The new only creates value when it finds its market. Once we’ve identified the underlying systems to build on top of, and the new value-creating activities to develop, we need to integrate the new into how we work so we can commercialise it effectively.
Anything genuinely new threatens to disrupt our current ways of operating. This triggers inertia, or resistance to change. The ability to change at speed therefore — integrating new sources of potential value into current value chains effectively — is where the game of innovation is won or lost.
Figure 8: Mapping the need for internal change and overcoming inertia
IBM, for example, knew the future of computing would be a utility-like service, but they remained stuck behind barriers of inertia, leaving the door open for Amazon to steal their future. The success of electric vehicles has also been driven by outsiders, such as Tesla and multiple Chinese brands, rather than dominant industry players like Ford or Toyota because change is hard when you’re successful.
The iPhone is another example of an outsider (a computer company) capturing value in an adjacent industry. Christensen claimed Apple’s iPhone was not a disruptive innovation and predicted it wouldn’t succeed. But he failed to see that entire industries would change in an effort to capture the value from a new object of material desire that also met user needs for mobile connectivity and computing.
"The smartphone didn’t just plug into new systems – it had to run on top of existing telecom networks while layering in new capabilities … This shift forced an industry-wide change. Network operators had to change how they managed capacity and priced data. Phone makers had to add software teams to hardware-led organisations .… The device was widely adopted not only because of its features, but also because companies orchestrated the systems around it.”
Orchestration
To extract value from new components, organisations must integrate the new into their current value chains. This creates friction between those focused on the potential value for the business tomorrow, and those focused on protecting the tangible value the business provides today.
These tensions often resolve in favour of the status quo, as the known past has the data to support its position that an uncertain future lacks. Overcoming such deep internal resistance to change requires skilful orchestration. A dynamictrimodal structure helps address this.
Pioneers - Settlers - Town Planners
Leading organisations — such as AirBnB and Singapore’s GovTech — organise their teams by attitude as well as aptitude (skills). Each of us has a natural problem-solving style, meaning we’re more suited to certain types of challenges than others. We group these into three archetypes:
Pioneers — those most likely to discover new sources of gold.
Settlers — those most likely to build the mines and get the gold to market.
Town Planners — those most likely to open factories making shovels for other Pioneers.
Figure 9: The three cultures every organisation needs: Pioneers - Settlers - Town Planners
Matching attitudes to challenges in the landscape allows us to take advantage of this diversity: Pioneers focus on what to DISRUPT on the left, Town Planners focus on what to RUN on the right, and Settlers focus on the CHANGE needed to bridge the gap between the two (see figure 10).
Key to making this trimodal approach work is an internal mechanism of theft:
Pioneers build new, higher-order sources of value on top of the reliable, efficient platforms RUN by Town Planners (commoditisation effect); or seek to overcome constraints in current value chains.
Once Pioneers have shown the potential in the new, Settlers ‘steal’ their projects to commercialise (or discard) them, forcing Pioneers to keep exploring the new.
Eventually, Town Planners ‘steal’ commoditised products from Settlers and RUN them as reliable, efficient platforms for Pioneers to build the new on top of (commoditisation effect again).
This is a continuous cycle of change.
Figure 10: A mechanism of internal theft enables dynamic change
Much is needed to develop a trimodal structure. But competitive advantage comes from knowing the systems to RUN, markets to DISRUPT, and how to CHANGE faster than rivals (RDC) — in that order!