How do you go from $314 million to $15 billion? - Disruptive Innovation Part 5

0:00 Welcome to the final episode of our series of Being Disruptors. By now we've covered the what, the why, the how, and the challenges of disruptive entrepreneurship. In this concluding episode, we focus on longevity. How to sustain your innovation and continue thriving in the long run. It's one thing to disrupt an industry, it's another to remain a leader and not get overtaken by the next wave of disruption, like artificial intelligence. Success can be a double-edged sword, you can be successful, but as you grow, there's a risk of becoming the very type of incumbent business corporation we've been talking about that's set in their ways and doesn't expand. How do you avoid that fate? We'll explore strategies for continuous innovation and building a culture that stays agile, scaling mindfully, and perhaps even disrupting yourself before others do. The goal is to ensure that your business keeps evolving and stays ahead of the curve. Remember, disruption is not a one-time event, but a continuous process.

1:03 Let's dive into how you can keep that process alive and keep it going in every venture you have. Never stop innovating. If you look through history, a lot of businesses were set in their ways, but you can't be set in your ways. Once you find success, you can't assume you're always going to be successful. The landscape is littered with former disruptors that become complacent and were subsequently disrupted by new players. Think of MySpace versus Facebook. Or how Nokia lost its dominance in the mobile phone market, or for that matter, BlackBerry. To avoid this, adopt the mindset that innovation is a continuous journey, not a destination. Clayton Christensen noted that disruption is a process and not an event. That means even after you achieve success, you should keep looking for that next improvement. The next customer need. The next technology that could impact your business. A cautionary tale we touched on was Shopify and Stripe,

2:07 and even Meta, companies known as disruptors, but admitted that right now they got too comfortable in recent times and lost agility. They assumed certain trends like pandemic behaviors would last forever, hiring too fast, and then had to retract and lay off a bunch of people. The learning here is to stay paranoid, but in a healthy way. Andy Grove Intel famously said, That doesn't mean you live in fear, but it means always scanning the horizon for what's coming. Encourage a mindset in your team that yesterday's success doesn't guarantee tomorrows. Or as the quote we ended with last episode, by Pollard goes, The arrogance of success is thinking history and yesterday's methods will work tomorrow. Instead, foster an environment where you continuously ask, How can we make this better? What's the next big idea? If you were starting fresh today, what would we do differently? One way to do this is to create internal processes for innovation.

3:12 For example, Google's 20% time, where employees can spend a day a week on side projects, was designed to keep innovation flowing. Not every company can afford that exact model, but you can set up hackathons, skunk work projects, or incubate new ideas within your company. Some companies establish small cross-functional teams to tackle moonshot ideas or improvements outside the daily grind. By institutionalizing innovation, you reduce the chance of stagnation. Culture is a major factor in sustaining innovation. If you want to keep your edge, build a culture that values agility, learning, and calculated risk-taking. We talked about hiring passionate innovators. People, once you have them, empower them. As Pardo from Leap Expert mentioned, Disruptive companies invest in developing their own teams and create environments that empower people to take ownership. As Pardo from Leap Expert mentioned,

4:12 Disruptive companies invest in developing their teams and create environments that empower people to take ownership. Collaborate, collaborate, and innovate. What does that mean day-to-day? It means encouraging employees at all levels to voice ideas and challenge the status quo. Not just the founders or executives, it means rewarding experiments. And not just pushing responsible failures. If a team tries something new to improve the product and it doesn't work out, celebrate the effort and extract lessons rather than instilling fear of failure and firing people. Keep teams nimble. Simon's Fast Company article noted that keeping teams small and close to problems fosters agility. As your business grows, avoid unnecessary bureaucracy. Many companies get slow as they add layers of management. Consider adopting a more flat or networked structure where possible so information ideas flow freely. Amazon famously uses the two-pizza team rule.

5:13 No team should be so big that it can't be fed with two pizzas. That's not just to save money, but it's to maintain startup-like agility. Fluidity and structure, as the Fast Company piece stated, allows an organization to scale up or down easily and respond quickly to change. If you notice a company getting too rigid or siloed, take action. Reorganize teams or redundant processes. The enemy of innovation is complacency and red tape. Part of culture is also the protecting of the disruptor mindset. Develop a disruptor mindset, then protect it. After some years of success, there's a temptation to become more conservative, to protect what we have. Fight that instinct. Protect the mindset that got you there. This might involve internal education, reminding employees of the company's founding vision and scrappy beginnings, or encouraging them to take risks. Think like underdogs, even if you're not an underdog and you're on top of the world, and ambitious stretch goals that force teams to think non-traditionally. To stay ahead, keep listening to your customers.

