Disruption

Welcome to the Part Three of a series of musings on Entrepreneurship. 

Disruption

What is disruption?

Welcome to the Martin Haese Report. If you have already read my previous posts about entrepreneurs and intrapreneurs, you will have noticed that one word has influenced both - disruption.

For the last decade or so, the word ‘disruption’ has usually been preceded by the word ‘digital’ and many businesses have gone down the path of building their digital footprint with websites, online stores, blogs and dedicated social media teams. 

These platforms are all valuable tools for businesses and even the humble corner shop should, at the very least, consider updating their details with Google. However, each of these digital tools are just that - tools.

I closed out my last post in this series with the statement:

“For many years, the biggest threat to most businesses was competitors with cheaper prices - a relatively easy problem to counter, but over the last decade or so it has been competitors with better ideas.”

Disruption happens when a new idea is enabled by technology.

I cut my teeth in the retail sector and retail has a long history of disruption. From the first chain stores of the Hudson Bay Company in the 1670’s through to mass production made possible by the first industrial revolution, disruption in the retail sector has been ever-present. 

The World's first shopping mall - Southdale Centre, !956

Southdale Centre, opened in 1956, was the world's first shopping mall. Designed by Victor Gruen, the shopping mall significantly disrupted the retail sector.

The advent of the department store in the mid-19th century, vending machines and mail order in the 1880’s and supermarkets, big box stores, credit cards and suburban shopping centres in the mid-19th century were each significant developments resulting in various levels of disruption. This has all happened in an industry that the pundits first pronounced dead in the 1880s when the Sears catalogue was produced. 

In the last quarter century, we have seen a sharp acceleration in the pace of new technology and with it, an explosion of new ideas.

Suddenly, anyone with a computer can open a shop and take orders from around the world, but it will be new and better ideas that determine which ones will be successful or not.

Global Disruption

In my last post I talked briefly about the epic disruption caused by the widespread use of the iPhone and I used it as an example of how it upended the photographic industry in a very short period. 

By enabling access to the internet, smart phones became increasingly indispensable and adding a camera meant that our way of thinking about photographs was always going to change. 

Smart phone technology didn’t happen in isolation - it required big leaps forward in both internet connectivity and wireless technology, but it has disrupted and destroyed many industries and created many new ones.

Happy 40th birthday - Sony Walkman

The Sony Walkman turned 40 on the 1st of July this year and it is important because this unassuming little box changed many lives.

The Sony Walkman

The Sony Walkman turned 40 this year, forever changing the way we listen to music.

The recorded music industry emerged as a disruptor to the sheet music printers at the beginning of the 20th century. Phonograph records had been available since the 1880’s but back then, new technology took a little longer to catch on. 

Recorded music enabled broadcast radio in the 1920s which brought music to the masses and with it came an explosion of artists, record producers, sound engineers, recording studios and companies, record player manufacturers and record stores. 

Many industries emerged from that first idea and the music industry grew apace.

Video killed the radio star … or not?

Video Killed the Radio Star by the Buggles was released in 1979 and the song predicted the demise of records and cassette tapes. It was, unsurprisingly, the first video aired on MTV in 1981.

Coincidentally, the beginning of the disruption of the music industry began in the same year with the release of the Sony Walkman - it was the triumph of an extraordinary idea over an otherwise good one.

The Buggles - Video Killed the Radio Star

The Buggles predicted that the future of music would be visual, in the same year that the Sony Walkman was released.

Up until that point, music wasn’t very portable - at least not in the way it is today.  Radios, record players and cassette decks were getting smaller, but most people still listened to recorded music in their cars or more commonly in their homes. 

Music videos seemed like the next big thing, a logical next step forward. However, music videos weren’t revolutionary as adding visuals didn’t radically change the way people listened to music, only their visual appreciation of it.

The revolutionary development or ‘better idea’ was in fact allowing people to listen to their favourite music anywhere and at any time and the industry continued to grow.

So, where did it all go wrong? 

Even better ideas.

Advances in technology led to digitised music in the form of the compact disc and later digitised music files, stored on your device or on the cloud - streamed, downloaded and endlessly shared.

By making the physical product redundant, the music industry has saved billions of dollars but that in turn has led to the demise of many jobs in the associated industries that supported it.

Some argue that it has also affected the quality of new music - when people paid for records, we had David Bowie - now we’ve got Chris Brown.

Local Disruption

Global disruption is usually easy to identify but what of the small-scale disruption going on around us every day?

Talking to business owners, I have noticed that many are doing it tough while others seem to be doing better, and this is most apparent in the food and beverage industry.

In the last few years we have seen the emergence of a new kind of business owner, one who is both entrepreneurial and curatorial. 

This new retailer has observed a niche in the market and has created and ruthlessly curated their business to that fill that niche.

A tale of two cafes

Not that long ago, successful cafes were much larger and had seats for 80+ people. 

