Disruption and Innovation: Two Sides of the Same Coin

May 19, 2016
Industry is faced by a seemingly endless array of disruptions—connectivity, Big Data, sophisticated algorithms, robotics, just to name a few. Stop being disrupted and start innovating.

Our industrial world is awash in disruptive forces: connectivity, Big Data, cloud computing, the Internet of Things (IoT), sophisticated algorithms, mobility, robotics, drones, infrastructure shifts, even customers themselves. You can choose to be disrupted by those forces, or you can turn that on its head and be the disruptor yourself.

“Innovation and disruption are just two sides of the same coin,” Terry Jones says. “Stop being disrupted and start being innovative.”

Jones knows a little something about innovation. He has a strong record of innovation with launches of companies like Travelocity, Kayak and WayBlazer—each a progressive march into the future of travel. He’s also the author of “On Innovation,” a book encouraging innovation and cultural change.

The 10 disruptive forces Jones counted off at the opening keynote this week at Siemens PLM Connection in Orlando are really just the start of a much longer list. They’re all forces that can make your current business model obsolete. You can let any one of them be the bullet that kills your company, or you can start taking aim and creating some disruption yourself.

These disruptive forces are also rich with possibilities. Take Big Data, for example, 90 percent of which has been created in the past three years and 80 percent of which is unstructured. No wonder we’re overwhelmed by it. But that complexity also provides a lot of opportunity to create systems of insight.

That’s what WayBlazer is doing in travel, leveraging IBM Watson’s data-crunching capabilities to create a cognitive travel platform, personalizing recommendations and insights for people planning trips.

There are all kinds of sophisticated algorithms, which might not seem all that disruptive…unless they’re in the hands of your competitors. But get them into your own hands and you can do some pretty amazing things. The algorithms around the Nest app are so good, for example, that ComEd is giving them away to its customers for the chance it won’t have to build another power plant, Jones said. Facebook can use algorithms instead of editors to publish news. “And blockchain is being applied in very interesting ways to improve security on transactions,” he added.

Developing countries are skipping much of the infrastructure that sometimes holds developed economies back—wiring solar cells straight to houses, doing banking from cellphones. “They don’t need the infrastructure, and they’re moving faster without it,” Jones said.

The U.S. Mars mission cost $730 million, while India’s Mars mission cost $73 million. That’s less than what it cost to make the movie “Martian.” “Because that’s what they have,” Jones said. “And it worked beautifully.”

Business models are changing fast. “Google doesn’t produce information; they merely organize it. And they make massive amounts of money doing it,” Jones said. Uber owns no cars. Facebook produces no content. Airbnb owns no real estate. “Half of Amazon’s business is selling other people’s stuff.”

Time to run and hide?

So what do you do about all this disruption we face on a daily basis? Do you run and hide? Do you try to hold it back?

Jones recommends drastically simplifying your business plan. Here’s a hint: It has a lot to do with software. Amazon, Uber, Airbnb… In so many cases, they peeled away the unnecessary overheads “and added some awesome software.”

“Don’t let some kid in the Valley come eat your lunch,” Jones said. “You have to think about what is the new model.”

Microsoft didn’t let Google eat its lunch. Microsoft now has the largest cloud app out there, Jones pointed out. “Are they making less money? Yes. But they’re still in the game. And if they hadn’t changed, they wouldn’t be.”

Half of U.S. executives are dissatisfied with the state of innovation in their companies, according to Jones, but the question is what to do about that. “You’ve got to take risk to live in the world of disruption,” he said.

Jones started his career as a receptionist in a travel agency 45 years ago. As an employee at American Airlines, he got shot down by top execs who couldn’t share his vision for the ways the travel industry needed to innovate, including moving from paper to e-tickets. Instead, American was one of the last airlines to face the inevitable, and meanwhile Jones moved on to start Travelocity. What had been an innovation itself, Travelocity later lacked the vision to move forward with Jones’ ideas about combining airfares with other hotels and cars to create travel packages, and eventually got beat out when Expedia introduced that concept instead.

“Innovation that happens from the top down is orderly, but dumb,” Jones said. “Innovation that happens from the bottom up is messy, but smart.”

Build a culture of innovation

Those ideas from the bottom need to break through the “bozone layer”—the middle management that keeps good ideas from happening. So top executives will typically need to reach down through that bozone layer to help cultivate innovation, Jones said.

Creating that culture is essential to get past established organizations that often view disruption as a threat. “If you don’t have the right culture, it doesn’t matter what strategy you have,” Jones said.

For one, people need to be given many chances to fail. Innovation is like baseball. “In baseball, you fail 70 percent of the time, and you are awesome,” Jones said. “We have to have a culture of experimentation. Changing culture is a contact sport. But you have to do it.”

Don’t be afraid to reach outside your comfort zone. “In real innovation, being comfortable isn’t good,” Jones said. “You have to be uncomfortable. It’s best when you’re a little bit scared.”

There’s no question that it’s hard to see the future. But according to the Golden Innovation Ratio, only 10 percent of innovations are transformational, and yet 70 percent of future revenues will come from those transformational ideas.

“Your job is to protect those ideas from the organization,” Jones urged. “It’s not enough anymore just to try to keep up with change. To survive today, you’ve got to drive change.”

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