Disruptive innovation is critical for organizations wanting to maintain a competitive edge in our changing digital world. Author Whitney Johnson, a business partner of innovation guru, Clayton Christensen, applies these concepts to personal disruption.

This episode applies the lessons of corporate innovation to improve individual performance through personal disruption.

Whitney Johnson is an investor, speaker, author and thought leader on driving innovation through personal disruption. Johnson is a Founder and Managing director of Springboard Fund, and co-founder of Rose Park Advisors alongside Clayton Christensen, where they invested in and led the $8 million seed round for Korea’s Coupang, currently valued at $5+ billion. Having served as president from 2007-2012, Johnson was involved in fund formation, capital raising, and the development of the fund’s strategy. During her tenure, the CAGR of the Fund was 11.98% v. 1.22% for the S&P 500.

Previously, Johnson was an Institutional Investor-ranked equity research analyst for eight consecutive years, and was rated by Starmine as a superior stock-picker. As an equity analyst, Ms. Johnson’s stocks under coverage included America Movil (NYSE: AMX), Televisa (NYSE: TV) and Telmex (NYSE: TMX), which accounted for roughly 40% of Mexico's stock exchange.

Johnson is also a frequent contributor to and writer for the Harvard Business Review, and is a LinkedINfluencer. She has authored two books, Dare, Dream, Do (2012), and the forthcoming Disrupt Yourself(TM): Putting the Power of Disruptive Innovation to Work, out October 6, 2015. She is a prolific speaker on innovation initiatives, and has delivered keynote speeches to audiences of more than 25,000 on her ideas and vision.

Transcript

Michael:

(00:02) Innovation and disruption, these are important concepts that we think about in terms of organizations, and organizational change. Now, what happens if we aim the focus of innovation onto ourselves? My guest today on episode number 142 of CXOTalk has written a book exactly about that, and I’m here with Whitney Johnson. Whitney how are you?

Whitney:

(00:40) I am fine and it is a pleasure to be here.

Michael:

(00:43) So Whitney let’s begin by telling us about your background briefly and you’ve had a very interesting and broad career, so give us a sense of your background.

Whitney:

(00:56) My background is I actually studied music in college and ended up surprisingly on Wall street. So when I graduated from college I moved to New York with my husband who was pursuing his Ph.D. and I didn’t really wanted to do music. I was sort of at one of those places where I was just going to work for a little while and then you know have children etcetera and we got to New York and my husband’s Ph.D. was going to take six or seven years, and I realized we needed food on the table and it was my job to make that happen.

(01:26) So I went out and got a job and I found myself completely entranced by Wall Street. It was the late 80s early 90s and you had bonfire insanities poker and working girl and I decided I didn’t just want a job I want to work on Wall Street.

(01:43) So I started out as a secretary because I didn’t have a background in numbers, I had never stepped foot in a business course or accounting class. I had no connections, I had no confidence. So here I was, secretary to a retail sales broker in Midtown Manhattan.

(01:56) Well as I said I was super excited about being on Wall Street, so I started taking business courses at night, I had a boss who sponsored me and that allowed me to move from secretary to investment banking which rarely happens.

(02:09) Then along the way I moved into equity research where I was covering stocks, and then eventually a cofounder in and investment firm with Clayton  Christensen and so today I am now an author, speaker, writer, thinker about how do you drive corporate innovation through personal disruption.           

Michael:

(02:27) Wow, so you started as a musician and you became a secretary, and you became an investment banker from being a secretary, that is such an interesting path. Maybe explain how did you make the leap from being a secretary to being an investment banker.

Whitney:

(02:51) It’s a really good question. The best way to describe is and to go into my own psyche a little bit and I think that perhaps because I’m the oldest child in the family and tend to be pretty ambitious and driven.

(03:07) When I got to Wall Street and I discovered what it was. I didn’t know what it was, I grew up on the West Coast pre-Silicon Valley I realized this was really exciting and as I sat as a secretary, sitting you know sitting in the secretarial pool basically across from a bunch of new recruits, stock brokers who were all men, I realized that this sort of pom-pom, cheerleader person that I had been in high school that it was time for me to throw down my pom-poms and actually get in the game.

(03:36) So it was I think in part an awareness, the situational opportunity of being in a place where there were really interesting exciting things happening and then my own grit if you will and determination to take these classes, and then third I had someone who was willing to sponsor me. So there was a piece of context, so there was an internal piece and then there was an opportunity piece of someone saying in me you know what, I see something in you, I’m going to promote you onto this investment banking track.

Michael:

(04:02) Okay, so you were an investment banker and how did you then make the career transition to becoming an expert on innovation.

Whitney:

(04:18) Very slowly. It’s interesting right when we talked

Michael:

(00:02) Innovation and disruption, these are important concepts that we think about in terms of organizations, and organizational change. Now, what happens if we aim the focus of innovation onto ourselves? My guest today on episode number 142 of CXOTalk has written a book exactly about that, and I’m here with Whitney Johnson. Whitney how are you?