They sold coffee and served a tried and tested menu of focaccia, bruschetta, pizza, pasta, cakes and ice cream - something for everyone.

Patrons would find a table, then go to the counter to order their food, shuffle across to another counter to order their drinks and come back with a table number and wait for their food.

This format worked well for a long time but lately that format has been challenged by a new type of cafe.

New Cafe

A new cafe format has emerged to cater to a new generation of patrons

For starters these new cafes are harder to find. They pop up in the least expected places. They don’t always want or need a mainstreet shopfront and they don’t need to pay inner-city rents because there are plenty of customers and very little competition in otherwise under-serviced suburbs. 

These new cafes are a lot smaller and less likely to be fitted out by a commercial shopfitter - they often have mismatched chairs and tables and the smaller size means they are quieter and more intimate.

Most of these cafes offer a wide selection of vegan and gluten free options because they know that an estimated 12% of Millennials identify as vegetarian or vegan and the percentage of Generation Z is likely to be even higher.

Don’t be surprised if your cup and saucer or knife and fork don’t match - it’s almost as if they’re saying, “who cares about the utensils - we’re all about the food.”

The lessons for traditional retail 

If food and beverage operators are finding niches and exploiting them, why aren’t other sectors of the retail industry?

There is an orthodoxy that every retail business should be heavily data driven like the Fast Moving Consumer Goods (FMCG) sector - an orthodoxy that involves no human curation and puts them into direct competition with the likes of Amazon.

I recently read this from Seth Godin in a blog post about curation:

“Amazon is good at selling everything, but they’re terrible at selling a thing … The platforms (Amazon et al) are built on the idea that the audience plus the algorithm do all the deciding. No curation, no real promotion, simply the system, grinding away. This inevitably leads to pandering, a race to the bottom.”

He goes on to say that, in the past:

“Curators and their curation led to promotion and attention. There was a cost to picking junk, and a benefit to earning trust.”

and it is this trust that builds customer loyalty much more effectively than a rewards card or complicated points scheme. 

You can read the whole post here

It is also entirely possible that many retailers have failed to change with the generational shift in the market. In some cases, the business practices that made them successful and endeared them to the Baby Boomers and Generation X are now their biggest liability with Millennials and Generation Z.

Disrupting your own customer base.

What do Nike, Michael Hill Jewellers and Gillette have in common?

Until recently, they all had a younger target demographic but an older client base - the customers that made them successful were becoming their liability.

When you think of Nike, Nike wants you to think of young, lean and strong sporty types, but their loyal customer base is often the exact opposite.  

Michael Hill was just another jeweller selling expensive baubles to Baby Boomers using the imagery of Generation X.

Gillette is a heritage brand and part of the global Gillette/Schick duopoly for razors, both are under increasing pressure from subscription razor models (another ‘better’ idea)

Millennials are just as rebellious as every preceding generation and wearing the same brand shoes as your dad or the same ruby earrings as your grandmother was never going to wash with them.

Faced with this reality, those companies made concerted efforts to win Millennial customers by deliberately letting go of some of their existing customers.

Nike 

Colin Kaepernick, Quarterback for the San Francisco 49ers, began protesting his country’s treatment of minorities in 2016 by kneeling during the national anthem and he continued to do so at every game throughout the 2017 season. 

Many Americans were incensed and Kaepernick was heavily criticised.

Under increasing pressure, Kaepernick opted out of his contact to become a free agent but was not picked up by another team.

While standing up (or kneeling) for what he believes in did not align with any of the other NFL teams brand values, another brand thought Kaepernick was a perfect fit.

In September 2018, Nike launched a campaign to celebrate the 30th anniversary of their “Just Do It” tag line. 

Colin Kaepernick - Nike - Just Do It

Nike chose Colin Kaepernick to disrupt their customer base

The campaign featured Serena Williams, skateboarder Lacey Baker and others but it was the inclusion of Colin Kaepernick that ‘inspired’ some Nike wearers to make YouTube videos of themselves threatening to boycott the brand and burning their Nike branded T-shirts and socks.

It would be easy to think Nike misjudged public sentiment, but I would argue that Nike doesn’t make mistakes like that. It was instead a calculated attempt to distance themselves from people they didn’t want to wear their brand in order to attract people they do want wearing their brand.

The campaign resonated with Millennials and Generation Z and Nike sales and shares soared in the direct aftermath.

Michael Hill Jewellers

Support for marriage equality has been high in western democracies for at least the past decade but especially amongst younger people and inter-racial marriages barely rate a mention.

But still, there was controversy and like many other things that older generations get ‘worked up’ over, most Millennials simply couldn’t understand what the fuss was about.

This sentiment was fertile ground for marketers tasked with differentiating their client from their competitors and in 2015, Michael Hill Jewellers released their stunningly beautiful ‘we’re for love’ campaign.

This two-minute-long advert marked a departure from hackneyed jewellery advertising with their unrealistic portrayal of glamorous women on the arms of handsome men or sparkly product shots. 

