Very few people see inflection points as the opportunities they often are: catalysts for changing their lives; moments when a person can modify the trajectory he or she is on and redirect it in a more desirable direction. - Howard Stevenson
INTRODUCTION
A great read on the topic of “strategic inflection points” - and how to navigate them.
As the author explores within the book, strategic inflection points can happen at any time, within any industry. The key is being not only ready for them, but to have a system in place that allows you to create them yourself.
This is no simple task and one that is a multidisciplinary challenge. Throughout the course of the book, Rita McGrath weaves key insights around leadership, innovation, growth, customer discovery, and more - touching on other classic resources from Clay Christensen, Andy Grove, Peter Druker and more.
FUTURENATIVE - THINK BETTER. BUILD BETTER.
I very occasionally send out an email recapping some thoughts, learnings and ideas typically centred around a thesis & approach I call being “FUTURENATIVE”.
In short, the thesis states: FUTURENATIVE individuals and organization find a unique way to leverage apparent tensions and blend both discovery & execution work, in order to unlock massive impact.
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KEY TAKEAWAYS
- Often the most important competition any business will face is from entrants who are not hamstrung by assumptions about what their "industry" expects of them.
- The terms "theory" and "theoretical" often connote "impractical." But theories are statements of cause and effect which actions yield which results, and why. As such, a good theory is consummately practical.
- While making predictions about the future is a fool's errand, opening our minds to possible futures is not.
- A strategic inflection point represents a force, external to any organization or institution, that exerts a 10X change on that entity.
- The reality of inflection points is virtually never an abrupt smiting from the heavens. Instead, as I describe in this book, we go from very weak signals with a lot of noise in them to increasingly strong signals to, eventually, fact. Moreover, we seldom recognize the implications of an inflection point at first. We need to get to the "edges," where big changes start.
- An entrepreneurial mindset is incredibly useful here. The key is being discovery-driven. Stop pretending you know all the answers. In a highly uncertain and fluid environment, neither you nor anybody else has answers.
- Though they are often depicted as disruptive destroyers of existing businesses, inflection points create vast new spaces even as they destroy outdated technologies and models. Famed economist Joseph Schumpeter said it decades ago incumbents in a sector are always vulnerable to the "perennial gale of creative destruction," which sweeps away the old and outdated, and introduces the new and more desirable.
- The great entrepreneurs and innovators, however, don't just allow an inflection point to happen to them. They connect emerging possibilities, deepen customer insights, and explore new technologies to spark the changes that can get them and keep them on top.
- There are four basic stages in the development of inflection points: hype, dismissive, emergent, and maturity. These are similar to the phases in the Gartner Hype Cycle methodology used to understand how technologies are commercialized.
- hype stage: At this point, pundits will start proclaiming that the entire world order is likely to be completely overturned. The result is often a bubble believers invest heavily and a "land grab" mentality takes hold.
- dismissive stage: This stage, however, is often where the real opportunities lie. In the dismissive stage, a few of the initial entrants will have survived the shakeout and begun to set the foundation for major growth. They will be building viable business models, finding new customer needs to address, and potentially even beginning to make money.
- emergent stage:In this stage, those who are paying attention can clearly see how the inflection might change things. This is the point at which you need to generate lots of options that position you for whichever model will eventually emerge.
- maturity stage: It is now obvious to everyone how it will change the world. Those who are not prepared will see their businesses go into decline.
There are far more possible catastrophes than will actually happen. - Patrick Marren, principal, Futures Strategy Group
- An inflection point occurs when a change what some people call a 10X change upends the basic assumptions that a business model is built on.
- There is little joy in moving too soon to try to take advantage of an emergent inflection point. [..] in the early stages they are inevitably incomplete in some way. Ecosystems can't form until they have a complete enough solution to offer.
- When there are so many things that could represent a potential inflection point, picking out the weak signals that actually matter is no small challenge.
- These are the risks of overlooking weak or faint signals that other competitors are able to see. The reason weak signals represent strategic opportunities is that the earlier you can spot an inflection point in progress, the more easily you can design your strategy to deal with it effectively.
- A lagging indicator is an outcome or consequence of some activity that came before. [..] strongly biased toward using lagging indicators to make their most important decisions, which itself can create incredible blind spots.
- Current indicators give you data about the current state of things. One reason so many real-time systems are popular is that it is valuable to know exactly where you are
- Leading indicators represent things that are not facts yet in your business. They have the potential to lead to facts later on, but at the moment you're looking at them, they are only suppositions, conjectures, and assumptions. They are often qualitative rather than quantitative. They are often told as narratives and stories rather than in meticulous Power Point charts.
- The dilemma for the strategist is that while we would like to be making decisions with the kind of specific and clear information that will be available at time zero, that is much too late. By that time, the inflection is obvious to everyone, and the chance to respond early has been lost.