Whitney:

(00:40) I am fine and it is a pleasure to be here.

Michael:

(00:43) So Whitney let’s begin by telling us about your background briefly and you’ve had a very interesting and broad career, so give us a sense of your background.

Whitney:

(00:56) My background is I actually studied music in college and ended up surprisingly on Wall street. So when I graduated from college I moved to New York with my husband who was pursuing his Ph.D. and I didn’t really wanted to do music. I was sort of at one of those places where I was just going to work for a little while and then you know have children etcetera and we got to New York and my husband’s Ph.D. was going to take six or seven years, and I realized we needed food on the table and it was my job to make that happen.

(01:26) So I went out and got a job and I found myself completely entranced by Wall Street. It was the late 80s early 90s and you had bonfire insanities poker and working girl and I decided I didn’t just want a job I want to work on Wall Street.

(01:43) So I started out as a secretary because I didn’t have a background in numbers, I had never stepped foot in a business course or accounting class. I had no connections, I had no confidence. So here I was, secretary to a retail sales broker in Midtown Manhattan.

(01:56) Well as I said I was super excited about being on Wall Street, so I started taking business courses at night, I had a boss who sponsored me and that allowed me to move from secretary to investment banking which rarely happens.

(02:09) Then along the way I moved into equity research where I was covering stocks, and then eventually a cofounder in and investment firm with Clayton  Christensen and so today I am now an author, speaker, writer, thinker about how do you drive corporate innovation through personal disruption.           

Michael:

(02:27) Wow, so you started as a musician and you became a secretary, and you became an investment banker from being a secretary, that is such an interesting path. Maybe explain how did you make the leap from being a secretary to being an investment banker.

Whitney:

(02:51) It’s a really good question. The best way to describe is and to go into my own psyche a little bit and I think that perhaps because I’m the oldest child in the family and tend to be pretty ambitious and driven.

(03:07) When I got to Wall Street and I discovered what it was. I didn’t know what it was, I grew up on the West Coast pre-Silicon Valley I realized this was really exciting and as I sat as a secretary, sitting you know sitting in the secretarial pool basically across from a bunch of new recruits, stock brokers who were all men, I realized that this sort of pom-pom, cheerleader person that I had been in high school that it was time for me to throw down my pom-poms and actually get in the game.

(03:36) So it was I think in part an awareness, the situational opportunity of being in a place where there were really interesting exciting things happening and then my own grit if you will and determination to take these classes, and then third I had someone who was willing to sponsor me. So there was a piece of context, so there was an internal piece and then there was an opportunity piece of someone saying in me you know what, I see something in you, I’m going to promote you onto this investment banking track.

Michael:

(04:02) Okay, so you were an investment banker and how did you then make the career transition to becoming an expert on innovation.

Whitney:

(04:18) Very slowly. It’s interesting right when we talked about the stories because we’re able to craft them into this very neat and tidy narrative. But very quickly, so I was an investment banker, and then after I had my first child 19 years ago I wanted to stay in banking but there wasn’t really an opportunity and so people inside the banks said, why don’t you consider equity research. And so I moved into equity research in part out of necessity because there weren’t opportunities in banking, and that was where I would put a buy or sell recommendation on stocks, particular stocks in Latin America and telecom and media space. And then I did that for 10 years, and that was really a career maker job for me, which was interesting because it wasn’t what I wanted, and yet it’s made my career.

(05:05) After that ten years, we’re now in 2005, I decide that I’m going to take a step back and do now what in my parlance is disrupt myself, walk away from this really prestigious opportunity, become an entrepreneur, connect with Clayton Christensen around this time, and then became immersed and steeped in the frameworks of disruptive innovation and eventually began to think, you know what, these don’t just apply to products and services and companies, people and countries. They actually apply to individuals. And if you really want to drive innovation in organization, individuals also need to disrupt themselves.

Michael:

(05:41) So you ended up working with Clayton Christensen​ who of course is…

Whitney:

The father of disruptive innovation.

Michael:

Yes, so I have to ask what was that like.

Whitney:

(05:57) Well that’s a great question. So I have to say when I first discovered disrupted innovation, I was still a pre-analyst and I heard him give a speech about (innovators weren’t about for probably six or seven years?) and it helped me. I said oh my goodness, it helps me understand why I keep putting out these estimates for wireless in Latin America and they keep on beating their estimates and there are trouncing unclear?) it helped me understand this disruption that was happening.

(06:24) So I was really intrigued by the frameworks, I was really intrigued by him. If you’ve ever met him he’s six foot eight, he’s this very charismatic, smart, warm individual. And so it was a real opportunity to be able to work with him, because again he is so smart, he’s so charismatic, he’s so driven, and he works incredibly incredibly hard. So it was really a really honor to be able to work with him for nearly a decade.

Michael:

(06:53) Okay so now let’s talk about innovation and tell us about disruptive innovation, what is it?

Whitney:

(07:06) Well so you had asked me the initial question in our warm up conversation as sort of what’s innovation because we hear that word like what does that mean. Well innovation is really is basically something that is new, trying a new idea. Well a disrupted innovation is different or it’s a more defined or narrow definition of innovation in that it is an innovation that starts at the low end or in a new place and then eventually ends in industry. So I will give you an example.

