Disruption – interesting times

In the last week I have encountered a number of thought challenging, disruptive experiences and articles. Here’s a couple of items that illustrate my point:

I have been exploring the changes that electronic medical records are creating. The process is being driven as part of the Administration’s stimulus plan and their efforts to improve the quality and reduce the cost of health care. The current approach has been summed up by on Twitter poster as: “… an endless barrage of information (and discussions and debates regarding various combinations of information),” Meanwhile CVS is expanding into health care services though clinics in their stores and using the personal medical records systems of Google and Microsoft to improve service and communicate with the patient’s doctor. Today there is word that the British national system is so over budget and late that they may adopt a Google or Microsoft solution. Are we seeing some classic Clayton Christensen disruptive technologies for health care? Microsoft and/or Google rather than a government driven program?

Here’s an article from the July 2, 2009 issue of Business Week by Shoshana Zuboff who is regular contributor to Business Week. She points at some different but equally disruptive ideas.

I spent a quarter-century as a professor at the Harvard Business School, including 15 years teaching in the MBA program. I have come to believe that much of what my colleagues and I taught has caused real suffering, suppressed wealth creation, destabilized the world economy, and accelerated the demise of the 20th century capitalism in which the U.S. played the leading role.

We weren’t stupid and we weren’t evil. Nevertheless we managed to produce a generation of managers and business professionals that is deeply mistrusted and despised by a majority of people in our society and around the world. This is a terrible failure. … Margins have shrunk steadily for 40 years; return on sales for the Fortune 500 has been declining since the early 1960s.

Many companies reacted to this decline by finding new ways to cut costs. The Harvard Business School, along with other business schools, taught them how: outsourcing, off-shoring, downsizing, reengineering, and finding new overseas markets for old products.

… a return to real prosperity and long-term growth … will require a rebirth of business based on new rules for a new era.

The old rules that most B-schools have preached were invented a century ago for supplying mass consumers with affordable goods and services. They are poorly suited to the values of today’s new consumers, who want help to live their lives as they choose, with personal control, voice, and a practical sense of connection. Many smart people have spent decades trying—and failing—to adapt the old model to this new pattern of consumer demand.

New Rule No. 1: Race to I-Space

The old rules assumed economic value. That’s why Harvard Business School students have been trained for a century in the “administrative point of view.” The manager’s job was to oversee and control what was inside organization space, or what they were trained to view as “my company.” Everything else was a distraction. The “administrative point of view” reflects a simpler time when business was about selling a product. …. It’s a world of producers vs. consumers, my company vs. your company, us vs. them.

Business is no longer just about the product. Now it’s about solutions for the individual. Economic value is hidden in consumers’ unmet needs and is released by providing people with the means to fulfill those needs. But in order to release new value, you need to get out of organization space and into the subjective space where individuals live. I call it “I-Space.” This means shedding the “us-them” mentality. Now everyone is an insider.

…. Apple headed for I-space with iPod/iTunes and released massive quantities of value by giving people what they wanted on their own terms in their own space. Meanwhile, music industry executives were busy throwing tantrums in organization space and suing their most passionate customers. …

New Rule No. 2: Advocate, Don’t Alienate

The old rules taught you to ask, “What is my product or service, and how can I sell it to you?” With that question, adversarialism was baked into the DNA of the buyer-seller transaction.

The new rules ask, “Who are you? What do you need? How can I help?” This creates a dynamic of advocacy and mutual accountability. The more trust you build, the more value you release, and the more wealth you create.

… President Barack Obama gets it. In his proposed overhaul of financial regulations, brokers will be compelled to put their clients’ interests first. Trained in the administrative point of view, Wall Street executives are already preparing to fight the very changes that would put them on a path to new wealth creation.

New Rule No. 3: Collaborate and Federate to Compete

When you’re in I-Space, you need to collaborate and federate to provide the support individuals need. You can’t do it alone because the needs of individuals don’t conform to existing organizational and industry boundaries. This means learning how to manage what you don’t control or own. These economies of trust are becoming even more important than economies of scale.

… Amazon’s marketplace and eBay’s webs of buyers and sellers are early prototypes of these federated networks. Apple and Facebook are struggling to understand the rules of engagement that should govern relationships with their applications developers. You can see them climbing a new learning curve through trial and error as they figure out how to build and sustain economies of trust.

Are You Ready to Let Go?

After decades of working with adults on the challenges of transition, I know that letting go of the old rules won’t be easy. No one gives up what they know without a fight. …

Letting go is a Catch-22. You don’t want to let go until you have something new to cling to, but you can’t discover the new thing until you let go. In between, you must cross a mystery zone. Eventually you get to the point where you can’t stand the feeling of things not adding up for one more minute. That’s when you take a leap of faith, and the questions start to feel more important than the answers. You’re in a new place. The bad news: There are no maps. The good news? You are the mapmaker.

Sounds like we are living in interesting times. Stay tuned.

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