Identifying the Tipping Point

In my last column, I explored the concept of tipping points and its importance for innovation. A tipping point is the moment when everything changes—when a cultural change or a technology or an idea moves from fad to trend, from interesting sidenote to landscape-altering tsunami. Malcolm Gladwell suggested the importance of tipping points, for society and for innovation, in his 2000 book The Tipping Point. Rita McGrath, in her new book, calls them “inflection points.” (Rita talks about the concept in this issue’s Conversations interview and in a recent Fast Company interview with Stephanie Mehta, as well; both are intriguing reads and good introductions to the book’s basic arguments.)

One of the defining characteristics of tipping points, or inflection points, is that they are easy to identify in retrospect and incredibly difficult to identify in advance—and even harder (maybe even impossible) to create. To borrow one of McGrath’s examples, December 17, 1903, clearly changed the world. That’s the day Orville Wright completed the first powered airplane flight, piloting the Wright Flyer 20 feet above the ground for just 12 seconds, covering 120 feet.Humans had been aspiring to flight for centuries and experimenting with ways to achieve it since the early 18th century, when the hot-air balloon was invented, but reliable, sustainable air travel had remained elusive. The Wrights had been working on the problem for decades. Their breakthrough made routine air transport (initially of mail) a reality within 10 years and a commercial reality within a few decades after that. Airplanes remade industries, from mail delivery to tourism to war, and nearly put the railroads out of the passenger transport business. The Wright brothers themselves became “the first major celebrities of the 20th Century,” according to Paperless Archives.But that first world-changing flight was unevenly—and inaccurately—reported by newspapers, as Lisa Powell reports. No one saw the tipping point for what it was.

In the 21st century, it feels like world-changing technologies show up every day. Artificial intelligence (AI), blockchain, big data analytics, robotics, the Internet of Things, the sharing economy, the list goes on. In a search of Harvard Business Review for tipping point, the first three items suggest tipping points have arrived for climate change, customer reference programs, and open-source software; the fourth article notes another tipping point, asking if the United States is becoming a cashless society. Further down the list are an article on 3D printing and a meditation by Dorie Clark on the death of privacy, thanks to the “unspoken mandate to engage” created by the growth of Facebook and other social media.

In the last column, I suggested that we are likely on the cusp of at least one tipping point. I think it’s more than likely; Mohamed Kande, writing for PwC in 2017, is not alone—then or now—in suggesting that AI is at a tipping point, to name just one possibility. But how? Where is the first mainstream breakthrough going to come from? And when is the right time to make the big bet?

The easy answer seems to be being first; jumping on the new thing and creating the market for it. But as Jace Grebski points out in a 2016 Medium article, there is no magic in first-mover status. Being early can be as bad as being late. In fact, as Peter Golder and Gerard Tellis found in a 1993 study, 47 percent of first movers fail. The rolls include Palm, which brought the first handheld PDAs to market but couldn’t survive the iPhone; Netscape, which once owned 90 percent of the browser market but fell to Internet Explorer; and TiVo, which invented the DVR box only to be co-opted by cable companies that simply integrated the feature into their own set-top boxes. Betamax, that icon of superior technology sunk by a failure to read the market, also bears mentioning; Nick Saint offers a few more cautionary tales in his list. Consider also the long demise of Yahoo!, once the dominant web search platform, which in 2002 passed on the chance to acquire an upstart called Google because the $5 billion price tag was too high. Netflix, known for adding Blockbuster to the list of juggernaut incumbents that failed to read a coming inflection, nearly put itself on the list by getting too far in front of its customers with regard to streaming video.

It’s not a matter of being first; it’s a matter of jumping in at the right time. The right time is the moment just before the tipping point, when the wave of change is gathering but before it crests, before the new idea or the new technology bursts into the mainstream. Jean Van Rensselar distinguishes between novelties and trends: “a novelty is the tidal wave and trend is what’s left on the beach after the tidal wave recedes.” The trick is predicting both when the wave will break and what will be left. Van Rensselar suggests that trends have five traits that novelties lack: they are obviously useful and sustainable (both economically and culturally), have broad appeal and application, and have some history—they repeat known themes in new contexts, with new implications.