(07:35) Think about Amazon in the 90s. When it was first launch it was this silly little thing where everyone thought that we don’t have time for that. They’re just doing this thing online. It’s not going to add much to our bottom line but just let it go.

(07:50) And so what happened then is that Amazon basically had this free pass in this foothold and once it had its own foothold it was motivated by bigger, faster, better just like Barnes and Nobel were, they just wanted to extend their margins and by the time it actually made sense for Barnes and Nobel to mount a counter attack it was too late.

(08:09) And so again low end or playing where no one else is playing and then eventually getting it’s foothold and up ending the industry.

Michael:

(08:18) And how is that different. We hear about disruptive innovation and sustaining innovation, and how are these different?

Whitney:

(08:27) So the best way to differentiate between the two is a disruptive innovation is something that is new, typically playing where no one wants to play or has thought of playing. So it’s new whereas a sustaining innovation is doing more of what you’re already doing.

(08:43) So in this particular example that I just illustrated for Amazon they were a disruptor. If Barnes and Noble or Boarders had added an online commerce an e-commerce platform for them that would have actually been a sustaining innovation, so part of this is really relative.

(09:01) But think about it, the most basic way is a disruptive innovation if you’re at the low end expand your margins, but if you’re an incumbent it decreases your margins, whereas a sustaining innovation actually expand your margins. 

Michael:

(09:16) So what are the conditions that need to be in place for an organization to undertake a program of disruptive innovation.

Whitney:

(09:31) I think that the first thing that there has to be a willingness to do it, and I think that that willingness has to be across the board. So oftentimes you’ll hear these ideas of you know the CEO, we’re going to be the disruptor, were going to innovate. And infact just the other day (unclear 09:52) saying you know disruptive being disrupted, so there’s this sort of drum beat of we need to do this. And you certainly do actually see a lot of disruption happening at the low end of people, low end inside an organization, basically people on the frontiers, people out in the field and they’re coming up with a lot of ideas.

(10:10) So one of the most important things that has to happen inside and organization is for the middle for what’s often called a frozen middle to be an opportunity for people in the middle to still be compensated for trying new ideas and infact incentivized for trying something new, and be given the time and the budget to to that. And infact encouraged to make mistakes. Otherwise they have absolutely no incentive, because if they do do something well maybe they will upside and if they don’t do something well they’ll probably get fired. So they have got to create a situation where the middle layer of management inside an organization has this incentive to drive this silly little thing, products forward.

Michael:

(10:53) So how do you do that, because in many of the large companies that I know middle managers are very focused on their very specific set of activities and their compensation encourages them to be focused there. So how do you drive these kinds of middle management shifts that will open up towards accepting disruptive innovation?

Whitney:

(11:23) Well I think it start with and this goes back and I’m jumping ahead a little bit, but this is one of the reasons why I’m talking so much about the importance of new drive through corporate innovation through personal disruption. Because we can talk about innovation all day long,  but I think if you’re going to have people that actually can disrupt they have to know how to disrupt internally.

(11:48) So for example one of the most important pieces around this is the idea of battling entitlement. So inside of an organization when you start figuring kinds of risk, you’ve figured out what kinds of market you want to go after, and you’ve figured out how to play to your strengths in the organization and it’s really easy to start thinking, well this is the way things are and this is how they’ll always be, our margins are expanding. People like what we’re selling let’s just keep going.

(12:12) So there’s this need to battle entitlement as an individual throughout the organization. And some of the ways that you can do that they are very simple kind of granular things but they start to un-thaw out that middle – apart from the whole idea of incentives. But one way is when I do these facilitations inside organizations I often find that different people in different silos are not actually talking to each other.

(12:39) And so one of the ways you could actually make this happen is to say to people, okay, how many people have you had lunch with inside of your organization over the last three months that are not in your department or who aren’t exactly like you.

(12:53) So if you’re in engineering, have you had lunch with someone in marketing, had you had lunch with someone in accounting? And it’s sort of an informal way of doing this, but as you start to have linkages with people in other departments and start to try to understand and speak and translate those languages you’re able on the middle management perspective to start to tear down these walls and in the words of Mr. Regan or President Regan and unthaw that middle so that this imperatives or (Edith’s) that the CEO has given and the ideas at the bottom are bubbling up and actually start to take root and move throughout the organization.

(13:30) The second thing I would say is watch your pronouns. Watch our pronouns because when you think about innovation it’s so easy to frame it as a battle. You versus me, David versus Goliath, disrupter versus disrupted and yet if you’ve got a brilliant idea and you are saying you and me and us and them, that idea is never going to happen.

(13:53) And so as we’re talking – notice how I switch my pronouns, as we’re talking inside of our company, how are we talking about the people that we work with and are we reframing problems and problems to be solved, and challenges to be wrestled with. Are we framing them as our problem as something we are going to tackle. And those small little shifts with have a surprisingly important and robust impact.

