20 years ago, Clay Christensen wrote a groundbreaking article about “disruptive innovation”, and that brought the term “disruption” into everyday business use. Hardly a week goes by without hearing about a business – or even an entire industry – being disrupted, so it’s not surprising many business leaders are worried. But we’re all talking about disruption, and forgetting the second part of his phrase: innovation! The real secret to success now is to disrupt yourself, so you can stay ahead of the game and lead the way in your industry.

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By 2050, two-thirds of the world’s population will live in cities.
What will the city of the future look like?

Here are 10 things we’ll see in the not-too-distant future …

1. Most buildings source their power from renewable energy sources.
2. Vertical farming uses land efficiently to feed larger, more dense, populations.
3. Self-driving (autonomous) vehicles are the norm.
4. Demographic changes create demand for new housing options and infrastructure.
5. Offices are replaced by more flexible workplaces – such as co-working hubs.
6. New housing options and “smart” infrastructure help older people age in place.
7. Cities learn how to better manage environmental issues such as air quality and waste disposal.
8. Eating habits shift towards healthier, protein-rich diets – even new cuisine like insects!
9. WiFi is reliable and ubiquitous – as good as water and electricity.
10. The city adapts to its residents with smart lighting, traffic shaping, and greater personalisation.

From the time Scottish professor William Cullen designed a small refrigerating machine in 1755, artificial refrigeration has transformed the way we store, transport, and preserve food. It has enabled settlement of areas that aren’t served by natural transport lanes, facilitated the dramatic shift from rural areas to cities, and changed the daily lifestyle of millions of families.

The modern refrigerator has one function – moving heat from one place to another – but requires different interconnecting parts: a condenser, compressor, evaporator, and expansion valve. There is no secret to how it works, but not everybody has access to all these parts.

This was the problem facing Manshuk Lal Prajapati, a middle-aged Gujarati from a small town in India. Prajapati was earning a living selling tea from a roadside stall, but always had an entrepreneurial mindset, and yearned to build a business building and selling household appliances.

His big problem was a lack of resources. When he set out to build a refrigerator, he didn’t have the sophisticated components used in Western appliances, and anyway he knew he couldn’t include them and still build something affordable to ordinary Indian families.

But he turned that limitation into an asset, forcing himself to find a way to create a feasible commercial product using limited resources. He turned to his own experience in pottery (an interest passed down over generations), and that gave him the spark of an idea that eventually led to his first – and now most successful – product: a clay refrigerator.

Although it doesn’t use the same components as more sophisticated appliances, it performs the same basic function, and keeps vegetables fresh for four days and milk for two days. It’s only about the size of a large microwave oven, so it doesn’t take up much space in a crowded kitchen.

Most importantly, it’s affordable, and Prajapati’s company MittiCool has sold 9,000 units across India.

Here’s the Point

The Mitticool refrigerator is an example of what Indians call “Jugaad innovation”, from a Hindi word that loosely means doing something innovative with limited resources. We might call it a “hack”.

This kind of innovation is often seen as a temporary workaround or cobbled-together solution that isn’t perfect, but is “good enough” until we can fix it properly. Unfortunately, that often means it’s only seen in a negative way.

Sometimes less is more! A lack of resources forces you to focus on what really matters.

There’s a management movement called “lean” (popularised by the book “The Lean Startup”, by Eric Ries), and that’s a good way to think about resourcing your project. Skinny runners don’t have enough energy, and fast runners carry too much weight. The best runners are lean: They have the right balance between too little and too much.

It’s tempting to throw as many resources as possible into a new project, because that seems like the best way to gain momentum and ensure success. But that isn’t always the best approach.

Don’t under-resource the project to the extent that it’s impractical or demotivating. But don’t go too far in the other direction and pile on so many resources that people get complacent and lazy.

Even if you have the luxury of these additional resources, consider holding them back and working within tighter constraints. Find the right middle ground, where people have enough resources to get the job done, but not so many resources that they waste them in non-productive activities.

