If there's one executive who knows how to disrupt industries and see opportunities that others do not, it's John Sculley, former president of PepsiCo and CEO of Apple during ten of its most formative years, and who mentored a young guy named Steve Jobs that some of you may have heard of.
Sculley continues to serve "as the second set of trusted eyes, helping be a rainmaker, open the doors, bring in the capital, help negotiate the deals" to multiple disruptive companies. When asked about how he took on entrenched giants such as Coca Cola and IBM, he shared a few crucial habits needed to develop if you want to challenge the giants and truly be distruptive. Here are Sculley's tips:
#1 Develop deep domain expertise.
"I don't go into any business where I don't have personally deep domain expertise or I can't surround myself with very smart people with deep domain expertise," Sculley explains.
What you're really doing when you disrupt an industry is you're saying, 'how do I go in and take established industries where people are already successful?'- and you're finding ways to take inefficiencies out of those industries. So unless you understand those complexities, you won't be able to disrupt. Innovation, Sculley explains, tend to be at the collision points, the edges, of domains. "Innovation takes place usually when another domain bumps up against the domain you're focused on."
#2 Look for the design gaps in industries.
What are the design gaps that you can not only fill but, in doing so, expand the market?
He uses the design of the Mac as an example: "Steve Jobs created it, thought it was a toy... by the time I left Apple we were the largest selling hardware PC in the world, and very profitable." Apple has done this many times over, going into commodity businesses like MP3 players. "Tony Fadell did a little tweak on the design, came up with a great user interface and came up with the iPod...you can take commodity businesses and do amazing things with them."
#3 Make sure you have the right personality.
It takes a certain kind of person to disrupt an industry. There's something about entrepreneurs: they really don't want to work for anybody else, they're willing to take big risks, and they're willing to beat to a different drum. Sculley prefers to work with entrepreneurs who have been through the experience of making mistakes, to have their back up against the wall and who know what it's like, "when you think you're going to die, metaphorically." "It's a great training ground," he says, compared to those who are too wary of making mistakes to consider taking greater risks. "Decisions are almost always correctable. Young entrepreneurs don't really realize that; they think if you've made a decision you're going down a different fork, and there's no opportunity to rectify it.
#4 Learn from past failures.
In Sculley's eyes, successful disruption often comes from learning from past failures. "The really cool stuff is always in the mistakes, it's never in the successes," he says. Some entrepreneurs are trying to avoid mistakes, and trying not to think about them, and fighting to let anybody know those mistakes have been committed, Sculley says--"and yet that's the most fertile ground for innovation."
Look at the companies that became wildly successful, and often the founders often moved on and the firms became victims of their own success. Either Market conditions changed, or management misunderstood why they were so successful. Look at Intel, Microsoft, Kodak, IBM, and companies that were great at certain moments, and all of a sudden, they lost their secret sauce. As Andy Grove used to say, only the paranoid survive.
#5 Set the company up for disruption.
If you go to even the most successful big companies, they all have one thing in common: middle managers are always empowered with the authority to say no. If you go to entrepreneurial companies, Sculley believes, everyone is empowered to get to yes. It's just a fundamental difference. If it weren't that way, why would the economy even need disruptive companies? Big companies are more focused in looking back and protecting what they have, but smaller disruptors say, how can I do something new?
#6 Keep practicing.
Sculley's been in the business world long enough that "I haven't made one or two mistakes, I've made lots of mistakes", he admits. But, just like athletes do, successful disruptors need to work on their "problem areas." NBA legend Kobe Bryant goes out every day, and takes 1000 shots. He does it every single day. He doesn't get them all in, but he's willing to work. Everyone that Sculley's ever been involved with who's been "outrageously successful as an entrepreneur" is willing to really work at it.
#7 Accept the tradeoffs.
Of course, all of that work--and practice - often means that you have to make some tradeoffs. Steve Jobs is a perfect example of it. The young Steve Jobs was an imperfect person. He didn't care if people liked him, but he cared a lot, he was passionate about whether people liked his products. He was willing to make sacrifices in his personal life in his 20s and early 30s that a lot of people weren't willing to make. But he was determined that he was going to change the world, and no one in our lifetime has changed the world as much as Steve Jobs. Even if you're not trying to be the next Jobs, you often have to make some personal sacrifices along the way.
Which of these have you already identified as growth opportunities? Which of Sculley's seven do you think you should focus on next?