A new order in today’s business leadership dynamics is aptly summed up in one word: INNOVATION. The word encompasses macro perspectives for improvising changes targeted at impactful business vibrancy.  This includes strategy reformation, process transformation, information & data revamp, restructured procedures, new creations etc – all the activities for doing old things the new way ……. and doing new things, so to speak.

A trendy two-word phrase has also inundated the business world: DISRUPTIVE INNOVATION. “Disruptive” connotes shifting away from prevailing norms of business practices for acquiring significant new market scores. The two-word phrase was coined by researcher Clayton Christensen and his cohorts in the mid-90’s.

Wikipedia defines disruptive innovation as “an innovation that creates a new market by providing a different set of values which ultimately (and unexpectedly) overtakes an existing market.” To me, the definition also relates to disruptive technology which bolsters a process to produce a new product or service that begins from the bottom of the market but could quickly pick up pace to displace established competitors.

Let us look at the common business scenes prevailing now. How many long-standing corporations have been carrying on the same modus operandi – or simply put, business as usual approaches –  and look for means to scramble for business growth? Do you not agree that many enterprises merely whip up pressure on their sales people year after year for organic incremental growth in business scores? Without salient innovations, regardless whether with the disruptive factor or not, it will be a matter of time such entities may phase out.

The promulgaters of innovation in today’s business order point at one message: Business leaderships must either *think out of the box or *create a new think box. The two perceptions may be similar but slightly different.

To think out of the box infers to creating ideas for changing the existing mode of business approaches but still falling on the same fundamentals representing the main founding principles. The current business box is the base; ideas extrapolated from the base (out of the box) serve as supplementary initiatives.

Take for example, a life insurance corporation relying on its large conventional sales agents as the bastion of business growth. While recognising the prominent contribution of this convention for now, the top leadership should extrapolate by considering new agent streams, like appointing tax consultant firms, community cooperatives, trade unions, private trusts, will writing enterprises, property developers, legal firms etc as corporate agents (not in individual/personal name). In view of wide network, these establishments can leverage on their existing contact database to promote life insurance products. Sales from corporate agents will be additional revenue to the sales scores of conventional agents who represent the main base. Probably, corporate agents may gradually gain prominence in comparison to the conventional agents

Formulating a new think box links to exploring entirely new business platforms with potentials for viable development. It does not necessarily mean abandoning the core business genre. More so, the new box may be fronted as a subsidiary to the main platform.

Here is a classic example. A pioneer budget airline of Malaysia, in facing up to competition posed by other budget carriers that entered the scene later, successfully ventured into an economy class hotel chain. At the same time, it incorporated an insurance arm. Travellers who fly by this airline to overseas destinations usually take up travel insurance and/or personal accident insurance along with their ticket purchase. Some travellers also book room accommodation with its hotel chain (in the country where it also operates) at the time of ticket purchase. The two additional idea boxes now serve as boosters to the overall business under the “wings” of this budget airline, rendering complementary revenue by offering packaged conveniences to travelers.

I have always wondered why large insurance corporations in Malaysia do not consider owning an established hospital chain, or at least hold a major equity stake in a reputable one. If this was conceptualised, I can imagine the following benefits:

# The hospitalisation claims pay-out from the insurance corporation to any policyholder who has sought treatment in its hospital would be recouped in the form of medical fees received, thus going back to overall financial coffers of the parent company, i.e. the insurance corporation. This is one way of curbing claims compensations going as outflows to external medical institutions.

# Some special privileges, like free annual medical check-up at the hospital, can be accorded to holders of its medical policies. Such perks may add attractiveness to its medical cover products, hence lending weight to capture the medical insurance market.

# Consensus by both entities under the same group to institute sound hospital treatment practices and charges would help to contain claims experience ratios (total claims pay-out amount vs. total premiums collected from medical insurance policyholders). This would sustain its medical products’ profit margins. In addition, the hospital’s reputation as an efficiently run service-orientated medical institution would be enhanced.

# Better promotion of the branding image of both entities due to effective strategic alliance.

I opine this idea is worth considering for possible exploration if properly strategised.

Now, let us look at the bookstore business. Question: Do we foresee hardcopy books facing the piercing brunt of competition coming from e-books in the current electronic or digital era? More and more reading enthusiasts are placing book orders the e-way. They can just download to their laptop after effecting purchase via credit card from home. They can also view the short synopsis of a book, like the preamble and contents outline, for free before deciding to buy on-line.