This ad shows product but if you blink you will miss it - the focus here was on real people and real love, no matter what form that takes.

I remember bumping into a jeweller after this ad was released and it came up in conversation. He was shocked that they chose ‘such ugly models’ by which I assumed he meant ordinary people.

This ad signaled to younger people (by far and away the largest target market for wedding and engagement rings) that Michael Hill was the destination of choice.

Gillette

There’s nothing trendy about razor blades - at least not since the heyday of Punk Rock in the 1970s and it’s difficult to instill brand loyalty in what amounts to a grudge purchase.

Until recently, the razor blade duopoly had little competition but the subscription models have chipped away at the younger market (older users generally don’t buy their own blades) by removing the hassle of having to remember to buy them, then lining up at a special counter and having to ask for them because they aren’t kept on the shop shelves. 

Earlier this year, Gillette set out to win Millennial hearts and minds with an advert squarely aimed at toxic masculinity with the ad riffs on Gillette’s tagline asking, “is this the best a man can get?” 

The ad caused an immediate backlash from some consumers and again, angry customers posted videos of themselves binning Gillette products on YouTube.

But for many, the ad tapped into the horrific revelations exposed by the #metoo movement and shone a light on other aspects of society that are all too often tolerated or excused. 

Here was a big corporate calling out bad behaviour, no matter the cost of doing so.

It is difficult to gauge the impact on sales, Gillette reported that sales were down 3% on the previous year but without access to historical sales data, we don’t know if 3% down on last year is an improvement in their long-term sales trajectory. 

We do also know that Gillette management reported post campaign sales were in line with pre campaign sales suggesting that Gillette gained as many customers as they lost.

5 ways to become a disruptor.

1. Embrace disruption

When speaking to business owners about disruption, they invariably see it as something they must counter rather than something they should be actively encouraging.

I can guarantee you that your competitors who are growing and thriving, those ‘challenger businesses,’ have a very different view of disruption - they see it as an opportunity. It often helps to cast your mind back to where it all started and think about how you would open your business today, knowing all that you know now.

2.  Think

I recently read about a senior executive who displayed a large framed poster in front of his desk that simply read ‘THINK’.

His reasoning was that we all spend far too much time working in the business rather than working on the business and the poster was a constant reminder to stop occasionally and think about the bigger picture.

When I owned my retail business, I consciously set aside most Fridays to work ‘on’ my business and not ‘in’ it. I credit this discipline as being one of the key reasons why the business was able to achieve size and scale faster than many others.

I often break the process into smaller pieces, concentrate on one aspect of the business and depending on the situation put myself in the customer or employees’ shoes before looking for pain points and opportunities.

3.  Competitor analysis 

Every now and again, someone will ask me for business advice. If it’s an industry I’m unfamiliar with, I will often ask what their competitors are doing and I’m frequently shocked by how many people say they don’t know. 

Getting out and about to see what the market is doing is one of the most important things you can do - If you don’t, you’re running your business in an echo chamber.

4. Educate yourself

You’re already reading my blog so that’s a great start but also consider booking yourself into an industry conference or trade show, take a short course in social media marketing or read books or listen to a business podcast. 

I am a voracious reader and often come across books, biographies, journals and articles that I sense you would benefit from. To provide you with even greater value, I will soon share some of these with you in future posts on the Martin Haese Network. 

You have the entire sum of recorded human knowledge at your fingertips - use your time wisely. 

5. Ask for help

Nobody expects you to have all the answers, so ask for help. 

Your first step is to ask your employees (see The Talent Within: Entrepreneurial Employees) but failing that, customers, colleagues, close friends and family each have different perspectives and they all want to see you succeed. 

Thank you for subscribing to my blog. 

If you haven't already joined my network, you can sign up here for free and please don't hesitate to recommend my blog to any of your friends, family or colleagues who share our common interests.

With kind regards,

Martin Haese MBA

Next blog post: 

Part Four - Social Entrepreneurs - can the world’s problems be fixed by entrepreneurs?

The talent within: The ‘entrepreneurial employee’

Welcome to Part Two of a series of musings on entrepreneurship.

The talent within: The 'entrepreneurial employee'

Intrapreneurs, innovators and so much more … 

Intrapreneurs are employees who search for opportunities and exploit them through innovation using the resources of the organisation they work for.

The term intrapreneur was first coined in the late 1970’s by an American author, inventor and entrepreneur, Gilford Pinchot III. 

Pinchot defined the term as ‘employees and leaders of large firms who bring to the organisation the traits of entrepreneurs.’ 

The concept of intrapreneurs is older than many think and an often-cited example is Lockheed Martin during WW2 when Kelly Johnson was tasked with developing what became the XP-80 jet fighter for the US Army.

Lockheed Martin XP 80 Fighter

The Lockheed Martin XP 80 fighter jet

Johnson recruited a small team which later became known as Skunkworks.

Given the escalation of the war effort, increased manufacturing output and subsequent lack of space, Skunkworks quite literally worked from a rented circus tent.

