This article is, first, about looking at the core beliefs, your assumptions, and asking, “Why do I believe this, and is it still true today?” Second, it is about preparing for the challenges that these assumptions inevitably face from external forces I call “jolts.”
For now it’s enough to know that a jolt is an unexpected event that comes along and rattles everything you know to be true about your business. It is usually a sudden and radical changing of the rules and can come from many sources, including competitors, government regulators, or sudden and unanticipated disasters. The best way to avoid these jolts is to actively use questions to drive innovation, rather than waiting to come up with a good idea when things have gotten out of your control.
If you constantly challenge your assumptions, you’ll be more likely to prevent some jolts and to effectively handle the ones you can’t avoid.
Individuals who feel comfortable need to be shaken out of their complacency to realize how narrow their vision is. The people who are uncertain about how to meet the changing realities of their business need to feel confident in their ability to do so, and to be reminded that they have the courage to try. But this requires an ability to step out of our own biases and to identify the “safe” assumptions and rules our industry operates under.
What Are Your Assumptions?
Early on, I started down a path searching for specific questions that would challenge others to find opportunities for new ideas—questions I now call Killer Questions. The following questions are designed to help you discover the rules and assumptions under which your organization and industry operates. I want you to use them to start unraveling the assumptions you have about your business, your industry and your own role in the marketplace.
The key here is to be able to get the assumptions that run around in everyone’s head out on paper. Only then can you shed the old constraints that held you back and look at new opportunities. By getting these assumptions out in the open, you have permission to challenge them in the context of new ideas.
Killer Question: What are the assumptions under which my industry operates?
In order to move beyond your assumptions about your industry, you need to first be able to identify them. This is harder than it seems; our assumptions are so ingrained in us that they appear less a personal belief and more of a universal truth. So, what are yours? What are the “rules” about how your industry is structured? How often do you reconsider what the rules are, what your customers like or don’t like, or what the rules are about how you operate?
For instance, when I did my rounds of meetings with potential editors and publishers for my book, “Beyond the Obvious,” I was asked again and again, “What are the ‘killer questions’ we should be asking ourselves? How do we change our industry in the face of new media?” My reply was to ask some basic questions.
What is a book? What does the book of tomorrow look like? How are we going to deliver these books to our readers? How are we going to apply the lessons learned from the changes in the music industry?
The point is that publishers are experimenting with ways they can reshape what a book is, and how they sell it to readers. People clearly still want books, but they don’t want to buy them and read them in the same ways they used to. Simply transferring content over to eBooks won’t satisfy readers for long.
- Why is your industry structured the way it is?
- What are the rules for how your industry interacts with customers, manufacturers, distributors, retailers, etc.?
- What would be the effect on your business if these assumptions changed?
- Which of these assumptions would radically alter your position in the industry if changed?
My dad worked his entire adult life at a company called Cincinnati Milacron. The company was founded in 1889 and started off as a little shop that made machine tools. Eventually they became the world’s largest manufacturer of machine tools.
In the 1970s, the Japanese came in and began to build machines that looked almost identical to the machines that Milacron was famous for. The Japanese were gaining a reputation for duplicating what existing US businesses were doing, but offering a significantly cheaper version of their products.1 Now, this would be an alarming situation for any business, but Milacron’s management had confidence in the quality of their products. It had taken them a hundred years to refine and perfect what they built, and they were renowned for the features and functions of their machines. They felt certain that their new rivals would never be able to catch up and replicate their full feature set. And they were correct on that score; the Japanese versions of Milacron’s products never had the same capabilities.
What Milacron failed to account for was something that the Japanese understood: Their customers’ priorities had changed. They thought their trump card was their quality workmanship and rich feature set. They believed that if customers had to pay a premium for the features, they would. They didn’t see that their customers were feeling pressed by cheap imports and the changing realities of the economy. Price was beginning to win in the battle between cost and features.
Fast-forward from 1970 to 1998. Cincinnati Milacron lost so much market share in the machine tool business that they sold off the machine tool division.
So, what went wrong? Cincinnati Milacron was a market leader.
However, their sense of history and pride in their work and reputation worked against them.
