Posted on 05 Apr 11
What do Nintendo’s Wii, Netflix, Red Bull, Swiffer, and Seinfield all have in common? They each came up with game-changing, disruptive innovation -- revolutionary ideas for their time that changed their respective industries. Each company/entity thought, “what would happen if we...”, doing away with clichés and traditional habits to come up with the next big thing or change the way a product or service is distributed. Wii turned the gaming industry on its head, becoming a big hit with consumers with a motion controller; Netflix delivered movies to your home and without late fees; Red Bull didn’t emphasize taste nor did it want to make you feel happy like Coca Cola; Swiffer replaced the wet mop; and Seinfeld broke the sitcom mold of “hugging” and “learning from your mistakes”.
Luke Williams uses these and other examples as illustrations of “disruptive thinking” in his new book, Disrupt: Think the Unthinkable to Spark Transformation in Your Business. Luke talks about how in this business world of non-stop change, there’s only one way to win the game––transform it entirely with a steady stream of disruptive strategies and unexpected solutions. He explains what disruptive thinking is all about, and shows how to successfully disrupt any market by: crafting a disruptive hypothesis, discovering a disruptive opportunity, generating a disruptive idea, shaping a disruptive solution, and making a disruptive pitch. Over the course of this book’s five chapters, you’ll learn to think about what usually gets ignored, pay attention to what’s not obvious, and create disruptive solutions in a matter of days or weeks, not months or years.
Annie George (AG): Luke, what is disruptive thinking and why is it so important for businesses today?
Luke Williams (LW): “Disruptive thinking is about making significant changes to the way you think about competition and the business you’re in. The old adage, ‘differentiate or die’, has been a key mantra for business competition for a very long time. It’s embedded in everyone’s psyche, and companies have been obsessed with trying to overcome the competition by making incremental changes to their existing products or services. This is a pattern of behavior most common in successful companies operating in mature industries. They often embrace incremental change because it supports their current business model and are reluctant to spend the resources needed to make new things, so they become complacent and stop innovating. This is a huge mistake, which I talk about in Disrupt. If a company only makes incremental changes it’ll find itself on a path that simply gets narrower and narrower. Eventually, the company will reach the end of that path by which time its customers have forsaken it for a new offering that no one saw coming.
“Disruptive thinking is not about how to spot a revolutionary change in technology or the marketplace. It’s about how to be that disruptive change. How to figure out a way to be the only one that does what you do. How to surprise the market with exciting, unexpected solutions. How to turn consumer expectations upside down and take an industry into its next generation.”
AG: Can you give us some examples of what you mean…companies that have embraced disruptive thinking and have come up with innovative solutions?
LW: “One example that resonates with a lot of people is Zipcar. If you think about the interaction that’s involved in renting a car, it’s been the same way for a long time; that is, you go into an office, fill out paperwork, and rent a car by the day. Zipcar is an example of someone who came in and thought very differently about the set of interactions involved and flipped those clichés on their head. They said, “what if we don’t have to see the customer, they didn’t need to fill out paperwork and, instead of renting a car by the day, the customer can rent it by the hour? Would this be of more value to the consumer?’ Zipcar thought about how to service the customer from the ground up. It wasn’t about incremental change to the existing way people rent cars; it was about rethinking the entire experience.
“Another of my favorite examples, which I use throughout the book, is the story of LittleMissMatched, a company started by Jonah Staw, who was a colleague of mine at frog design. One evening a few years back, Jonah was sitting around with friends, talking about mature industries and ideas that could shake things up in those industries – be it, insurance, banking, fashion, etc. When discussing the apparel industry, someone said, ‘wouldn’t it be crazy if someone sold socks that didn’t match?’ No one thought it was a particularly good idea. Everyone, that is, except Jonah, who couldn’t get the idea of mismatched socks out of his head. In his view, the sock category was lazy and boring; we’re still buying and wearing socks the same way we have for decades. And, how many times have you lost one sock and had to toss the matching one—how much of a pain is that? It was a category of clichés ripe for disruption. Jonah experimented with the idea until he found a way to put into action. He identified tween girls (ages 8–12) as their core target market, which led to a key insight: There are socks for kids and socks for adults, but nothing particularly compelling in between. If he could combine self-expressive fun with mature sophistication and premium quality, he could address a gap in the market.”
Today, if you take a look at LittleMissMatched, you’ll see that they have expanded way beyond socks. They’re now into clothing, flip flops, sandals, pajamas, bedding, furniture, toys, and much more.
AG: In the book, you gave an example of Bank of America, and how they started the Keep the Change card in 2005 as a way of helping individuals save money. This is one way a huge company in a mature industry thinks disruptively.
