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Status Quo: The Big Lie

There’s a big deceit looming over the global marketplace, perhaps the most prevalent and insidious bias in business. This big lie is that the status quo exists. Nothing stays the same. Companies who strive to keep things the way the presently are—one definition of status quo—live a lie that is not sustainable. They get fixed and rigid, locked into a certain way of counting on the world, and then they crumble and fall.

In a dynamic marketplace, the current state of affairs never becomes fixed. As the housing bust reminded us, you can never bet on the market acting and reacting the same way for too long. Likewise, look at Kodak. The giant waited too long, hoping against hope that the market might, for an unimaginable reason, revert to an outmoded technology. The refusal to accept reality and the insistence on keeping the status quo allowed new era companies like Microsoft and Google to bid on Kodak’s only relevant assets at bargain basement bankrupt prices. We could list tragedy after tragedy, case after case. The sickness is the same: the big lie.

The key to this column is ensuring your business or place of employment does not allow itself to hide in the shadows of the status quo. Good is never good enough, really, when you can do something great. So, put safeguards in place. Challenge your co-workers, your employees, each other to identify when entropy sets in. Also, know that the status quo can cost you a lot of money. So many forms of business operations have become more effective and more cost-effective. Why settle for a tired routine when it isn’t working for you at the highest return?

Proactivity drives away the big lie—and is less expensive than remedial actions. It takes enterprise-strength and a hefty budget for Change Management to fix an entrenched issue remedially. Proactivity cures the parts of the corpus that are drifting on autopilot.

Acting as if the status quo were real may limit growth significantly. In a rigid culture, a lack of attunement to what drives the business means that no one will have eyes to see, or the heart to seize opportunities. Here, a paralyzing resistance to change means that no one is inspired to think about new forms of top-line growth.

The big lie damages your brand. Branding is a game of building momentum and creating a shorthand out of a name. If your brand is known for being inflexible, rigid, and status quo-driven, we hope you work in the security industry where such traits may be seen on the positive side of the ledger. Otherwise, you will never gain the type of equity that amounts to a respectable valuation.

Most important, status quo thinking keeps you at risk of becoming obsolete in the market. As the farmer says, “If you’re not growing, you’re dying.”

If your business operates under a business model that seems outdated, it probably is. If your company suffers the status quo bias, ask for help. For a business, lapsing into a status quo mindset means lapsing into a harmful delusion that markets stay static. The speed of change increases every moment. While retreating to the status quo may seem like a good defensive strategy, it actually is a worse trap. Beware.

Zero Budget – What a Boon

Entrepreneurs come alive when all odds are stacked against them. Think of the famous stories. Walt Disney and Frank Lloyd Wright going bankrupt several times until their visions pay off. Edison brokering the GE deal that meant the West would use the type of electricity the wizard of Menlo Park created. Steve Jobs kicked out of Apple, starting Next. The old saying holds true: the darkest hour is just before the dawn.

Most corporate drones lack this fortitude – and one reason is that it is impossible to take risks if you have the comfort of knowing you have a budget. Not until a concept stares into the void – of life, of death – does it earn the right to try and thrive in the market.

Nothing stymies innovative thinking more than the inability to conceptualize a pipeline of products, services, and leaps in business models without relying on a budget.

Once a budget is provided, it typically narrows the scope of thinking. Worse than constricting the vision and possibilities, budgetary thinking keeps lazy professionals in a rut. Acting in default mental models, they will compare what they do now, how they do it, and what they are trying to change by thinking about the how the budget is used today. In essence, the actions inherent in the budgetary mindset pre-set the limits and actions of planning. The golden handcuff theory applies to new product and service concepts when conceived with the constraints of a budget as much as it does to professionals stuck in a bad situation because of a financial compromise.

One exercise that taps innovative thinking is to imagine that you have no money to birth and socialize a new concept, idea, service, or product. As a pilot study, give two teams an assignment. Have them develop a breakthrough concept that will increase top-line revenue by 10 percent or more within 18 months. Then tell both groups that they have to get internal buy-in, develop a go-to-market plan and campaign, and craft a full marketing strategy.

Next, tell the first group that they have a budget of $2 million. The second group will have to move ahead without any internal funding. Give them a day to craft and workshop draft plans. Then, it is presentation time.

