Next Concept: Intentionality
Many leaders think of their companies as pioneers. CEOs like to fashion themselves as rebels and rule breakers. Steve Jobs once declared that it’s better to be a pirate than to join the navy.
While many companies like to break the rules, transformative companies know how to create an advantage by breaking the right rules. To achieve their objective of category-creating solutions and the right customer outcome, transformative leaders know to put everything on the table, including the traditions, beliefs, accepted practices, and behaviors in the market. And when they break the rules, it shapes their industry and puts them at an advantage.
Rules exist for a purpose. As an industry develops, competition leads companies to adopt best practices for operation. Products mature over time, and advantages give way to commoditization. Companies compete along similar parameters, and business models align to the best way to make a profit. Internal processes become more efficient. Thus, companies become nearly identical to each other and start following similar paths and performance trajectories.
Companies take these standard industry practices and assumptions for granted as requirements even when they are no longer useful. Rule breaking is about spotting opportunities to deviate from industry assumptions and practices that no longer matter or are actual impediments.
Opportunities to break the rules are enabled when shifts occur in the broader contextual environment. Advancements in data analytics and the ability to collect customer data, for example, have enabled consumer companies like Dollar Shave Club to sell directly to customers, breaking traditional industry norms and enabling them to better serve their customers. Organizations that continually review changes to the contextual environment in which they operate, for example, understanding the political, economic, social, technological, environmental, and legal context of their industry often find advantages.
Can there possibly be a set of rules about rule breaking? Maybe not but understanding which rules to break will increase success and reduce wasted effort. In particular, organizations should pay attention to rules that prevent better customer outcomes, create bottlenecks in supply or limit consumption, reduce performance, limit convenience, and are generally limiting broader market adoption. These are the rules to break!
Break rules that aid in improving the customer outcome, give the company a strategic advantage, and are difficult for incumbent competitors to replicate. Those that are foundational to the industry are often the most strategic and beneficial to break. They are often supported at a high cost because they are seen as necessary to the company’s current view of customer value. Breaking them when they create an advantage for you creates strategic dissonance with incumbents, making it hard for them to follow.
Explore this and other topics in the upcoming book Transformative.