Michael:

(14:26) So one of the thing I’ve observed in companies I work with Whitney is this notion of the anti-innovation antibodies, right. The company want to introduce or people management wants to introduce innovation. And yet the entire organization clusters around those changes to make sure that it never actually sees the light of day.

Whitney:

(15:01) That is great. I have to tell you, when you first said that I thought of this metaphor that’s perhaps going to seem somewhat unseemly on here. But I have had this philosophy that one of the reasons there sort of the reasons that women when their pregnant et morning sickness is that they’re kind of rejecting all of this thing, you know what’s this forgein object doing in my body and then eventually they allow themselves to flood the fetus and then sit and be born. Actually the metaphor is very apt. you know first when somethings new you don’t know what to do with it. I would say that it’s really important when these new ideas come in. it’s start’s – I’ve lost my train of thought. What do I want to say here.

Michael:

(15:48) They reject the new ideas, they circle and bubble up…

Whitney:

(15:52) Yes okay, thank you. So what it means is that the reason that they circle or close ranks is that they don’t feel safe. They don’t feel safe. They afraid that if an innovative idea comes along they will not get credit and therefore not get paid and therefore not get promoted, or they worry that they’re going to lose their job. And what I would say is that whenever there’s a situation where people do feel safe as in they are doing a good job. They do a good job and a new idea comes along and for whatever reason they are doing currently they’ll be reallocated, resituated, then they will buy into it. I think it’s basic human nature, when we don’t feel safe we circle the wagon. So when people do feel safe then professionally they will work on those ideas and I think when you really step back and start to analyze it, it all comes around you, do I feel safe or not

Michael:

(16:53) So fear is the enemy of innovation and disruption.

Whitney:

(16:59) Absolutely 100%.

Michael:

(17:03) Well it makes perfect sense, so that then I’m assuming connects to what you said earlier that corporate innovation rise on personal disruption.

Whitney:

(17:21) Right, because if you’ve got people who – when you think about when you’re disrupting yourself right, theirs is something fundamentally humble about that. when you are on one learning curve think about this you know this wave or an S and at the top of the learning curve and you jump to a new curve, what are you doing?

(17:44) You’re first of all doing something that’s basically a freefall. So there’s a lot of trust in that. it’s a scary thing to do and you’re willingly doing it. Sometime you’re going to get shoved off, but sometimes you’re willingly doing it. and when you do that you are effectively saying, okay, I’m going to try something new. I don’t know how to do this. So there’s a humility in being willing to try something new. There’s a humility in saying you don’t know how to do this.

(18:11) And I think that when people see people that are more senior to them being open to saying I don’t know how to do this, can you show me how to do it. it creates this atmosphere where people do feel safe. But that part of it does absolutely come from the top, and sometimes people would say to me, well I’ll do it if my boss would do it. and my response is you know what? you can’t control what your boss does, you can control what you do and on your watch the people can feel safe. And overtime that’s going to make a difference and if it’s still doesn’t work then you may need to change firms. But for now, start with you, the people on your watch. See what happens, then you can make a decision, stay or go.

Michael:

(18:53) now you mentioned humility, earlier you spoke about entitlement and it seems that these are to opposites of one another, these are in opposition of humility and entitlement.

Whitney:

(19:06) They absolutely are and what’s interesting is that the research shows that the more you have, the more you think that you deserve what you have. So the more entitled you get, the more entitled you become. It’s tough and I think it’s one of the reasons why people need to surround themselves with truth tellers. I think that’s part of the reason why (? 19:35) ones are actually very important because they will tell you the truth in a way that people around you again who are concerned about their jobs just never will.

Michael:

(19:44) So truth tellers, so elaborate a little about that because I think that we all know that especially at the more senior levels of the company the leaders tend to be surrounded by not truth tellers but yes sayers.

Whitney:

(20:01) Yes, there are no name sayers. Again I think that is partly you know we’re in a high pressure position, we want to be around people that can help us get things done and so it’s important that one of the ways you actually balance entitlement and this goes to a senior person especially as you  - I’m going to back up.

(20:26) So I said earlier my husband was doing a Ph.D. in microbiology, so when he was doing his Ph.D. he would grow all of these beautiful cells in colored media and then after a couple of days it would use up all the nutrients. Those nutrients, some of them would be toxic and so they would have to re-plate the cells and into a new petre dish. So if I think about that especially for someone as very senior, women really like the colored petre dish, it made them go and feel comfortable, everybody likes you. But if you’re actually going to drive innovation in your organization and then you have to disrupt yourself. And one of the best ways to do that is occasionally put yourself in new situations. That new situation might be a willingness to listen to people who are junior to you, who you think you have nothing to learn from.

(21:13) Again there is a humility in that but again if you were to listen from whom we have nothing to learn from, and you allow people to tell you things that aren’t necessarily what you want to hear, and there are no adverse consequences for those people, that’s going to be a shock that’s heard around the company and it will make a huge difference.

