"New journeys are always challenging, but they force us to move forward rather than staying mired in the past", says disruption expert Charlene Li. Image by David Ryder/Bloomberg via Getty Images
In tumultuous times, why do some organisations prosper while others fail? According to disruption expert Charlene Li, the companies that will survive are those already focused on the future and even obsessive about where their customers are heading. Interview by Karen Christensen. The global pandemic has changed the world in countless ways. You advise that business leaders approach ‘the new normal’ in three phases. Please explain. The first phase, which most organisations have already addressed, is to restart. This involves thinking about re-opening your business and looking at issues like safety, security, and how you will operate in a socially distanced way. Once these things are in place, leaders need to think about reforming their business model by examining and questioning everything they do. Things have changed so much that many will need to completely reconsider and reformat their strategy, how they deal with their customers, and even the key aspects of their culture.
The third phase is to revise your purpose. Every leadership team needs to revisit the very core of what their business is about. This is a time of such radical change that many will need to revise it. Going forward, you need to be able to say, ‘This is absolutely the direction in which we should be moving forward’. Having total clarity around that will be your guiding light during all of the uncertainty that lies ahead.
As indicated, you believe it is essential to question just about everything about how things were done before. Why is that so important? When you question everything—in the most respectful way, of course—it means that you are not taking for granted that things are ever going to be the same. This means you’re giving stakeholders—your employees, customers, suppliers—the benefit of the doubt and saying ‘We fully recognize that your needs may have changed, and we want to understand that’. Even in non-crisis times, if you don’t regularly question whether you are effectively addressing the needs of your stakeholders, you are likely missing the mark.
Innovation was at the very top of many business agendas before the pandemic hit. Will it move to the back burner while things get back up and running? The need for innovation and ingenuity did not go away with the shuttering of businesses. It has instead shifted to address more arising needs, and if companies can shift with those needs, they can fill the gap.
So many examples of ingenuity have surfaced in recent weeks. For example, some closed schools rerouted their school buses to deliver meals to people who were home-bound; in Ireland, small business AMI refurbished high-quality laptops from companies to meet a demand to rent or buy laptops for employees working from home; and trainers and yoga instructors brought their clients together on Zoom calls.
As a leader, you can find the next disruption opportunity by aligning yourself and your entire team around understanding the needs of your emerging customer. Instead of asking, ‘What should we do next?’, ask instead, ‘How can we best serve?’
Are companies with a disruptive mindset better equipped than others to tackle what lies ahead? Definitely. It has always astounded me how disruptive organisations seem to thrive in uncertain times, and it’s because they think about strategy, leadership and culture in a very different way. The key thing they all do is, they are very focused on the future and are almost obsessive about where their customers are going to be in the future. Then, they take actions today to prepare for that future.
Also, they’re not as surprised as others when things go wrong because they have anticipated that things could go wrong. And they anticipate that when things do go wrong, new opportunities might come about. As a result, even when crises like Covid-19 comes along, they have the discipline and the culture to be able to swing into action.
Can you provide an example of a company that does this well? I think Microsoft has done a fantastic job. When Satya Nadella came in as CEO, he did a reset of the company, starting with its culture. His focus is on empathy—which is not what you would expect from a big tech company. He brought empathy right to the core of the business, affecting everything from how the company develops products, to how they sell them, to how colleagues treat each other and work together.
As a result ,when Covid-19 hit, they were one of the first companies to send all of their employees home to work. They could see how dangerous and disruptive it would be and they said ‘We need to begin social distancing’ before anyone else had even thought about doing that. They are very active in China, so they could see first-hand what was happening and how it was likely going to spread around the world. In the midst of the pandemic, they’re still innovating, they’re continuing to support companies, and they’re making their teams available to people. That’s a sign of a highly structured organization.
Talk a bit about the importance of ‘social listening’ going forward. Social listening has been around for a long time, but it has been dominated by the idea of ‘understanding what people are saying and thinking about your brand.’ I think we need to turn that on its head and make it about understanding what people themselves—your current and potential customers—are doing and saying, period. It should be a way to literally walk in the shoes of your customers—not in the context of your brand, but in terms of what’s happening in peoples’ lives.
To do this, you can use existing social tools like LinkedIn, Instagram and Facebook. Locate current or target customers on these platforms and follow them, watch what they’re saying and doing, and what they are interested in. The idea is not to send messages to these people but to say ‘wow, that’s great’ or ‘that’s terrible, tell me more’. You can use these platforms as a springboard to have conversations and begin an engagement, all in an effort to understand the individual. I don’t think anyone in this day and age wants to be messaged to; we want companies to truly understand us.
Digital connectivity has been a bit of a savior during the pandemic. How will it change things going forward? More than anything else, this pandemic has taught us that relationships matter. It took us being socially distanced from each other to realize how important it is to be connected to each other. I really don’t want us to lose this moment where we recognise how important relationships are. I hope it will make us focus—as individuals and as businesses—on what is really important.