However inconvenient, being located outside of the corporate bureaucracy meant that Johnson was also able to work outside of its rules, traditions and hierarchies.

Johnson developed 14 rules and practices for intrapreneurship at Skunkworks and you can read them here

Skunkworks designed and delivered the XP-80 in only 143 days - a full week before the delivery deadline.

Post War Intrapreneurs

During the post war years, many organisations actively encouraged intrapreneurial ecosystems and subsequent new products and innovations made companies such as 3M, Xerox, HP (Hewlett Packard) household names. However, other companies hosted significant internal R&D programs but could not make the leap of faith that their intrapreneurs asked of them.

‘Talent hits a target no-one else can hit.

Genius hits a target no-one else can see’.

Arthur Schopenhauer

Steve Jobs presented the Apple iPhone to the public on the 29th June 2007 proving Arthur Schopenhauer right and every high school math’s teacher who ever uttered the phrase, ‘you won’t always have a calculator with you’ wrong. 

Twelve years on from that first smart phone, we are rarely further than arm’s length away from having the entire sum of all recorded human knowledge at our fingertips.

The impact of the iPhone on businesses and society in general cannot be understated. 

It not only changed the way we communicate but also the way we listen to music, how we meet partners, how we shop, socialise, keep fit, take notes and stay on time. 

The list of products, and in some cases, industries made redundant by the iPhone and subsequent technologies and ideas enabled by it, is staggering. 

Disruption on an epic scale

While the iPhone changed the way we take photos and what we do with them, it might surprise you to learn that it wasn’t Nikon, Canon or Sony that developed the first handheld digital camera, it was Kodak and they did it way back in 1975.

Kodak is often used as the worst example of how to create intrapreneurial ecosystems and it still stands today as a cautionary tale for any business.

It was Kodak who had been at the forefront of new technologies including dry plates to film and black and white to colour who ran a large R&D department and employed a 25-year-old engineer named Steve Sasson.

When Sasson developed the digital camera for Kodak it was a little different to what we think of today. 

His camera weighed 3.6kg and took 23 seconds to store a black and white 0.01-megapixel photo onto a cassette tape.

The cassette tape held 30 images and to put that into perspective, think of how many selfies you have on your phone today.

World's First Digital Camera

The world's first digital camera

Most unfortunately for Sasson, Kodak’s executives were not as forward thinking as the young engineer. They saw, what seemed to them, an obvious threat to their 90% market share of film sales rather than a revolutionary new technology that could change society.

Kodak could not envisage a world without prints, photo frames and albums and certainly not one with Facebook, Instagram, WhatsApp, Snapchat and Tinder.

Kodak allowed Sasson to continue his work and retained the intellectual property, but they forbade him from going public with it.

The result was that Kodak filed for bankruptcy in 2012 while just two years later it was estimated that people took and uploaded 1.8 billion photographs per day or around 657 billion per year 

In 2018, we collectively took an estimated 1 trillion photographs and only very few of them were taken using film and even fewer were printed.

Kodak got disrupted.

The late Twentieth Century

The eighties and early nineties were a bleak time for intrapreneurs. 

A shift in corporate culture meant that many organisations became more risk averse and demanded a stricter adherence to top down management systems.

This was wonderfully parodied in the 1986 Michael Keaton movie ‘Gung Ho’ (released as Working Class Man in Australia). In the following scene, the new Japanese owners of a Pennsylvania car manufacturing plant insist that the local American workers perform morning calisthenics.

It’s curious to note that the top down, Japanese ‘salaryman’ culture that was the subject of ‘Working Class Man’ was, at the same time, laying the foundations for a multi-billion-dollar console gaming industry through companies like Nintendo and Sony.

However, at that time, these companies were the outliers and most CEO’s were turning their attention to increasing efficiencies, minimising risk and cutting costs. 

Reducing input rather than increasing output is still sadly the established orthodoxy in some larger organisations.  

No company, organisation or individual has ever become truly successful by reducing their capacity.

Enter the Millennials

Many Western leaders have been told, or are telling themselves, that we live in an ageing society. However, this statement ignores the impact that young people with higher disposable incomes have on the consumer economy. 

Millennials are now the largest generation born in decades. They have seen advances in technology that have upended industries and broken oligopolies - just ask a Millennial when they last paid for music and they will almost certainly say a live concert.

Millennials also grew up during the global financial crisis and felt the effects of austerity measures introduced in its wake, leading many to question if there wasn’t a better way.

This is a generation that has known nothing but disruption, most accept it as normal, adapt and exploit it, so is it any surprise that they bring that same appetite for change to their workplace? And, is it any surprise that progressive organisations are recognising the value of their ideas?

I would argue that businesses that are embracing, encouraging and creating an intrapraneurial ecosystem for this new generation of employees and catering to a new generation of customers, are not the ones complaining about a downturn in sales.