6:16 And even to your non-customers or customers you've lost. Keep listening to the trends. See, market needs evolve. So the disruption you caused yesterday might become the norm today, and tomorrow's customers will want something new. Engage deeply with your user community. Solicit feedback and actually act on it. Many big companies have customer feedback mechanisms that have been largely ignored or move extremely slowly. Or worse, the same customers or new customers are asking for the same thing, and they know 100,000 customers want this, but they choose not to do that. And those customers are likely to leave to another company that provides them that. That's an opportunity for you to differentiate by staying responsive. Also, watch what's happening in adjacent industries. Sometimes the next threat or opportunity comes from outside your immediate field. For instance, cameras on your smartphone have been educated by what other camera manufacturers are doing.

7:18 And unfortunately, some camera manufacturers haven't even adopted the kind of techniques that smartphones are using. And if they do, they'd make better cameras. As a disruptor, you likely already have a broad perspective. Don't lose that as you succeed. Stay curious. Continue the habit of reading, networking, and exploring new techs. You know, like the ones we've discussed in episode two. The founder of LinkedIn, Reid Hoffman, and many others schedule regular think weeks or personal learning time, even as they lead large companies to ensure they're not stuck in a rut. Always learning. Always researching. Read newsletters. The same stuff we spoke in episode two. Encourage your leadership and team to continually learn and to bring fresh ideas to the table. Self-disruption. One of the boldest strategies to sustain leadership is to disrupt yourself before someone else does. That means being willing to occasionally reinvent parts of your business,

8:19 even if they are currently successful, in order to stay successful and keep up with the lead. A classic example is Apple and the iPod. Apple dominated the portable music player market with the iPod in the early 2000s. But Steve Jobs wasn't content to ride that forever. He introduced the iPhone, which among many things essentially included an iPod's functionality. This move cannibalized Apple's own iPod sales and eventually led to the destruction of the iPod whole business line. But it was a masterstroke of genius because it was better to disrupt their own product than let someone else do it, like BlackBerry. As a result, Apple leapt from one wave music players to the next smartphone's logical leap in their business and continued growing tremendously. In fact, one analysis pointed out that while Apple's iPod revenue fell by $345 million, when the iPhone arrived, the iPhone generated $18 billion in new revenue. That's a valid trade-off in my opinion.

9:21 Apple's willingness to pivot and integrate new functionality prevented competitors from stealing their users with multifunctional phones. They not only competed directly with BlackBerry, Palm Pilot, and all the flip phones on the rest of the market, they created a whole new market. Even if it meant removing a market that they have already become the industry standard. Ask yourself, what part of my business model would I attack if I was a competitor? Then consider doing it. Get a whole team to attack that part of your business. It could be introducing a new product that's cheaper or more advanced. Even if it means to threaten your older product line. Or make your product line adaptable. Ooh, I can't go there quite yet. Or adopting a new disruption method that might upset partners, but is clearly where the market is heading. Like shifting from retail to e-commerce or e-commerce to mobile. Self-disruption is tough. It takes foresight and often courage to potentially short-term sacrifice something.

10:24 But the long-term reward can be huge. Amazon is another example. They disrupted their own profitable e-book reader business. Kindle. By creating Kindle apps for smartphones. Basically making the hardware less essential. They did it because they saw people were reading on iPhones and tablets. And they preferred to be the ones serving those customers. Even if it meant fewer Kindle devices. The strategic self-disruption. Whether that made them more money in the long run, we won't know. But I do know, I have some Amazon e-books. Now let's talk about mindful scaling and diversification. As you sustain growth, do it mindfully. Scaling isn't just about size, but also about making sure you keep the quality and values that made you successful. Understanding your company's purpose and values clearly before scaling. So you don't compromise them in pursuit of growth. If your brand is built on exceptional customer service, Scaling might tempt cost-cutting and outsourcing. That undermines your service. Think carefully about such moves.