Most importantly, perhaps, trends mesh with other trends in ways that create synergy and drive adoption. The most significant trends merge with other trends to feed new trends. They emerge logically from previous inflections and provide stepping-stones to new developments. Air travel, for instance, emerged from the mechanical developments of the Industrial Revolution, into a society prepared for the idea of rapid travel and an interconnected world by the transcontinental railroad and the telegraph, and provided a vehicle not only for travel but for the emerging sense, after the world wars, of the world as interconnected.

No one can predict the future, of course, or unfailingly identify every significant trend, but innovation leaders can access a number of established tools for trend spotting and analysis. Foresight studies are one critical tool. Christian Crews and Ted Farrington, in a 2017 RTM article, offer an overview of a corporate foresight process; Crews’s periodic columns, under the title Futures Praxis, provide grounding in the processes and approaches of foresight, as well as its applications for innovators and business leaders.

Adoption curves offer another tool. Tipping points, as I pointed out in my previous column, are socially driven, and any attempt to identify a coming inflection has to take the social dimension into account. Who is adopting the technology now? Who are they talking to about it? As Mark Kennedy told KMPG in a recent interview, “It’s less about predicting what’s going to take off based on the substance of the technology, and more about what people are saying about the innovations.” KPMG suggests looking at two adoption curves: the traditional S-curve and Gartner’s Hype Cycle, which helps sort the fads from the trends as new technologies develop.

Resources

IN PRINT

Christian Crews. 2015. Killing the official future. Futures Praxis. Research-Technology Management 58(3): 59–60.

Christian Crews and Ted Farrington. 2017. Foresight and the future of R&D. Research-Technology Management 60(1): 43–46.

Malcolm Gladwell. 2000. The Tipping Point: How Little Things Can Make a Big Difference. New York: Little, Brown.

Gerald Kane. 2019. The technology fallacy: People are the real key to digital transformation. Research-Technology Management 62(6): 43–48.

Rita McGrath. 2019. See Around Corners: How to Spot Inflection Points Before They Happen. New York: Houghton Mifflin Harcourt.

Rita McGrath and Jim Euchner. 2019. Seeing around corners: An interview with Rita McGrath. Conversations. Research-Technology Management 63(1): 12–17 .

ONLINE

Eric Almquist, John Senior, and Nicolas Bloch. 2016. The elements of value. Harvard Business Review 94(9): 46–53. https://hbr.org/2016/09/the-elements-of-value

Dorie Clark. 2011. Privacy is a luxury you don’t have. Harvard Business Review, August 5. https://hbr.org/2011/08/privacy-is-a-luxury-you-dont-h

Peter N. Golder and Gerard J. Tellis. 1993. Pioneer advantage: Marketing logic or marketing legend? Journal of Marketing Research 30(2): 158–170. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=906046

Mark Gottfredson and Dunigan O’Keeffe. 2019. Tipping Points: When to Bet on New Technologies. Brief, June 11. Bain & Company. https://www.bain.com/insights/tipping-points-when-to-bet-on-new-technologies/

Jace Grebski. 2016. Being first to market doesn’t mean success. Medium, August 1.https://medium.com/@jgrebski/being-first-to-market-doesnt-mean-success-81648df045df

Mohamed Kande. 2017. Artificial intelligence: A tipping point for digital business. PwC, March 2. http://usblogs.pwc.com/emerging-technology/artificial-intelligence-tipping-point/

KPMG. 2016. Consumer adoption: How to predict the tipping point. Insights, November 15. https://home.kpmg/uk/en/home/insights/2016/11/how-to-predict-the-tipping-point-of-innovation.html

