State of Disruption
An Interview with RLL CEO John Rogers & RLL President Brig. Gen. (Ret.) Brian Layer
Interviewer: Chase Friedman
Chase: Let’s start big picture... If you would in your own words, describe what disruption means to you, and how we’re feeling its effects today.
John: Disruption to me, means a destabilization of a system. That system could be society, that system could be in an organization. That system could be an individual's life. And it really is to change an impact, and potentially alter the course of direction of any of those entities.
Brian: It’s when predictable patterns shift. And the way that they’ve shifted in the past, at least in previous generations, whether it was economics, social, military, informational, the patterns would flow like quiet streams. Everybody had to move in that same stream. If you had the lead, your lead was pretty secure, unless somebody invented a faster engine. And then periodically you’d have these inflection points that were like waterfalls. If you could navigate the waterfall, you could return to calm water that moved at a certain pace. The pace was predictable and if you could safely navigate that stream at that pace, you could keep your position. What’s happening today in all those arenas, it’s like navigating white water and your ability to navigate this crazy environment is your advantage. It isn’t so much the ability to win in the normal, it’s the ability to acknowledge that the stream is rough, and that getting through it alive is an advantage in itself. Being able to get to the front, doesn't necessarily mean you’re going to stay in those relative positions. There’s all sorts of rocks ahead that can trip you up. Everything is moving faster now, for a variety of reasons. I think that those who acknowledge white water isn’t an anomaly, it’s the world we live in, and those people who can navigate it best are gonna win in the disruptive time… That’s my story and I’m sticking to it.
J: I love the story. I’m going to add to the metaphorical vision here. I think that at the same time one is navigating those rough rapids in that white water, it’s more and more difficult for them to see around the corner and around the horizon, because of that pace, and because they’re in the fog of it all. And so, individuals, organizations, society, are not only operating more and more rapidly but that rapidity is contributing to an essence of fog, that they've got to try and see through it, concurrently.
C: John you've spoken a lot about the disruptions that have affected Fortune 500 (88% of those listed in the original 1955 designation are now obsolete - Source). How has disruption has played a pivotal role in changing the competitive landscape for companies that are successful in today’s age, versus those that have fallen by the wayside?
J: Clearly a big part of that has been for CEOs, to understand what’s coming at them, and to anticipate, to make the appropriate moves to position their organizations for the future. As is the case with the fortune 500 organizations, arguably, one could make the case that the majority of CEOs, have not been able to do that (adapt) since 1955. Frequently, that is driven by technology as Brian and I will discuss in a moment, technology may be the vehicle that delivers that disruption, but the disruption is much broader than just technology.
C: Brian, having spent 30 plus years in the military, there’s not as much transparency as to what may or may not be the pivotal disruptive forces facing our government, how has disruption affected the government, the public sector, and furthermore, how it has impacted our day to day lives as civilians?
B: Going back to the stream metaphor, in the industrial age, there was a more predictable international environment, the investment in government in peer nation states was about the same. It was to become the most efficient navigator of the predictable stream. What’s shifted I think, in the modern world is that the barriers of entry are lower. It used to be that the only people who could navigate the river with you, were the people who have the same kind of wealth, the same sort of capabilities. Then all of a sudden, non-state actors figured out they could navigate the river too. And since they weren't traveling with all that baggage, when they got into these white water environments, which seemed to be the norm, their agility was a huge advantage. We saw that as non-state actors in warfare, we see it with social movements inside the political space, not the big party, but the small local disruptive ones, and you see it in business, where companies that can push you out of business, because they compete differently. And they are more agile, they don’t have all that infrastructure to shift, they aren’t turning aircraft carriers, they’re turning a kayak. The challenge in the future is going to be that the big organizations, the world leaders, are going have to figure out how to be as agile in their space as those small competitors who are chipping away at them. You've got to think how the little guys are thinking. And, it’s not just thinking, but you've got to be able to act with that kind of agility and initiative at the potential point of failure.
J: To add to that, the startups are changing the models... So think about Amazon. Uber is another great example. Those startups have rapidly become the establishment. So there is an ebb and flow to all of this. And they are going to be grappling with that future disruption, and who else is out there and how do they remain as agile as they once were. which led to their market dominance. Depending on any given organization, because they can’t chart that course, they can’t see that.
B: I think that the big question, theoretically, is that all of these kind of changes have sped up as the water has gotten faster. Does that mean that the typical life cycle of business is compressed? Or will an Amazon be able to figure out how to navigate those waters for as long as GE, Ford, and GM did? That’s yet to be seen, and the challenge they face.
J: Although I suspect they won’t be, they won’t have that kind of GE, Ford, hundred year, seventy five year run, as you say. But while technology again is only a facet of it all, it is a significant component of disruption. And technology continues to evolve at the pace that it is, even as the worst lull runs its course. Technology evolves so much faster, and those technologies get to the marketplace and then create so much of that disruption so much faster, and organizations are compounded as a result of that.
C: It’s an interesting framing of contextual disruption as it pertains to different organizations, and how it’s been perceived over time and across generations. Whereas more institutional organizations have traditionally viewed disruption as a threat, something they needed to fend off in order to survive, more recent generations of startups and new-tech enterprises have been built to be more adaptive and agile, actively promoting rapid innovation. Where and when have you felt that kind of paradigm shift from disruption as a threat, to now being embraced as the status quo?