Michael:

(21:33) So it seems from what you’re saying that corporate disruption is we can boil it down to being a state of mind among the people who are working on them.

Whitney:

(21:48) I like that. Yes I think that’s right. if I had to distil all of my ideas down into sort of 10 words or less it would be companies don’t disrupt, people do, here’s how in seven steps. I mean I really do believe that. I hadn’t thought of it in that way of describing it that way as state of mind but I like that.

Michael:

(22:10) So tell us about you mentioned the S-curve earlier and tell us about the components of that curve and the components of personal disruption that can serve as an enabler to corporate disruption.

Whitney:

(22:29) The S-curve was created in 1962 by E.M. Rogers and the whole purpose of it was to be able to analyze and have basically an algorithm in our equation for understanding ideas or get adopted over time.

(22:45) And so what he figured out is that ideas get adopted in the shape of an S, so think of an S in your mind that I’m drawing on the screen. At the low end or the base, they are going to start out and it’s going to be working really hard and it’s going to look like absolutely nothing is happening and that’s the low end of the curve.

(23:06) And then about 10 or 15% penetration of an opportunity you hit this tipping point, and then you move into hyper growth and you go into that steep back of the curve. And at the top of the curve you’re reaching saturation of 90% and then you may work hard but not a lot’s going to happen because you’re at the top of the curve and you’re not going to work that hard. It’s time to jump to a new curve.

(23:29) Now what I stated to think about is that this also help us to understand this hypnology of disruption. So again, low end of the curve you work really hard, and perhaps you understand I might get discouraged here because it looks like I’m putting in the time and nothing is happening.

(23:46) Then you go into this sweet spot where you start to get competent and very confident, all of your synapse are firing, feeling really really good to you. And then on the upper end of the curve, you can put things on automatic, it’s pretty easy but you’re no longer feeling those feel good effects of learning and so then you actually get kind of bored.

(24:04) And what’s important here is that that what seems like a plateau can actually become a plus. And so as I thought about this whole idea of companies don’t disrupt, people do and let’s think about the S-curve for how you manage the learning curve, how you become to be able to serve the S-curve ways with your own disruption. Then I came up with seven variables that would help you see your progress along the curve.

Michael:

(24:31) And what are the seven variables.

Whitney:

(24:33) Let me take a sip of water and I’ll tell you.

Michael:

(24:39) I was going to say while you’re taking a sip of water you’re obviously in an airport lounge and I should have asked you where are you?

Whitney:

(24:45) I am in Atlanta. I had to seriously run around trying to find a place to sit. So I’m in Atlanta sky lounge B or something and maybe because I gave them that advertisement I maybe should ask for my money back.

(25:01) Okay, so the seven variable. The first variable is taking the right kinds of risks. And that is whenever you’re jumping to a curve, this is the whole notion of you want to play what other people aren’t playing or haven’t thought of playing.

(25:15) And so if you’re playing what other people are playing you’re taking on competitive risk, where people aren’t playing you’re taking on market risk, and what we know from disruption theory is that when you take on competitive risk it may feel like it’s safer because it’s more certain and you know that the competitors can kind of scope it out. Market risk is actually maybe a little less certain, but it’s actually less risky. And again, according to the theory the odds of success from six times higher, revenue opportunity 20 times greater.

(25:46) Second piece of the curve is your strengths. Find an opportunity and then you’ve got to play to what you do well in what other people in your sphere do not. Oftentimes we may be passionate about something that we’re deeply passionate but it’s not necessarily what we’re best at. I know that it’s counter intuitive but some of the things that we do best we completely undervalue because they are so natural for us. It’s like breathings, so climbing that part of the curve is to figure out what your strengths are. Move them into a sort of fish out of water situation and then be willing to play with them.

(26:19) The third piece is that we’ve got to embrace our constraints. Today I’ve got a constraint of being in an airport. I’m embracing it I think, so how, so way. But it’s oftentimes as we look at these constraints and think if only I had. But what I’ve discovered is that those constraints often are very important for giving us a lot of feedback for along the curve and we’ve got all this stuff to bump up against. When you’re bumping up against things it gives you information like a skateboarder. They’re quick learners because they move incredibly fast and use the feedback.

(26:51) And so part of this is figuring out how to embrace this constrain and turn constraints, not into a check on freedom but a tool of creation.

(27:00) Step number four battle and entitlement, and we talked about that already, right at that sweet spot is if we start thinking we deserve it and we can slide back down. Instead figure out ways to battle that and to continue to move up the sweet spot of the curve.

(27:16) Number five, sometimes you have to take a step back in order to grow, that step back could be just pulling back to get a broader perspective. It could be changing ladders that you’re on in your career, like when I left Merrill Lynch I took a step back to try something new. Now the kind of counter intuitive piece of this is – wow I don’t know what we have here a paper shredder. The counter intuitive piece of this is that you’ve got a net pleasant value equation of that step back could have been a sling shot forward.

