As we are getting ready to welcome the holiday season of Christmas, Hanukkah and New Year – it appears, as if, the “Festival of lights” season (we had observed in our earlier blog), seem to be reemerging all over again, with a SHIFT- and rightfully so, one of the pressing questions, facing most business leaders being – what would be the next big paradigm shifting idea, they can bet on in 2012? While there is no silver bullet, the short answer, in our opinion, is the experimentation mindset, - as we never know, which experimentation project, will bring forth the “aha’ moment! However, we often hear another follow-up question, from our clients – does that mean one need to experiment every idea under the sun? In other words - how do we go about identifying a handful of high potential ideas (or the strategic choices), for the so called experimentation adventure?
"Connect the Dots" in three phases - Decide, Destine and Disrupt
Our experience suggests that most of those high potential paradigm shifting ideas, in most cases, happen to exist, just around us, and so, it is just a matter of identifying them with a right set of purpose shifting lenses. What do we mean by that? To explain it further, let us start with the concept of Gestalt, as illustrated by the famous optical illusion picture of “duck & rabbit” –as listed on the top of the page.
Depending upon, how you look at it, the picture could be a duck or a rabbit. In other words, when we start looking at the opportunity space, with a purpose shifting lenses, we, not only get the ability to spot the ducks and rabbits distinctly, but also, we get the ability to discern how ducks slowly shift into rabbits and vice-versa. As it turns out, these mind shifts, usually occur in both steps (like a duck) and in jumps (like a rabbit) and so, as leaders, we, not only need to master this “connecting the dots” game of discerning those shifts quickly, but also, we must learn to apply those shifts, within the right business context (CORE vs. EDGE) for us to be successful in the 21st century. To help master this “Connect the dot” game, we have put together a 3D framework (Decide, Destine and Disrupt), as part of this article.
1. Decide Phase is all about discerning those shifts (i.e. ideas/strategic choices in the form of ducks and rabbits) using the purpose shifting lenses. In other words, this phase is all about resetting the five part purpose seed (vision/mission/values/codes/BHAG) of the corporation, and start looking at the opportunity space with a fresh set of eyes, with a green field mindset.
2. Destine phase is all about properly slotting those shifts into “STEPS” and “JUMPS” into core and edge businesses, depending upon the velocity of those ideas(i.e. distance divided by time). As it turns out, ducks move in steps and rabbits in jumps, and so, this phase is all about answering “how far” and “how long” questions, from the standpoint of slotting those ideas (or strategic choices) into the appropriate step and jump type markets, by answering the following questions –
- How far would we want to go? – Establishing the geographical market boundaries to help answer “where to play and what to play” question- Force in Play
- How long would it take to get there? – Setting the timeline expectations to help answer “when do we need to win” question - Power in Play
3. Disrupt Phase is all about transforming core businesses with edge ideas/choices, with appropriate amount of capital (resources), to produce the extraordinary results by answering the following question –
- How much would it take? – Setting the resource or capability expectations to help answer “How do we win” question - Energy in Play
Core, Edge and Fringes Defined within the context of this 3D framework
Now that we have outlined the 3D framework, let us define few terminologies to get our message across with little more clarity -
• CORE are, the businesses that generate majority of the revenue for the firm, per their purpose seed (i.e. vision/mission/values/codes/BHAG) by meeting the unmet needs of the customers, and by exploiting their capabilities, within a well guarded environment, that is managed by an established set of rules.
• EDGES are, the businesses that generate a minority percentage of the revenue for the firm, not necessarily in alignment with the purpose seed (which means, it provides the opportunity for the leaders to reset their purpose seed), by meeting the unmet needs of the customers, with a help of their exploited (i.e. CORE’s capabilities) and unexploited capabilities, within a boundaryless environment, that is operated by a set of rules, that are constantly being redefined. Edges, over a period of time usually transform in to CORE or FRINGE.
• FRINGES, for all practical purposes, are edge businesses, with one difference – i.e. edge businesses that fail to transform into core within a reasonable period of time (say 1-3 years), end up as fringes, which usually go into extinction soon after.
Core and Edges come to life within a spinning wheel metaphor
What do these definitions tell us? Core and edges are not independent businesses, rather, they are children, born of the same parent, and so, they need each other for them to be successful in the long run. While edges have significant growth potential, to scale its growth, it is essential for edges to gain access to the resources and markets of the core. At the same time, core has another challenge to deal with i.e. to meet the margin pressures of the street; they are also constantly looking for new growth platforms, to meet the demands of the street.
