlo Park, CA. To learn more about Jedidiah and other speakers at the summit, click here.