Stephanie Mehta. 2019. This volatility expert wants to help you see around corners. Fast Company, October 19. https://www.fastcompany.com/90415264/this-volatility-expert-wants-to-help-you-see-around-corners

Paperless Archives. n.d. Wright brothers newspaper articles 1902–1914. Paperlessarchives.com. http://paperlessarchives.com/wbscrapbooks.html

Lisa Powell. 2018. When the Wright brothers shocked the world (and the media flubbed it). Dayton Daily News, December 17. https://www.daytondailynews.com/news/local/when-the-wright-brothers-shocked-the-world-and-the-media-flubbed/dKLdhFWlSUevZE6wR22GmJ/

Nick Saint. 2009. 10 first-to-market products that lost. Business Insider, December 1. https://www.businessinsider.com/10-first-to-market-companies-that-lost-out-to-latecomers-2009-11#everquest-9

Jean Van Rensselar. 2017. 5 ways to predict a trend. Business Know-How, October 19. https://www.businessknowhow.com/marketing/spottrend.htm

In a brief for Bain & Company, Mark Gottfredson and Dunigan O’Keeffe suggest a process that uses four specific forecasting tools to predict a technology tipping point: experience curves, which measure the rate of decrease in production costs as technology matures; an Elements of Value analysis, which measures the value a new technology offers consumers; traditional S-curve adoption curves; and a barriers and accelerators analysis. Taken together these four analyses capture both sets of forces that drive an inflection: the maturity of the technology—is it ready for a mass market?—and the readiness of the market to adopt the technology.

The Elements of Value analysis, which considers not just functional but emotional and social values, is particularly important. It reaches beyond traditional market analysis to consider the emotional and social forces that can make a fad into an enduring change. Based on the Elements of Value analytical model developed by Eric Almquist, John Senior, and Nicolas Bloch, which identified 30 separate elements of value, it lets leaders see beyond the technology’s current state to its real potential for impact.

For any of these tools to work, however, those engaged in the process have to be willing to escape their own mindsets, to discard what Crews calls the “official future” and see what’s really out there. As Kennedy says, it doesn’t matter whether the technology is actually superior or mature, or even what the experts say about it: “It really comes down to the world’s collective assessment of whether that’s true or not”—whether the value the technology offers outweighs the costs, real or imagined, of adopting it.

Ultimately, then, as Gerald Kane said about digitalization in our November 2019 issue, tipping points are not about the technology; they’re about people. The businesses that succeed at riding the waves of inflection won’t lose sight of that reality.

Reviews

Turning the Flywheel: A Monograph to Accompany Good to Great

Jim Collins (New York, NY: Harper Collins, 2019)

At just 37 pages, Turning the Flywheel is a short monograph that expands on one of the ideas in Jim Collins’s bestseller Good to Great. As Good to Great went to market in 2001, Collins was engaged in multiple consulting jobs in which the flywheel concept became central to major improvements at his client companies. The core concept is that a strategy is not a linear set of progressive actions but a recursive collection of mutually reinforcing strategies. As with a physical flywheel, energy is initially difficult to generate. But once the flywheel begins turning once, momentum gathers with each circuit—the first turn passes energy to the second turn, which adds momentum to the third, and so on. Each strategy in a series adds energy to the next one, until eventually the wheel returns to the first step, this time with more energy. A well-designed flywheel will continue to add momentum and gain speed with each turn, gradually becoming a powerful, dynamic engine that competitors cannot catch.

Turning the Flywheel expands on Good to Great by illustrating how the flywheel works. The heart of the monograph is a set of case studies of the flywheels created by seven extremely successful organizations: Amazon, Vanguard Investments, Intel, Giro Bicycle Gear, Ware Elementary School, the Ojai Music Festival, and the Cleveland Clinic. This diverse collection of organizations and change initiatives is meant to illustrate the broad applicability of the concept, to large corporations, startups, public institutions, artistic events, and healthcare services.