A common drawback in respect of hardcopy books housed in many conventional bookstores is, most of the items - especially the costlier ones - are tightly sealed in thick transparent plastic wraps to curb browsing by visitors. Only the cover of a book, showing the name of the author, the title and the cover design can be seen. I believe the bookstores want to protect the hardcopies from being smeared and worn off by the hands of browsers who put back to the shelf after flipping through. But would you buy a book just by viewing the cover only without having any idea what the contents are about? I would not.

It is high time for owners of conventional bookstore chains to explore innovations that could effectively protect their business competitiveness vis-à-vis the gaining popularity of e-books. Unless some value-added facilities are improvised, hardcopy book business will face more challenging times.

What about the following idea for hybrid “transformation” (combination of “out of the box” and “new box”) of a conventional bookstore?........

+ Cozy spread-out premises in a commercial zone within the perimeters of upmarket residential clusters. To target at the upper middle-class society as customers.

+ Bookstore cum library setup – for *purchase,*rental or *loan of books. Loan privilege is only applicable to patrons who pay an annual loan membership fee. No restriction to the number of loans. All items are available for purchase or rental to all patrons. Purchase is at item’s listed price but frequent purchasers are entitled for rebate. Rental fee rate is based on the listed sale price of an item.

+ Only the soft copy of a book on loan or rental can be read via any of the computer screens linked to the system containing the items available in the store. The screens are situated in the library section, equipped with desks and chairs.

+ Intended purchasers can view the synopsis and a few excerpts of a book for free before deciding whether to purchase, rent or opt for loan.

+ A stipulated period for loan or rental, which cuts off the on-line access to the loan or rent item after the last date. If a patron wishes to refer to the book again, he/she can request to resume the transaction. Rental fee will be charged again for renting the same book the second time. Within the stipulated period, patrons may log off from the screen and resume reading anytime. In other words, patrons can read a book on loan or rent in phases as long before the cut-off date.

+ Duplicating via camera shots or video is prohibited. To ensure compliance, CCTV cameras are installed in the section housing the computer screens.

+ Phone calls and other uses of mobile phones within the premises are prohibited, to bar unnecessary disturbance to the tranquil environment.

+ A patron who has read a book on rental can buy the same in hardcopy form at the price less the rental fee.

+ Book loan members have the privilege of purchasing books at concession prices, slightly cheaper than the listed price.

+ A cozy cafeteria is adjoined next to the library section, partitioned by a glass panel wall with a glass door. Food is served at the cafeteria only. Beverages ordered from the cafeteria may be served to patrons in the library. The cafeteria is responsible to upkeep the tidiness of the desks in the library where drinks have been served.

Do you think my two proposed revolutionary ideas (for a large insurance corporation and bookstore) are viable? Perhaps the optimists may be impressed with positive intrigue, while those who are less adventurous may hold reservations about shifting from the norm for fear of possible failure risks. No denying significant costs come along with significant revolutionary changes. Large capital outlay may perhaps be required. There is also no guarantee the innovative directions will not end up as flops.

Let us face reality. In the modern era, corporate leaders must wake up to recognise that innovation culture has already zoomed in to be the new business order of the day. Many disruptive innovations have already taken place. Corporations cannot expect to thrive for long without being willing to absorb some risks to thrust innovations that disrupt conventional business modes.

Look around what has happened in the competition realm ……… conventionally brewed beer vs. craft beer; conventional camera vs. handphones with built-in high solutions camera facility; conventional financial institutions vs. fintech enterprises; walk-in purchase vs. online purchase etc. We know the conventional ones are facing intense pressure to ward off the competitive onslaughts posed by their disruptive counterparts.

More and more disruptive innovations will continue to emerge into the various markets. Top corporate leaders not willing to try out brand new initiatives just to avoid possible failure risks may still face risks of their business faltering at the tail end due to disruptive competition. Look at some once upon a time big names which phased out of the market - all because they preferred to focus on organic growth than innovative growth, and because they preferred to play safe than take risks. Top leaderships must first inhere a mindset whereby some form of risk-taking is tolerated for the sake of innovations linked to new thrive potentials.

InTheBlack business magazine carried an elaborate write-up which propounded the key points shared by Professor Ram Charan, a renowned global business adviser.

# The issue facing business leaders is not how to cope with change; it is about how to anticipate changes coming down the track, understand their implications before competitors do, then harness them to enhance market position and profitability.

# Many leaders think of how to better what they have always been doing, but that is not enough in an aggressive competitive business world. They often get engrossed in looking for incremental gains, without time to explore the big picture.