(27:47) Number six, this failure it’s due. The dirty little secret about failure is we may say we all celebrate it. we celebrate our own failures but we don’t really celebrate others failures. When we fail that is an essential part of this process. That being said we have to allow ourselves to be sad. We must allow ourselves to be sad and then once we allow ourselves to be sad, then we have to ask what important truth did I learn because of this failure. If we don’t it becomes a referendum on us, we wallow, we can’t move forward. So it’s really important to give it it’s due, learn what we need to learn and then move forward.

(28:24) And the seventh and final step is to be driven by discovery. Because you’re a disrupter you are looking for a market that has not been created and so you have got to and be willing to take a step forward to gather feedback and adapt it accordingly. And one of the things that I think is so interesting is that 70% of all successful businesses have ended up with strategies different to the one that they initially pursued. So it gives me great confidence to say I just look forward because and trust that I’ll eventually be able to see the top of the curve, but I can’t see it from above of the curve.

Michael:

(29:00) So we’ve been talking about both corporate innovation and disruption on the one hand and personal innovation and disruption on the other hand, but now let’s try to link them together. So if I am a senior manager inside a company and I’m interested in disruption and I hear these terms and hear about innovation, but I’m struggle I’m sure you have, we’ve all seen many senior executives and companies struggle. They try to put forward innovation, but it just doesn’t work. Why doesn’t it work and what’s your advice.

Whitney:

(29:49) So the first thing I would say is to think about this idea that companies don’t disrupt, people do because I think that most people don’t think of it that way.

(29:58) The second thing I would say is that in order for a person to disrupt because it is – disruption is actually again, you’re jumping to a new curve. You’re jumping from one curve to the next. There is an element of this that is very scary, and so it’s important to allow people to bring their dreams to work. They have to believe that those dreams that they have count at work and because it’s those dreams is what makes them problem solvers. It’s what makes them say nothing is going to stand in my way. It’s makes them hungry for a better life, so I really believe that dreaming is the engine of disruption.

(30:36) And so one of the things as a CEO or a leader is to say to them okay, am I allowing for people to bring their dreams to work? Do I know what their aspirations are sort of in this more holistic fashion?

(30:47) I know this sounds pie in the sky, but I do think that we are moving in that direction and infact we’ll get there and I do believe that millennials and thanks to millennials they are pushing us in that direction.

(31:00) The second thing that I would say is that when you’re disrupting and be aware that if you are scary and lonely you’re probably on the right track, and because it doesn’t involve a step back, you’re going to have some periods where Wall Street is going to go I don’t like what you’re doing.

(31:17) I remember when I was a Wall Street analyst and I was covering America Noble, and they introduced you know the straight talk, pre-paid wireless here in the United States and we just pummeled them, like what are you doing. The margins are terrible, (unclear 31:29) knew something that we didn’t know which is this was eventually going to be a really big business, and the margins just needed to be bad for a while. So it takes some real gumption to say, okay, you know I’m going to do this because it’s important to do it, so there has to be this time.

(31:37) So again, recapping really quickly, companies don’t disrupt people do and in order for your people to disrupt and including you, you have got to be able to bring your dreams to work because the dreaming is the engine to disruption. Understand that it’s going to be scary and lonely and innovation is an inside game. It starts with the inside, so you’ll start with your people and figure out are they playing to their strengths. Figure out are their some people that you need to allow to jump to a new curve. Sacrifice in short term productivity, but knowing that you will build loyalty and engagement. And that even although you feel that you’re on the sweet spot and don’t want to change anything, that’s precisely the time when you need to do it.  

Michael:

(32:24) So let me just push back on you on a point. I do understand what you were saying to allow people to bring their dreams to work and create the conditions of safety where they feel secure enough that they can do things differently, but there’s a lot of stupid ideas out there, and so how do you know that the ideas and that the disruption you’re pushing forward is actually a good idea as opposed to just, you know a fight of fantasy. 

Whitney:

(33:01) That’s a completely and totally fair question. I think that’s where this idea of you know, lean startup really comes in and I think is really really important and relevant and the whole notion of constraint, right. You can embrace constrain but you can impose constraints.

(33:16) So yes, there can be a lot of ideas that aren’t great, but if you say to people, all right, you’ve got a day, you’ve got a budget of $200, I mean like  I ‘m being really bootstrapping here. But a day, $200 and you can reach out to three people. Tell me what you come up with, and tell me the three questions, the three things that you need to know in order that need to prove true in order for us to pursue.

(33:45) So that’s where the whole discovery thing comes in and it’s what needs to prove true in order for us to be willing to pursue around this and it imposes really strict constraints. And one of the things you’ll find oftentimes a lot of people talk, talk, talk, talk. But when you say all right, you’ve got a day, go and do something, they won’t do anything. So that right there gives you a tone of information and win those ideas out that were never there.

(34:13) And I think that’s another place where the battle of entitlement comes in and sometimes we just want our brilliant ideas to be done because we want them done. But if we say to someone, okay, you’ve persuaded me that we should try this, so that takes some element of tenacity and now I’m going to give you some very strict constraints in which to try this. Tell me the three things you need to answer a senior board and you’re able to do that, then you are able to start to see ideas that are interesting and we can move forward from there. So it’s a very you know small process but I think that’s a way to really lead through.