That is not to say that all Millennials are intrapreneurs or that all intrapreneurs are Millennials. I certainly don’t think that other generations lack intrapreneurial spirit but Baby Boomers and Gen X’ers have lived and worked through the economic rationalism of past few decades and may be less inclined to put their heads above the parapet. 

In my experience, intrapreneurs come in all shapes and sizes, they exist in every organisation and they can be enabled. 

Identifying Intrapreneurs 

When you consider that the chief difference between an entrepreneur and an intrapreneur is their employment status it should be easy to spot an intrapreneur within your organisation. They should be the ones displaying those entrepreneurial traits I covered in ‘Who and what is an Entrepreneur' right?

Not necessarily. 

I would argue that unless you create an intrapreneurial environment, most of your entrepreneurs will remain hidden and under-utilised - an incredibly useful resource left untapped. However, if you create the right environment, intrapreneurs will readily identify themselves.

10 things you can do to create an intrapreneurial culture.

1. Hire more intrapreneurs

Sounds simple doesn’t it? 

Some creatives like to work in isolation (although they might credit a ‘Muse’) but creativity in business is more often a result of collaboration and inspiration and employing more intrapreneurs means more opportunities for both. 

Have a look at your organisation’s last few job advertisements - do they start with a long list of duties and responsibilities followed by required formal qualifications?

If you want to attract cookie cutter candidates advertise a list of cookie cutter job descriptions, but if you want to attract intrapreneurs you will need to post more thoughtful job advertisements.

Try reversing the job description and matching the potential candidate’s strengths to the organisation’s needs. Eg;

‘the successful candidate will use the full Microsoft toolbox to engineer new solutions to old problems’

… sounds a lot more attractive to a potential intrapreneur than:

 ‘must be competent in Outlook, Word and Power Point, and proficient in Excel’

Remember that intrapreneurs are looking for a challenge, so appeal to their aspirations and intellect rather than their experience - try asking what they can do rather than what they have done:

‘we’re looking for someone who can take our customer service to the next level’

is better than:

‘must have 5 years’ experience in B2B sales'

2.   Encourage employees to think of themselves as partners in the business

There are many reasons why intrapreneurs don’t become entrepreneurs and it is often personal financial circumstances. While it would be easy and uncharitable to define intrapreneurs as people with great ideas who don’t want to risk their own money, that definition ignores the experience, loyalty and entrepreneurial instinct that intrapreneurs bring to an organisation.

It could also be that while entrepreneurs are often driven by individualism, intrapreneurs are driven by collaboration.

If you want to develop an intrapreneurial culture, people need to feel as though they have a stake in the organisation and I think it goes without saying that this starts with trusting all employees, from the cleaner through to the Vice President. Nine times out of ten they will know how to innovate within their own area of expertise, but they must feel as though they are heard and trusted to make decisions as part of the solution. 

The best way I have found to build trust is by being open and transparent with all employees by sharing relevant and important information. 

I have seen company CEOs and senior executives try to hide the company’s financial position from their employees in a misguided attempt to calm fears about job losses. If you’ve ever been an employee, you will know why this is misguided. 

Ask for feedback, but more importantly ask for recommendations. You would be surprised how rarely this happens, especially in large companies and rarely in organisations with a top down management culture.  

Great ideas (and solutions to problems) often come from unlikely sources.  

3.   Enable people and encourage ownership

General George S Patton famously said;

“Never tell people how to do things. Tell them what to do and they will surprise you.”

Ownership of a project or role is one of the most important drivers of intrapreneurial behaviour. When you allow people to own their work, what you are really doing is giving permission for them to make that work the very best that they are capable of delivering.  

Taking away the back stop, or reducing an employee’s reliance on it, means that the individual assumes responsibility for their successes and failures and both of these things are key to creating an intrapreneurial environment. In my experience, this is one of the hardest things for anyone to put into practice, but it is the main difference between being a leader and manager.

4. Provide opportunities for people to speak

This seems like an obvious thing to do, so it is surprising how few large organisations have a multi directional system of communication - even more surprising when you consider how many new ways of communicating there are. In the old days there might have been a suggestion box allowing at least bottom/up communication, but technology has made the suggestion box largely obsolete.

I will write further on the concept of a Social Enterprise Network (SEN) but for now, they are basically a social media styled intranet or a private Facebook page for all employees - allowing people to actively engage with other areas and levels of an organisation or within specific groups. 

Of course, there are other ways to communicate, but make sure that if you have an ‘open door’ policy that your door is open. Quashing ideas and recommendations before they have been discussed and explored will lead to fewer ideas and recommendations.

5. Provide time, space and resources

In my last Blog post, I discussed entrepreneurs. If we look back at the definition of an entrepreneur, it’s someone who;

1. Creates and/or recognises opportunities

2. Assumes the responsibility for the risk involved in new ventures, and

3. Has the managerial skills to gather and deploy the required resources

It should be obvious, yet far too many managers of intrapreneurs stumble at this hurdle.