# Identifying new potentials should be one of the key responsibilities of top leaders. Ideas to usher business forward should be a core skill of any top leader.

To mitigate possible unforeseen risks for contriving innovations, certain prudent proactive preliminary measures may be taken, as follows:

- Form a special task force comprising the right players in the right roles pertinent to conceiving and developing a new major project. The members are subject matter experts in their respective field. 

- Brainstorm sessions by the task force on the proposed project. Adopt an elaborate but workable brainstorm model to draw in pertinent points for deliberations.

- The task force may consider organising a focus group for soliciting feedback on the suggested innovation. Focus group participants should be meticulously identified, like top sales personnel, premier customers, experienced customer service representatives. Their inputs from different perspectives will identify the likely strengths, attractions and drawbacks relating to the idea.

- Test the water by rolling out a trial run or mock launch. During this trial, the task force should note down their observations for further deliberations. What lessons have been learnt? What aspects could be improved? What flaws could be averted? What strengths could be capitalised? 

- Re-define the processes based on the lessons learnt from the trial run. Then roll out the full launch with refined features. However, abandon the project if the final assessment indicates it is not viable - this is to cut loss.

SUM UP:

Major innovations in any corporation rest on two fundamental prerequisites applicable to its top leadership, namely (1) Willingness to accept challenges, particularly in facing up to possible failure risks.  (2) Willingness to allocate resources (time, manpower, logistics, dedicated efforts and budget) toward working on intended innovations – in other words, allocate expenditure for research & development (R&D).

Two popular idioms of “no risk, no gain” and “adapt or die” hold out as manifested truths. It is incumbent on top leaders to proactively recognise signals of changing trends if they want their business to survive in the longer run.

Nazir Razak, the group chairman of a top rung bank in Malaysia and who was holding the chair of the East Asia Business Council, pronounced at a meeting of prominent people on 13 November 2017 his key emphasis:

^ Technologies emerging around them were transforming the world – from the nature of jobs and work to the way societies function.

^ The 4^th Industrial Revolution would bring new challenges which were going to affect everything in running businesses. There would be a huge disruption to jobs.

^ Robots and artificial intelligence were already replacing workers in factories and increasingly also challenge service jobs too.

^ If the South East Asia nations could position themselves properly and quickly , the 4^th Industrial Revolution would be a powerful force for prosperity.

(Source: The Star newspaper)

I like to end this article with a few punchy quotes from three respected leaders.

There is a herd mentality prevailing in many top corporate leaders that their prime focus is to drive business dynamism for the respective organisation they steer, and nothing else is more important than this objective. In this respect, they direct clarion calls for garnering full resources to propel initiatives targeting at business growth. That perception appears realistic and practical, except one thought-provoking question: Should they not pay equal attention to tackling issues that possibly stumble the pace of growth?

Some leaders think it is quite simple to solve problems – just recognising the issues that can be seen and heard at work, followed by applying assumed corrective actions quickly. But is the approach so simplistic? Well, I think not. Why? Because what they normally perceive are superficial ones, i.e. those noticeable at the open surface, and not the underlying core causes contributing to the issues seen and heard.

Any corporation yearning for assertive revamp or transformation needs to fully recognise the ominous hidden impediments, which if not eradicated, will thwart salient improvements. Like it or not, without eradicating the core causes, efforts to drive intended revamp and transformation will be negated.

Take the analogy of an apple tree once adorned with juicy fruits but now withering away. Let us say hypothetically the farmer decides to treat by pruning the branches, also applying pollination booster spray and laying fertiliser on the surrounding soil surface. Would such measures based on what could be perceived and seen outwardly really help? Probably it is not the outward tree problem but pertaining to decaying roots beneath which could not be seen. If the roots are being attacked by termites, surely efforts to treat the tree above the ground would be hapless.

The farmer should instead unearth the surrounding soil to diligently check the condition of the roots. If termites have infested the roots, he should tackle the termite issue, like applying the right pesticide and the right fertiliser directly to the root buttress. That would be correctly tackling the core issue with the right solutions.

Getting to the core of a superficial problem necessitates meticulous attention. Literally speaking, the process entails drilling deep through numerous layers to reach the underlying core. Not as simplistic as acting on what could be seen or heard.

The above analogy represents the right approach to tackle a single core issue. The single apple tree could relate to an individual subordinate in a team. A corporate leader should learn to understand every direct downline subordinate well to identify the respective core weaknesses marring respective personal (individual) performance. This is the Micro Prong aspect.