For example, in 2015, Stephan Aarstol, the founder and CEO of one of America’s fastest-growing companies, Tower Paddle Boards, challenged his entire company to switch to a five-hour workday. He didn’t reduce their pay; he simply asked them to achieve the same results in just over half the time. The results were outstanding, and what started as a temporary initiative (introduced over summer, so staff could enjoy the long summer days with their family) became standard in their workplace.

It might seem counterintuitive to impose restrictions and remove resources, but it works because people tend to use the resources available to them. When you have a big budget, you can spend it on feasibility studies, reports, consultants, and expensive tools. When you don’t, you’re forced to find more “jugaad” solutions.

Thinking Ahead

• What projects are currently “top heavy” and could be trimmed to encourage jugaad innovation?
• What project could you launch right now with a lean set of resources?
• Which start-up companies in your industry are operating “lean and mean” – and what can you learn from them?

I’ve just come back from a short holiday in Singapore, where we spent some time eating, shopping, walking, sightseeing, and enjoying a few days of warmth after a cold winter in Perth.

One of the amazing things about Singapore is the way it has transformed itself over the last 15-20 years. I remember when most outsiders knew very little about it except as a transit spot to change planes on the way to somewhere more interesting. But now it’s become a tourist destination in its own right, with twice as many tourists now than 20 years ago.

Singapore has done this in two ways, and these apply just as much to your own business as well.

First, it has built on its traditional past, preserving and enhancing experiences such as the Lau Pa Sat hawkers market, first built 150 years ago, and protected as a National Monument of Singapore for its historical significance. By night, it’s bustling with locals and tourists, and was our favourite spot for satays and beer.

Second, it has created totally new experiences, such as Marina Bay, built on reclaimed land that didn’t even exist 30 years ago.

So Singapore has done two things:

• Evolution: Building on what they already had.
• Revolution: Creating something entirely new.

The same applies to your business.

Most leaders – especially in established organisations – think only about evolution. They look at their assets and figure out how to build on them.

Intuitively, that makes sense – but it’s dangerous. Your biggest assets are also your biggest weaknesses, because they blind you to other – possibly better – opportunities. In the past, these assets protected you from newcomers, but now they might offer only a false sense of security.

What are the biggest assets in your organisation and industry? These could include:

• Traditional accounting assets, like equipment, stock, premises, cash and other securities, and intellectual property.
• Less tangible assets, like your brand, reputation, and licence to operate in this industry.
• Intangible resources, such as your talented staff, systems and processes, and positive culture.

These are all assets, because they are positive features that have built your success … so far. But sometimes our biggest assets hold us back from something better.

For example:

• Owning premises gives you a local presence, no landlord, and more control over the building. But is it holding you back from a better location, opening other locations, or letting staff work from home?
• You might have a strong brand, but is it holding you back from doing something daring because it might damage that brand?
• The positive culture in your office is an asset. But is it holding you back from expanding your team to include remote workers?

Building these assets took effort and money, and it’s difficult to let go. But whatever you spent on them shouldn’t figure in choosing what’s best for the organisation now.

The problem is that it’s difficult to ignore the time, money, and effort you spent in building these assets. Psychologists call this the “Sunk Cost Fallacy”, where we mess up our decision-making procedure by placing too much weight on how much we have already invested in something. That makes it more difficult to abandon something, even if that’s the right thing to do.

Beware the sunk costs!

To overcome the risk of the Sunk Cost Fallacy, assess each of the assets in your business by asking this question:

“If we didn’t have this, what would we do differently?”

For example:

• If we didn’t already have a Website, what Website would we build? Would we even build a Website at all?
• If we didn’t have these systems and processes for delivering this service, what service would we really offer?
• If we didn’t have a database of loyal customers we might upset, what radical change could we make?
• If we didn’t have established agreements with our suppliers, what agreements would we create now? Would we even choose these suppliers, or would we choose different suppliers to meet our business needs now?

Sometimes the answer is, “Yes, that asset is the best option, and we wouldn’t do anything differently”. In that case, you can opt for evolution, and build on that asset.

But if the answer is, “No, if we didn’t have that, we wouldn’t choose it”, then maybe it’s time for a revolution, and abandon that asset to invest in something better.