While entrepreneurs are able to gather and deploy the required resources, intrapreneurs are not as likely to have the authority to redirect resources such as staff and capital and likely to have less control of their own workload and time. This is an area where leaders can have an enormous impact in creating an intrapreneurial culture by simply making available the required tools.

6. Don’t try to design by committee

I spent many years in the fashion industry building a national retail chain. In the retail industry, there is a graph used to reveal the sales arc of products and it is often used by fashion buyers to determine product lifecycle and when to look for the next big thing. 

The graph is called the ‘Rogers Adoption Curve’ or the ‘Diffusion Process’ and it was originally applied to agriculture and home economics. It has since been most commonly used to describe the adoption of new technology, but the principle can be applied to almost any new product or idea.

I present it here because intrapreneurs sit squarely in the 2.5% of the sample area designated 'innovators'

The Rogers Adoption Curve - Diffusion Process

The Rogers Adoption Curve - Diffusion Process

If you submit a new innovation to a committee of ten people, the best that you can hope for is that two of them (innovators and early adopters) will get it straight away and see the potential, three will understand part of it and the other five will be completely baffled. 

The danger of ‘design by committee’ is when the majority are able to veto the minority but an even worse situation occurs when the majority aren’t able to veto so they compromise instead.

This sees a new idea stripped of innovation until it resembles an old and easily recognisable idea, then it will be held up as progress and proof that the committee system works.

I think you can guess how this impacts an intrapreneurial culture.     

7. Cross functionality

Silos are the scourge of modern organisations.

Department A and B sometimes collaborate with C (usually because they have to) while department X, Y and Z have only limited contact with other departments.

While working on a previous project, a colleague described a large company who wanted to improve the organisation’s digital footprint - particularly setting up an online store.

A committee was formed with representatives from each department.

The chair of the committee was the General Manager of Human Resources while the Project Manager was a relatively junior from Marketing with little or no authority (either personal or official) to work across departments.

The project quickly descended into chaos as each representative was afforded an equal say in all aspects of the project including areas they had no experience or knowledge of.

In the end, the organisation built a portal with an online store added as an after-thought, resulting in a giant opportunity missed. 

My colleague maintains that it could have been worse - they could have handed the entire project to the IT department and ended up with a website that no-one could use.

That is not to say that silos cannot be broken down to enable collaboration because a great idea or innovation in one area might have disastrous effects in another, but by the same coin, other perspectives can also add significant improvements to the original.

In my experience, the best way to smash silos is not with a sledgehammer but with a smaller group that shares a common problem or goal who is afforded the authority to work across all departments and pay scales.

8. Mistakes, I’ve made a few.

I don’t entirely subscribe to the mantra of ‘fail fast and fail often’ because it implies that failure is part of the original goal.

Failure is, by definition, the opposite of success and everyone should want intrapreneurs to succeed - especially the intrapreneurs themselves. 

Instead, a better word is ‘mistake’ … mistakes happen and we correct them. 

9. Collaboration or competition?

An intrapreneur is likely to respond well to both.

Collaboration is required for teams to work individually or across departments to draw upon collective knowledge and experience, but competition is just as important.

Healthy competition ensures that benchmarks are not only reached but reset.

10. What’s in it for me?

Recognise and celebrate the wins along the way. I have yet to meet anyone who doesn’t respond to recognition of their contribution. 

Recognition amongst peers, raises, bonuses, promotions and even a share in the profits are all examples of rewards but not the only ones and they may not be the most effective in all circumstances.

Rewards for intrapreneurs should not only reflect what they have achieved but also how they would like to be rewarded.

Think of it this way, they have spent the last few days/weeks/months pouring their energy into understanding the problem and delivering a successful outcome. They’ve sweated the big and the small stuff, knowing that their reputation and status are on the line. At the end of it a pay rise might be welcome, but it could also seem impersonal to someone who has invested more than was asked of them.  

If you are asking people to go above and beyond, be prepared to go there too - find out what motivates them and if you still don’t know, ask.

What’s in it for you?

When organisations create an intrapreneurial environment, where people are given a genuine opportunity to think, create and transform, employees become more enthusiastic and engaged which in turn leads to productivity increases. It’s then easier to attract and retain valuable people and skill sets.

Yet, there is another compelling reason why it's important to embrace greater entrepreneurial thinking with your organisation - disruption.

I will cover disruption in my next Blog post but for now - disruption is the single biggest threat to every business.

For many years, the biggest threat to most businesses was competitors with cheaper prices - a relatively easy problem to counter, but over the last decade or so it has been competitors with better ideas.

Disrupting your own business (before someone does it for you) by attracting, retaining and enabling intrapreneurs might be your best option to survive and thrive.

Why I chose to support business in SA

Vision, strategy, communication, persistence and … 

Having owned my own businesses, taught university students, held public office and led positive change for communities, I have appreciated and learnt from each experience. However, it was those years as an entrepreneur and business owner leading a large team of employees that reinforced in me the importance of vision, strategy, communication and persistence. 

