By Rebecca O. Bagley
If you don’t do it, your competitor will.
That was the message former Microsoft COO Bob Herbold delivered to professors, students and business leaders in Cleveland recently. Herbold spoke at the Case School of Engineering’s annual banquet, where he shared his insights on leadership, innovation and entrepreneurship.
Herbold shared two well-known stories of once-successful companies that failed to disrupt their own businesses and were essentially driven out of business by innovative competitors: Research in Motion vs. Apple/Samsung and Blockbuster vs. Netflix.
He told these stories to pose and answer a basic question: When should successful businesses change?
His answer: All the time.
Click here to see Bob’s keynote address
“It’s so important at every juncture, no matter how successful you are, to step back and say, ‘Okay, what’s going on. Let’s not just rest on our laurels here,’” Herbold said. “Look around, face reality, jump onto fresh new ideas, and see what they’re gonna mean to you.”
It’s a very important lesson that companies learn the hard way over and over again.
“The thing they’re really guilty of is not being adequately paranoid and constantly facing reality and saying, ‘Okay, now what? We’re having a good time, but guess what, we know competition will be right around the corner,’” Herbold said.
I have written about this concept before. Basically, the idea is that businesses are more likely to grow if they make a transformational change at their peak. Think about it, initiating a meaningful change is much more difficult in a state of decline when resources are depleted and confidence is low. Many companies fail because they miss that ideal point of transformation.
To avoid that, Herbold said, successful companies stick with what they are really good at but also constantly look for points of inflection.
“What’s an inflection point?” he said. “It’s where the technology is changing or consumer habits are changing. In essence, it’s gonna have a big impact on you and you better start thinking about the alternatives right now.”
But how exactly do you do that?
“The world’s most innovative people remove all their filters and open their minds,” Hoffman told the audience at TEDxWallStreet. “[Companies that fail] lost the ability to wonder about their business. They stopped reinventing and thinking about what they did, why they did it and if there was a better way to do it.”
Hoffman said the world’s most successful and innovative people don’t just wonder about the things they do or the things others in their industry do. They wonder across disciplines.
Hoffman has a daily routine that helps him do that. He calls it “info-sponging.”
For the first 20 minutes of his day Hoffman takes a look at innovative things people in other industries do. He also looks at the top Internet searches, new legislation and global events.
“What am I looking for? I don’t know. But I write it down. Things that say, ‘Well, that’s interesting,’” Hoffman said. “I just click and let my mind go. Things that I would never look at otherwise if I wasn’t intentionally info-sponging.”
Hoffmann said many days his notes don’t make much sense, but eventually a picture forms, things connect and ideas form.
“That’s were innovation happens because you took a look at the world bigger than your own,” he said. “Every single day when I look at that list I say to myself, ‘Okay, what can I do today that I couldn’t do yesterday?’ That’s the key question.”
Hoffman said he filters the data he collects through the eyes of his customers. He keeps what matters to them and discards everything else.
As I wrote previously, innovators not only turn a vision into new products or services that customers want. They also have the ability to re-imagine things that already are.
Innovators challenge the status quo, push boundaries and embrace change. They understand innovation is not a one-time thing and that start-ups as well as companies that have been around for decades must continuously reach above and beyond what they have done before to stay competitive.
In short, innovators are disruptors.
One person I admire for being disruptive is Mel Kurtz, CEO of Quasar Energy Group, an affiliate of the Kurtz Bros. landscaping and waste recycling company. Kurtz launched Quasar, a manufacturer of anaerobic digesters, in 2006 despite the fact that the industry didn’t even exist in the U.S. at the time.
Kurtz saw anaerobic digestion taking off in Europe and realized that he could modify the technology and business model to work in the U.S. Today, Quasar is the leading anaerobic digestion company in the country. It has 13 digesters in three states and more in the pipeline. It employs about 100 people.
Another company NorTech is working with, American Greetings, is disrupting its more than 100-year-old business – paper greeting cards. The company is working to incorporate flexible electronics technology, for example.
The Cleveland-based company is also responding to changing consumer habits. Realizing that its customers want more digital and highly customized options, it has introduced video e-cards that can be personalized and sent via e-mail, directly to mobile phones or to Facebook. It has also launched an iPad app that lets kids create cards using digital drawing tools and then mail professionally printed copies to friends and family.
The bottom line is that companies of all sizes must be aware of inflection points and be willing to disrupt themselves before their competitors do. The ability to do that is a driver of productivity, competitiveness and growth.
So ask yourself, “Is it time to disrupt my business?”
* This article was written by Rebecca O. Bagley for Forbes.com