Thinking Ahead

1. Which “assets” in your organisation could be liabilities because they are blinding you from other opportunities?
2. If a smart start-up company without this asset wanted to get the same benefit, what would they do?
3. What would you do if you didn’t care about [affecting the share price / damaging your brand / losing your best people]? How else could you achieve the same result?

Want to know more?

In my Think Sharper masterclass, I show you how to shake up your thinking to avoid problems like the Sunk Cost Fallacy. Find out more here, or drop me a line and let’s talk about it.

In Auckland, there’s some discussion now about building a light rail system. Like many topics that are open for public discussion, interested residents can have their say in online forums, and of course they do – with comments like this:

• “From building face to building face, all Dominion Road stations would have 21m of width to play with. We can fit a central island platform if we want.”
• “If we absolutely have to keep through traffic in both directions, then we cannot have cycle, general, and LRT lanes at those three of four locations, and for 100m or so, cyclists will have to share the lane with motorists.”
• “I would envisage the parking lane stopping at a station/stop and the drive lane moving over to it so the platform could be where the drive lane is.”

But these residents didn’t just make their comment in writing. They demonstrated their ideas in pictures, like this:

They are using the Streetmix service, which allows local councils to publish a proposed transport layout online, which anybody can then adjust – directly from their Web browser – to contribute their suggestions. Then, when Auckland Transport starts work designing the light rail layout, they can take all these ideas into account.

That’s what being “customer-centric” really means.

There’s a lot of talk now about businesses needing to be more “customer-centric”. That’s good, but what does that really mean?

It’s not just about customer feedback surveys and your Net Promoter Score.
It’s not just about delivering better experiences.
It’s not just about customer empathy mapping and customer journey mapping.

All those things are useful and valuable, but they still treat the customer as somebody outside your business.

Being customer-centric means bringing your customers inside, and involving them earlier in your internal processes.

In the past, there was a clear “wall” between you and your customers, with your team inside the wall and customers outside. You engaged with customers only in a narrow band of interactions – such as marketing campaigns, sales meetings, feedback surveys, customer support, and of course the sales transaction itself.

But that isn’t enough anymore.

In our more social, highly-connected, information-rich world, the most successful organisations break down this wall and let customers in.

Turn your customers into innovators.

Your best customers already have years of experience using your products and services, so why wouldn’t you draw on that experience when designing them? That wasn’t easy to do in the past, but technology makes it much easier now.

If you can provide easy-to-use tools for them to provide design input (these are known as “mass-customisation toolkits” or “MC toolkits”), your customers will gladly help out. An example is the Streetmix service above.

Of course, your customers aren’t design experts, so they might suggest design ideas that just won’t work. But that doesn’t mean you shouldn’t ask them for any ideas at all!

Great design is a combination of experience and expertise.

In the past, you relied on your internal resources for both, but now you can call on your customers for their experience. And then add your expertise to make it happen.

Of course, it’s not enough to just ask your customers for their ideas – you also need to use them! And that might mean changes to your systems, processes, and even your team culture. So it’s not as simple as clicking your fingers today and magically making this happen overnight.

In the Harvard Business Review article “Customers as Innovators: A New Way to Create Value”, authors Stefan Thomke and Eric von Hippel suggest these five steps for turning your customers into innovators:

1. Develop a user-friendly tool kit for customers.
2. Increase the flexibility of your production processes.
3. Carefully select the first customers to use the tool kit.
4. Evolve your tool kit continually and rapidly to satisfy your leading-edge customers.
5. Adapt your business practices accordingly.

But that was written more than 15 years ago, and now that process is way too slow! You might be able to find a toolkit (rather than developing your own), you can open it up to all customers (not just a few), and you will have to adapt your business practices much faster now.

The most important first step is to make the decision today to be more customer-centric, and set that direction for your future.

If you would like my help, please get in touch. In my Think Sharper masterclass and executive mentoring, we examine six different touchpoints in the customer journey where you can involve them as innovators.