Michael:

(34:48) You know it’s interesting you mentioned lean startup because we’ve had a couple of times on CXOTalk both Alex Osterwalder and Steve Blank, and Steve Blank is very focused these days on the application of lean startups to corporate management.

Whitney:

(35:09) Yeah, I think it’s absolutely such a sound idea and for me it dovetails beautifully with this whole notion of disruptive innovation, because you’re talking about low end, where no one else is playing and so lean startup is a great way to really iterate at the curve. So I think they are really powerful ideas and dovetails very nicely.

Michael:

(35:35) Okay, so we’ve got about 10 minutes left, so we don’t have that much time. So let’s dig into advice, first for corporations and then let’s talk about advice for individuals who want to take the lessons from your research. So let’s dig into corporations a little bit more.

Whitney:

(36:00) Okay, so let’s take each of these steps in turn and think about how we would apply them at the corporate level. So let’s start with the whole idea of taking on the right kinds of risks.

(36:14) So the first thing I would say around that is if someone comes to you and says, I’ve got this that there’s a need that’s not met, a job that needs to be done. No one’s doing it. I don’t have projections but I think we should design and test to find out. Be open to that, and that’s one of the ways to figure out if you’ve got a market opportunity.

(36:34) The tendency is to say well you do have projections, we don’t have projections, we’re not going to look at it. Well in which case that’s sustaining innovation, that’s not the kind of innovation that we’re talking about here, the disruption that it builds new businesses and creates something new.

(36:49) Number two, just stick to strengths, let’s talk about it on a corporate level. Are your people inside your organization playing to their strengths? And are you as a company playing to your strengths. One of the things that is interesting is that you will find that you’re getting a lot of feedback all the time, all the time from the customers. And yet if you really look at that feedback of what they like is that what they like? What you’re known for the jobs that they actually hired you to do? Is that what’s reflected on your website? Is it reflected in your marketing literature? Is it reflected in the conversations that your salespeople have? And so make sure you know what your company does uniquely well and identify that and play to that strength.

(37:34) The third is the whole notion of constraints, and depending on your company, if you’re really small company then it’s really about placing the constraints, whether it’s lack of time, money, buying or expertise.

(37:46) If you’re a larger company you may need to impose constraints. You may need to say, all right, we do have a lot of money but we’re going to take- and this is what (into? 37:57) it did with a thing called (Fossel 37:59) they wanted to improve the lives of Indias 1.2 million people but they didn’t throw a lot of money at it. They sent three engineers to India for three weeks, figure something out.

(38:07) That’s a pretty small budget so they imposed those constraints. The engineers embraced the restraints and they eventually came up with this algorithm that would allow farmers to get access to commodity prices at really significantly reduced their cost of doing business.

(38:24) The forth I would say is battle the entitlement is a very practical thing that I eluded to a moment ago is for people to talk to other people inside of your organization, and also do some of the hard work of translating the ideas. Can I explain what it is that I do or need to someone in marketing? Can I explain what it is that I do or need to someone in engineering and vice versa? So you’re starting to translate and have a sort of a UN if you will a sort of a lean work bond for innovation.

(38:57) Number five is the fact of growth, say that goes very much in this idea of allowing your people to bring drinks to work. I would say nearly every leader that’s looking into this can think of someone inside or reporting to them who they have moved to the top of the curve, it’s time for them o move, and you don’t want them to move because you need them, but you’ve got to let them move, because if you do let them move over time they are going to be even more productive for your organization.

(39:28) Sixth, is on a failure piece I would say do you ever allow yourself to fail, and when you failed and you talk about it in such a way that you explained to the team what you’re running. And if you have people on your team that you are not allowing to fail, then you may not have the right people on the team. Because if you think about it, with a small child that’s learning how to walk, if they fall down when their learning how to walk what do you do. Do you slap their hand? No, you just say come on, get back up. You can do it. And if you have the right people then you’re willing to do that, but if you’re not willing to do that, you may have the wrong people on your team.

(40:05) And then seven, I would say driven by discovery, that’s something I mentioned just a moment ago with these ideas is to say to yourself, what has to prove true for us to continue with this idea.

(40:15) So those are seven very concrete things that you can do inside of your company that can start to move the gears, they’re practical, they’re simple and they start to create this shift where that first disruption is happening and that will start to move into corporate innovation.

Michael:

(40:37) This notion of failure, and you know we hear a lot of fail fast and sort of glorifying failure. I really mean that very, very, very few people who say, I love to fail and that I’m glad to fail. So how do you reconcile. So when you talk about failure what does that mean exactly in practical terms

Whitney:

(41:00) I think that people are talking about the kind of failure when they’re testing something. They’re kind of you know doing it simply and there are no sort of ego attached to that. So that is important and we need to be able to do that.

(41:16) When I’m thinking about failure, is the kind of failure where you really care deeply about something. You really want to get it to work, and certainly in our society, we have this ethos, this is from Derren Brown you know, kill or be killed, control or be controlled, so if you fail it’s like you’ve been killed.