Their leadership assumed that they understood the rules of their industry and how a successful company operated.
They knew who their customers were and what they wanted, and they weren’t going to waste time wondering if the Japanese had sensed a change in the marketplace that they themselves were ignoring. This certainty blinded them to the reality that their industry was indeed changing. Their customers were feeling the pinch of cheap foreign-made products that worked with lower-cost machines, and they couldn’t afford Milacron’s price premium.
- Why is your organization organized the way it is?
- What are the rules your organization operates under?
- Is the organization operating the same today as it did in the past?
- What are the assumptions about your customers, products and how you operate?
If assumptions keep you safe, comfortable, and stagnant, then jolts are their counterpart. Jolts are the earthquakes and the tsunamis, metaphorical and occasionally literal, that you either don’t or can’t see coming. Jolts can be terrifying; one day you wake up and a fundamental assumption about how you do business has crumbled away. Its absence can leave a hole in your understanding about what you do and how you do it. However, learning how to navigate the jolts is a key element in the innovation process. Look at it this way: A big jolt will put a hole into how you do things, but also in how your competitors do things. If you already have the “jolts happen” mind-set in place, you can leapfrog over your competitors who may be in numb denial about the unexpected shift. This is an opportunity for you, and you need to recognize it and act fast.
So, a key part of using the “killer questions” is to challenge your organization to prepare for unpredictable events that can seriously affect your business. It is also about opening your eyes to ways in which you can do something so unexpected, so jolting, that it throws off your competition, thereby giving you a competitive advantage.
There are two kinds of jolts that can affect you. The first is the unexpected jolt, and the second is the competitive jolt. Notice I said “affect,” not “damage” or “harm.” Jolts can be devastating if you are unprepared to deal with them, and the nature of a jolt means that you won’t see it coming. But a meaningful jolt can open up major opportunities if you have the fast reflexes and confidence to respond to them in a proactive way.
Killer Question: What are the unexpected jolts that could transform your business?
What’s the worst-case scenario for you or your company? What situation is so dire that you know it will never happen? Something so unrealistic that it seems pointless to prepare for it?
Consider the situation of Johnson & Johnson (J&J) in 1982, when seven people in the Chicago area, three from the same family, died after taking Tylenol capsules that had been tampered with by an unknown saboteur. Though an arrest was never made, a suspect was identified, and it seems likely the poisonings were part of a poorly conceived extortion attempt against J&J. More than 31-million bottles of product had to be recalled, and at one point police officers were driving through residential streets in Chicago using bullhorns to instruct people to throw away their Tylenol.
J&J, like all drug companies at the time, did not protect their product from saboteurs because no one had ever tried to compromise their product before. The packaging could be opened and resealed, the capsules could be easily pulled apart, tampered with and reassembled. The Tylenol murders could have destroyed J&J, but they didn’t. Why? Because J&J made bold moves and disregarded how things had been done in the past.
In the space of a few months, J&J had a new imperative: We must protect our products and our customers from tampering. They ordered a $100-million recall and designed antitampering packaging that has since set the standard for the industry. They also realized they needed to phase out the easily compromised capsules in favor of caplets, though it took another scare in 1986 to pull the last capsules off the shelves.2 Even so, for a company as large as J&J, this was swift action. So, what would be your Tylenol scare?
Killer Question: How can I create a jolt that will give me a competitive advantage?
Yahoo is a good example of a company who was blindsided by a competitor making a quantum leap in improving their core product. In the late ’90s, Yahoo thought they had search in the bag.
They developed a search feature where websites were rated by people who individually curated and ranked pages. Sure, it was laborious, but it allowed for accurate search results. Yahoo never seemed to put serious thought into what would happen if a rival came up with a much better search engine. We know what happened next. A couple of guys from Stanford came up with the idea of automated page-ranking rather than human organization, and Google was born.3
That’s a big shift. Yahoo was essentially offering a very modern service (an Internet search engine) that was curated in a very traditional way (by humans). Google came along and said, “There is a better way to do this.” They devised a system where the popularity of a page, and the number of links or views it garnered, decided what level of influence it had and where it fell in a search listing.