- business is based and which have come to be taken as "facts" by most decision-makers, it is often difficult for leaders to imagine a different world. It is this failure of imagination that so often leads to strategic surprise.
- It's important to have a variety of scenarios to think about, which will broaden the range of potential futures you anticipate. The next step is to begin putting some early warnings around those potential futures. Generally, we ask the question, What would have to be true at six months, twelve months, or eighteen months before the scenario could occur? Then we create indicators of this outcome becoming more or less likely.
- With the mind-numbing pace of change that seems to be all around us, it is also worthwhile to consider what is highly unlikely to change as you consider your strategy. [..] the things that won't change are what we call the customer "job to be done.' In other words, human needs and preferences are remarkably stable, even as the technologies for meeting those needs change.
- A company stalls because the things they believed the longest or the things that they believe the most deeply are no longer valid. Basically, what they know is no longer true. - Matthew Olson, Derek van Bever, and Seth Verry.
- "growth stalls," identifies the single most significant reason that once-successful firms have sudden collapses in revenue. In other words, something in the environment has changed the assumptions that company leaders are making about the key elements of their strategy their customers, the needs being met, the competitive set and yet the organization hasn't responded.
- These capabilities can be thought of in terms of traditional ideas such as the value chain, or the "set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market." Different value chains can produce very different attributes, and many traditional ideas in strategy come from that understanding.
- an arena is primed for an inflection when some kind of change takes place that shifts one of the key metrics important to an established business or creates a new category with entirely different key metrics.
- As Jeff Bezos has observed, it isn't usually all that difficult to identify key trends. The hard part is knowing when to move and bringing the organization with you when you decide to take action.
- Three analytical lenses intersect in this example.
- The first is the consumption chain, which reflects the journey customers go through as they interact with an organization.
- The second lens is the attribute map, which highlights how customers react to the features of an offering at various points in the chain.
- The third is the job to be done, or what customers are trying to achieve, which motivates their behavior at any given link in the chain.
- When you identify a barrier to achieving a job to be done, you have identified a vital point at which an inflection might change the arena.
- With a smartphone, you simply fire up the camera app, set it to "video," and away you go! This is an example of how shifting constraints everything from the replacement of bulky videocassettes with slim DVDs to the ability to take videos on a device that is probably in your pocket anyway can help a company identify opportunities to change the customer journey. To begin to anticipate the effects of a shift in constraints, it's important to experience the customer journey and customer frustrations at not being able to get their jobs done. This leads us to think through what customer pain points may be at different links in the consumption chain.
- At the time, Uber's business model was basically to match potential riders with existing limousine companies. The model in which ordinary people could become Uber drivers had not yet emerged.
People who are right a lot work very hard to do that unnatural thing of trying to disconfirm their beliefs. - Jeff Bezos
- What is valuable in complex systems is to be able to keep multiple possible futures in mind so that if and when they unfold, the landscape is more recognizable. […] Seeing around corners is about broadening the range of possibilities you consider paying attention to. Your ability to look into the future is only as well developed as the set of possibilities you are prepared to entertain.
- Having seen an inflection point coming, you are now at the moment of deciding what exactly to do about it. The real dilemma facing a decision-maker at this point is that uncertainty is still extremely high. In other words, the ratio of assumptions that must be made relative to the hard-core knowledge that one has is high in the extreme.
- futurist Paul Saffo's recommendation to form as many forecasts as quickly as possible and then prove them wrong as quickly as possible as well as to "hold strong opinions weakly."
- Antifragile: Things That Gain from Disorder: "Anything that has more upside than downside from random events (or certain shocks) is antifragile; the reverse is fragile."
- Decisions seemingly need to be made urgently but the context is so uncertain that it would be nearly impossible to guarantee that they are correct. Instead, in this highly uncertain context, decisions are pretty much guesses. And yet, having invested personal capital and often organizational capital in promoting a given point of view, decision-makers escalate their commitment, becoming even more committed to the same ideas.
- Instead, what we find with this population is a that they have a set of methodologies they use to gather lots of information, detect patterns, test assumptions, and bring together resources. My colleague Ian MacMillan calls this "webbing": habitual entrepreneurs are tireless in connecting with others, particularly those who do not overlap with their own knowledge. They are also incredibly curious. It is such an ingrained part of their personality that they may not even be conscious of it they are simply really interested in why things work the way they do. They are also resourceful. As Mac is fond of saying, they "spend their imagination" to validate assumptions rather than buying their way into an answer.
- Creating a plan for fast learning is something successful serial entrepreneurs do almost by instinct.
- a mistake I often see people in organizations make is to link, in their minds, the outcome they are seeking with a particular solution. It is entirely possible to have appropriately identified a desirable outcome, but to be completely wrong about the best way to get there.
Big trends are not that hard to spot (they get talked and written about a lot), but they can be strangely hard for large organizations to embrace. - Jeff Bezos
- What the company historically got right was listening to people on the edges […] not being able to take those messages and transform them into a galvanizing common purpose.
