PRODUCTHEAD: Exploiting inertia for fun and profit
PRODUCTHEAD is a regular newsletter of product management goodness,
curated by Jock Busuttil.
you and whose product? #
When strategic frames grow rigid, companies, like nations, tend to keep fighting the last war
If organisations (incorrectly) view change as gradual they will have resistance to the change
The innovator’s dilemma: cater to current needs or attempt to anticipate future demands?
Many common financial tools distort the value, importance, and likelihood of success of investments in innovation
every PRODUCTHEAD edition is online for you to refer back to
Whenever I start working on something new, inertia inevitably crops up. Part of it is my own starting friction, of course. I also see it when I’m helping my clients to change how they work (ideally for the better).
Inertia keeps us doing what we were doing before #
We’ve come to use the word ‘inertia’ to indicate a tendency to do nothing or not get started with something. But I quite like the more technical definition from physics, that something will either continue to stay still or keep moving uniformly in a straight line until an external force acts upon it.
Inertia provides us a neat analogy for product management: in the absence of anything forcing us to change our behaviour, we just keep doing what we were doing before. Resistance to change is not necessarily ill-intentioned, it’s just … easier. To effect any change takes sustained effort, and always seems harder at the beginning.
Inertia leaves you open to disruption from new entrants #
We see plenty of examples of established companies being disrupted by startups. They may have seen the disruption coming, even researched their own response, and yet still fail to act in time. (Kodak famously developed a digital camera then shelved it long before digital cameras disrupted their photographic film business.) Part of why this happens is because it’s easier for the startup to introduce something new, than it is for an established company to change how they operate. It’s inertia at play again.
In The Innovator’s Dilemma Clayton Christensen wrote about why some companies are better at innovating than others. Established companies are great at creating inertia because it can be desirable. The kind of inertia where the company optimises itself to keep doing what it’s doing, but more efficiently, makes a lot of sense. Christensen calls this “sustaining innovation”.
Imagine a factory manufacturing a particular type of component. It wants to churn out these identical components as efficiently as possible, so it optimises its processes for efficient repeatability. Variation is the enemy. But in doing so, it also makes itself far more resistant to change. This makes it vulnerable to disruption from new entrants which are doing things differently, and don’t yet have that same inertia.
The new entrants have less to lose (customers, brand reputation, revenue and so on), so they can take more risks. They have not yet optimised their processes for repeatability, so they can also change and adapt more quickly and easily. In time, however, a successful new entrant itself becomes established, and optimises itself to keep doing what it’s doing, more efficiently in order to scale up. And so it too becomes vulnerable to disruption.
Inertia means change takes longer and more effort #
It is not impossible for established companies to successfully change and adapt, but it takes significantly more effort than many expect. This may explain why change often comes too late for them, and at higher cost.
Tesla disrupted traditional automotive manufacturers with its electric vehicles, charging infrastructure and online purchasing experience. However, it may continue to struggle to scale up mass production quickly enough — while also maintaining quality — to maintain its lead over the competition.
Many competing marques have either acquired or partnered up to bide their time while restructuring their company and developing their own electric vehicle platform and charging infrastructure. Some of them are already offering driver assist capabilities that exceed those of Tesla’s over-promised Autopilot. And they can now exploit their prior experience in mass production to scale up quickly.
Exploiting inertia #
If your company is a new entrant without the ‘baggage’ of established companies in your space, you can exploit the incumbents’ inertia to steal their lunch. But unless you can then follow up your disruption with optimisations for scale, repeatability and quality, you may find your competitors catch up and overtake you because they’re already good at that.
And if your company is an established player, assuming you can see the disruption coming in the first place, commit early to the change, be realistic about the effort and time needed, and see it through. Then exploit your ability to scale.
Exploiting inertia is one of many strategic plays Simon Wardley discusses in the context of his eponymous mapping technique. I’ve included the relevant section from his online book in this week’s links. I also have some other insightful articles about the importance of exploiting inertia, both as an incumbent and as a challenger. Have a great week!
Speak to you soon,
what to think about this week
One of the most common business phenomena is also one of the most perplexing: when successful companies face big changes in their environment, they often fail to respond effectively. Unable to defend themselves against competitors armed with new products, technologies, or strategies, they watch their sales and profits erode, their best people leave, and their stock valuations tumble. Some ultimately manage to recover—usually after painful rounds of downsizing and restructuring—but many don’t.
[Donald Sull / Harvard Business Review]
In the previous section, I discussed the importance of interfaces for activities that commoditize and become components of higher order systems e.g. standard electricity supply, standard units of currency. There is a significant cost associated with changing these interfaces due to the upheaval caused to all the higher order systems that are built upon it it e.g. changing standards in electrical supply impacts all the devices which use it. This cost creates resistance to the change.
[Simon Wardley / Bits or Pieces]
The backbone of every great business is the pursuit of innovation. While there is a difference between disruptive innovation vs. sustaining innovation, the fundamental goal remains the same—to create value. From a strategic standpoint, it’s worthwhile to explore each classification. It will help you identify the best path for your company to travel. You can think of the information that follows as your crash course in each methodology. Welcome to Innovation Strategy 101!
Most companies aren’t half as innovative as their senior executives want them to be (or as their marketing claims suggest they are). What’s stifling innovation? There are plenty of usual suspects, but the authors finger three financial tools as key accomplices.
[Clayton M. Christensen, Stephen P. Kaufman, and Willy C. Shih / Harvard Business Review]
Have you ever wondered why product managers say “it depends” quite so often?
[I Manage Products]
Video games aren’t necessarily everyone’s cup of tea, but some of the most successful games and products share a common attribute: they help the user become more skilled throughout their journey.
[I Manage Products]
I’m currently applying for loads of product manager jobs. I’ve received an offer from a sales-led company where the Product team reports in to Sales. Should I take the job?
[I Manage Products]
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PRODUCTHEAD is a newsletter for product people of all varieties, and is lovingly crafted from six (six!) new tyres in one week.
Read more from Jock
The Practitioner's Guide To Product Management
by Jock Busuttil
“This is a great book for Product Managers or those considering a career in Product Management.”— Lyndsay Denton