Yahoo was prepared for a competitor who could improve on their product, but they assumed they’d be dealing with an improvement of 5 or 10 percent. They were completely unprepared for a total change in how search results were gathered. Google then went on to develop an entirely new business model in terms of selling advertising, and the rest is history. Bear in mind that in 1999, Google was in negotiations to sell itself to Excite for less than a million dollars.4 Things change fast, and knowing how to anticipate and (in some cases) create jolts can help you stay on top of unexpected changes. The question to think about is “what happens if our fundamental business changes, either for better or for worse?”
Take a few minutes and think about your personal history, and the history of your organization and industry. Have you ever experienced a jolt in either a negative or positive way? It’s critical to understand that your business will be shaken by unexpected events, as well as by your competitors making sudden, “out-of-the-blue” advances in the products they offer their customers.
It’s also imperative that you have the ability to recognize when the improbable is actually happening to you. We’ve all seen the horrific images of the Balinese (and now Japanese) tsunami and the unfortunate people standing transfixed on the beach, watching the water slowly get sucked out before it returned as a killer wave. It’s easy for us to think “Run!” but the reality is that when you’re standing there, looking at the water, it’s much easier to believe “Nothing bad is happening, really, this is fine. Weird, but fine.”
You have to be open to seeing the warning signs, the things that are saying, “This is your fifteen-minute warning; you need to run now.” Keep your eyes open for the weak signals that let you know something unexpected is coming. Yahoo ignored the weak signals they were seeing, and they didn’t do anything. Don’t get lulled by a seemingly slow change and tell yourself that you can handle it, because all of a sudden you could find yourself being washed away.
There is a risk to being number one in your market, because it can make you feel you have the right to finally relax; after all, you’ve gotten to the top of the mountain. The reality is that you are constantly being challenged by the person climbing up behind you. But if you aren’t careful, you’ll fall into the trap of simply trying to stay ahead of the number-two guy who’s trying to catch up with you rather than focusing on moving forward on your own.
Remember, dealing with jolts isn’t just about playing defense, it’s also about using them to your advantage, or even creating jolts yourself if they will help you to disrupt your competitors and get ahead of them. Use the questions as a guide to list possible jolts, and devise ways that you would survive and even profit from them.
The first step toward innovation is shaking loose your assumptions about your organization and preparing for the unexpected jolts that will inevitably come. Apply a critical eye to your own industry. The point isn’t to decide that “up equals down” but to shake things up and open your eyes to opportunities you weren’t even aware that you were missing. Now, bear in mind that assumptions have an upside, too. We assume certain things because waking up every morning wondering if the basic nuts and bolts of our lives still hold true would waste a whole lot of time and probably cause us some unneeded stress on a daily basis. So it’s safe to assume you should follow the basic laws of civilized society. If you run a red light, you’ll probably get a ticket.
That’s a good assumption. There are “good assumptions” within the business world too, but I’m not going to list them for you; it’s up to you to run these exercises and do your own filtering to determine what assumptions are beneficial to your work or not.
The point is to keep questioning your assumptions because even good assumptions may go bad. If you constantly ask yourself questions that challenge you to evaluate what you do, how you do it and who you do it for, you will automatically be ahead of your competition.
- What situation do you know will never happen to you or your business?
- What situation is so outside the realm of possibility that there is no need to prepare for it on any level?
- What would be the effect on your business if it did happen?
- How would you respond, and what would you do?
Now, I’m not really asking you to look into a crystal ball and guess the nature of the random jolts that may affect your future. I have zero interest in asking you to consider the possibility of random geological events disrupting your manufacturing or sales. What I am interested in is helping you open your eyes to possibilities that will shake up the “safe” way your organization operates today. There are huge challenges coming in the business world, and you need to accept that your business will be profoundly rattled by jolts that are so unexpected they have no name to describe them.
The takeaway is that you need to learn how to think and observe like an outsider and see the assumptions that others are missing. Ask yourself if your assumptions about you, your work and your organization are still valid given constant changes. Ask yourself, “Why am I making these assumptions? What happens if I no longer choose to believe that they apply?” Use the questions in this article to find all the areas of your business where you’re missing opportunities to make big moves, both for your sake and for that of your organization.