17 September 2017

Incremental or Disruptive Innovations ? Gui Gu Zi's Wisdom#6 C4 抵巇 Fix It

Any partnership and any business will soon encounter problems. Gui Gu Zi gives us the principles for solving such problems, which he calls them cracks. Firstly is to be watchful and detect it. Never ignore the little faults because the accumulation of little will result in a big one. Secondly, you can incrementally fix it. But, thirdly, at times, it is better to break it and start building a new one. Transform the crack into an opportunity to bring gains. Do the radical innovation.
Any partnership or business needs your attention and effort to build and grow. Things that are used will need maintenance to keep running. There will be changes that slowly creep in to create problems for you. To have a growing and sustainable company or partnership, you need to follow the Principles of Fixing Cracks proposed by Gui Gu Zi.

Principle 1 Detect Early
Problems, defects, or changes in the early stage will usually be small to escape our attention. Often, we spend much worrying about the big changes coming in the future to forget to notice the decays that are happening right under our nose. We are encouraged not be myopic and to look into the future but we must also, at the same time, watch for the present progress and take note of any signs of troubles. It is not a choice either or but rather a must to take care for both, the present and the future.

Principle 2 Know the Power of the Accumulation of Little
Gui Gu Zi tells us any great mountain is but an accumulation of small sands. Lao Zi said that a journey of thousand miles begins with one step and is the accumulation of more steps. There are three lessons to learn.

Firstly, never ignore any signs or signal just because it is small. Don't despise any small start-up. We must learn to take care of the details.

"The details are not the details. They make the design."
--- Charles Eames, Famous US Architect, and Designer.

Secondly, we need to continue to work on it, a step at a time, and never give up. Eventually, we will have a great success. Perseverance brings success.

"Through perseverance, many people win success out of what seemed destined to be certain failure." --- Benjamin Disraeli

Thirdly, we are not going to make a giant leap immediately. We need to learn the technique of bootstrapping and get going with as little as possible. We learn from the boot process of a computer where the boot program, a small program, when switched on will load the larger program, the Operating System (OS) from the larger memory device such as the disc. We are familiar with the technique to using a small string to slowly pull in a larger and larger rope.

Principle 3 Fixing the Crack Incrementally - Incremental Innovation
Interestingly, Gui Gu Zi uses the fall of a kingdom as a precursor to the methods of fixing cracks. He listed seven reasons for the fall, namely, an unwise king, corrupt officials, good people are not employed, profiteering, cheating, and falsifications are rampant, distrust between king and officers, no laws and order and infighting, and breaking up of family. The biggest issue in any business is not the products or services but the people running it! Or, the culture that creates the bad behavior in the people. Depending on the types of cracks, there are many ways to fix them.  If you can manage it and it can be fixed, then do the incremental fixing, one step at a time. If it could not be fixed, so badly cracked up, then you have to abandon it and go for transformation as in the next principle. Fixing incrementally can be first trying to block the leaks, repair/restore it, stop it at the root cause, and cover up the crack to make it invisible.

Principle 4 Break it and Start with a New Thing - Disruptive Radical Innovation
Not all cracks can be fixed. It may be better to abandon it and do something radically different. Transform the crack to become an opportunity for gain. We heard the famous story of  Thomas Edison calmly watching his factory being burned down and said, "Thank God we can start anew.”
This is a typical Chinese Proverbs on Crisis which is written as 危机 in Chinese. It is a combination of danger and opportunity. Within any danger, there is an opportunity. Within any opportunity, there is the danger. We just have to seek the opportunity in the crisis and transform it to become an opportunity for gain. Cybersecurity business is the opportunity for the dangerous hacking and stealing of sensitive and valuable information from businesses.

For businesses, we the fall of once glorious leaders such as Nokia, Kodak, RIM etc.  In 2017, 15 companies were out of the Fortune 500 list. From 1955 to 2014, only 12% of the companies remain in the Fortune 500 list. The ranking of the list also changes annually. Hence, we must watch the changes in the external environment close and adapt accordingly.

Let's learn from the rich and famous Warren Buffett. In the 1985 Berkshire Hathaway Annual report.

  • My conclusion from my own experiences and from much observation of other businesses is that a good managerial record (measured by economic returns) is far more a function of what business boat you get into than it is of how effectively you row (though intelligence and effort help considerably, of course, in any business, good or bad). 
  • Some years ago I wrote: “When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact.” Nothing has since changed my point of view on that matter. Should you find yourself in a chronically-leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks. 
More quotes from the experts:
  • E W Deming … zero defect does not guarantee jobs.
Make sure you’re climbing the right ladder otherwise all your efforts will be wasted.

Lim Liat (c) 17 Sep 2017

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