What you might discover is that the group without the budget is forced to find new and inventive ways to connect with buyers and influencers – and that the radical thinking they employ can be adapted to other, more mature lines of business.

Money can be as much of a numbing drug as it can be an active current; it depends on how it is used. By role-playing and acting as if there is no budget, those in charge of an innovation are forced to think outside of their normal habitual patterns and limited experiences.

Force your team to get outside of its comfort zone. Assign a zero-budget exercise. You may be amazed at how cunning, crafty, and creative your team can be when forced to imagine the impossible.

Consumers Driving Healthcare Innovation

Everyone in the U.S. complains about healthcare—the rising costs of insurance premiums and co-pays, the lack of innovation, the poor experience at doctor’s offices and hospitals, and price of medications.

The landscape of big healthcare is eroding faster than the biggest players can adapt.

Thanks to malpractice, the Internet, the rise of specialists and decline of general practitioners, integration with complementary and alternative medicine, and other factors—consumers feel as if they must drive their own healthcare.

Gone are the days when actions are blindly followed, as in “the doctor told me to take this __________________ and do __________________.”

Instead, Internet research leads to second-guessing and attempts at self-diagnoses, mass cyberchondria. Both scenarios lead to information anxiety. Too little and too much unfiltered information causes this quiet despair. The emerging paradigm finds consumers lost, bewildered, looking for sources and solutions that help make health care make sense for them—and willing to switch to what works for them.

This tension creates a gap of opportunity for disruptive entrants into the market. With $2.8 trillion at play, everyone will race to get their piece of the pie, from well-established companies outside of healthcare, to service providers offering new models of care, to start ups. Hopefully, healthcare companies will recognize the need to transform their business model and their product and service mix, or risk dying on the vine.

A recently released study by the Health Research Institute (HRI) called “Healthcare’s New Entrants: Who will be the industry’s” makes plain the threat to the established players:

Revenue will circulate differently, and to many new players. Consumers, spending more of their own money, are exerting greater influence and going beyond the traditional industry to find what they want and need. In the New Health Economy, purchasers increasingly will reward organizations providing the best value, whether it’s an academic medical center, a tech company with a great app, or a healthcare shopping network.

Traditional providers have not yet caught the tide of change, nor have they figured out how to diversify their revenue streams. A single innovation can put a huge dent in the market. For example, if half of all U.S. patients opted to administer an at-home strep test, it could hurt the traditional provider network as much as $68 billion. This move would benefit consumers, the company that makes the test, and the retailer, but is a seismic shift for doctor office revenues.

Huge players are scrambling to make an impact: Walgreen’s, Google, Time Warner, Target, as well as an increasing number of healthcare technology start ups.

Who will win? The ones who listen to consumers, as they are the driving force of the change.

Why Limit Yourself?

When consulting with clients in this Memphis area, we often have to deliver the bad news first. This bitter pill usually comes in the form of a Sunset Analysis that details when the client’s once market-leading products will be costing more to keep in production than generating revenue.

Outside of the region, we do not see this problem as widespread. There is a sin of hope being applied here again and again, as if one day history will revert and a company’s flagship product will suddenly regain the sales and stature it once had when it was relevant, innovative, and competition was limited. This type of thinking depresses the region and drains your company of its ability to thrive.

Moreover, when a company sees the statistically modeled point at which they start burning cash it is a telling moment. Either they accept the facts or they don’t. Most often they enter a four-phase process of accepting death and decline. They try and argue, make excuses, and then realize that they must change or die.

The change itself serves as a mirror of the organization’s psyche. Too often a company facing a sunset of a major product line will force a me-too product in the market because it seems like easy pickings. There is already proven demand for the product line and we have a product line that makes sense to add this one to it, thanks to distribution. This knee-jerk approach floods the market with junk and makes a market segment into a commodity war.

A few, brave companies take such news as a personal challenge to reinvent themselves, their product lines, and the market they serve. These rare birds dare to fly higher, take calculated risks, expect some experimentation in the process, and don’t rush into playing copycat.

Instead of noticing what they can steal and adapt from the completion, they notice the gaps in the market that competitors do not offer. They notice trends in adjacent industries. They work with consumers to figure out the unmet need that may create a transformational opportunity in the market that will propel their growth.

