Orthodoxies, or otherwise known as conventional wisdom, refer to how things have always been done. In corporate talk, orthodoxies are often called best practice. While there are positive orthodoxies like human safety and regulations, there are those that limit an organization and indeed, individuals, from thinking “outside the box.” This conventional wisdom, over time, becomes integrated into corporate cultures and playbooks, creating barriers to new and innovative business models, processes and other transformative actions that could lead to greater growth, sustainability, defensibility, and profitability.
Geoff Tuff and Steve Goldbach of Deloitte are the coauthors of “Detonate: Why – And How – Corporations Must Blow Up Best Practices (and bring a beginner’s mind) To Survive,” a book that seeks to expose defunct ways of thinking within organizations and help them innovate their way to the next level. In the book, the authors discuss how organizations develop poor corporate habits, which end up masquerading as best practices. They also offer alternative views on how organizations can embrace new ways of thinking and doing to win in the marketplace. Geoff and Steve recently joined us for a chat about their book and how they see the market evolving as digital transformation takes root across industries.
Exponential Growth vs. Linear Growth
In previous industrial revolutions, growth was mostly linear, explains Geoff. Companies at that time had the opportunity to observe and assess technological advances and then integrate them once they matured. They did this without losing their competitive edge and without having to take any major risks. Today, the rate of change is no longer liner – it is exponential. While at the start of the information age, Moore’s Law dictated the rate of change, today, as Steve says, “the impact really has to do with not just the technology itself, but it’s all the technology upon the computing power which, in turn, changes how people behave and what’s possible.” The result of this “technology stack” is the combinations of those technologies accelerate the disruption to business models and the pace at which this disruption is happening.
Organizations with playbooks and cultures optimized for linear growth will find themselves playing catch-up in the market if they do not adjust. Realizing that this exponential change is only starting to accelerate, organizations must embrace new orthodoxies and ways of thinking that allow them to experiment with new technologies and new approaches. One way to do this is by undertaking what Steve and Geoff call Minimum Viable Moves (MVMs). These are actions taken by an organization to test new ways of doing things without impacting the overall business. Borrowing from the phrase Minimum Viable Product popular in startup circles, focusing an organization on undertaking inexpensive and non-risky MVMs can help introduce new capabilities to an organization quickly and efficiently.
Customer Behavior vs. Internal Forecasts
Most established organizations use financial projections to inform the strategic direction of the organization, or as Geoff puts it, they staple strategic planning processes to an annual financial forecast. This thinking creates a gap between what the business is doing and what customers expect. When this gap remains unaddressed, disruption occurs. “That’s the essence of disruption: it’s something that makes the consumer’s life, or a technology that makes it possible for a consumer’s life, to be meaningfully different,” says Steve, “and businesses that don’t adapt to those new possibilities will eventually just become irrelevant to the consumers.” Steve and Geoff call human behavior the subatomic layer of any business. They assert that every business outcome is because of human behavior. “You cannot change your performance review, you cannot grow, you cannot improve your margin unless someone somewhere changes their behavior,” says Geoff.
But businesses cannot always respond to change in the same way that consumers do. While a consumer can risk a few dollars to try out a new service or product, large organizations are constrained by risk management measures. They cannot afford to take bold risks at the expense of the business. Steve and Geoff advise such businesses to embrace a culture of Minimum Viable Moves. This could be through the formation of an innovation lab or a corporate venture capital arm tasked with investing in startups. Steve adds that businesses must intuit what will be delightful to the customers that they are trying to serve and take every measure to deliver delightful experiences to them.
Beginner Mind vs. Expert Mind
Geoff explains this dichotomy by quoting Suzuki’s book Zen Mind, Beginner’s Mind; “In a beginner’s mind, there are many options. In an expert’s mind, there are a few.” This statement implies that most businesses develop an “expert” way of looking at situations blocking out alternative, and in some cases, better ideas. To avoid this trap, organizations must approach each situation with an open mind, remaining willing to explore new ideas that may at times fly in the face of conventional wisdom. To illustrate this point, Steve and Geoff narrate how Deloitte US blew up conventional wisdom when determining whether to invest in a “click university” or “brick university.”
Deloitte US wanted to set up a university where they could train their people. Faced with a recession, the firm could have gone with conventional wisdom to leverage technology in a way where they could take cost out of their system. Instead, they decided to challenge this orthodoxy and build a brick university. “It’s even more important in this world of technology and people not being face-to-face and being virtual to invest in something that can bring our firm together in a cultural way,” explains Steve. This is an excellent example of how challenging conventional wisdom can result in an extraordinary outcome. While in this case, Deloitte US went in the opposite direction of digital transformation, they did so out of a clear understanding of what their company needed and ended up delivering a solution that brought the entire Deloitte fraternity together to learn and become collegial in an amazing facility.
Anticipating Exponential Change
“Bring a beginner’s mind. Don’t presume that what’s happened in the past and the way things have been done in the past is the right way of doing things because if you try to bring past expertise to the table in a world of exponential change, you’re probably going to get it wrong,” cautions Geoff. However, he is quick to add that while organizations must challenge conventional wisdom, this does not mean throwing out everything. Instead, they must preserve the effective and profitable parts of their business while maintaining a portfolio of ongoing activities that attempt new things. Businesses that become adept at discovering new things, innovating quickly and working them into their core business, are the ones that will win in the 4th industrial age.