Knowing how to be disruptive

If nothing else, the state of the economy must make us wonder what things are going to be like when it is all over. At a personal level, there are people whose careers have been forced in a direction they neither expected or wanted. Some household names (such as Woolworths in the UK) have already disappeared, and there will doubtless be others.

Mary Abraham has taken a look at what firms may need to do to see a clear way through the current economic crisis.

Rather than focusing on what doesn’t seem to be working, focus on your organization’s strengths. Ask yourself, what are we doing right? How can we do more of that? How can we do it better? Then, look at your mission. Is it the right mission for your organization? Does it line up with your organization’s core strengths? Are your colleagues and their activities aligned with that mission? Is all of this supported by your organizational culture?

In the midst of all this upheaval is a golden opportunity to reinvent ourselves, to create something new. The “Clean Sheet of Paper” exercise is just a tool to help you get started. Don’t let this opportunity pass you by.

I commented on Mary’s post, but I want to develop some of those thoughts a bit further. My initial reaction to the post was to refer to something else I had read recently on a similar point.

The questions you suggest as part of the “Clean Sheet…” exercise leave out an important part of the equation. What do our clients want? What are people buying?

At the end of his recent long article (“The Great De-Leveraging“) Bruce MacEwen reminds us of Andy Grove of Intel’s reaction to a similar crisis:

Better yet, or more realistically yet, perform Andy Grove’s famous thought (and reality) experiment when Intel was a low-end maker of commodity DRAM chips, having their lunch eaten in the late 1970’s by the voracious and talented Japanese, threatening Intel’s very existence.

I paraphrase: Grove said to his top management team, “If we don’t turn things around in a very serious way, the Board will fire us. So why don’t we ‘fire’ ourselves. Let’s march out of this conference room and march back in assuming we’re the new team the Board has hired. What would we do then?”

They performed the exercise, decided to abandon DRAM’s and invest in microprocessors. The rest is history, and it’s history residing under your desk or in your lap.

I think the Andy Grove approach is an essential part of the clean sheet exercise.

There is a real problem for businesses that want to innovate their way out of the crisis. We are used to working with clients to identify what products and services they need. This symbiosis requires a degree of stability. Even if someone doesn’t know what they need until they see it (and who knew they needed an MP3 player with such minimal controls and so few features before Apple created the iPod?), disruptive innovation depends on people realising when they see it that the new product or service does actually fill a hole. The need, niche or desire is created in the same moment as it is fulfilled. At the moment, it is extremely difficult to know how the market will react to novelty. We can’t rely on understanding our clients’ needs to get us through this — we need to walk with them and discover together what is required. We cannot know what the outcome of this perambulation will be. In particular, I don’t think we can assume that the status quo ante will be any part of the future. As Seth Godin puts it:

It’s amazing that people have so much time to fret about today’s emergency but almost no time at all to avoid tomorrow’s.

A glimpse at the TV and internets shows one talking head after another angsting about today’s economy. These are the same people who needed to devote entire hours to mindless trivia nine months ago when they could have done an enormous amount of education about avoiding this mess in the first place.

His point is that we need to concentrate on what is coming, not what is happening now. In a business that depends heavily on the brain-power of its people, like a law firm, that means that we need to focus a significant part of our knowledge efforts on working our what we and our clients need in that future. Tending to our past knowledge needs will not get us safely out of this crisis.

There is another strand to this. Whose knowledge are we talking about? To what extent will the stresses and strains of the current economy affect firms themselves, especially when coupled with tools that could facilitate very different organisational forms. Consider John Roberts’s view of the firm, couched as an objection to a hypothesis that “the firm is simply ‘a nexus of contracts’ — a particularly dense collection of the sort of arrangements that characterise markets.”

While there are several objections to this argument, we focus on one. It is that, when a customer “fires” a butcher, the butcher keeps the inventory, tools, shop, and other customers she had previously. When an employee leaves a firm, in contrast, she is typically denied access to the firm’s resources. The employee cannot conduct business using the firm’s name; she cannot use its machinery or patents; and she probably has limited access to the people and networks in the firm, certainly for commercial purposes and perhaps even socially. (The Modern Firm (Oxford, 2004): 104) 

What does this mean for knowledge-intensive firms? The resources that Roberts refers to are less relevant — the machinery is either freely available (Google has a few useful tools on offer) or is located in the heads of the knowledge workers. The networks that he highlights as important are increasingly located outside the firm — in Facebook, LinkedIn or twitter, for example. One consequence of this may be that firms which fail to reinvent themselves or provide other compelling reasons for their existence could end up as empty shells — with their people relocated to other firms or new forms of self-organisation.

The brick building in the centre-right of the picture above was one of Manchester’s Victorian railway termini, opened in 1880 and closed in 1969. As the railways were rationalised and nationalised, and as passenger numbers fell, there was clearly no need for a city the size of Manchester to have six major railway stations. There are now just two. Of the others, one is at the heart of a museum, one is a car park, the one pictured is an exhibition hall, and one is derelict. The building on the left of the picture is the Bridgewater Hall, home of the Hallé Orchestra (Britain’s oldest symphony orchestra). The Hallé’s previous home, the Free Trade Hall, is now just a facade for a hotel. Rising above the old station is Manchester’s tallest building, the Beetham Tower. The solidity and apparent permanence of all these buildings was (is) no guarantee that they would always fulfil the same purpose. In fact, the longest-lasting thing in this tale is the orchestra — an excellent example of a group whose purpose cannot be separated from its form. A symphony needs to be played by a symphony orchestra: individual musicians cannot replicate the sound by playing on their own. As long as people are willing to pay to hear symphonies, the Hallé and orchestras like it will continue to exist.

Is your firm an orchestra or a collection of soloists? Is there still an audience for its repertoire?