In organizational terms, we have always believed that the workplace was a physical place—that you had to go to an office to be connected with other people. If anything, this crisis has proved that a workplace is made up of the relationships we have with each other. Will we travel as much for business anymore? Definitely not. Why would you get on a plane to attend a meeting when we can just hop on Zoom and do it in the next hour or so? There is an ability to get so much more done now because we’re not constrained by time and distance.
Remote work is here to stay. In the past, people wouldn’t let you work from home because they didn’t trust that you would actually do your work. They needed you to come into an office and prove that you were putting in the hours. Now, we have had to trust everyone to get their work done—and lo’ and behold, everyone is getting their work done! And in many cases, they’re even more productive than before.
I also think we’re going to have a lot more empathy for the fact that we all have lives, and work is just one part of that life. When we’re on Zoom calls and we see the chaos happening in our colleagues’ homes, it makes us more accommodating, flexible and understanding. In the past we were told not to bring our personal life to the office—but with Covid-19, there was no avoiding it, and that will hopefully increase our empathy for one another. I would actually go so far as to say that the traditional workplace model has been blown apart. It will no longer be about a physical area, but about how we choose to work together.
Going forward, what does a prepared leadership team look like? I truly believe that empathy is the most important skill a leader can have, and again, that requires a lot of listening. It means you have to set aside your biases and your view of the world, step into the shoes of the people you’re trying to understand and develop a relationship with them—whether it be your customers, your partners, your shareholders, or members of your community.
We will no longer be solely driven by profits. It has become clear that focusing on optimizing the bottom line is not good for the long-term health of an organization and its people. We need to figure out how to take care of the health of not just the bottom line but of our employees, our customers and our community.
Do you feel like leaders are up to the task? Unfortunately, everything we’ve been taught about leadership does not prepare us for this challenge. In fact, it’s just the opposite. If we follow the lessons of the past, we will not do this correctly. We have to completely rethink things. Many people will realize that it’s okay to sacrifice a portion of their profits in order to have a healthier workforce and organization. We need different ways of thinking about our business and it’s going to require very enlightened leadership to understand how to make these trade-offs.
You have talked about four possible scenarios for the near future. Please summarize them. This work was done by The Trium Group, a San Francisco-based consulting firm. Their first scenario would see a gradual recovery where the economic free-fall will quickly spring back as soon as the pandemic fades. This could happen if social distancing works, our hospitals are not over-run, ventilators are produced, new drugs are created, and government financial stimulation is effective. This scenario requires that society re-opens before a vaccine is ready.
Their second scenario is one of ‘fits and starts’. Things start to move forward but they get pulled back because a second wave of Covid-19 comes along. The third scenario is the perfect storm scenario, whereby the public health crisis persists and we experience an unprecedented, prolonged global shutdown. Clearly, nobody wants this to occur. And the fourth scenario is called the Great Correction. In this one, people suddenly stop fighting and the world goes into major collaboration mode. Pharmaceutical companies work together and as soon as one of them finds a vaccine, they share it with the world. We beat Covid-19 and we all actually come out of this better.
The question is, how can we make sure the Great Correction is the scenario that occurs? One thing I’ve been struck by when I present these scenarios to people is that they aren’t ready to accept that one of these things is going to ‘happen to them’. They want to actively ensure that the Great Correction happens—and that gives me hope. The foregone conclusion is that it is up to us to decide which of these scenarios actually come to fruition. We can all have an impact on how this plays out.
Any parting wisdom for leaders who might feel daunted by what lies ahead? After over two decades of studying disruption, I have learned that it has one major upside: it creates significant opportunities for change. That’s because when a disruption happens, our sense of normal is torn apart into pieces and thrown into the air. The people who thrive with disruption jump into the air to catch the pieces before they fall. Those who duck their heads and hope not to get hit become the victims of disruption. My hope is that people will leap high with courage and conviction so that they can be the disruptive leaders we so desperately need in the coming months. I wish I could promise that the journey ahead will be smooth sailing. It’s going to be anything but. That’s what disruption is: It forces us out of our comfort zone and makes us come face to face with our biggest doubts and fears. But if you can look past them to the opportunities to serve created by disruption, you will have a focus to steady your hand. New journeys are always challenging, but they force us to move forward rather than staying mired in the past. In the wise words of Winston Churchill, “Never let a crisis go to waste”.
Charlene Li is the New York Times bestselling author of six books, including her latest, The Disruption Mindset: Why Some Businesses Transform While Others Fail. She is the founder of Altimeter Group, which was acquired by Prophet in 2015. She continues to work with Prophet as a Senior Fellow. This article originally appeared in a recent issue of Rotman Management, the magazine of the University of Toronto's Rotman School of Management. www.rotman.utoronto.ca/connect/rotman-mag.