To comprehend this interdependent relationship little better, let us use a spinning wheel metaphor -imagine for a moment that the corporation as a spinning wheel, with three types of dices (core, edge and fringe) that are being rolled into the spinning wheel, that is spindled on a common axis of purpose seed (vision/mission/values/codes/BHAG as the axis) - the core dices are the lucky ones (older established businesses) that get plugged tightly into the inner groove (i.e. wheel win region) quickly, whereas, edges & fringes are the chaotic roller dices, trying to find a spot inside that spinning wheel, that is being constantly spinned(disrupted) with varying speeds (i.e. changing the rules of the game). In other words, edges and fringes are the moving targets that are spinning with varying speeds within the wheel (i.e. corporation) with one difference - edges over a period of time, transform themselves and find a spot inside the core, whereas, fringes transform themselves into extinction.
Core and Edge Integration Options
What does this metaphor tell us? Winners in the 21st century are the companies, who not only find a way to make their core and edges to work collaboratively, but also, simultaneously disrupt the core with their edges, before they go into extinction. A corollary to that hypothesis is - Are today's corporations overly focused on “STEP” type core P&S’s and business models, and insufficiently aware of the “JUMP” type edge opportunities, and hence fail to disrupt their core, and thereby, let their competitors to eat their own lunches? If we had to further synthesize them - it all boils down to answering the key question – what are the possible organization models available for corporations, to make their core and edge businesses, to work together (but, still disrupt the core) and yet achieve the extraordinary business results, all simultaneously?
While bringing edge to the core is one of the best organizational models (as suggested by Professor Clayton Christensen), we also believe that there are situations, where, we may have to bring core to the edge, especially, when core resources need to adopt the emerging management practices of the edge – which means, we have three possible types of organization models evolving. Depending upon the culture, industry and size of the company, one needs to pick and chose one of the following three models, as one size does not fit all.
1. Edge comes to Core - the centrifugal model: This model is all about taking edge resources and slowly integrating them into core, within the four walls of the existing business division. One efficient Go-To-Market strategy for this type of model is product bundling– i.e. bundling core P&S with edge P&S - and then phasing out the core P&S’s, over a period of time.
2. Core comes to Edge – the centripetal model: Take core resources and move them into a newly formed, autonomous, edge business division with a different set of performance measurement/reward schemes. The edge business divisions come up with a revenue sharing and/or transfer pricing models, with different weight factors across both edge and core BU boundaries. After edge BU is commercially successful, edge can be merged back to the core BU.
3. Core and Edge meets in the middle of the road, with a hybrid spin-off model: Take a set of talented resources from both edges and core business organization, and augment them with an entrepreneurial talent from outside (preferably from different industry) and form a new “edcore Inc”, with a different set of leaders, performance measurement/reward schemes. After "edcore Inc", is commercially successful, it can optionally be bought over by the parent.
With that said, let us conclude with a key take away – as leaders, we not only must learn to master this “connect the dots” game, with a purpose shifting lenses mindset, but also, we must learn to be both a stepper (duck) and jumper (rabbit) – to face the ambidextrous leadership challenges of the 21st century! Simply put, the billion dollar leadership question before us today is – as leaders, do we want to be a stepper, jumper or both? The choices are crystal clear before us, like the fork in the road, in the words of Yogi Berra- and so, it is up to us, to take it, with an integrated systemic mindset, and then solve it with our 3D process (Decide, Destine and Disrupt) within the context of our firm’s Triune Purpose Frameworks. Interestingly enough, these three phases happen to align perfectly with our firm’s Triune Purpose framework (TPF) dimensions of leadership, strategy and innovation, respectively, as outlined below.
• Leadership is all about discerning those decisions with a purpose shifting lenses mindset – Decide Phase
• Strategy is all about destining those decisions within the destiny puzzle (i.e. Core and Edge) with the purpose shifting lenses mindset – Destine Phase
• Innovation is all about disrupting CORE with EDGE, with the purpose shifting lenses mindset– Disrupt Phase
Having said that, we do agree that edges do have significant obstacles, before transforming themselves into core. However, given the tremendous promises we have outlined earlier- (i.e. scalability, differentiation, consumer relevance, preventing competitors eating one’s own lunch and last, but not the least, the aspiration), edges have a plenty of compelling reasons, to work together collaboratively with core, using one of the three organization models, suiting to the culture of the corporation. And so, let us finish with an optimistic note – while edges, at times, might have lost their battle, the war is not over yet, and so, cheer up edges –very much like how, we are enjoying the gifts of this holiday season, because of the shift that happened 2000 years ago(from law to grace), there is still hope – as tomorrow’s edge gift is always better than today’s core shift – and so, let us continue to collaborate with each other, and make the core-edge integration to work as part of our common sense of purpose– and let that be our last word!
Wish you all Happy Holidays!