We all get feedback every day. What separates winners from losers is their ability to creatively respond to every point of feedback and the ability to see opportunity instead of fear. The mindset of an organization makes all the difference.

The question is: why limit yourself? There are several mid-market companies in the region who define themselves as manufacturers. In reality, they are branded product companies. If they choose they could compete with global companies such as L’Oreal, Proctor & Gamble, and others. Instead, they choose to make passable products and place them on low-end store shelves even though they are losing market share rapidly.

How are you going to respond? We say let’s grow.

You Should Play to Win in Business

At an event in our hometown, A.G. Lafley, CEO of Procter & Gamble, the keynote speaker at the FedEx Institute of Technology’s Innovation Expo, shared a wealth of insights on leadership and strategy from his experience and his collaboration with Peter Drucker. However, his most impactful message was so simple, many in the audience may have missed it – strategy is about making choices. That’s all there is to it. Make decisions about what business you are in and how you win in this business, then stick to them.

We’ve found that making definitive choices is difficult for many businesses. They prefer to keep their options open and not limit themselves to a particular market, customer, or value proposition. This is largely fear based: the fear of change, the fear of being wrong, and the fear of losing it all. Sometimes there is too much noise, too many things to consider and leaders become paralyzed because the path forward isn’t clear. Not making committed decisions about the strategy is far worse for the health of the business. The world is dynamic, it is changing and yet the company is static.

Lafley attributes much of his success at P&G to the choices he has made. Many of these choices were not popular, like when he sold Jif peanut butter, a profitable business unit. It’s certainly not easy to let go of a cash flowing legacy business. Especially with incoming calls from past leaders and board members questioning this decision. Lafley was able to triple the company’s market cap by making the decision to grow P&G’s core, extend into beauty and personal care, and expand into emerging markets. Peanut butter was no longer a strategic fit.

He will tell you that the purpose of strategy is to win. Lots of companies are playing without the intent to win. Just being on the field isn’t good enough. To win you must clearly define winning. Winning companies have a unique position in their industry, a sustainable advantage, and deliver a superior value versus the competition.

Lafley points out in his book that a potentially winning strategy shortens your odds, it does not guarantee success. Nothing in life is certain. Do the analysis to minimize risk and give yourself a decision advantage. Then make the decision.

People think that innovation is about wildly creative ideas that break the mold – and it is to a certain extent. But it really is just solid execution within smart strategy. Lafley is well known for turning P&G into an organization that innovates quickly to delight its customers. How did he do this? With discipline, fortitude and action. He’s laser focused on where to play and how to win.

Danger, the Early Warning Sign of Opportunity

Without relying on the predictable places to hide—spread sheets, business buzzwords, risk mitigation plans, past glories—look me in the eyes. Now, point out the potential dangers for your business. When you stutter or express worry about your employees, I will know you’re being real, vulnerable, human.

I understand. You had a formula that worked. You grew an amazing 10% or more for 12 consecutive years, even if your growth is now declining, or flat, or worse. The market is dynamic. Competitors arise out of nowhere. Customers change habits, brands, or both. Your once magic formula seems commonplace.

The very things that made you different—how you went to market, a product breakthrough—limit your ability to thrive in the new world of today. Perhaps regulations are changing, or import or export laws make it harder to move swiftly.

The world has been moving at the pace of the market for more than a decade, but you’ve stayed still. Everything has changed, except your company. OK, you may have made an incremental improvement in execution or attained operational excellence. Here’s a consolation prize.

New brands have been born. New business models have entered the market. Service means something else than it did when you started to gain traction. Old customers have not been loyal in the long run. Be real. Back to danger.

Your dangers may save you. They can instruct your next move. An informed and intelligent response to danger, rather than a knee-jerk reply to it, can force a company to make changes that will empower it to thrive—but the firm must be willing to change and capable of being honest with itself.

Woe be on those companies whose pride will not let them adapt, change, and reinvent themselves. Companies so vain as to not change their story and their culture if they are losing market share deserve to live in an isolated, airless bubble.

Wake up—it’s dangerous out there—and that’s the good news.

The Chinese ideogram for danger also means opportunity. This is not to suggest that we seek out danger, but that we look for openings:  broken brand experiences, a chance to wildly redesign service expectations, or outdated business models to reinvent or revise.