11:24 Growth is important, but sustainable growth is the goal. Not sacrificing your values. You want to scale revenues and impact. Not necessarily headcount or adding complexity. Sometimes less is more. A lean operation can be more innovative than a bloated one. Also while focusing on core strengths. Be open to diversification at the right time. Many enduring companies have multiple product lines or business units. They can act as hedges against each other. If one market changes, another part of the business can carry on. However, diversification should not be something you just do, but it should be strategic. And it can't be too far from your competencies, things you do well. Unless you're deliberately entertaining a new field for a long-term position. For example, Google went from search to email to maps to Android to cloud services and business services, each somewhat related to technology and information. When they strayed too far, like Google Plus in social networking,

12:26 kind of technology and information, but not a field that they were ready for. Arguably, not a strength. It didn't plan out so well. So diversify in ways that make sense and leverage what you're good at. Or acquire new companies through hiring or acquisition and keep an eye on the disruptive market. Ironically, one of the best ways to stay a disruptor is to embrace new disruptions. Instead of brushing off startups once you're established, keep an eye on them. If a new player has a great idea or a space, consider partnering with them, investing in them, or even acquiring them. Having more capital should not mean less disruption, but you can use that capital to fund continuous disruption. Purchase new businesses, bring them into the fold, encourage them, uplift them, build them that framework of success and allow them to disrupt while still being able to grow your company and its values. If it aligns and it makes sense, buy them. Many large companies have avoided being disruptors by absorbing the disruptive element.

13:28 Facebook bought Instagram and WhatsApp. Acknowledging those services tapped into behaviors Facebook hadn't. That's one approach, though it's not always culturally smooth or financially feasible, or in some cases, not exactly legal. Anti-competitive laws and all that. And it's usually not feasible for smaller firms. So even if you don't acquire, learn from emerging innovators. Partner with them. There might uncover a segment or feature you missed that you can create. Also consider mentoring or supporting younger startups once you're in a position to do so. It might sound all to help potential competitors, but it could be symbiotic. You might invest in them and gain insight, or simply by mentoring them, you stay sharp and plugged in to cutting-edge ideas. Think of all of the sharks that invest money into smaller businesses. They may have larger businesses in their profile or their portfolio that have a higher percentage of the market, but they are investing into a disruptor. So if this position fails, they have a backup.

14:30 It's not betting. It's strategic planning. Some companies run accelerator programs or have venture capital arms to be close to innovation. Legacy and evolution. Think about the legacy you want to create. Do you want your company to just ride one innovation and then fizzle out? Or do you want to continuously evolve and contribute over time? If it's the latter, build that into your mission. Many companies now have mission statements around continual innovation. Amazon says it strives to be Earth's most customer-centric company, and they constantly expand what that means from selling books to powering the cloud to AI assistant devices, etc. Because their core mission wasn't selling books, but something broader. It guided them to keep disrupting themselves and others. That's why it's essential to have that why. If you haven't seen that podcast episode, you should go back right now and see it. If your mission is too narrow, you might not achieve it and then stagnate when you do.

15:35 So crowd a vision that leaves room for evolution, but at the same time, stay true to your values. As a paradox, evolve in strategy and product, but hold on to the core values, innovation, quality, customer focus. They define you. That consistency builds trust even as you change. For example, one might say IBM survived over a century by shifting from punch card machines to mainframe computers to services to AI drastic pivots. Always valued research and enterprise-customer relationships which carried them through. Finally, the future is yours to create. As we conclude, it's clear that being a disruptor is a journey with no finish line. But that's a good thing. It means there's an adventure there. There's an opportunity to reinvent, improve, and make an impact. The future belongs to those who keep learning and adapting. As Peter Drucker famously said, The best way to predict the future is to create it. You as a disruptor are a future creator.

16:36 Don't lose that spirit. If you continually create the future, you'll never be left behind by it. One quote to leave you with, from John Chambers, who led Cisco through many technological waves. If you're not a disruptor, you will be disrupted. If you're not a disruptor, you will fizzle out. We started the series with that same kind of sentiment and we ended up on it. You have the knowledge and the mindset, not only to be a disruptor, but to remain one. Disrupt yourself. Disrupt your industry's expectations and do it all for the betterment of your customers and the people you love. I hope you've enjoyed that episode. Let me pray for you right now. Lord, I pray right now that in everything that we do, Lord God, that your hand would be upon it. That you give us divine wisdom. Synesis, Phronesis, and Sophia wisdoms, Lord God. Give us the ability to understand how to create. Give us the ability to have no fear and be bold and accomplish the goal that you set in our hearts, Lord God. I pray right now that you provide everyone watching this the boldness, the intuition, and the wisdom to accomplish what you set before them.

17:42 Don't let fear hold them back, Lord God. Don't let them wait, Lord God, but let them accomplish now in Jesus' mighty name.