J: I think that society on some level has always evolved because of disruption. And, I think you could go back to the ancient Greeks, and I think you could easily tie that into the renaissance. As we moved from agrarian to industrial societies, and industrial to service, and societies and technological societies, I think that disruption is one of the few constants. So I think that it’s not a question of IF, it's a question of when. I think the challenge for any organization, the larger they are, it’s hard to anticipate what’s around the corner. Versus what Brian described earlier that small agile startups are using disruption as a way to break in.
C: What elements of agility would you consider to be crucial to any new business? How must it be integrated in their culture, in their business framework, the embracing of disruption as not only a necessity but a competitive advantage.
J: Having part of the the leadership team, part of the organization, that is really very much focused on disruption. You have people focused on BD, marketing, finance and accounting. You also have folks focused on strategy. But strategy doesn’t necessarily focus on disruption, even if it should. More often than not, Strategy is a pursuit of the next stages of blocking and tackling. Leadership teams and boards talk about mergers and acquisition, are we going to grow organically, those kinds of strategic questions. Alternatively, creating a component of the organization that is constantly thinking of disruption, and communicating that to the overall entity.
C: Are their certain blind spots that still exist when leveraging your internal team, in being able to ascertain, and assess disruption? And how can it be augmented perhaps by outsourced innovation or consulting, how does that play into the mix?
B: The challenges are layered. So you have a near term challenge just to win the day. You want to win the day with your customers, in the social world, with your stockholders, and over your competitors. You also want to win tomorrow. Which means that you’ve got to be able to identify challenges you want to deal with and avoid as well as the opportunities that arise today. . And then you have sort of the longer term disruption, and unfortunately in this really interconnected, global, economical space, you can’t be isolating yourself from what’s going on around you. Traditionally, companies have built big walls around themselves. What they did inside those walls was sort of secret, and maybe they would lift the hood quarterly to the shareholders, but for the most part they’d ask us to trust them to do what’s right. Today is a much more transparent environment. To go back to the metaphor, you need a different kind of operator in your modern boat in the old days, you needed crew members who could just stay on course. Today you really need somebody who’s really strong with a paddle, who can adjust to those opportunities, and adapt to the challenges as you move downstream. Well, eventually that means that you need a lot of those agile, think on their feet, employees. 50 years ago, I could train a necessary skill that might last a lifetime. But today, our institutions aren’t prepared to create those kind of agile employees who can learn a new skill every week, so maybe I've got to look at new ways to navigate this persistent disruptive environment. 50 years ago, nobody would have put that kind of strategic ramifications we routinely place in the hands of employees today. This is a riskier environment where day to day outcomes can be strategically catastrophic. But, if you don’t let the kayaker make those life and death decisions from the boat, you’re going to miss every opportunity to win the race downstream.
C: John if you if the CEOs or perhaps the policy makers reading this or listening in, what would be the first step in terms of congregating or assessing external inputs or the different perspectives one would want or need to augment their internal teams.?
J: Senior leadership teams can suffer from rigidity of thought, that we’ve talked a lot about. They're just trying to accomplish the task at hand, trying to win the day, as Brian describes it. And that’s a critical component of their job, so the trick is to make sure the organizations not only supply their own internal expertise on that on the topic so that they have their internal experts thinking about the subject, but also getting the holistic perspective. Reaching outside of that organization. And looking for resources, and insights that are beyond the immediate reach of an organization. Another component is to create an early warning system, such as the aforementioned Chief Disruption Officer. For example, Sears has announced that it is filing for bankruptcy and they were once one of the great innovators of our society. The Sears catalog was once an enormous innovation, the brick and mortar approach that Sears adopted 50, 60 years ago, a huge innovation in how customers were able to access a variety of products that they could not afford. And then a couple of funny things happen on the way to the forum; Walmart happened. As Walmart came into existence, late 1980s, Sears was deeply impacted by that, and started to drop their prices, and then fast forward 30 years, maybe 25 years, to Amazon, the combination of Amazon and Walmart and how consumers approached that retail experience, they were never positioned for, they never repositioned themselves, they never reimagined themselves, they never reinvented themselves, to address and embrace that disruptiC: Brian, are there any specific examples you can share in the type of augmented innovation and perspective RLL has provided to organizations helping them see the bigger picture and address these sort of systemic challenges?
B: I think the existence of RL is an answer in itself. In the past, the idea that government entities would turn to an outside entity and ask, ‘can you tell me what I’m getting wrong’, would have been unthinkable. But it’s an acknowledgement of the unpredictability of the world and emergence of new threats that you're going to have deep expertise in house and at the same time, can use broader understanding and broader viewpoints from outside. The Defense establishment and it’s large bureaucracy was great in the cold war at outperforming peer competitors. We had a more democratic way of thinking and a logical form of execution. And I think some make the argument that democracy was a perfect industrial age political system, because it was the best way to get the best ideas, and make the best decisions. In the information age, when machines may start to think for us, one wonders if that advantage will last. I think the big thing now is understanding how complex the environment is. For example, Uber, who has deep funding from Saudi Arabia, is now facing a huge diplomatic crisis not of their own doing but because they are connected to international incident . The modern social world expects them to respond to the crisis also. Well, one could argue that all Uber did was get financing from the Saudis, but that choice may be enough to turn some passengers to Lyft. You have to win these day-long, local battles because they have strategic consequence. And the ability to make the right decision on the spot is much more important than having everyone row in the same direction all the time. The fact that we (RLL) exist and take on the sort of problems that we do, proves the point that people are acknowledging they don't have all the answers in house.