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LEADERSHIP

4/03/2013 @ 7:22AM

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Disrupt or Be Disrupted
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How  Great  Companies  Out-­Execute  AND  Out-­Innovate  Their
Competitors
My  colleague  Randy  Ottinger  has  a  keen  eye  for  business  and  an
interesting  perspective  on  what  he’s  seen  as  the  best  practices  of  successful
companies.  Here  he  offers  his  most  recent  observations  of  how
organizations  are  succeeding  while  keeping  pace  with  the  increasing  speed
of  today’s  world.
Business disruption has become a hot topic – and it’s not just a passing
trend, it’s the new normal. Whereas a decade ago business disruption was
the rare exception, it is now a reality that companies face on a regular basis.
The major cause of disruption is the rapid advancement of technology and
globalization, which allows new business models to be introduced at an everincreasing rate and with rapidly declining costs. The truth is, at this very
moment your company is most likely either disrupting other companies or
being disrupted.
One key to surviving in a world of disruption, where the external
environment is changing at lightning speed, is to change  the  game
internally. This requires accelerating your speed-of-execution as well as
your agility to seize new opportunities. When a company can do both, it goes
from just surviving to thriving. The capability to out-execute and disrupt is
quickly becoming a critical competitive advantage for the 21st century
company.
Although this may seem obvious it is by no means an easy task. The barriers
to accelerating operational execution while at the same time innovating at a
faster and faster rate to disrupt competitors are daunting. Most companies
fail at one or the other. The primary reason for failure is that disruptive
innovation requires a different set of skills than management execution.
The  Innovation-­to-­Execution  Cycle

So how does a company execute on today’s opportunities while constantly innovating to avoid – or even lead — disruption? Dual  Operations:  A  Disruptor’s  Competitive  Advantage The key is to create a dual-operating structure that combines the best of both worlds. they hit a certain point where they require structure to scale. John Kotter. however. They shun management structure because it impedes creativity and slows them down. As these companies grow. and revenues slow down. the innovation engine that led to the company’s initial success has often been killed by increasingly adept management. systems. and adjust at a very rapid rate. Entrepreneurial networks are most often seen in early-stage companies with innovative founders.Innovation by its very nature is the domain of entrepreneurs. Dr. It is only at this point that many companies realize they are at risk due to a lack of continued innovation. This is described by my colleague. learn. slowing down innovation until it dies off. in a recent article published in the Harvard  Business  Review. The diagram here shows the natural progression of a company moving from being high on “the ability to innovate” with a networked structure (top left quadrant) to high on “the ability to execute” with a hierarchical structure (bottom right quadrant). by that time. and predictability. During this progression the management structure and systems typically overwhelm the entrepreneurial culture. In short. As a result. And. competitors jump in. which cannot be achieved through an unstructured innovation network. With the death of innovation. they are most successful in a highly networked world where a free-flow of information provides the ability to invent. and processes. Then markets become penetrated. Scaling is less about innovation and more about management structure. The impact of the disappearance of innovation is often imperceptible to leaders since it can be years before it has any effect on financial performance. Entrepreneurs thrive in an unstructured environment. great managers build highly structured management hierarchies. a company becomes highly susceptible to disruption. an employee innovation network provides an . reliability. In other words: Innovation leads to growth that continues for a period of time. At the same time. Instead. Great managers realize that growth and scaling require accountability. a dual-operating structure allows the management hierarchy to execute on the opportunities of today without being burdened by the free-flowing nature of an innovation network.

com/in/johnkotter . So if you want to avoid disruption – or even lead disruption — then you need to greatly accelerate the way you operate internally to keep pace with a rapidly changing world. Google. the same employees live in both worlds within the same organization.facebook.com/KotterInternational On LinkedIn: http://www. you can see that they are simultaneously executing and innovating. great companies execute and disrupt at the same time. As a leader. Ultimately. and Starbucks constantly find new ways to become relevant to us and remain an essential part of our lives. Truly great companies like Apple. Often they disrupt themselves. (The top right quadrant of the diagram above). In the Kotter model. a key to your organization’s long-term success is its ability to balance the management discipline to achieve short-term financial results with the agility to quickly seize new windows of opportunity. Great leaders maintain the balance between achieving results today and innovating to seize new opportunities in the future. Amazon. If there is not enough innovation. changes do not occur quickly enough.engine for new innovation that is not limited by the structure of the management hierarchy. Follow John Kotter: On Twitter: @KotterIntl On Facebook: http://www. *** For  more  about  how  organizations  can  develop  the  agility required  to  succeed  in  today’s  rapidly  changing  world. your products can become outdated – and worse.  Accelerate!”  available  from  the Harvard  Business  Review.  Emeritus. Kotter’s  recent  article.  a  firm  that  helps  leaders  accelerate  strategy implementation  in  their  organizations.  read  Dr. crucial breakdowns occur in the day-to-day operations. which led to accelerated growth and stock price performance. If there is not enough management in the organization.linkedin. I discussed how Apple disrupted itself. your people can lose their passion. When analyzed closely.  at  Harvard  Business School. Randy  Ottinger  is  an  Executive  Vice  President  at  Kotter International. your business can become irrelevant. In a previous blog.  and  is  the  Konosuke Matsushita  Professor  of  Leadership. John  Kotter  is  the  chief innovation  officer  at  Kotter  International.

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