If someone is going to eat your lunch, shouldn’t it be you?
That’s the question posed by entrepreneur and venture capitalist Josh Linkner in his new book, The Road to Reinvention: How to Drive Disruption and Accelerate Transformation. Linkner urges companies to pursue not success, but rather a long series of successes, each springing from--and sometimes obliterating--the one before it. Toward that end, he advises leaders to develop a heightened awareness of change and a willingness to strike when the iron is just warming up. Linkner spoke recently with Inc. Editor at Large Leigh Buchanan.
In the 2000s, you reinvented your company, ePrize. How did that play out?
When I started ePrize, we were focused on one product: online sweepstakes. We set out to serve all these venture-backed dot-com companies that were going to take over the world. In the midst of the crash, we realized that those people could no longer afford to pay the bills. We decided to reinvent the customer base: shifting aggressively toward large brand advertisers. To do that we had to reinvent our sales process. We had to reinvent our product offering. We retooled the entire company to meet the needs of different customers. Today the company serves 74 of the top 100 brands.
Is it a good idea to do everything at once like that?
In my case, I had to respond to very challenging times and had to make drastic, wide sweeping changes all at once. That is not the best approach. I waited too long until the bottom fell out of the dot-com arena and then had to scramble to survive. While it ended up as a big success, it could have gone the other way. A much better approach would have been if I was proactive and started that process six months prior. I could have systematically reinvented one aspect of the business at a time and enjoyed better results with less pain.
There’s an old saying that I’ve always loved: if you chase two rabbits, both will escape. If you try and reinvent everything all at once, it is difficult to measure the impact of any one change. If you are simultaneously reinventing your product and your customer and the experience and your storytelling and your operations, are you really going to be world-class at any of them? Instead, you should take on one thing at a time and do it really well. Then the benefits gained from that change--profits or resources or something else--can be used to help fuel the next step.
What do people misunderstand about reinvention?
One thing people misunderstand is that think they will see the warning signs and have plenty of time to react. They think decay is a gradual slope. But it’s not. The momentum of a previous success may allow a company to coast for a while, and they may blame any little signs they see on market conditions or currency rates or whatever. Meanwhile, decay is happening underneath, where they don’t see it. Or competitive threats are building that they don’t see. And instead of a gradual slope, suddenly there is a giant cliff. It is much better to reinvent early, when you are still in a position of strength.
How do you persuade employees who have worked hard getting the company to a position of strength that reinventing is a good idea when there is no obvious threat?
You can't just walk in, guns a-blazing, and say go reinvent. You need to make the case that change happens. It will be thrust upon us whether we like it or not. So do you want to change early, leverage that position of strength to reap all the good things that come from being a leader? Or do you want to be reactive, which will cost more and means we won’t enjoy all the benefits? If we wait too long then likely we will find ourselves responding to some bad circumstances. When companies that were once in a leadership position have to enter a turnaround, they only fully regain that leadership position about 10 percent of the time.
The way you sell that to team members is to say, “You were an instrumental part in helping us get here. Now you have a big new blank canvas of creative expression and opportunity. Help us craft the next chapter. And the chapter after that.
To what extent is reinvention a reaction to technology advances?
Technology is just one front of many that are in constant flux. Companies can be displaced by technology advances, by consumer trends, by geopolitical turmoil--just go on down the list. The leader’s responsibility is to constantly survey the landscape and understand what is moving and how to architect their organization to meet the demands of the future rather than the past. That applies to technology, it applies to product, it applies to packaging, it applies to storytelling--it even applies to careers.
In the book, you talk about Whirlpool’s expansion into garage storage systems. Do you consider just adding something to be reinvention?
Reinvention takes place when you think about the organization as a totality in its current and future states and see that something very different is happening. In Whirlpool’s case, they actually did reinvent some of their core business: for example, the way washing machines look. But they also zoomed out and said, “What should our overall company look like?” And they determined that a significant portion of revenue needed to come from products and services that were new--invented in the last five years. In doing that, they pushed their engineers and their talent to find new opportunities: in this case, moving from the laundry room to the garage. And they launched this incredibly successful new product line. It didn’t replace their old stuff. But it added significantly to their growth and success.
And getting rid of things is also an aspect of reinvention?
One of the hardest things to do is let go, especially when something has been successful. Polaroid, for example, was really successful with instant photography, but they were unwilling to let it go when the trends changed. They didn’t want to cannibalize themselves by venturing into digital technology. In the business world we often talk about cannibalization as though it is this horrible thing. But business leaders have to be cannibals.
If a company is constantly reinventing, is there a danger that it will get rid of something good and replace it with something worse?
I’m sure that people have let go of good things too quickly. In any creative pursuit you are never going to get them all right. But that doesn’t mean you can use that fear to avoid reinventing. Leaders no longer have the choice to rest on our laurels. If you have something that is working well, then great. But you should still be thinking: how long do we keep our current version? We need to reverse the ratio of time we spend trying to protect what exists and time we spend trying to imagine what doesn’t exist. “If it ain’t broke, don't fix it”--those are fighting words.
How do leaders make time for reinvention when they are busy running their companies?
In the perfect world, thinking about reinvention would be pervasive in the company at all levels. But we, as busy business folks, are always filling up our calendars with meetings, getting our to-do lists done--what I call “heads-down” work. And when you are heads-down you are not looking up at the possibilities. So you should schedule times to be heads-up: to imagine what can be and challenge your assumptions.
I’ve issued a challenge to many organizations I have worked with: set aside 5 percent of your workweek--2 hours--and use it to bring your creative mind to life. You might take a field trip. You might go to an art museum. You might go for a walk in nature. You might doodle or explore on the Internet. What happens in that 2 hours a week could become a magical gift. I’ve done this with companies all over the world, and the first thing I hear back from them is there is zero drop in productivity. And those 2 hours become really powerful because they open up all kinds of new ideas for the organization.
You urge reinventing companies to create or improve products or services so that they outperform the competition’s by a factor of 10. Does the goal have to be that ambitious?
Too often people overestimate in their minds the difference between their products versus a competitor’s. They think theirs is 10 percent better, but really it is only 2 percent better. If I sell a pen, and someone else sells a pen, I say, “Yeah, well, mine has got a special grip on it.” That might be important to me. But maybe other people don’t really care all that much. Companies really take off when the leader is focused on creating a 10X or more benefit compared to the competition.
If you are saying, “I’ve got to make my TV or my baseball team or my life-insurance policy ten times better than the other guy’s,” then you are not going to gravitate toward low-hanging fruit or easy solutions. You are going to gravitate towards ones that make a much bigger difference.
How has the ongoing reinvention of your hometown Detroit shaped your thinking on this subject?
It has affected my thinking quite a bit. I’m a multi-generation Detroiter. I deeply love my hometown. And I’ve seen reinvention play out here in both good and bad ways. A hundred years ago Detroit was like Silicon Valley. People would come to build a fortune. It was filled with innovation and creative thinking. We were reinventing industries and careers. And when we were in that groove our city really prospered. We built gorgeous buildings, hospitals, roads. But then we slammed the brakes on it. We became very protective: building stifling bureaucracies and giving in to finger-pointing and blame and divisiveness. And our city for the next several decades was a mess.
Today I’m very happy to report that we are reconnecting with our entrepreneurial roots. Detroiters have a renewed sense of purpose and risk-taking and a willingness to confront the past. The spirit of reinvention has started to propel our city forward. It’s clear we have a long way to go, but we are on an incredibly exciting upward trend.
It would have been ideal for us to reinvent in the ’40s. But just because we didn’t doesn’t mean we can’t reinvent now.