… an unwavering focus on the customer!

No matter what your industry or sector, customer centricity is vitally important. Customers are the very reason why we do what we do but nowhere are the lessons sharper or more immediately felt than the retail sector. It should therefore come as no surprise that I have taken a relentless, customer driven approach to everything I have done.

Change is the only constant

Technology is transforming the way that we work, communicate, live and recreate. Automation will even inevitably transform the way that we travel.

As Lord Mayor of Adelaide from 2014 - 2018, I delivered Ten Gigabit Adelaide; an ultra-fast fibre optic data network as a partnership between the City of Adelaide and TPG Telecom. I believe that digital infrastructure in a CBD environment has a transformative impact on underwriting the competitiveness of the city and the business community within it.

While disruption is frequently associated with new and innovative technology, this only tells part of the story. Technology is simply the enabler of new ideas and new ways of doing things, especially in business.

With change as the only constant and the pace of disruption accelerating as technology makes new things possible, many business leaders have identified the need to re-invent both themselves and their businesses. Most understand that if they don’t show leadership and disrupt their own business or industry, someone else will. 

Embracing disruption is the only option for building sustainable enterprises (both financially and environmentally) and far too many businesses owners have already learned, at great cost, that standing still and trying to deny and defy change is no longer an effective strategy.

Having built multiple businesses, I know what it means to take a financial risk and I have great empathy, insight and support for those that do the same. The relationship between risk and reward strikes to the very core of being a business owner.

My future blog posts will focus on the three important themes of leadership, reinvention and sustainability.

Business SA

I recently joined Business SA as CEO. 

The Sunday Mail 26 may 2019

Chris Russell - Sunday Mail (SA) 26th May 2019

Business SA is the peak body for employers and business owners and supports all industry sectors with a diverse offer of training solutions, mentoring, networking, export services, sponsorship opportunities and public and political advocacy. Business SA assists employers on a daily basis with navigating the complexities of employing staff and complying with their obligations.

As a former business owner, it was more often the things that I didn’t know that kept me up at night and as business becomes increasingly complex, it is Business SA’s core function to assist employers in growing their business and watching their back.

As the first Chamber of Commerce established in Australia, Business SA has an influential history, but it also has an exciting future with a leadership role to play for all South Australians because when businesses grow, there is more opportunity for everyone.

Premier’s Climate Change Council

Often, the reality of climate change is seen as an unsurmountable challenge or impost to be endured, however, this type of thinking ignores the opportunities and denies the potential of emerging industries. As Chair of the Premier’s Climate Change Council in South Australia, I will be looking at sustainable development from both an environmental and economic perspective. 

South Australia is well placed to lead the world in providing solutions to address climate change and other sustainability related technologies. It is my personal challenge to identify and champion the innovative solutions created by South Australian entrepreneurs so that they can provide them locally, nationally and globally. 

Thank you for subscribing to my Blog

Thank you for subscribing to my blog and stay tuned for my next post where I will be sharing with you some thoughts about the nature of entrepreneurs and whether being an entrepreneur is something innate or is a skill that can be learned.

If you haven't already joined my network, you can sign up here for free and please don't hesitate to recommend my blog to any of your friends, family or colleagues who share our common interests. Bye for now.

Kind regards,

Martin Haese MBA

Expect Change

Expect Change

Expect Change

As a former national retailer, I like to pay attention to what’s happening in the retail sector. I also like to keep a close eye on this sector as it is a barometer for growing consumer confidence, or the opposite.

The news this week is that Woolworths will close thirty BigW stores effective immediately with two regionally based distribution centres marked for closure in the next two years. The business commentariat has flagged competition from online as a major contributing factor. Oddly enough, no-one seems to have noticed that BigW's competitors in the Discount Department Store (DDS) sector, Target and Kmart, are seemingly less affected. The truth is that BigW's problems started a little over a decade ago in South East Asia when Wesfarmers placed a call to Mr Guy Russo, the then retired President of McDonalds Greater China and former Managing Director and CEO of McDonalds Australia.

Someone at Wesfarmers had decided that Mr Russo might be able to salvage something from the emerging train wreck that was Kmart Australia. Mr Russo's appointment was to be the last roll of the dice for Kmart which had had something of a revolving door for senior managers with three Managing Directors occupying that position in 10 years. Mr Russo took some convincing, after all, what could a guy with 34 years of fast food experience have to offer a department store?

As it turns out, quite a lot.

Company Culture

I had the privilege of hearing Guy Russo speak at a conference just a few years after this spectacular turn around. A down to earth, unassuming man approached the podium and asked the audience to guess how much his outfit, a suit and tie, shirt and shoes, cost. He didn't tell us then, he instead saved that for later.

