Meta Founder and CEO Mark Zuckerberg said, “Move fast and break things,” and it spawned an entire era of innovation with startups and large conglomerates trying to disrupt markets. In recent times, cloud migration has altered the economic landscape as companies move from physical infrastructure to cloud services providers, investing hundreds of billions of dollars a year to become more efficient. Companies must therefore make strategic investments to avoid the significant financial losses associated with inefficient spending. With the rise of AI and a new era of innovation, businesses need to identify how to govern and exploit this technology, while mitigating risks and successfully investing in the future.
At Avasant’s Empowering Beyond Summit (EBS) 2024 earlier this year, speakers at a fireside chat discussed how businesses can utilize internal disruption to balance technological, business, and financial goals to achieve sustainable growth. Anupam Govil, Managing Partner at Avasant, moderated this conversation with RJ Hazra, IT CFO at Equifax, and Daphne Jones, CEO of The Board Curators. The speakers led a thought-provoking discussion about the “Art of Disruption,” breaking “the art” into three parts: Culture, Exploration, and Intelligent Investing. These three stages cover how businesses need to shape themselves for success, how businesses need to understand the problem they aim to solve for themselves and customers, and the need to understand and mitigate the risks and opportunities of their investments.
Culture
The speakers described culture as fostering the ability to adapt and always finding ways to grow, optimize, and innovate. When asked how they could facilitate disruption in their companies, the speakers stated the key is adaptability; a business must have the ability to pivot when required so that it does not fall behind. As product life cycles and business life spans become shorter, companies must prepare to alter their products to stay relevant and keep up with the changing landscapes of all applicable markets. Effective change management is therefore essential. The speakers highlighted the importance of this when balancing the positive and negative aspects of innovation.
Organizations must be able to identify when their current product demands are declining and jump to a new product line or offerings that align with their core principles. Jones identified three excellent ways to accomplish this successfully. The first is through mergers and acquisitions (M&A), which are growing in popularity because they can be a quick way to create growth. Second, business leaders can form partnerships to enter new markets or develop new offerings with the competition. Lastly, leaders should change the way they look at their companies. View it from a business perspective and instill the desire to innovate among the staff, so they can quickly pivot product offerings if needed.
Hazra emphasized, “Disruption for the sake of disruption makes no sense. There needs to be a guiding principle, a core value, a north star, where then whatever disruption comes your way, you can better ingest.” However, he added that disruption is inevitable, and your work culture must be one that absorbs it by embracing the market and challenging the status quo; this allows for continuous evolution. He gave the example of how Equifax holds an annual analytics tournament to enable all teams to experience working with data. By continuously involving employees in these tasks and transforming the company culture, this initiative helped to successfully implement completely data-driven short-term forecasting at Equifax, which was initially deemed impossible.
Apple recently showed its ability to adapt to disruption by partnering with its competitor, Microsoft’s OpenAI. Rather than trying to implement its large language model in Siri, Apple decided to integrate ChatGPT into its own software. The company recognized that its MM1 model may not be ready for public use and pivoted Siri into a more capable virtual assistant through a partnership that allowed it to improve its offerings in the face of AI’s disruption.
Exploration
The speakers explained that responsible exploration is all about setting investment goals and doing due diligence. It refers to the ability of a business to consider and understand all risks associated with its new investments. Stakeholders should utilize all efforts to educate management and staff on what the company is investing in and the effects of its implementation.
With the recent uptick in AI development, many businesses are trying to implement these technologies into their products and offerings to increase productivity and improve their capabilities. The exploration stage comes before and during the development and commercialization of such expansions, as it is imperative to understand the risks that new technologies may come with. For instance, data privacy risks in training AI models or inaccuracies in model data sets.
When speaking about the exploration stage, Jones said that the first step is identification: “What is it that we are trying to be? Are we trying to be that low-cost provider? Are we trying to be the innovator? Are we trying to be the customer-centric organization?” Once business leaders identify this, they must locate gaps or the issues that must be solved to reach that self-identified goal. Her approach to solving this is a 2×2 matrix, with feasibility on the horizontal axis and the metric you are trying to improve on the vertical axis. Your focus must be shifted to the top right corner of that matrix or the most optimized of your options. This process involves working with the entire business to determine what goes in that “sweet spot,” and then conducting rigorous testing or research in that area to implement the solution and fill any gaps.
Businesses must start with a risk-adjusted strategy. According to Hazra, “Execution should be small. Take something small, try it, and then learn from it.” This is because businesses often do not achieve their intended outcomes each time, so they must first optimize the plan and adjust before fully adopting it.
A recent example of large businesses forgoing exploration or not doing enough of it would be the launch of Google’s Gemini AI image generator, which was reported to have biases. According to Prabhakar Raghavan, Senior VP at Google, Gemini’s image-generating model was paused, due to its inability to produce entirely accurate images based on prompts. This suggested that Google did not devote enough time to internally test its model before releasing it to the world, leading to massive criticism and a decline in its stock price.
Intelligent Investing
When it comes to investments, all businesses have different ideas on how to approach them; some want to invest in their people, some want to invest in their offerings, some want to invest in productivity, while others want capabilities that make their teams self-sufficient.
According to the EBS panel, the key to intelligent investment is understanding the problem you are trying to solve and then using your investments to fill in the gaps identified in the exploration stage. Jones spoke of a principle called “targeted self-disruption,” where companies must recognize how they can strategically disrupt the value chain to generate further value for the business.
Hazra elaborated on the outlook of business investing, emphasizing that it is a never-ending process as investments continue to generate value well after their initial implementation. He said the focus should be to develop a common language across all departments of an organization, so that goals and expectations can be easily set and made attainable. He also touched on the importance of accountability in the organization. Business leaders must ensure that their investments are producing results aligned with their company’s strategy and the department’s ability to self-fund.
An example of implementing intelligent investing brings us back to Apple. Apple is known to be slower than many of its competitors in bringing features to market; in fact, it only launched a calculator on its iPad lineup in June 2024. However, Apple is also known for having unparalleled quality in most of its lineups at the initial launch, regardless of whether the features were available with competitors years before. According to Ayush Jalan at Make Use Of Apple, besides quality control, Apple is also more selective with features that would benefit users rather than be a gimmick. This shows not only Apple’s drive to innovate but also its commitment to filling gaps in its value chain. By engaging in intelligent investments of its time and money, Apple aims to strategically enhance its features and satisfy consumer needs.
Conclusion
Businesses invest substantial amounts annually to stay competitive in the technological landscape. But according to the panel, the key to making valuable investments is to recognize how you can use these applications to your company’s advantage to fill gaps in your value chain. Leaders must identify the advantages and pitfalls of investments, create a comprehensive implementation strategy with use cases, and then execute on a small scale to see if the outcome is as expected before committing to the investment. By following the principles outlined by Daphne Jones and RJ Hazra at Avasant’s EBS 2024, business leaders can invest in and implement technology successfully to maximize its advantage and minimize associated risks.
By Avi Manik, Avasant