KATE SWEETMAN on the power of Reinvention

An author and change agent asks: Instead of focusing on surviving disruption, why not consider reinvention?

What does it mean for a business to exist in the age of Uber?

In essence, it means that change can come from anywhere, that it is often technology-driven, and that it often necessitates a new business model. This is what we are seeing, over and over again. The good news is, because change can come from anywhere, it can also come from you — from your colleagues, your organization or your network. As a result, each of us can ‘own’ this age of disruption — as much as anyone who tries to disrupt us.

You have said that a version of Moore’s Law will soon apply to the speed of change in the global business environment. Please explain.

For those who don’t know, Gordon Moore was one of the original founders of Intel. In 1965, he predicted that going forward, the number of transistors per square inch on an integrated circuit — i.e. a microchip — would double every year. His prediction has held true, and this fact — and the technology enabled by it — is what is driving much of the disruptive activity we see today.

You believe there are ‘three degrees of change’ that every individual and organization can engage in when striving to improve performance. Please describe them.

The three degrees are increasingly powerful in terms of the outcomes they enable. The first is continuous improvement: Consistently upgrading your abilities to get results. The second is renovation — performing a refresh in order to make a meaningful leap in performance. And the third and most powerful is reinvention. This entails totally rethinking your business model and your ability to compete.

On an individual level, reinvention entails core changes to your mindset, skill set and behavioural set, which collectively lead to a new ‘personal brand’. It might even mean rethinking your career path and occupation. For organizations, reinvention comes with a strong need to rethink the entire business: Everything from strategy and processes to people, culture, product portfolio and brand image is on the table. Of course, organizations can’t change unless people change; and people can’t change unless organizations change.

What sort of mindset is required to truly embrace reinvention?

Last year, I was about to give a talk in Toronto, when a young

woman came up to me and said, “I want you to know: I love change. I can’t wait for change to happen.” And I said, “Wow. That is so unusual!” I gave my talk, and then she came up to the microphone afterwards and said — this time to the entire audience: “I totally embrace change and I can’t wait for change to happen.” I said, “Great; what is your question?” And she said, “My question is, how can I make sure that it doesn’t affect my day?”

Of course, my answer was, That is not possible! Change is going to affect many aspects of your day: What you do, who you interact with, how you get rewarded, what you need to learn. People still need to have certain expertise and skills, but they also need to accept that they have to learn all sorts of new stuff. That mindset shift is the only way to survive, thrive — and maybe even enjoy the process. Modern change entails an exponential learning curve for each and every one of us.

What is an example of an industry or company where reinvention is direly needed?

One example is the food industry, which is at a critical tipping point. More and more shoppers are seeking fresh, organic choices, and this is costing packaged-food companies serious market share. The top 25 U.S. food and beverage companies have lost more than $18 billion in value since 2009. The question is, can industry leaders reinvent fast enough to turn things around?

To make an analogy, these companies are a bit like melting icebergs; every year they become less relevant. We refer to this as a ‘melt-rate’. As a leader, it’s important to regularly ask yourself, ‘Is our iceberg melting? If so, at what rate, and why? In terms of individual companies, Sony is on a slippery slope. Gaming is increasingly moving to the phone and tablet, and yet it has continued to focus on gaming devices. In the past 10 years it has implemented only incremental innovations, rather than making attempts to disrupt the marketplace with new ideas.

In your book you describe ‘six deadly blindfolds’—fundamental reasons why individuals and organizations slip into irrelevance. What is the most important one to look out for?

The blindfolds (see sidebar) are all manifestations of the human ego. As we accelerate forward into a world filled with uncertainty, what people really need to do is say, ‘You know what, I won’t always know what I’m doing; and I won’t always be the expert’. We can’t be arrogant. We need to listen, even to negative feedback, and pay attention to what’s going on in the outside world. Because, guess what: Someone might have figured it out better than you have!

What is an example of a company that has fallen prey to one of the blindfolds?

The first blindfold is Arrogance, and a few years ago, Walmart was exhibit A. Its various global expansion efforts have never met analysts’ expectations, and Brazil Walmart was a case in point. Launched in 1995, it was intended to

curvmodernmodernchangeentailsanexponentiallearningcurve for each and every one of us.

prove that the company could establish strong roots anywhere in the world. The thinking among executives was, ‘what works in the U.S. will work elsewhere’. They basically imposed a series of systems, procedures and a culture that didn’t fit, and neglected to learn about the people of the region. That was a strong example of corporate arrogance. However, since then, Walmart’s mindset seems to have shifted dramatically — for the better.

Tell us about your Reinvention Formula.

My colleagues and I depict the Reinvention Formula as an algorithm with six elements:

1. Dissatisfaction (D): There has to be a powerful internal felt need for change;

2. Focus (F): Next, you have to ensure there is a compelling and articulated desired future state to generate forward movement;

3. Alignment (A): This means ensuring shared understanding is in place regarding processes, tools, structure, finances and systems;

4. Execution (E): You need a comprehensive game plan, with clear milestones in place;

5. Leadership (L): Exceptional leadership; is a must; and

6. Lastly, these five elements must outweigh the true Cost of Change (C) relative to the reinvention effort.

The algorithm itself looks like this: Reinvention = (D x F x A x E) L > C

We have found that the most successful change agents use a combination of art and science to bring about powerful change. The Reinvention Formula is the ‘science’ part of the equation, and the skills and behavioural aspects of reinventors are the ‘art’ portion.

What is the role of Big Data in reinvention?

On the one hand, access to so much data can lead to break- through insights, because you can get a lot more nuanced information about your customers — and the world—and that allows you to break down what you’re doing into granular detail. On the other hand, at the end of the day, you can only achieve so much with data. There is still a lot to be said for the human factor — intuition, judgment and empathy for others. Like most things in life, a balance is required.

The tone of your book is one of urgency. What is your parting message for our readers?

The need to be flexible, adaptable, humble and actively engaged in changing your organization has been firmly in place since the Age of Disruption was launched in the early 1980s. The difference now is the degree, intensity and scale to which these attributes need to be modeled. The bottom line is, it’s always better to change before you have to rather than because you have to. Kate Sweetman is the co-author of Reinvention: Accelerating Results in the

Age of Disruption (Greenleaf Book Group Press, 2016). She is the Founding Principal and Chief Client Officer of Sweetmancragun Group and a Visiting Coach and Lecturer at MIT’S Legatum Centre for Entrepreneurship.

You can only achieve so much with data. There is still a lot to be said for the human factor — intuition, judgment and empathy for others.