(41:36) So we have to acknowledge that when we fail we’re probably going to feel pretty bad. If you’re however aware of that, if we’re aware that our identity was attached to succeeding a fail and start gradually, gradually separating our identity around whether or not we’ve succeeded or failed and do that with the people around us. Then overtime if we can disconnect those two, then the failure does not become a referendum on us and we can celebrate it more. But I think this is one of these things that’s a task of a lifetime. The question is do I feel less ashamed of my failures today that I did two years ago. That’s the best I think we can do, because I think we’re always going to struggle with that because obviously the society in what we live in and how we’re wired.

Michael:

(42:30) Okay, really we have just a few minutes left, I wish we had more time. But now can you offer advice to individuals who want to be the face of disruption and innovation inside their organization. And also when an individual inside a company is facing those corporate anti-bodies – anti-innovation antibodies that we spoke about earlier, what should they do? So now this is advice to the individuals.

Whitney:

(43:04) Inside of a corporation. All right, so first of all market risk, competitive risk. Sometimes we go after opportunities inside a corporation. They can either be job opportunities or just ideas that everybody else is looking at. And so the advice would be is look where people aren’t working. Take on those projects that people don’t want to take on. The jobs that you think that need to be done, but aren’t that so exciting, that playing where no one else is playing or thought of playing. Because you will have a lot easier time getting buy-in because people just dismiss it. It’s not a big deal. It’s a silly little thing. So that would be number one.

(43:41) Number two is play to your strengths an again what I mean by that is  think about the things that you do well that you don’t necessarily often want to own. For me as an example, as a stock analyst, I was so proud that I built a really good financial model, and I wanted everybody to just say, wow you’re the best financial model builder ever.

(44:02) And I was good at it, but I wasn’t great. What made me a good analyst was my ability to read stocks, understand the psychology of a stock. To be able to make connections across lots of different silos, something that was a softer skill. And when people said I was good at this I was like, what are you dissing me, like the fact that I didn’t want to own the fact that I was  really good at this. So I would say to you that if you really want to soar inside of your company, get your pain of place skills, the thing that you have to do well. But then play to your constraints and strengths and it’s that is what’s going to allow you to be really successful. Compare that strength with an opportunity.

(44:39) Embrace constraints. I would say  - let’s use it basically, if you’re not getting a buy-in as an idea, then use that as an opportunity – which is a constraint. Us it as an opportunity to figure out how do I need to explain this in such a way that people will understand what it is that I’m trying to get done and use that fact that people don’t understand it as an opportunity to be much clearer on the value proposition if you’re talking to accounting, much clearer on how that plays and why the engineers need to do it etcetera.

(45:13) So embrace that constraint because it will become a tool of you being able to speak the language of innovation.

(45:20) The fourth would be buy-in time, which I kind of just eluded to is doing the hard work of getting buy-in’s and for your ideas that’s speaking in ’we’ and find ways to frame things as ‘we’.

(45:29) Fifth, taking a step back to grow. Sometimes you may need to take a role that’s a lateral move in order to move up. Sometimes you may need to take a step back in the sense that you sort of take one for the team to move things forward. You can’t do that all the time, but sometimes you just need to do that and this is one of the ones that I think that people, that when they realize that they may need to do that it’s a really important a-ha , because again there is a lack of selfish around that.

(45:59) Failures to, I would say that the best thing that you can do there is when you fail and when something doesn’t work, make sure you allow yourself to use that. Because if you allow yourself to be sad then the energy that you need in order to get back on the horse, get back on the saddle will be there. If you try to sublimate that sadness it sort of all your energy in general implodes and you need the energy that comes from having something you care very deeply about, so that you’ll go on to care deeply about something else.

(46:32) And then the seventh and final one to be willing to not know where this is all going to take you. I think most people would say if they think about their career path and inside of a company, is if I’m willing to just work really hard and take two or three steps forward I’ll figure it out as I go. And just to see far enough to that if this door can open more doors then that’s a good path to go down. You don’t have to know everything from day one.

Michael:

(47:05) Okay, well what an action packed 45 minutes this has been

Whitney:

(47:12) Good I’m glad.

Michael:

(47:14) So thank you so much. We have been talking with Whitney Johnson, who is the author of the book Disrupt Yourself and who I think personifies the notion of shattering, breaking, destroying the glass ceiling. Whitney, thank you so much this has been a lot of fun.

Whitney:

(47:38) Thank you for having me.

Michael:

(47:38) You have been watching episode number 142 of CXOTalk thank you so much, and next week we’ll be speaking with Elisa Steel, who is the CEO of Jive software. And Whitney thanks again for joining us.

Whitney:

(47:55) Thank you.

Michael:

(47:56) Everybody have a great week. Bye bye.

Companies mentioned in today’s show

Amazon:                                                                    www.amazon.com

Barns & Noble:                                                         www.barnesandnoble.com

Book: Disrupt Yourself by Whitney Johnson:      www.whitneyjohnson.com