Noticing danger means you notice opportunity. Noticing the new connections in the cracks of an older system produces insights about what you can do to reset market expectations by redefining what the category means to customers.

When you are ready to reinvent your business or take a leap into a new market, notice the dangers first. That is where opportunity will be hiding.

Think Like Nature to Innovate

Nature stores many business success lessons for those smart enough to see them. Companies that prove able to interpret and transfer creation’s learnings to its own culture prosper on an on-going basis.

When it comes to pragmatically producing innovations, businesses and people tasked with a new product or service pipeline would do well to take notes from the chrysalis process.

First, note the fragile eggs. If they are not on the right host, in the right environment, they die. These eggs include new incremental ideas, adjacent products or services, and breakthrough business ideas that change the landscape and create a new category and leadership position. At this stage, they all look the same, have a high mortality rate, and need care and support. They are nurtured by white boarding, customer co-creation workshops, and further discovery.

Second, see the larval caterpillar. Eric Caryle’s famous children’s classic The Hungry Caterpillar provides the right image for this stage. Here the hungry concept grows and eats, and molts and grows, and eats more. This stage of development is where the innovation concept is fed benchmarking studies, modeled out in different sizes, played with in workshops, and where financial cases are drafted. The concept is cared for via the imagination, potential, and excitement. Keep away from internal politics and cocoon the concept with access to a humble, separate budget if the prototypes and preliminary numbers look positive and realistic.

Third, the chrysalis: this is where the magic happens. Just as a Vespa could no more imagine itself transmuting into a Lear jet, the humble concept cannot envision itself taking flight. Here, all cells turn into liquid, totally fluid—do not lose sight of the significance of this metaphor: totally fluid. In this creative, primordial soup, they become the alchemical agent, known to science as “imaginal cells.”

These imaginal cells transmute into something much bigger, more beautiful, and with a different nature than the original concept. The process, to extend our overarching analogy, happens when teams come together with a sense of mission and possibility and infuse the concept with radical perspective of what can be.

It is a visionary exercise and those who only criticize or only see limits and hurdles should not be allowed in the room at this stage. They are not fluid enough to learn to fly.

You know the end of the story: the sublime butterfly, new eggs, the process begins again. But, are you creative and smart enough to apply the age-old story to your business?

Can you access your imaginal cells and defy your original nature? Can your business fly?

Only the brave and the capable and the willing should try.

The Power of Unplugging

A favorite vacation spot is the Forgotten Coast, a cape wedged in between the sea and a bay. The best part of the location is that a smartphone connection does not work. All of the incessant demands of running a business, having clients, making social media updates, keeping up with news for organizations for whom we serve on boards: poof, gone.

And, when on vacation, no news is the best news of all. By going fallow from the routine, energy renews perspective.

The modern etymological connotation of vacation comes from the 14th century: “freedom from obligations, leisure, release” (from some activity or occupation), from Old French vacacion ”vacancy, vacant position” (14c.), and directly from Latin vacationem (nominative vacatio) “leisure, freedom, exemption, a being free from duty, immunity earned by service,” noun of state from past participle stem of vacare ”be empty, free, or at leisure.” The Latin past participle says it best, “be empty, free, or at leisure.”

Only by letting the mind empty out its agendas, notions, biases, mental models, conceptions, and fixed files can new ideas and connections present themselves. This is the power of unplugging—and we, as a culture, may not be unplugging enough to, as our Buddhist friends say, “empty the bowl” or see life and work with a “beginner’s mind.”

“You can say that taking a holiday is a little bit like going back to childhood, when the world was full of wonder and everything you saw was full of things that you hadn’t expected or seen before, you had to calibrate it in your brain,” explains Michael M. Merzenich, chief scientific officer of Posit Science. As people age, less and less attention is paid to details in the world. Therefore, keeping a childlike attitude is important — it’s one of the reasons children learn so much, he adds. “It’s really important that we be challenged about that every so often, that we’re reminded to pay attention, that we’re really engaged again,” Merzenich said.

This implies two key points. Routines can be numbing to our creativity and productivity, and maintaining a fresh perspective reminds us again of the poet Wordsworth’s adage “child is the teacher of man.” In short hand, vacations allow us to become unstuck and see things anew.