Collins began his deep exploration of the flywheel concept with Amazon; he credits that experience as a major stimulant for this book. Amazon’s flywheel consisted of five strategies implemented in 2001. Those strategies appear obvious in the wake of their ensuing success, but they were less evidently logical when they were being defined in the heart of the dot.com bust. The first strategy in the set focused on offering lower prices on more product offerings; that strategy generated more customer visits, which in turn attracted third-party sellers, which allowed expansion of the store and extension of distribution services, which then grew revenue, which allowed lower prices on more product offerings—returning the wheel to its starting point.

Each trip around the flywheel is not just a faster version of the previous journey. The company should seek to extend the flywheel on each pass, making it bigger and generating more energy while remaining true to the core of its success. At Amazon, that meant expanding from books to other kinds of merchandise and adding Amazon Web Services.

Collins offers another example from Intel’s early history, when the company’s original memory chip business was being commoditized by international competition. Gordon Moore and Andy Grove could see that the company needed to shift into microprocessors; many companies, they knew, would accomplish such a radical change by firing the leaders and hiring a new team. According to Intel’s (possibly apocryphal) lore, the two fired themselves and then rehired themselves with the mandate to redefine the company for microprocessors. Once they put Intel in that business, Moore and Grove created a flywheel that began with inventing new chips and selling them at high prices; those profits were plowed into R&D, where they were used to create the next generation of faster chips while competitors were still copying the old version. Over time, Intel gained momentum and distance on its competitors, until it was nearly uncatchable.

In a very few pages, Collins explains seven flywheel strategies and provides a clear picture of how the concept works, differentiating it from a linear series of strategies that do not have the same reinforcing cycle. He peppers this short monograph with complementary gems, such as, “The greatest danger in business and life lies not in outright failure but in achieving success without understanding why you were successful in the first place,” and “When caught in the doom loop, companies react to disappointing results without discipline—grasping for a new savior, program, fad, event or direction—only to experience more disappointment.”

Collins also inserts concepts from previous books that apply to the flywheel. From Great by Choice, he extracts the concept of “fire bullets then cannonballs”—a vivid metaphor for the importance of using small exploratory projects to look for ways to improve or extend the business. You can afford to fire lots of small bullets until you hit a target. Only after the target has been identified and ranged is it time to invest more resources in firing a large cannonball. This stepped approach is much more effective than firing one or two cannonballs, missing the target, and depleting all resources.

Collins closes with advice on building disciplined people, disciplined thought, and disciplined actions as a means of creating a company that is “built to last.” Though this monograph is just 37 pages, it contains as many useful concepts as one of his fully developed business books. This might be what an early outline of Good to Great or Built to Last must have looked like.

Roger Smith is the President of Simulation First LLC. [email protected]

You’re It: Crisis, Change, and How to Lead When It Matters Most

Leonard J. Marcus, Eric J McNulty, Joseph M. Henderson, and Barry C. Dorn (PublicAffairs, 2019)

When crises arise, people look for a leader—someone who can make decisions and work through the crisis. Sometimes, that person is not the one who has formal authority. You’re It introduces the concept of meta-leaders, people who “perceive, engage, connect, and generate influence far beyond their span of formal authority.” Meta-leaders see the big picture, understand that important decisions require a collective response rather than an individual, and act to generate that response. The authors have derived from their business and leadership experiences, along with those of other people who have provided leadership in crisis situations, and derived common concepts and tools for crisis leadership. They present those tools, and illustrate their use, via excellent stories and real examples.

The key to meta-leadership is integrating different perspectives. For instance, consider a cone in a box. A person looking at the cone through a peephole in the side of the box will see a triangle; a person looking down at it from the top will see a circle. A meta-leader will integrate those different perspectives to create common ground for the team. Doing that, the authors explain, requires that the leader challenge his or her own biases and know his or her limitations. Meta-leaders must empathize with the other people involved and use diplomacy and flexibility to work with the cognitive biases of those involved, rather than trying to force them to ignore or overcome those biases. The meta-leader’s task is to “discover and respond to that bigger picture, fusing different perspectives into solutions that work across your range of critical constituencies.” The authors offer several examples of this process in operation, in crises from the Boston Marathon Bombing and the H1N1 virus outbreak to the Coca-Cola–based outbreak of illness in Europe.

