Rita Gunther McGrath, Professor, Columbia Business School & Michael Sikorsky, CEO & co-founder, Robots & Pencils Rita introduces her new research on how strategic inflection points offer an opportunity to disrupt existing players using examples like Dollar Shave Club vs. Gillette to show how changes in technology can destabilise existing competitive advantages. Michael Sikorsky shows how companies create entirely new business models to solve perennial problems and drive growth – how can banks use mobile to appeal to millennials and machine learning talk to talk to your mobile? Watch the talk here: http://businessofsoftware.org/2018/03/software-driven-inflection-points-how-emerging-business-models-drive-growth/

1. Alarming the Enterprise:
Software-driven inflection points
@MJSIKORSKY@RGMCGRATH

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I will find you,
I will say thank you.

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Inflection
points and
early
warnings

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The
Interview
you don’t
want to be in

5. 2004 2006 2008 2010 2012
0
10
0
50
BLACKBERRY STOCK
INTERVIEW TAPED
APRIL 1ST, 2008
PEAK SHARE
PRICE
JUNE 19TH, 2008

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The astonishing
success of the
Dollar shave club

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8. On Edge
P&G, which has lost market share to upstarts in the
razor business, is trying new services to boost their
detergent business.
Post-
Inflection
Point
P&G market share in the U.S.

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The back Story
Business
declines
Business
reaches new
heights
Inflection Point
The Inflection Point curve
-Andy Grove

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Developing Early Warnings
Three kinds of indicators
Ask: What % of the data I use falls where?
Lagging Current Leading

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Time
Developing
Early
Warnings
Time Zero
Signal Strength
Degrees of Freedom

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Time
Developing
Early
Warnings
Time Zero
Degrees of Freedom
Signal Strength

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Now ask, what would
have to be true
• Six months before this could happen?
• Twelve months before?
• Eighteen months before?
• Any evidence this could be an emerging paradigm?

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Time Zero event examples
• 50% of all insurance contracts traded on a market, not sold by a broker
• Unbundling of traditional banking offers
• Over the top services commoditize running wireless carrier networks
• Millennials stop buying things in favor of borrowing or using
them on demand
• A key competitor makes a legal/regulatory/technological breakthrough that
you won’t be able to match

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Worked example: Autonomous cars
Now Zero minus 18 months Zero minus 12 months Zero minus 6 months Time Zero
Autonomous driving capability
introduced for ordinary
customers by Tesla
First consumer death due to
shortcomings of auto’s
sensing system
Lots of M&A in this area
First successful truck delivery
by autonomous vehicle
Governments issue a ban on
introduction of autonomous
features in cars
Companies begin to assemble
their lobbying positions;
positions are articulated and
proposed new rules set forth
Companies such as Ford
redefine themselves as
“mobility” firms
Semi-autonomous features
are widespread in ordinary
vehicles; consumers express
interest in fully autonomous
driving
New business models
(access, not ownership)
emerges for autonomous cars
Some jurisdictions use
autonomous services to
supplement public transport
Required infrastructure for the
introduction of autonomous
cars is in place.
Innovators introduce new form
factors and operating models
for these vehicles
New forms of licensing are
created
Institutions start to catch up to
regulations for such vehicles
The introduction of
autonomous vehicles leads to
a complete overhaul of the
regulatory structure around
transportation risks.

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WELL,
WHAT
IS BREWING?

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Leading
Current
Lagging

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Leading
Current
Lagging

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1 ETH ~= $290.37 USD
330,497 ETH ~= $95,000,000 USD

23. 27.5 Trillion is NYSE+NASDAQ (or, 366X)

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“SOFTWARE IS EATING
THE WORLD”

27. “EATING SOFTWARE”

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DOES
ANYONE
SEE THIS
COMING?
@RGMCGRATH

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In almost every case of
disruption, someone in the
organization has identified it
but very seldom has access
to the decision makers

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The Innovation Maturity Scale

32. Bias toward exploitation:
Status quo is taken for granted as the right way to do things.
Emphasis on sustainable advantage. Often, a long history of
success.
Innovation Theatre:
Desire to improve and innovate exists in islands, but there is little support
across the organization. There may be workshops, boot camps and visits to
Silicon Valley, but there is no sustained effort.
.
Localized Innovation:
More innovative activity, but no official recognition of innovation
as a discipline. One or two groups within the company initiate
local efforts to innovate. Typically dependent on key sponsor,
and often episodic.
Opportunistic innovation:
Innovation practices are recognized by senior executives as being an
important proficiency. When opportunities are perceived there is more
attention paid and resources allocated. The vast bulk of the organization
still prioritizes the ‘day job.’

33. Emergent proficiency:
Executive sponsorship includes dedicated resources of both time
and money. First signs of innovation metrics. Early stage
governance, funding & processes.
.
Maturing proficiency:
Strong executive commitment and resourcing. Teams have a set of
repeatable, scaled, best practices to guide their innovation. Upper
management monitors these quality indicators.
Strategic innovation:
CEO recognizes and articulates publicly that innovation is integrated into the
company's central defining mission. Each step in the product development
lifecycle benefits from the innovation practices.
.
Innovation mastery:
Corporate commitment to innovation at all levels creates a portfolio of
wins, as well as cadres of highly-skilled practitioners, enabling the
learnings and mastery of innovation practices to contribute to the global
community.

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If we don’t make
small amounts of
resources available
for experimentation,
our ventures get big
before they get
smart.
@rgmcgrath
rdm20@Columbia.edu
“

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Snow melts
from the edges
— Andy Grove

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WHAT
TO DO?

38. HUMAN
ADAPTABILITY
TECHNOLOGY
WE ARE HERE
LEARNING FASTER AND
GOVERNING SMARTER
TIME
RATEOFCHANGE

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how to get out
of the way.

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Follow
The
Talent

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“Everyone has
talent. What's rare
is the courage to
follow it to the dark
places where it
leads.”- Erica Jong

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me being wrong.
(i missed this strategic
inflection point)

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https://missions.ai/ews

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MONEY
MEANING
MORALE

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PARTING THOUGHT…
WHAT HAPPENS
WHEN YOU
FOLLOW-THE-
TALENT?

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@RGMCGRATH
@MJSIKORSKY
SHAVE YAKS. Shave Money.
Questions?
#bos2017