Steve Dennis has worked for some of the world’s most well-known retail companies — in-house with Sears and Neiman Marcus and as a consultant for various others. And in all these experiences, he has found that they all had one thing in common: they struggled to keep pace with the disruptive forces specifically impacting business and retail.
“I was always asking some version of the same question, which is, ‘If the world has changed so much, why have you changed so little?’” Dennis said during a recent episode of the Retail Remix podcast.
Dennis has explored the challenges and opportunities for retailers specifically with his 2020 book Remarkable Retail, which has become a bible of sorts for industry executives. However, he found there was an opportunity to dig further into leadership — and the new Innovator’s Dilemma that is forcing today’s executives to take big leaps — or simply move out of the way. Hence the inspiration behind his latest book, Leaders Leap: Transforming Your Company at the Speed of Disruption.
“So many retailers that had plenty of advantages historically have not been able to be successful, so I really wanted to dig into that in a way that perhaps is additive to what others have explored before,” Dennis explained.
Below are key takeaways from the conversation, with content edited for clarity and conciseness.
A new Innovator’s Dilemma is disrupting leadership teams.
“I think what’s fundamentally different today between, or really for the last 20-plus years, from when Clayton Christensen released his book, is that the internet didn’t exist. Ecommerce didn’t exist. Cloud computing didn’t exist. Smart devices didn’t exist. There are many forces today that allow technology to be adopted much more quickly. And there are all sorts of interesting combinations between technologies, as well as just shifting consumer behaviors and dynamics that cause changes to ripple more quickly.
For example, we see something on social media blow up in a matter of minutes and affect the culture. This means we must accept that the Innovator’s Dilemma is still real. But the real need is to aim even higher in the value you deliver to really differentiate yourself from the competition and move much, much faster. That’s the fundamental difference that has emerged over the past 10-plus years.”
Many retailers are failing to close the transformation gap, which means they’re losing confidence from consumers and Wall Street alike.
“On one axis, visualize the degree of customer value that a company delivers and the distance that is created between the next-best competitor. And on the other [axis] is speed. If you think about the degree of change or disruption that we see, it’s typically relatively incremental improvements over an extended period. That’s part of just business optimization. Sometimes you’ll see companies make more significant changes and do it a bit more quickly.
But the problem is, if you are in an industry that’s being disrupted very fundamentally, and there’s quite a lot of innovation and customer value that is delivered, it really puts these disruptive companies significantly ahead of the typical competition. And it happens faster than the typical pace of change in that industry; this gap can be created between [the disruptors and] those companies that haven’t innovated very much. In many cases, if you fall too far behind, you may never be able to catch up. In some cases, it means your customers have found a new favorite place to go; in other cases, it means you have a great plan that you’re not going to be able to get support for from Wall Street or investors, because it’s deemed too expensive or way too risky.”
Advertisement
To set a foundation for transformation, leaders need to separate the table stakes from the differentiators and put an appropriate action plan in place. And yes, that includes assessing possible risks.
“Every company has got stuff to do. But there’s a difference between table stakes and differentiators. There’s the stuff you have to do to stay in the game — and then there’s the stuff that really distinguishes you and causes you to stand out. But it’s important to be very conscious of how much change is necessary and how far you have to set yourself apart from the competition, depending on your industry and category.
However, I will say, if you work at a retailer or any organization that is struggling — and you haven’t had much success putting change into place — there’s a pretty good chance you have a messed-up relationship with risk — that you don’t realize that the slow and steady kind of incremental change isn’t actually the riskiest path of all. For example, it would have been far better for department stores to take more risks 20, 15 or even 10 years ago, than to keep putting these incremental changes into the world. Part of what I argue in Leaders Leap is making sure you’re doing the homework and that you’re really digging deep to understand your situation and breaking through any denial.
If you really can get a clear view of where you really stand — and that can be from a customer perspective, organizational capabilities, technology, a whole bunch of things — you’ll be able to better quantify the risk of inaction. You have to let go of some of your old ways of operating, get a very clear view of the data, get different perspectives and challenge your assumptions, because as it turns out, many assumptions that were very valid a few years ago are no longer valid at all or are becoming much more questionable. And I think mapping out the different paths you could take, and trying to put some risk assessment to it, could help.”
Remember that sometimes you don’t need one big, bold leap. A series of small yet impactful leaps can be just as good — if not better.
“One of the problems with putting ‘leap’ in the title of my book is that it may give this idea that everything has to be some sort of big bold move, and I’m not necessarily suggesting that. In many cases, you do need one big bold move. But in most cases, it’s a series of smaller leaps. It’s a portfolio approach of trying stuff, failing fast or gleaning the learnings from your experiments and translating them into something new. Or it’s simply about being willing to step on the gas and up the ante on something that is working well.”
Listen to the full episode to get Dennis’ tips for taking bold leaps in your work.