Facebook has recently been reminding me that, five years ago, I went on a holiday to Sri Lanka with my parents and my sister.

Among the many enjoyable moments was spending time with two of my aunts, who I hadn’t seen for more than 30 years. Not only did we get to enjoy a very tasty Sri Lankan meal, I also had the unexpected opportunity to become an amateur “electrician”.

Their electric fan wasn’t working, because the plug didn’t fit snugly into the adapter plug, which was plugged into the power board, which in turn was plugged into the wall socket. With a bit of experimentation (and enough care and luck not to electrocute myself), I discovered I could make it work by wedging a small piece of cardboard in there, and that tilted the plug just enough for contact!

Of course, I wouldn’t have dreamed of doing such a thing back home in Australia! We have Woolies, electricians, and other – more sophisticated – options to fix this kind of problem. But those options weren’t available at the time, and a piece of cardboard was the perfect solution.

This is an example of Jugaad innovation.

“Jugaad” is a Hindi word that (roughly) means solving a problem in an ingenious way when you have limited resources. I’m sure you have seen plenty of photographs of this from around the world – such as this ute constructed from random spare parts:

Many people – especially in developed nations – used to laugh or look down on this kind of problem solving. But there’s a growing trend of applying the concepts of Jugaad innovation in well-resourced, established organisations. Authors Navi Radjou, Jaideep Prabhu, and Simone Ahuja talk about this in depth in their 2012 book, “Jugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth”.

The big idea is that you can trigger better ideas when you have fewer – not more – resources.

In fact, this is exactly how smart start-up companies disrupt the big, well-established incumbents. The start-ups don’t have huge cash reserves, a large staff, and many other assets that sometimes reduce the need for innovation. They have to be lean, so they are forced to be more creative in solving problems big and small.

If you want to be more innovative, try removing some resources!

If you want more innovation in your organisation, the obvious option is to throw more resources – time, money, people, etc. – at it. But that might not necessarily be the best option. What if you removed some of those resources instead?

What if you had to create a working prototype for under $100?
What if you set aside just one hour each week to fix 10 small problems?
What if your team had to solve a problem but without using any in-house resources?

Of course, you need to strike the right balance.

Removing too many resources can also stifle innovation. But don’t automatically assume that fewer resources means less innovation.

It’s like runners in a race. If they are fat, they carry too much body weight; and if they are skinny, they don’t have enough energy. The best runners are lean, not skinny or fat!

So, if you want to spark innovation in your team, try removing some of their resources!

I’ve been speaking to a lot of organisations recently about innovation, and I reckon we’re getting this whole innovation thing wrong.

Smart leaders know they need to change and innovate, but their efforts just don’t get traction. Why?

We’re not talking about the simple and obvious reasons – like:

• Change for the sake of change (“shuffling deck chairs on the Titanic”)
• No management buy-in for the change
• A toxic workplace culture

Let ’s assume you don’t face these obstacles. You have a team that ’s willing to change, you have the support of your management team at all levels, and you’re not just doing change for the sake of change.

So, we’re talking about essential change/innovation efforts designed to keep your business current – or even ahead of the game.

And yet they still fail. Why?

Most people think it isn’t their job.

Even in a positive workplace, where people find their work interesting and would engage in innovation or change, many of them just don’t recognise it as part of their work.

Many (perhaps most?) people think of “innovation” as something big, like inventing a new iPhone, creating a nanotechnology surgery robot, or sending a commercial rocket to Mars. These major world-changing innovations capture the world’s attention, but everyday innovation, continuous improvement, or “kaizen” (as the Japanese call it) is just as important. One small idea might not have the same impact as one big idea, but thousands of small ideas building on each other might!

That was the strategy behind the British Tour de France team, Team Sky, in 2012 when their rider Bradley Wiggins became the first British cyclist to win the Tour de France. Their coach, Dave Brailsford, adopted the approach of making “marginal gains”: a series of seemingly small improvements that cumulatively led to ultimate victory.

