It’s time for disruptive change

Apple has just released the iPhone 5S and the iPhone5C to underwhelming response from the stock markets, which have already hammered the company’s stock. So is it time to write off Apple?

No. Apple has managed more times than any other company in the history of modern business to rewrite the rules of the game. It changed personal computing not once or twice but thrice over, with the Macintosh, the iMac and the iPad. It rewrote the mobile phone business’s direction with the iPhone and practically re-engineered the music business with the iPod and iTunes.

A company which has managed to pull so many rabbits out of the hat so many times cannot be written off just because it managed only evolutionary and, not disruptive, innovation this time around.

But the importance of disruptive innovation and discontinuous change cannot be under-estimated. Less than 300 years ago — a mere blink in human history — the idea that kings and emperors did not have a divine right to rule would have been unthinkable. Today, the opposite is true.

Time has a way of changing things, making possible the once unthinkable. Rapidly changing economic landscapes have the same impact on businesses, only in a more cruelly compressed timeframe. Less than a decade ago, it would have been unthinkable that Motorola — the company which invented mobile telephony — or Nokia — which took mobile telephony to the masses — would no longer be making mobile phones on their own.

Missed the bus

Yet, the unthinkable has happened. Both Motorola and Nokia no longer exist in the form they did at their height, having been bought out by Google and Microsoft --- as the erstwhile emperor of the digital world, Microsoft, and the new pretender to the throne, Google, engage in their own grim battle for survival and dominance.

Around the time of the Y2K crisis — short enough a while ago for even millennials to remember — the companies that dominated the digital world were Microsoft, HP, Dell and IBM. Today, with possibly the rapidly declining exception of Microsoft, these erstwhile giants are irrelevant in today’s digitally interconnected world. Why? Because they simply missed the mobile revolution.

In retrospect, it is astonishing that these companies did what they did. After all, they were all giant corporations, with billions of dollars of revenues, led by some of the smartest people in the world, and endowed with the ability to attract the world’s best talent and the economic elbow room to invest in research. Advantages, one may add, which they did use to the full. They hired some of the best people in the world, spent millions of research — and yet managed to miss the bus.

Bitter pill

As with companies, so with countries. Just a few years ago, India was the toast of the emerging markets. A few years of high growth had showcased to the world the enormous potential of the country and its people. Investors were beating a path to our door, and the Prime Minister spoke confidently about making Mumbai into Shanghai.

For the captains of Indian industry who were once the stars of Davos, for those who had nursed global ambitions powered by the apparently limitless availability of cheap funds and the confidence to actually take their own decisions and implement them without being ensnared by bureaucracy — a confidence engendered by the first few golden years of reform — the change must be a bitter pill to swallow.

Today, India stands at the brink of becoming the first BRICS nation to be relegated to junk investment grade. Investors have not only stopped coming, but even the ones already here are upping sticks and deserting India in droves.

As a nation, India, despite being a country with huge potential, enormous resources and led by what appeared to be very smart people, has, just like all those once-great companies, managed to miss the bus.

Is there a solution to this? Is there a way that those who have managed to miss the bus can board it again? There is, says Professor Gary Hamel of the London Business School, a man whom the Wall Street Journal calls the “world’s most influential management thinker”. The answer lies in reinventing the way we manage things.

Hamel has argued that the bureaucratic approach to managing things, which created the foundation of modern governance as well as modern business, and led to the greatest increment in productivity and efficiency, may have outlived its usefulness.

It is time, he says reset our goals: From aiming for ever-increasing efficiency to gunning for increasing our adaptability to the inevitable change which will happen, from managing to change to actually building what he calls an “evolutionary advantage” to survive change.

It is not as if this is not already happening. The Internet revolution is essentially powered by principles that are antithetical to the traditional ‘command and control’ structure — of societies as well as businesses. Social media is such a disruptive influence precisely because it is collaborative and crowd sourced.

Even businesses are changing. A Californian billion dollar company, Morning Star, the largest player in the US tomato processing market, has undone one of the fundamental tenets of business management — it has no management.

Responsibilities and tasks are assigned between employees by mutual negotiation. Individuals can make million-dollar purchase decisions, provided they are able to convince others. Compensation is decided by everybody ranking everybody else. Even hiring is a community decision. Against all odds, the company lasted more than 40 years and grown in size, revenues and profits.

Getting it right

In China, a company with more than 80,000 employees broke up its business into 2,000 business units of about 40 people each, which all run as profit centres. Leaders are chosen by group election. If a leader misses the target for three months in a row, a new one is elected.

Such examples are, of course, few and far between. But the very fact that they exist is encouragement enough. Today, the world’s biggest countries and corporations are struggling to cope with change and an uncertain future. Perhaps the time is ripe for radical and disruptive innovation in the way we manage ourselves.

We may have missed the bus, it is never too late to recognise that you have missed it, and try and correct the situation. After all, Microsoft was late into the Internet, late into mobiles, late into touch — but it has got into all these things, and is still hanging on — even if one of the smartest men in the world is no longer actively running it.

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