Our advice is to not put off vacation. Take little breaks and practice awareness exercises to see life and work through new eyes as often as possible, too. This way we do not sleepwalk through our work and act like a zombie with an appetite for long lunch breaks at work.

You see, by unplugging the brain begins to notice connections everywhere.

Within a few days, I was taking notes about projects, tearing out magazine articles and highlighting book passages for clients, and thinking of ways to elevate the Studio’s creative culture of innovation.

Want to see real opportunity? Unplug for a spell.

Growing Together- Synthetic Teamwork

In Henry Mintzberg’s 1994 landmark book, The Rise and Fall of Strategic Planning, the author calls for a new method to create effective strategies. He notes that, “Strategic planning isn’t strategic thinking. One is analysis, the other is synthesis.”

Mintzberg draws a definitive line between those that create strategy and those that devise the plan, arguing that the two are disparate exercises. He says, “Real strategic change requires inventing new categories, not rearranging old ones,” sage wisdom from the ’90s that has perhaps been forgotten by many American companies who play defense rather than offense during the economic downturn.

In regards to the nature, nurturing, and definition of innovation, the proverbial pendulum may have swung too far toward the creativity pole and away from quantitative analysis in some ways, causing many to doubt the credibility of innovation as a discipline.

But what if we merged the practices of strategic planning and innovation? Ultimately they seek the same end but each lack skills the other practice possesses. Numbers cannot possibility tell the whole story. Conversely, ideas are a dime a dozen until they are sized and validated.

It is simple really: creativity plus analysis equals breakthrough strategy. We believe that if the best of the two practices are brought together, companies can achieve synthetic thinking – one of the highest human functions. Thinking synthetically is the essence of growth – and a guiding principal for a growth team after the strategy is discerned.

The ability to generate original ideas and then validate, organize and monetize them is the holy grail of strategy. Being able to adapt is key. This new growth team then must remain nimble, always observing and testing the market. Strategy is by definition a plan. However, it is a living organism, not a document that is updated every few years and then returned to its dusty shelf.

This new team should be tasked with observing the emerging trends in the world, the socio-economic factors at work and the psychodynamics and drivers behind the groups of people in the value chain. Relying solely on historical data and trends to inform your next move does not generate big leaps in the marketplace.

How do you build this team at your company? Scratch your innovation group. Kill your strategic planning group. Then, repurpose them to a diverse cross-functional team of people tasked with identifying growth opportunities for the company.

This team should not be a homogenous group, forget the common pedigrees. Get some financial guys in there, consumer insights folks, marketing analysts, and don’t forget operations. What do they all have in common? Curiosity. Let them explore the possibilities together and then devise the strategy. Then, focus on growth as if the company’s life depended upon it, because it does.

Parts or Whole?

What do you call a single cell in a huge body, acting counter to the general flow of a body? A rebel cell. The theory of cancer is happening at the corpuses of businesses everywhere. When parts are running in different directions than the whole, there is a schism a hand.

We’ve used Marcus Aurelius’ line already in this book, but it’s worth noting again: What is good for the bee is good for the hive. The parts and the whole need to be in harmony, and every part (each initiative, every project, every action or inaction) should play an integral, strategic role. If parts are not working in concert, then efforts and resources are wasted.

How well do your parts sync up to a whole? Does every assignment, every project, every mission add value to the total vision?

Given the buzzword of “corporate waste” or the thousands of killed projects we have seen sitting in a warehouse that’s next to a warehouse that’s next to a warehouse filled with shelved projects, we think there is a lack of cohesive vision at many companies.

The reason is simple, a lack of vision and leadership. These firms are not applying systems thinking and considering how the parts add or subtract from the whole.

Often, to ignite new growth, we are called into a skunkworks for new product or new market innovation. What we discover, time and time again, is that there are so many parts running in different directions that no one knows what the whole is anymore. This lack of a holistic approach shows that short-sighted, knee-jerk relationships with growth do not work for more than a season and the long-term fallout confuses the whole enterprise.

The corpus is sick without a whole vision. If a company chooses parts as a default—without envisioning how each part adds value to the enterprise—it displays a lack of a coherent vision.

Before a project kicks off, ask how it is related to other projects. Ask if there is a clear path to value. Ask how this part plays into the whole. If you cannot answer, take it to your leaders and demand clarity.