A corporate leader invariably also encounters general issues posing major faults negatively impacting his entire team, hence the necessity to zero in to the bottom of the real macro causes. This is the Macro Prong aspect.

I wish to recommend my approach called THE IN-DEPTH DIAGNOSTIC INQUIRY for probing into core causes that conjure superficial problems.

Now, let us examine two simulated case studies – one micro and one macro -  reflecting probable scenarios of the real corporate world.

Case Study 1 (Micro)

A sales director finds one of his recently recruited sales member slow in sales scores despite having undergone full sales technical training. Tracking records indicate the young man is not conducting enough business calls. Should the leader take the perceived problem at its face value? Should the leader immediately recommend intensive business call methods re-training for the sales member? Or should the leader probe for the underlying reason why the subordinate is not making sufficient calls?

The in-depth diagnostic inquiry, with the cooperation of the subordinate, may be like the following process. 

SUPERFICIAL ISSUE: NOT ENOUGH BUSINESS CALLS. INQUIRER: SALES DIRECTOR. RESPONDENT: SALES MEMBER 

Conclusion: Core reason for not making enough business calls is the agent’s negative concept of the career.  He is neither proud nor committed to his selling role – that is why he has refrained from further prospecting and making business calls to people outside his natural contacts.

Had the leader tried to tackle the superficial issue by recommending the subordinate to undergo intensive technical re-training in prospecting and cold calls, that would be like wrongly treating the individual apple tree without checking the condition of the roots. That would be futile. Rightly so, reinforcing the right concepts of the career into the agent might work……if this still does not help, then no point to retain the individual; the plausible action is to advise him to look for other careers.

Case Study 2 (Macro)

After the merger of two prominent corporations in the financial services industry, the revamped institution decides to quickly implement a new IT service support system to consolidate data from both sides so that all backroom personnel could rely on one (common) platform for service operations. Alas, few years down the road from the commencement date for system migration, incessant complaints from customers and sales agents on service discrepancies continue to bug the management. There seems to be no end to new discrepancies discovered continually despite restitution “patching” work done each time a complaint has cropped up.

The management’s off-the-cuff generalised conclusion sans (without) further probe: Discrepancies due to human errors in the system migration process – a quick superficial perception. However, this does not answer how and why the human errors occurred. An in-depth probe, led by an outside consultant adept in such inquiry and with sound related experience in the same industry, may unravel the core causes (not just one) of the discrepancies, like as below:

SUPERFICIAL ISSUE: DISCREPANCIES DUE TO HUMAN ERRORS IN THE MIGRATION PROCESS

INQUIRER: APPOINTED CONSULTANT. RESPONDENT: KEY REP. OF SYSTEM VENDOR.

Evidently, the in-depth diagnostic inquiry revealed three main factors had contributed to the anomalies. (1) The short time-frame allowed for completion of the system migration. The project itself was a rush job. The few samples picked for user testing were not encompassing enough to fully cover the multifarious data contents. (2) No proper due diligence to analyse the structure and contents of the old systems. (3) The task force was not well-versed with the different service parameters of the two previous corporations. The unlearned bitter experience which set in should render a lesson learnt when the institution considers future IT projects.

For a macro exercise, an experienced empowered impartial moderator should come in. In the above example, an outsourced experienced consultant is appointed the protagonist because no internal officer with such astuteness is at hand. Obviously, a macro exercise is more complex than a micro one, as reflected by the longer inquiry steps in case study 2.

The right remedy for reforming data consistency and service stability needs the management’s committed resolve to support the recommendation. The top management needs to decide on costs versus revamp results………or aptly put, either foot the extra costs to effectively stamp out data discrepancies once and for all, or face up the possibility of erupted wrath expressed by customers and sales agents. The current approach of executing sporadic “patching” work whenever new complaints on discrepancies crop up now and then will never be the wholesome solution.

Obviously, a new task force comprising personnel familiar with the intricacies of the old systems and data contents should be formed to work with the vendor. This calls for an efficacious documented proposition by the consultant – written, visual and verbal – to secure the top management’s buy-in.

Summary:

Inquisitive proactivity and determination by all relevant segments in a corporation represent the bastion for successfully ironing out core issues which hinder vibrant progress. First, relevant leaders must be seriously keen to investigate the real inherent issues causing perceived problems. Second, relevant personnel must render whole-hearted cooperation to be involved in a drill-down diagnostic exercise. Third, only experienced personnel familiar with the specific situation should be engaged. Fourth, the top management of the corporation concerned must support recommendations constituting the right remedial measures. Such an endeavour requires committed synergy from all relevant internal parties.

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