Mr Russo recounted the phone call he had received and his own trepidation about it but then pivoted to what we were there to hear, how he turned around a monolithic company like Kmart from the brink to setting the pace for other in the DDS sector to follow. How did he manage to make Kmart so 'cool' that numerous Facebook fan groups have popped up, boasting no less than a combined half a million followers; something unheard of for an Australian retail corporate.

In short, Guy Russo did nothing except listen for several months. He listened to the Buying and Marketing teams, he listened to the Retail Operations teams, he listened to the upper, middle and junior managers but perhaps most tellingly, he listened to the floor staff; even the 17 year olds that hand out garment tickets at the entrance to the fitting rooms.

Unsurprisingly, he discovered that after more than a decade of flagging sales, uncertain job security, heavy handed management, staffing cuts and other by-products of economic rationalism, the company had a culture problem. The people themselves had most of the solutions and they were more than happy to share them but collectively, Kmart didn't know how to win anymore and no-one even knew what the brand stood for.

The situation at Kmart was so dire that Wesfarmers, quite rightly, were not prepared to throw good money after bad and this presented yet another challenge for Mr Russo. He would have to change the company's culture on a shoestring budget.

Mr Russo called in his Senior Management team and work-shopped the feedback he had received over the previous months. The team looked at every business function and gradually a way forward emerged.

Expect Change

It was at about this time that Kmart launched a new TV marketing campaign. These weren't the adverts with people bouncing around to funky covers of 80's era one hit wonders; that would come later. These were simple ads that stated 'Expect Change.'

I remember discussing those ads with a colleague at the time; the genius of those two words as a slogan, their double meaning. The message that something was happening at Kmart and it was going to be affordable.

Meanwhile, the Kmart Senior Management team were reinventing the whole company and Mr Russo was proud of the fact that reinvention didn't automatically mean redundancies. He mentioned that some people left because they did not like the changes that were happening but no-one left Kmart during this period involuntarily. Mr. Russo was intent on refocussing as many of the existing personnel and putting their ideas into practice, building capacity and creating a winning team.

In an unusual move, much of the early focus fell on the buying department. Mr Russo tells the story of how, prior to his arrival, Kmart stocked somewhere between 20 and 30 different outdoor barbecues. Several brands with many options and this was whittled down to 3 barbecues - a good, better and best option.

During this time, some departments disappeared altogether which is why you can't buy plants and garden accessories at Kmart anymore. National brands were also in the crosshairs and Bonds was one of the first casualties. Why buy from an importer with no control over how their brand was discounted when Kmart had the resources to import their own product and sending buyers overseas with empty 'Open To Buys' led to further opportunities.

Mr Russo and the Senior Management team turned their attention to pricing and earned sage nods from the audience when he related that using pricing that ends in 0.95 or 0.99 cents is equivalent to lying to your customers; you both know that the item is the rounded up figure so why pretend?

Next it was the store's turn. New floorpans were introduced and the aisles were cleared of clutter. Does anyone remember the large cardboard bins full of $2 DVDs that obstructed every Kmart aisle? Those bins were bought and paid for by the suppliers but Kmart's profits from DVD sales were in steady decline. Those bins were removed for economic reasons as much as aesthetic ones.

All of this newly found space was filled with new stock. The buyers had been busy buying all those new product ranges that half a million Facebook Mums now love Kmart for.

Marketing then had its turn. Do you remember the last time you received a Kmart catalogue in the post? Me neither … and this proved his point before he made it. Mr Russo described the decision to drop catalogue advertising was like giving up cigarettes or hard drugs. For years, Kmart's poor performance was propped up and papered over by a regular cycle of catalogues. When catalogue advertising was dropped, Kmart entered a year long period of barely meeting last year's sales and many counselled starting them up again to arrest the situation. However, steady improvements in other areas of the business enabled them to justify and continue with the plan.

With all of these exciting changes happening elsewhere in the business, it must have been tempting to leave Retail Operations alone. However, Senior Management had a plan to change the company's culture and part of that involved giving staff members more control over the stores that they worked in. A new set of operating procedures were introduced where floor staff were empowered to make some decisions without the need to refer to their managers. I have personally experienced this when an item scanned at $10 instead of $5. The situation was immediately rectified without making me or the staff member feel uncomfortable; it's a nice way to shop.

The Cost of Change

None of the above changes were implemented without associated costs but they were cost effective (remember that shoestring budget?) and they changed the entire company culture at Kmart.

Target and BigW both noticed Kmart's resurgence on their sales performance and ultimately it's dominance of the DDS sector. In 2016, Mr Russo was promoted as CEO of the Wesfarmer's Department store division (Kmart and Target) and at the same time he was made Managing Director of Target. From that time, Target also started to change (for the better).

BigW tried to emulate their competitor's success but as events of the last few days show; it may have been too little too late.

And Mr Russo's outfit? Suit, shirt, tie and shoes came in at slightly under $100 from, you guessed it ... Kmart.

 

 

 

 

 

 

Perhaps you're not already subscribed ...

Get more articles like this in your inbox and become a more influential leader, join Martin’s network today …