Disrupt Yourself—Before Someone Else Does

How established companies can bring out new products that compete with the old.

Disruption 3From the Inside Out
Nottingham does agree that working at a full arm’s length from an outside design firm can create difficulties. Many firms want to create cool designs that win industry awards, but they have scant ideas on how to turn them into businesses. That’s why it is important to include manufacturing, engineering and sourcing mavens in any design team, and that’s why Nottingham Spirk calls itself a “business innovation firm.” “If you want to scale a new idea, you have to build in a business mindset,” he argues.

Of course, CEOs use many other strategies and they all have their strengths and weaknesses. Some argue that mergers and acquisitions can lead to the absorption of new technology that disrupts, but others say that the burden of integrating two organizations can actually interfere with innovation. Other CEOs are fans of internal innovation labs, crowd sourcing and open innovation with other companies. None of these are perfect.

The Value of Varying Approaches 
It may be that a CEO should use a variety of these tools—depending on the nature of the enterprise and scale of the attempted disruption. Matco Tools, for example, does not rely on any outside partner when it works with a supplier to improve a particular finished good that it, in turn, resells to auto technicians. That approach is considered an open innovation model of collaboration.

How does the company decide on which disruptive innovation model to use and when? “The key thing is the complexity of what we’re looking at and the overall impact on the business,”
Gilmore explains. Improving a specific tool might yield only incremental gains. But toolboxes are the major money-makers. “We decided we want to spend more resources on that,” he says.

One of the industries that, perhaps surprisingly, relies on a constant stream of disruption is the toy and game industry. Hasbro, based in Pawtucket, Rhode Island, makes everything from the Monopoly board game to Star Wars paraphernalia.

Disruption 4With $4.4 billion a year in sales, CEO Brian Goldner says that 75 to 80 percent of its products are new each year, meaning there is a constant flow of new items replacing the old. “I am reinventing and reimagining our brands all the time,” says Goldner. His philosophy of disruption is a twist upon Govindarajan’s three-box theory. Hasbro builds teams that manage each brand globally, including household names like Nerf and Play-Doh. They conduct their own research with customers and potential customers. But the company also has its own future-focused innovation groups, including one called the i-Play team, that conduct research on how to take physical toys or games and make them digital or how to adapt them to social media. It’s up to the teams managing each brand to recognize and embrace a disruptive idea.

“I think of the three-box strategy as being more like the Matryoshka Russian dolls that nestle together,” Goldner explains. “You are managing the present and selectively forgetting the past. But you also may find a new truth that changes current beliefs. That is the future. You have to think about all of these at once. They inform each other. I don’t think they are separate processes but rather nestled within each other. The core brand team needs to have a sense of all three boxes at once.”

One of fastest-growing brands within Hasbro, ironically, is Play-Doh, which has existed for 60 years. “We looked at the present, selectively forgot the past and imagined the future,” Goldner says. “You look around the world and people are very focused on helping their children to concentrate on achieving development milestones.”

So Hasbro developed playsets and figurines to sell with the Play-Doh itself, allowing children to do things such as build a village or an imaginary scene. That enhances their creativity and story-telling capabilities, encouraging parents to buy more. In short, the company reimagined how Play-Doh could be used. As a result, Play-Doh sales grew more than 30 percent last year and have doubled in size over the past three years.Disruption 5

In summary, there are many different disruption models and CEOs can decide when to use a particular example. Large companies have the benefit of bigger budgets, more specialized expertise and global scale. But smaller companies can use less formal methods of disruption and can act faster than their larger peers. It seems every CEO needs a toolbox of disruption strategies that everyone in the company understands and embraces. These strategies must be accompanied by the right mindsets and culture, as well as the compensation systems that support the most
collaborative and inventive behaviors. The effort is necessary to maintain a competitive edge. Any CEO who is not thinking about disrupting his or her business is exposed to the possibility
that someone else will.

Sidebar: Solving the Disruption Dilemma

Sidebar: HALO: Disrupting at a Disruptor


MORE LIKE THIS

  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events

    Roundtable

    Strategic Planning Workshop

    1:00 - 5:00 pm

    Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process

    Executives expressed frustration with their current strategic planning process. Issues include:

    1. Lack of systematic approach (70%)
    2. Laundry lists without prioritization (68%)
    3. Decisions based on personalities rather than facts and information (65%)

     

    Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns.  They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning.  Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process.  This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented.  If you are ready for a Strategic Planning tune-up, select this workshop in your registration form.  The additional fee of $695 will be added to your total.

    To sign up, select this option in your registration form. Additional fee of $695 will be added to your total.

    New York, NY: ​​​Chief Executive's Corporate Citizenship Awards 2017

    Women in Leadership Seminar and Peer Discussion

    2:00 - 5:00 pm

    Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations. 

    Limited space available.

    To sign up, select this option in your registration form. Additional fee of $495 will be added to your total.

    Golf Outing

    10:30 - 5:00 pm
    General’s Retreat at Hermitage Golf Course
    Sponsored by UBS

    General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.

    The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.

    To sign up, select this option in your registration form. Additional fee of $295 will be added to your total.