Rita McGrath, a Columbia Business School professor on Strategy & Innovation, has an amazing video that discusses “inflection points”, why businesses often miss them, and how you can spot them in your own business. Why I was amazed by this video is because it mirrors my own life’s work but whereas she is looking for shifts on a business scale, I’m looking for larger shifts on a societal scale.
So an inflection point in business is something that changes, usually in the environment, that causes the assumptions underlying the way business works to change in some meaningful way.
If you’re paying attention, you can see the oncoming inflection points way before they happen.
So now you have to really rethink your whole business in order to accommodate that post inflection point world.
So that’s how I think about an inflection point, it changes the metrics that you use to predict success in a business.
That is an amazing statement above because if you apply this to shifts that cause changes in “the metrics that you use to predict success” on a societal scale, it really tells a lot. In effect, for a lot of people, especially younger generations, they’re no longer interested in the narrative of the American Dream (i.e. formal education, fancy car, big house, big family).
So I think there are a number of reasons why people miss inflection points when they’re happening.
I think the first is you just get so used to the way things are that you’re not really paying attention. So it’s not so much heads in the sand as heads just looking straight ahead, you know, and not looking up, not looking down, not looking around at all. So I think that’s the first thing.
The second thing is acknowledging that things could be really different can be very scary. Everything you do, every bit of success you’ve had is premised on a certain model of how things work and if you pick up early warnings that that model may be changing, that can be very threatening. So there is a very human response to not want to take that in.
And I think the third reason is people spend so much time being busy that it’s very hard for them to take big step back and say ‘You know what could be changing in our environment? What assumptions do we need to challenge?
And I think the last thing is we tend to surround ourselves with people who are a lot like us. So we’re with people who have the same worldview. We’re with people who have the same opinions. We’re with people who talk to the same people, we watch the same television, blah, blah, blah. And so if something is emerging from somewhere unexpected, it’s easy to miss because we’re not talking to people who are familiar with that.
And this explains precisely why so many people get stuck in their current worldview because it’s difficult to step back and let go of an existing worldview, even challenge and question it, as it feels very threatening. On society scale, you’ll feel like you’re going against society itself.
In today’s environment, especially with digitization accelerating everything, we’re dealing with life cycles. So you have a period of time when an advantage is created, it kind of comes into the world, we see whether it’s going to make it or not, then it scales and you can enjoy it for a while but then it comes under pressure, customers get bored, competitors catch up, your ability to protect it erodes, your patent evaporates, whatever it is, and that advantage goes into decline.
How do we know when strategic inflection points are going to be upon us?
So one of the early warning is to me of an advantage fading is that you start losing good people or you can’t recruit the people you would like. Or the people that you have aren’t actually being recruited by other people. That tells you something.
So when you fail to adapt, what will happen is you’ll start to see the earliest signs are the people who are your researchers, your scientists, your whatever, they kind of look at their book of what they’re doing and what motivates those kind of people is they wanna work on what’s next, the cutting edge. If they feel like they’re retreading the same old boring territory, they’re going to go somewhere they can work on what’s next. So the first people go will get people like that.
Now the reason that’s kind of interesting is that those are not people who sit regularly within the C Suite. Those are probably not even people the C Suite people are talking to but their immigration, their departures, sends a strong signal that if we’re not exploring the next thing, we’re going to be basically regurgitating what we’ve already done a thousand times.
So if people see you stuck in the past, they will not hitch their careers to your trajectory.
If you want to attract the best, they wanna know are they going to get a better network, be exposed to really cool stuff, they’re going to have a lot of autonomy, they’re going to be growing and developing, they’re going to be more employable when they’re done with you than they were when they started. And if you can’t make that promise, it’s going to very hard to recruit them.