- A classic tension in any successful organization is the tension between exploiting a repeatable business model and identifying a new one. When a business model is repeatable, the emphasis is to become efficiency-oriented. The dilemma is that when the challenges facing an organization are not about repeatable execution, but about innovation or responding to complexity, the idea of breaking things down into well-understood parts is not only unhelpful, it can also be a dangerous trap.
- In a complex situation, when you want to empower the entire organization to be able to act without direction from the top, having a shared view of what the purpose is and how each participant fits into it is absolutely critical. It is only with a basis of a shared understanding of what we're all trying to achieve here that distributed action is possible. In organizations that don't have a clarity of strategy and alignment, decisions get made and unmade, resources are spent on things that are not really relevant, people end up confused
Entrepreneurship is not "natural"; it is not "creative." It is work . . . Entrepreneurship and innovation can be achieved by any business. They can be learned, but it requires effort. Entrepreneurial businesses treat entrepreneurship as a duty. They are disciplined about it. .. they work at it . they practice it. - Peter Druker
- increasingly, innovation was a collaborative endeavor requiring organizations to reach across boundaries to source ideas and create value.
- At the core of these platforms' success was that they all freed up and leveraged trapped capacity and then very efficiently matched supply to demand. […] None of them competed head-on with any existing player.
- Building innovation proficiency is an organizational learning endeavor, and learning and mastering do not happen instantly.
- One universal aspect of leadership of all kinds is that where the leader focuses attention is where the organization tends to focus it. "As a leader, where you are spending your time is one of the most important investment decisions you can make
- You will also find that the antidote to complexity is team alignment and prioritization.
- the problems that can arise when the overall strategy is not clear to all the team members. If you're sloppy on the direction of the company's strategy, lots of things get built that fused about the "why." The second thing on the table for alignment is what she referred to as "the culture stuff." This includes mission, vision, and values. Next is alignment on key priorities. Gaining clarity about what is, really important in the business and in what priority order is a critical topic. These are called "rallying cries" in Patrick Lencioni's book The Advantage.
- Given the amount of change and disruption, some have concluded that the entire enterprise of formulating strategy is to some extent futile. But my research suggests that a core strategy is more important now than ever before
- Andy Grove articulated this point in his original work on strategic inflection points. Before the pattern is clear, he said, you have to let a certain amount of chaos reign. Lots of inputs, lots of ideas, and lots of arguments are essential. Only after you have sufficient information (the weak signals have become strong enough) should you coalesce the organization around a selected strategic path.
- The wisest decisions are made by those closest to the problem regardless of their seniority." General McChrustal has found that the answer to how senior leaders can become comfortable with the loss of control is by helping their teams develop shared consciousness. As he has said, "This means getting to a point where you trust almost anyone to make decisions on their own because you believe they have the same information and objectives you do."
- The first requirement in a precarious situation, he found, is that leaders need to be able to keep people calm. They need someone "who can establish the vision for the way ahead-even if there is no detail to it.' Hugely important here is the creation of trust and a sense of purpose. And trust can't be manufactured in the moment; it requires many interactions over time that build a sense of mutual interdependence. As Kolditz says, the job is to "literally deny the possibility of failure." Contrary to many of our misconceptions about command-and-control leaders, he points in a dangerous situation leaders don't need to create out, more emotion; instead, they need to be able to temper people's feelings in order to create focus. The second requirement is to keep people focused on tasks and the environment, not on themselves. They keep it simple: Think about X; just focus on X for the time being, and I'll let you know when that changes would be a typical articulation.
- People are more likely to be led by those whom they can relate to on a personal level those who share common experiences, who don't keep themselves apart or insist on special perks, and who can communicate about similar things.
- As Kolditz pointed out in an email to me, "The problem is, it is nearly impossible to suddenly become a successful 'wartime' leader, unless you've put money in the bank. It's too late to play catch-up. So the only solution, really, is to lead like a wartime leader all the time, as a matter of personality, of who one is."
- He wrote, "Step one of the crisis - fire those incapable of making the transition to the demands of wartime." This leads me to conclude that the best leaders are continuously poised for wartime. Failing to put the practices in place to build trust, shared risk, and willingness to follow your lead during peacetime can lead to people being desperately ill-prepared in wartime.
Very few people see inflection points as the opportunities they often are: catalysts for changing their lives; moments when a person can modify the trajectory he or she is on and redirect it in a more desirable direction. - Howard Stevenson
FUTURENATIVE - THINK BETTER. BUILD BETTER.
I very occasionally send out an email recapping some thoughts, learnings and ideas typically centred around a thesis & approach I call being “FUTURENATIVE”.
In short, the thesis states: FUTURENATIVE individuals and organization find a unique way to leverage apparent tensions and blend both discovery & execution work, in order to unlock massive impact.
You can sign up here to learn more:
