Scaling a business in a newly chaotic environment while continuously evolving your disruptive model and technology, and maintaining your exponential mindset and vision in a tempest of linear demands, is a sensitive balancing act.
In my first two blogs on “Leading Through the 6 D’s” I shared my personal experiences in developing new technological solutions and seeing them through the Digitize and Deceptive phases. One hopes the payoff for the investment of weathering these stages is winning that rare chance to build a Disruptive business. “Disruption” has become a hackneyed concept: to keep my meaning clear I will use the definition offered by Singularity University Executive Founder and Director, Dr. Peter Diamandis, in his New York Times best-seller, Bold. “In simple terms, a Disruptive technology simply is any innovation that creates a new market and disrupts an existing one.” Classic examples are the mass production of the Model-T opening automobile ownership to the working class, silicon-based integrated circuits enabling literally exponential improvements in electronic complexity and cost, and the radical enhancements in the speed and agility of connecting ideas, experiences, and preferences afforded by internet-based social networks. (If you are interested in a deeper study, Singularity University faculty member David Roberts has researched and defined seven modes of business disruption.)
Balancing Ever More Variables
The Disruptive phase presents significant new complexities that can easily deflect attention from the critical process of continuously evolving your business and solution. Juicy growth market opportunities attract strong, fast competitors, many with substantial resources to catch and pass you. The glow of winning major customers brings the challenge of continuously supporting and satisfying them. Success now demands attention to processes and tactical details in addition to, not in place of, the skills of timing, narrative, and planning that carried you through the Digitize and Deceptive phases. It’s ironic that winning in this most exponential-appearing phase, just when your ability to dramatically change a market paradigm is realized by key industry players, depends so heavily on efficient execution of very linear tasks. Here are a couple of lessons that I learned along the way.
One of the reasons why it is so hard to cope with rapid growth is that it is very hard to anticipate it, even for those who champion the vision. In the Fall of 2001, I experienced an almost giddy, unscheduled mid-quarter analyst call. The CEO of Genesis Microchip, which was in the process of acquiring our company, Sage Inc. in the explosively-growing flat-panel display control chip business, announced to the Street that Q3 revenue could be two times what the company had guided just six weeks earlier. Merger discussions had been tentative for months, going on and off for some time and when the market ignited, both companies were ready to leap forward and join forces to bring the scale needed to continue our mutual geometric growth.
Second – and this is the balancing act – logistics and operations become very important, very fast, and mismanaging them will kill your business fast, too. Appreciating the trials of scaling logistics and operations can be especially difficult for technology-focused companies; I learned through failure. 3Dfx was the major competitor to Nvidia in the burgeoning 3D graphics accelerator market in the late 90’s. As a leadership team we decided that the best way to scale our volume and guard our margins was to vertically integrate and deliver the complete product: not only our 3D graphics chips and software but also the printed circuit boards the chips were mounted on, hundreds of additional components, and even retail packaging with sophisticated graphic designs. After all, there were dozens of specialty companies in the world doing that work so we could do it too, right? We even bought one of those companies to speed progress and reduce risk. The management distraction overwhelmed us: the 3D graphics technology at the heart of our value proposition lost pace and before we knew it we were losing money on every finished product sold. In just eighteen months our bank account had run dry and our intellectual property and top staff were acquired by Nvidia.
Outside of those who follow the history of the tech industry, few people know about the countless would-be disruptors who did not survive. Microsoft’s DOS was not the first personal computer operating system, Facebook was not the first online social network, and Google was not the first search engine; a good part of these giants’ success was due to their ability to manage fundamental operations as their businesses charged forward at breakneck pace. Releasing high-quality code day after day, optimizing application performance, and even building servers is a tough linear grind. Although developing new technologies and applications may be more exciting to founders and leaders who could view operations and logistics to be as exciting as a conversation with a block of wood, an exponential business in the Disruptive phase can be made or broken by these challenging and vital functions.
Innovating In A Cacophony
Managing new and complex logistics is tough, but innovating and iterating on your solution is what got you here so you can handle that, right? Well, now it’s different. You must maintain your capacity to look ahead and shoot ahead amidst boisterous inputs from partners and customers, while capable competitors take their own shots at every potential weakness in your technology and business.
The looking ahead is also getting harder. In this stage, it’s not just technology that is growing but a new business model in concert with it. Cycle after cycle, countless moving parts must be considered. In order to precisely project the market’s needs, leaders must also predict future states of increasingly complex and alien systems, sometimes far from their earlier domains of expertise. A Trident Microsystems, an early innovator in high-definition digital TV, we successfully projected semiconductor process roadmaps, third-party video API development, consumer trends for television use, and dozens of unsynchronized national and regional public policies that would affect switch-over from analog to digital TV broadcasting. We were able to capture 60% market share partly to having a leadership team where we were all expected to learn and knowledgeably discuss those topics and to make candid inputs into key decisions.
Such complexity currently faces the IoT market, where numerous interface and control standards, multiple and inconsistent data privacy regimes, and the geometric growth of edge computing power are all in play. The recently announced collaborative goal of Apple, Amazon, Google, Samsung, and the Zigbee Alliance to standardize an interface and control scheme for ‘things’ shows their acknowledgement of complexity as they streamline to facilitate exponential market growth.
Noise from competitors and customers will constantly urge attention to the here-and-now at the cost of future visioning. With numerous customers comes numerous customer requests that serve individual, tactical needs tangential to your growth path (For example, at Trident I was regularly asked to support a customized flat panel display, optimize a driver for some proprietary application, etc). As painful as it is you have to professionally and firmly say “no” in cases where the request compromises your focus on long-term objectives.
Hungry aggressive competitors will skillfully promote to customers and the media critiquing every possible weakness of your solution and your company. Leaving those questions unanswered risks having your narrative become distorted and muddied. One of the best investments to counter those sewing fear, uncertainty, and doubt (“FUD”) about your company and solution is a senior and empowered Product Marketing staff who can fight those sophisticated battles.
Making it Work
The Disruptive phase is raucous but singularly rewarding for a company that makes the right choices at the right times. Business management issues, not the core disruptive technology or debut product, will come to dominate executive team meetings. Tackling them while continuously evolving your solution maintaining focus on your long-term vision is like walking a tightrope; I know of no easy ways to stay upright. Planning in advance for hyper-growth, actively considering the importance and difficulty of linear business imperatives, and finding a method that is natural for your unique team and culture to sustain focus on your vision will maximize your chances at becoming the wonderful and rare Disruptive business success.