143: What Makes Corporations Change?

change

Corporations change in the same way people do – through both positive and negative stimulus (although negative is more effective)

Raw Transcript: Corporations Change The Same Way People Do.

Good morning everyone and welcome to the think future podcast.  My name is Chris Kalaboukis and today we’re going to talk about change or as David Bowie would put it change is OK don’t sing people have told me many times do not sing Chris you cannot sing.  So I was thinking about change the other day because I was thinking about all of these companies who failed to change when disruptive innovation came along from outside of their borders but I guess you could say some of it even came from inside their borders companies like Kodak companies like Nokia companies like BlackBerry they weren’t able to change when all of this disruption came along and Nick is a very interesting case because the disk destructive innovation actually came from within.  It was actually a Kodak engineer who invented digital photography.  This guy internally within the organization came up with a way to do photography without film.  And he turned around and presented it to senior management and guess what senior management said they said keep this quiet.  We make too much money from selling film.  Don’t let this innovation out.  Of course what happened is it other companies came up with it and now we have cameras in every frickin smartphone all over the world digital photography has basically taken over the world and hardly anybody uses film anymore.  And this is all.  In even though Kodak had an engineer within their ranks who invented the thing they were disrupted internally because they couldn’t change or they couldn’t change fast enough and I was saying before Nokia is in that position blackberries in that position.  There’s lots of companies that are in that space who are unable seemingly unable to chain.  When disruptive innovation comes along and puts them into disarray even Yahoo could be considered one of those companies why isn’t Yahoo able to change no matter who is in the top spot at Yahoo.  It never seems to change.  Anything I find interesting is that maybe corporates are like people.  So let’s take a second and examine people.  And determine what makes people change right.  Because that’s another thing that’s interesting and and if you think about it is kind of course the experiences.  How do people change what has to happen for people to actually change.  Right because people are like that people are creatures of habit.  People are creatures of inattention and inertia.  They’ll just keep doing the exact same thing.  Unless something pushes them in a different direction.  And if you think about it.  External forces which push people to change can either be a positive or negative and when you look at the history of how people change people change more often when there’s a negative influence against them.  So for example.  Let’s say somebody is a smoker.  Right and you’re smoker and if you keep on smoking you may get lung cancer.  Now people might think to themselves well I may or may not get lung cancer but if they’re suddenly diagnosed with lung cancer.  It’s like oh my god huge shock.  I’m going to quit but the thought of sort of linking living a longer life having a happy having grandchildren enjoying grandchildren join a life being able to travel etc that sort of positive feeling doesn’t.  Hold as much bang to make this individual change as it does for a negative impact of lung cancer or say somebody is an overeater and they’re there.  Hundreds of pounds overweight and they say I enjoy food too much food is great but the stopping yourself from eating the pleasure.  Isn’t there to stop yourself from eating because you don’t see the upside of stopping yourself an eating as much as say something a heart attack was a heart attack would cut could come along and knock this person down and go home and now I really need to change.  So you see when it comes to humans.  When it comes to people in negative stimulus is much more powerful at eliciting change than a positive stimulus right.  So let’s look at corporations corporations are very similar right.  I mean there.  They look at it from that perspective as well.  They say well you know I’m just doing great.  The way I am I don’t need to change until some hugely negative impact comes in and forces them to change but usually it’s too little too late.  So how do these corporations deal with disruptive innovation before it’s too late.  Well it’s quite simple.  Basically they do it themselves.  They have to become.  Devil’s advocate they have to become that change agent that comes into the company and kills it.  They have to look go down those paths and in vision.  What it would be like if some other company came along and did this thing so example.  Let’s go to the Kodak example.  Let’s say that when the Kodak engineer who came up with the digital photography went to senior management said hey look I’ve come up with this concept to do digital photography.  This is going to destroy our business.  Our current business and senior management thought just that they thought oh my God this is going to destroy our business we better keep it quiet.  What if instead of saying to themselves.  We better keep it quiet and say this is what they said they basically said don’t go there and they will have said hundreds of times you cannot say don’t go there.  They said don’t go there but let’s say they said to themselves.  It’s probably not going to happen but let’s let’s assume that somebody else comes up with this technology.  Let’s assume that somebody else comes up with this technology and let’s zoom that this technology takes off because at the time I’m sure that they were scoffing and going out.  No one’s ever going to do that.  It’s kind of like that prediction from I.B.M. Oh there’s only six computers in the world or I think Bill Gates at all.  You only need.  Ten K. of memory or something that they would all these funny tech predictions where somebody said well you know it will never be this much you will never be that much when now we’ve blown it out of proportion crazily.  You have to imagine.  What if this happened.  What if in this room that it occurs.  Assume that some other company invents the digital photography and assume that it takes off.  I know it’s unthinkable but you have to think the unthinkable you have to go down that path to see what happens.  And if they did that if they sort of did that future scenario mapping of a world where digital photography completely takes off then they might think to themselves.  Wait a second.  Maybe it would be a good idea for us to do something about this.  Let’s create a little lab over here a little skunk works and explore this investigated.  It’s in some secretive secret way and see if there’s some way we could take advantage of this because if you think about it.  I mean this is this that is the future.  Or one of the possible futures of the company so are you really going to take a possible future which may or may not become real and not investigated to determine whether or not it could become real or if it does become real at least you can deal with it.  And I think that was that was affecting code act that’s what’s affected Black Berry And that’s what’s affected Nokia and all these other companies that fail to see the disruptive innovation come along they need to envision it themselves.  Internally and take it seriously.  And once you envision it yourselves internally take it seriously enough to realize that hey this is an area that we may want to be in then you’re ready in case it happens because you have an answer.  You already have an answer to the question once it’s been asked your head of the game.  You’re nimble you’re agile you’re resilient.  No matter what happens you can defeat the disruptive innovation that’s coming along or at least work with it so that you don’t end up like those companies ended up.  That’s it for me for today.