For example, they colour-coded the drink bottles the riders picked up during the race. A bottle with a white top was water; a blue top was an energy drink. That simple change saved a few seconds each time a rider reached for a drink. That might not seem much over 3,500 kilometres, but it was just one of many small changes that all added up.

But this method wastes time and energy.

The problem with this kind of innovation is that it often wastes time and energy.

With a clear goal like winning the Tour de France, it’s easy to direct these small innovations where they matter most. But without direction and clarity, it’s easy to put excessive resources into “improving” something that shouldn’t be a high priority.

This is known as Parkinson’s Law of Triviality. It’s also informally called “the bicycle shed problem”, where people leave complex design tasks to the experts, but spend endless hours debating the design of a simple bicycle shed because everybody has an opinion about it.

Don’t get me wrong – I know continuous improvement is important. But it needs to have direction and focus.

Innovation needs to start from the future.

Before you start any innovation or change program, you need to know where you’re heading.

Futurists call this skill “foresight”, and it’s the missing element from most innovation and change programs.

This might seem obvious, but most innovation programs don’t work this way. They operate without direction, as if the next big idea is just going to pop out of nowhere.

Pull from the future, don’t push from the past.

The key difference when you start with foresight is that you start with a future focus. Instead of pushing change from the past, you pull it from the future.

When you think like a futurist, you can then act like an innovator. If you really want to create compelling change, first learn how to see into the future so you can design a path to success.

As a team, you stay ahead of the game. And as a leader, you can feel proud and excited to be leading this motivated team.

Discover the missing piece that dooms most innovation programs to failure.

For more about using foresight to drive your strategy, innovation and change programs, download my free white paper Think Sharper and you will learn:

• Why most innovation programs don’t work
• How to add a crucial first step before you start any innovation or change program
• How to make innovation a habit – not a burden – in your team and organisation

How do you find time for innovation in a busy world, when you hardly have enough time to meet your normal day-to-day goals, let alone think of innovation and change? Use the powerful “if/then thinking” process to make innovation a habit.

One of the most commonly-quoted stories around disruption is about Kodak, which was the market leader in film photography, but failed because it couldn’t adapt to digital photography. There are many variations of this story, giving various reasons for Kodak’s demise: It had too much invested in film, it had grown so big it had stopped innovating, the organisational structure couldn’t cope with a digital world, and so on. There’s even one dramatic story that the Kodak employee who invented the first digital camera was told by senior management to hide his invention because it would destroy Kodak’s existing market.

The problem with these stories is that they aren’t true. What’s worse, they hide the real reason behind Kodak’s demise.

So why did Kodak fail?

To answer this, let’s first look at one of the most common reasons many change programs fail.

And just to be clear, when we’re talking about “change” here, I’m not talking about the random, senseless change programs that many businesses go through from time to time. Let’s focus on razor-sharp innovation programs that are intended to keep your business current – or even ahead of the game.

Ideas are not enough.

First, of course, some businesses only pay lip service to change. They might run a one-day innovation workshop, a fancy innovation off-site, or something else that’s designed to generate a lot of ideas – with the promise of transforming the business and disrupting their industry.

And you know what? Sometimes it works … at least as far as generating ideas. People come back with butcher’s paper, flip charts, and sticky notes full of ideas – some good, some bad, some practical, some impractical, some crazy, and some surprisingly sane.

But ideas alone are not enough. Far too often, those ideas never get implemented, because the leaders don’t make time and space for action. Change needs ideas and action. Indeed, a common definition of innovation is “applied creativity” – in other words, taking your ideas and putting them into action.

Of course, ideas in action are better than no action at all (or, as General George S. Patton said, “A good plan violently executed now is better than a perfect plan executed next week.”). But even that alone is not enough. The problem is that many of the ideas just don’t have any practical value. It’s all very well to implement ideas, but if those ideas aren’t really moving your business forward in any meaningful way, they are worthless.

And that’s the problem with so many change and innovation programs today. You might be constantly evolving and changing, but still find yourself disrupted and blindsided by some smart, savvy start-up that does something radically different. Or the world changes in unexpected ways, and your wonderful ideas are instantly obsolete.