LW: “This is a great example of a company that paid attention to something that wasn’t necessarily a problem. And this is exactly where I typically advise organizations to start with disruptive thinking. Most approaches to innovation focus only on the things that don’t work and need fixing. But, more often than not, it’s the small, seemingly unbroken aspects of a situation that provide the richest opportunity areas for innovation. These are often the nagging issues that linger for a long time without receiving much attention. They tend to be the things we ignore, precisely because they don’t change. The attitude of ‘If it ain’t broke, don’t fix it,’ is the enemy.
“In the case of Bank of America, they created a way to turn a habit of losing money into a habit of saving money. The result is a program called Keep the Change, in which, each time you make a purchase with a Bank of America Visa debit card, the bank rounds up the amount to the nearest dollar and transfers the difference into your savings account. Since its launch, over 700,000 have opened new checking accounts, and 1 million have set up new savings accounts.”
AG: Progressive’s Pay-As-You-Drive is a good example of disruptive thinking, where you pay for insurance based on the miles you consume. They started the program in a couple of states and now are taking it nationally.
LW: “Any conventional wisdom can be challenged, and Progressive’s program reflects this. Consumers are changing the way they buy, and businesses need to change the way they compete. Every business needs to rethink the habits that have made it successful in the past.”
AG: In our industry, there are constraints due to regulation, so there are limitations in what you can do. You can still be innovative and there are many companies coming out with new products all the time, but there are issues and laws that need to be considered.
LW: “In an industry with a lot of regulation, I typically advise a business to come up with the disruptive ideas first––without the limitations. Once you have some new ways of thinking about the industry, bring the constraints into the process to help shape the ideas into a feasible, viable solution. If you begin with the limitations, you have no hope of seeing things from a different perspective.”
AG: “How do you get a company to adopt a culture of disruptive thinking, does everyone in the organization get involved? How do you foster this new way of thinking especially in an industry such as insurance, which is mature and rooted in tradition?
LW: “I believe there are three major stumbling blocks for an organization to overcome. First, teams and individuals feel overwhelmed, directionless, and lack focus. In my experience, this is the direct result of relying on traditional brainstorming approaches, which, by the way, have been around since the 1930s. The problem is that traditional brainstorming has ignored the huge difference between generating lots of ideas and capturing quality ideas. As a result, brainstorming sessions often leave organizations and teams feeling overwhelmed and directionless. If your ideas are going to have any disruptive impact, you need to move beyond a shotgun approach to brainstorming and start pursuing creative effort with a laser-sharp focus.
“The second barrier is that many organizations still think of the world in terms of isolated products, services, and information. This is a mistake. They should be thinking more holistically of product-service-information hybrids. For example, the disruptive idea behind the iPhone is that it blends product (e.g., iPhone with iPhone OS), service (iTunes+App Store), and information from the network (which includes wireless providers, Google, Yahoo!, iPhone developers, related iPhone social networks and communities, and the manufacturers). In other words, the relationship between a product, a service, and the information they provide is more important than the details of any one particular feature alone.
“And third, most ideas never get articulated in anything other than water-cooler conversations. As a result, they rarely escape people’s heads and instead remain there, unformed. You can talk about ideas in general terms, at least for a while. However, abstraction makes it harder to understand an idea and remember it. So, to increase the potential, you have to stop talking about it and explain it in sensory terms. Sketch it out! Ambiguity disappears when you describe your ideas in visual or written form.”
AG: “What would be your parting advice for us?”
LW: “There is quote I include in the book from Paul Romer, an influential economist at Stanford. He defines ideas as ‘the recipes we use to rearrange things to create more value and wealth.’ The goal for any organization, no matter what size or what industry, should be to generate a steady stream of new recipes… ideas that alter the trajectory of the business and reinvent the competitive dynamics of a segment, category, or industry. I ask readers to think of Disrupt as the business equivalent of a cookbook that provides them with the framework and the motivation they need to discover and execute bold, new recipes. My ultimate goal is that by the time you’re finished reading the book, you’re asking, ‘wow, why hadn’t we thought of our business or industry in this way before?’”
Luke’s book is available at amazon.com. Begin thinking disruptively, and see how you can take your company, wholesale operation, MGA/MGU, PA, brokerage, and agency to new places.
ABOUT LUKE WILLIAMS
Luke Williams is a leading consultant, educator, and speaker specializing in innovation strategy. He is a Fellow at frog design, one of the world’s most influential innovation companies, and has worked internationally with industry leaders like American Express, GE, Sony, Crocs, Virgin, Disney, and Hewlett-Packard, to develop new products, services, and brands. He has been invited to speak worldwide, and his views have been featured in BusinessWeek, Fast Company, and NPR (National Public Radio).
Over the last five years, Luke has also been working as Adjunct Professor of Innovation at the Stern Business School at New York University. At Stern, he has created the curriculum for a graduate MBA course called Innovation and Design. Luke is passionate about giving business people the confidence to conceive and execute creative solutions. He calls this process Disruptive Thinking, which is the basis of his book.