Examine clichés in approach to innovation

Spot-and-react strategies are better than no strategies at all, but organisations should have a “rebellious instinct for change” in approaching innovation, entrepreneurship expert Luke Williams said.

Williams, speaking Monday at the American Institute of CPAs’ fall Council meeting in Boston, said entities should challenge their common practices in order to be leaders in disruptive change.

To spark innovative thinking, organisations must first examine the assumptions – or clichés, he called them  – about products, processes, and pricing. Chances are, decisions being made today are often not in line with today’s fast-changing business environment.

“How many of the decisions that are influencing the way you think about your business every day were based on decisions that were made in a different age and a different context?” Williams asked. “Many of those decisions might still be valid. But you won’t know until you surface them and deliberately challenge them (and) their ongoing validity.”

“What you’ll find,” he said, “is many of the (assumptions) that keep you doing the same thing in the same way are around for no other reason than, ‘We’ve always done it this way.’ ”

And that type of thinking can be problematic, said Williams, the Executive Director of the Berkley Center for Entrepreneurship & Innovation at New York University’s Stern School of Business and the author of Disrupt: Think the Unthinkable to Spark Transformation in Your Business.

The habits that have made organisations successful in the past are not likely to make them successful in the future, Williams said. That’s why organisations must ask themselves several questions to be leaders of disruptive change.

He touched on those questions and other topics Monday. Among his key points:

The disruptive hypothesis has to come first. “You have to pick apart the way you’re thinking about your business and industry before you go out and get new information. Otherwise, you’ll just be using the same filters you’ve always been using.”

The purpose of thinking isn’t to be right, it’s to be effective. You don’t have to be right at the start, the goal is just to be right at the end. An idea immediately seen as a game-changer probably won’t be. “If you’re coming up with a new idea or hypothesis or approach that seems right from the start, and everyone’s nodding and going, ‘Yeah, great idea, I can see that working,’ it means it’s generic, it’s incremental,” Williams said. “It means someone else is already doing it or they will be doing it soon.”

Three questions to ask in being disruptive.

• What can you invert? Williams mentioned Red Bull, which cost more than mainstream soda, isn’t as sugary or tasty, and isn’t marketed as an aspirational product the way Coca-Cola and Pepsi are. Red Bull, which seemed to have three strikes against it, instead created a new category of products, energy drinks.
• What can you deny? Williams singled out Zipcar, which disrupted the process of renting a car, and later was bought by a traditional rental competitor that operates Avis and Budget. Zipcar created a model that streamlined the reservation process and also made vehicles available in hourly increments.
• What can you scale? “When there’s property or quantity involved, you can exaggerate the scale,” he said. Williams’ example was a company founded by entrepreneur Jonah Staw, who challenged the notion that socks are sold in twos or multiples of two. Staw wondered why socks couldn’t be sold in threes and why they had to match. It turns out, there was a market for mismatched socks sold in threes – preteen girls loved them, and a company called LittleMissMatched was born. Today, it sells far more than socks.

“The richest areas for disruptive innovation are … the areas where nothing appears to be wrong,” Williams said.

—Neil Amato (namato@aicpa.org) is a CGMA Magazine senior editor.