Creative destruction at high speed
Accepting disruption and overcoming cultural inertia demands courage.
New Zealand businesses are small by international comparisons, but they can be every bit as resistant to change as large enterprises.
Change is hard. First you have to recognise the need for it. Then you need to convince others.
Business leaders who participated in our roundtable series described their battles against the organisational cultural ‘‘immune system’’ that can stop innovation in its tracks.
Malcolm Johns, chief executive of Christchurch Airport says if companies are not actively trying to disrupt their own business models, somebody else is likely to come along and do it.
What Johns calls the ‘‘disruptive life cycle’’ is rolling on, moving throughout the economy breaking down geographical barriers to supply and to markets.
For a ‘‘production driven’’ economy like New Zealand, he says, the risk is the separation of the revenue transaction from the product transaction.
This ‘‘decoupling’’ has happened in media, with the separation of content creation and advertising revenue, but is now occurring much more widely.
‘‘There’s a huge leadership challenge here,’’ Johns says. ‘‘Organisations in status quo have this enormous immune system around them. When you try and introduce change, the immune system is tremendously efficient at killing it.’’
What can be needed is a separate, dedicated team with strong backing from senior management to challenge to the status quo.
‘‘That’s really challenging and I can tell you personally when it comes to engaging with boards that is incredibly challenging for them to get their heads around – that you are going to spend some money to create a team to destroy your own business.’’
Professional director Mary Jane Daly says the key to this at board level is diversity of thinking.
‘‘You have to be open to really act against that natural immune system,’’ she says.
Because customers interact digitally across the entire economy, they are comparing their experience of your business not just to your direct competitors but to whole other industries.
Daly says it is still more relevant in some businesses than in others.
‘‘One of the boards I’m on is Airways and new technology is really going to change that space over the next twenty years quite dramatically.’’
Sina Wendt-Moore, chief executive of Leadership NZ, agrees, says having the same people around the table means you end up getting the same answers.
Bringing fresh people into the leadership conversation, people who ‘‘know what we don’t know’’, also requires courage.
Bruce Gordon, chief executive of ventilation system supplier HRV, says courage is required long after a company has successfully disrupted itself. The issue then becomes how or whether you continue existing channels,
‘‘How do you make your core historic proposition still relevant?’’ Gordon asks. ‘‘Maybe it isn’t and you shut it down.’’
The answer is to listen to the customer, he says.
‘‘There will be segments of the market that still want that level of service. If they value it they’ll pay for it.
‘‘But if it becomes self-evident the world has moved to delivery through a more digital platform, proactive management and tailing off those other services is a smart thing to do.’’