Disrupt business norms: playing at the bleeding edge

Among the more compelling findings in this year's KPMG CEO Outlook is the increased focus of business leaders on agility and the ability to challenge and disrupt business norms. This is the fourth KPMG CEO Outlook and it involved 1,300 chief executives around the world, including Ireland, who discussed how they are confronting long-held market orthodoxies and assumptions that govern decision-making.

Some 72 per cent of Irish CEOs say that rather than waiting to be disrupted, their organisation is actively disrupting its sector while 82 per cent of them say they want a culture where it is accepted that errors and mistakes are part of the innovation process. This emphasis on innovation has increased markedly with 76 per cent of Irish CEOs saying they need to improve their innovation processes compared with only 12 per cent in 2018.

Furthermore, Irish chief executives are increasingly recognising the danger of being too slow and cumbersome in a fast-moving age. More than a third believe that acting with agility is the new currency of business and that if they are too slow, they will become irrelevant.

Paul Toner, head of consulting with KPMG in Ireland, believes Irish companies are well positioned to adopt the disruption agenda. "Disruption is tied to innovation and we normally see disruption associated with start-ups and smaller enterprises," he notes. "That's a positive for Irish business as our enterprises tend to be small enough to display the speed and agility required to innovate. By their nature, Irish companies are the right size to disrupt on a global stage."

Different mindset

Disrupters need to adopt a different mindset, he contends. “They have to be at the bleeding edge, not just the leading edge. This can be very hard to do with the same people you have always had. You need fresh thinking to disrupt your own organisation and a common way to achieve this is by bringing in new individuals. It can be difficult for new people to have the required impact, and it can take quite a while to see if it is working effectively. Often our clients rely on external advisers to begin with and bring in the new people later.”

New blood isn’t the only answer. Companies also need to make better use of existing resources. “They need to move out of the boardroom and the executive suite and look for ideas from employees throughout the organisation,” says Toner. “When you start looking for ideas you’re likely to be surprised at what you find. Most disrupters have created a culture where everyone feels able to put their ideas forward and where every idea is valued.”

“Few innovations end up the way its creators thought it would or intended,” he adds. “Innovation evolves and changes over time. Organisations who want to disrupt their markets need to accept that there will be failures and changes in direction along the way.”

The internet

Toner is keen to point out that innovation and disruption aren't necessarily tied to technology. "The obvious enabler of a disruptive business model is the internet," he notes. "We all know the story of how Ryanair killed the travel agents and how Amazon killed the High Street. Every organisation has to look at that. But it's not just about leveraging technology. It can simply be a question of moving from one way of doing business to another. Many companies are moving from being makers and sellers to just being makers, for example."

He cites the auto industry is an example. “Engine design is now largely shared by the manufacturers,” he explains. “That element of the product has been commoditised with the manufacturers sharing the R&D costs. They now compete on design and other features. Their cost base would be unsustainable if they had to continue developing and manufacturing everything themselves. That’s one new model.”

Customer experience

Improving the experience of the customer is a key battleground for innovation. In this space, Toner gives some examples of disrupters who are succeeding in the Irish market. “Appliances Delivered is a very good Irish story,” he says. “A washing machine is a washing machine. Few people enjoy going out to shop for one. For these customers, it’s a far better experience to research and pick a machine online, get it delivered and have your old one taken away.”

“Tyreland is another very good example. Instead of getting up on a Saturday morning and wondering where to get a new set of tyres, you simply call Tyreland and they’ll come to your house or workplace and look after it. Hugely convenient for the consumer and likely more economic for Tyreland to have vans on the road than to have physical premises around the place.”

“Innovation involves finding new or different ways of doing things,” Toner adds. “Digital technology is playing a fundamental part, of course, but it’s not the only enabler. Fundamentally it’s largely a question of mindset. Too often the challenge organisations set themselves is about how they should adopt digital technologies when the key question is how do we change or challenge our existing ways of doing things.”