That’s what happened to Kodak. They weren’t afraid that digital cameras would cannibalise their existing products; they just didn’t anticipate it. They didn’t deliberately try to kill off a threat; they just didn’t see it as a threat.

The first digital camera – built by a Kodak engineer – was as big as a toaster, took 20 seconds to take a picture, and the resolution was much lower than a print. Kodak’s management assessed it, but ignored it because they thought it would never be good enough to compete with film cameras. They didn’t account for exponential growth, which meant the improvements happened much faster than they expected.

It’s easy to look back now and criticise Kodak for its lack of foresight. But many, many businesses – especially established businesses – are doing exactly the same thing now. And they are doing it for exactly that reason: a lack of foresight.

That’s the missing element: foresight.

To be truly successful, innovation needs all three elements: ideas, action, and foresight.

Foresight is the ability to look into the future. It’s not about predicting the future like a fortune teller or a lucky gambler. Rather, it’s about using the tools that futurists use to direct and drive change.

For example, you might:

• Identify trends in the way customers interact with businesses in your industry.
• Understand how new technology will change your business.
• Examine global megatrends to identify potential threats and new opportunities.
• Learn how personal choices are driving professional decisions.

The simplest version of this is to just ask the question: What problem are we solving for our customers?

That’s a good start, but even that question starts from the present, not the future. You’re talking about your current customers, their current problems, and your current solutions.

It doesn’t look further into the future, which means you’re still vulnerable to competitors who look further than you do.

Pull from the future, don’t push from the past.

The key difference when you start with foresight is that you start with a future focus. Instead of pushing change from the past, you pull it from the future.

When you think like a futurist, you can then act like an innovator. If you really want to create compelling change, first learn how to see into the future so you can design a path to success.

Henry Ford was said to have quipped (although this is an urban legend), “If I had asked my customers what they wanted they would have said a faster horse.” More recently, former Apple CEO Steve Jobs echoed that sentiment when he said, “It isn’t the consumer’s job to know what they want”.

That principle might have served you well in the past, when a business would see customers as just walking dollar signs – in other words, just buyers for their products and services. They were passive recipients of what you offered them (hence the term “consumers”), and got whatever you offered them.

That has changed now, and that kind of thinking won’t work in today’s business world. Any business that still treats their customers that way won’t last very long. Customers have more power and influence than ever before, and you can no longer treat them as outsiders.

In fact, your best customers want to be involved in the success of your business. Invite them into your business, ask for their ideas, and many of them will participate enthusiastically with no reward except the opportunity to contribute.

Pick Your Battles

You can involve your customers throughout the business, but be more careful when it comes to innovation.

Think of your business as operating at three levels:

• Why: Your purpose, mission, vision, values and goals
• What: The products and services you offer
• How: The processes you use to deliver those products and services

You usually won’t ask your customers for innovative ideas in developing your “Why”. That’s your job, as an organisation or team. You can – and should – ask employees, suppliers and internal stakeholders, but not customers.

You also won’t usually ask your customers for innovation in the “How” of your business, because that involves your technical expertise and internal know-how. Most customers just aren’t qualified to innovate in this area.

The place where customers can add most value is in the “What” – that is, ideas about your products and services. They can tell you what products they like, what features they like most, what bugs them most, what problems you can solve for them, and so on.

The article “Turn Customer Input Into Innovation”, in the Harvard Business Review, reinforces this idea:

“Companies go about listening to customers all wrong – so wrong, in fact, that they undermine innovation and, ultimately, the bottom line … Customers should not be trusted to come up with solutions; they aren’t expert or informed enough for that part of the innovation process …. Rather, customers should be asked only for outcomes – that is, what they want a new product or service to do for them… What form the solutions take should be up to you.”

So, ask your customers for ideas about the “What”, and tackle the “Why” and “How” internally.

Like everything, there are exceptions to this rule. For instance, some of your best and most loyal customers might be so close to the business that it is appropriate to involve them in shaping your “Why”. And some customers do have enough technical expertise to make meaningful contributions to your internal “How”. But as a rule, you will get most value by asking for their “What” input.