Meta-leadership has three dimensions:

• the leader—the leader’s skills, abilities, strengths, and limitations;

• the situation—what is happening and what needs to be done about it; and

• the social aspects of the situation—the patterns of behavior and actions among the people involved that can shape the course of events.

Addressing the first dimension requires self-examination; becoming a meta-leader means understanding how your brain functions. The authors segment the brain into three areas: creative thinking, routine patterns, and survival instincts. Survival responses are deeply ingrained—we’re programmed to freeze, flee, or fight. Those responses reside in what the authors refer to as “the basement.” Some people get stuck in the basement, trying to survive; meta-leaders can escape the basement. Once they’ve shed their survival reactions, they can assess and assert control over the situation and then help others get out of the basement.

The authors offer techniques for getting out of the basement. First, recognize that you are in the basement; then reset your brain, by finding a familiar prompt that generates self-confidence and composure. For instance, engaging heuristics from your daily job can rapidly direct actions and problem solving, focus thinking, and eliminate distractions. This pivot activates the routine circuits in the brain and calms survival instincts, allowing the meta-leader to act, and motivate others to act, from a place of confidence.

The second dimension of meta-leadership begins with recognizing the two elements of the crisis situation: 1) what is happening and 2) what should be done about it. In a crisis, incoming data can be overwhelming, those involved are pulled in many directions, and everything is urgent. Meta-leaders escape the chaos by systematically decoding patterns, anticipating decisions, and planning actions. The authors offer a tool for approaching this process: the POP-DOC Loop—Perceive, Orient, Predict; Decide, Operationalize, Communicate. The tool is depicted as a Mobius loop. The left loop is the Thinking steps: Perceive, Orient, Predict. The right side is the Acting steps: Decide, Operationalize, Communicate. Repeating the loop, from thinking to acting, continuously taking into account new information and the effects of past actions. The POP-DOC Loop provides a disciplined way to take concrete action based on current information, mitigate risk, and address multiple problems simultaneously.

The final dimension of meta-leadership addresses the social aspects of leadership; the key task of this dimension is building connectivity. Meta-leadership is not just a tool set but a “systematic way of thinking and acting.” In this context, connectivity allows people to accomplish more together than they could alone; the meta-leader creates connectivity, by “cultivating, nurturing, and building person-to-person value,” and then leverages the resulting relationships to accomplish the mission. Meta-leaders bring all the stakeholders together, invested in a common purpose. Creating and maintaining connectivity requires navigating dynamics of authority, linking the multiple interdependent situations that may be occurring, and leading beyond the crisis to recraft relationships.

The authors offer several examples that clarify how connectivity can be developed and nurtured. One of the techniques they discuss is “the walk in the woods.” The walk in the woods helps people identify their key interests, understand other viewpoints, find commonalities and solutions, and clarify the give-and-get exchanges required to achieve an acceptable outcome. In describing the four steps of the walk, the authors provide a concrete example of how connectivity can be created.

Above all, meta-leadership is active. Open-ended questions at the end of each chapter and suggestions for journaling emphasize the active nature of the process—readers should not just read the book, the authors suggest, but actively engage with it. Answering the questions and recording your thoughts will provide insight into your own strengths as a meta-leader.

You’re It is a book that will help people at any level in an organization to solve problems and react productively in a crisis or high-tension situation. It provides a perspective on these situations that provides a map for navigating crisis—and the change and growth that often come with it. The book shows how effective crisis leaders can marshal resources from across the spectrum of the organization to address the crisis.

David Voracek has been an aerospace engineer involved in research of one-of-a-kind aircraft for more than 30 years; he currently leads research and technology strategy for his organization. [email protected]

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