Chapter 1
Disrupt or Be Disrupted
When I let go of what I am, I become what I might be.
âLao Tzu
The year was 1993, and Lee Kun-Hee, CEO of Samsung, had absolutely no rational reason to be unhappy. Since he took over the company after his fatherâs death just six years earlier, Samsungâs revenues had soared by an astonishing 250 percent. But Lee wasnât running victory laps. He wanted to help Samsung do even more. So he left South Korea to embark on a world tour to examine how his brand and company were doing internationally.
Leeâs first revelation came early in the trip. At an electronics store in California, he was shocked to see Samsung TVs collecting dust on the back shelves, while the store prominently displayed those from competitors like Sony and Panasonic. This visit became Leeâs moment of truth; although Samsungâs brand was performing well in certain aspects, he believed the company was headed for problems. Samsung had excelled at producing large numbers of low-quality goods, but it offered little in the way of high-quality merchandise. Looking at his products in the competitive context of that California retail store, Lee understood that his company wasnât prepared to compete in the new era, with consumers the world over demanding a sense of luxury and high-quality craftsmanship in their home entertainment.
Samsungâs near-term results were strong, yet Lee refused to coast while his competitors led the consumer trend toward high-quality products. Instead he was about to launch one of the most extensive companywide reinventions in business history.
When Leeâs global tour took him to Frankfurt, Germany, he decided he was ready to strike. He called in hundreds of Samsungâs top executives from around the world and conducted a session that would forever change the face of his company. He delivered a three-day manifesto that laid out the vision for the companyâs reinvention and path to his vision of success. In this powerful and emotionally charged call to arms that demanded reinvention of every aspect of the business, Lee famously exclaimed, âChange everything but your wife and children.â The speech became known as the Frankfurt Declaration of 1993 and marked the companyâs most significant turning point. Samsung later began distributing a two-hundred-page transcription of the speech to all of its employees.
Today the spirit of reinvention and creative energy sparked by Leeâs Frankfurt Declaration continues to reshape Samsung. One division of this massive organization is known as the Future Strategy Office (FSO). This elite group comprises top-performing employees, each a former employee of a separate division of the Samsung Group. Their job in the FSO is strictly preventative: they monitor diagnostics that might reveal mistakes or potential dishonest actions by employees, but also, and more important, the team looks for ways Samsung could fall behind by maintaining the status quo. In this light, their goal is to shed an âoutsiderâsâ light on areas where the company risks stagnation.1
Samsungâs commitment to quality still shines brightly as the company continually pushes for better results. In 2012, prior to a smart phone release, inspections revealed that the productâs cover texture was off. At the last minute, Samsung workers remade 100,000 covers, finishing the job before shipment and underscoring the companyâs ongoing push for continuous improvements in quality and design.2
Leeâs determination to reinvent his organization has led to incredible growth and prosperity. As of 2013, Samsung was the largest TV and smart phone manufacturer in the world. Revenues topped $250 billion and net income was reported at nearly $20 billion. If this wasnât enough to be proud of, the company represented 17 percent of the entire gross domestic product of its home country, South Korea.3
As a leader, itâs your responsibility to prioritize reinvention. If your organization has become intoxicated by its own success, your job is to infuse at every level the same creative hunger that launched it in the first place. The market no longer leaves room for me-too players, a principle that applies to both companies and individuals. Remarkable category-of-one products, services, and processes are the driving force of our fist-fighting economy. The choices are clear: disrupt, or be disrupted.
Global markets and rapidly evolving technologies have turned the rules for winning upside down. Hard skills born in the Industrial Revolution, including manufacturing expertise, strong customer service skills, and even accounting excellence, are now outsourced or allocated to technology. As a result, these once-prized skills have become merely the ante to play. Todayâs victors are turning their winning trump cards in the margins. Creativity is the new, most effectively sustainable competitive advantage; itâs the one thing that no company can outsource. That makes disruptive innovation your most valuable natural resource, even though it isnât displayed on the balance sheet.
Reinvention isnât a single event, itâs a way of life, a constant process of discovery and imagination. Change is inevitable. The question is, will you drive that change or be driven by it? You can choose to adopt the spirit of reinvention and, in the process, set the tone for both your company and your career. No matter how successful you are, no matter how many awards youâve won, no matter how great last quarterâs earnings may have been, you are risking it all if you expect your winning streak to automatically continue. Someday another company will come and put you out of business. It might as well be you.
Make the Leap to Reinvention
With global financial crises, increasing complexity, and crumbling competitive advantages, Iâve seen all too many people freeze in the face of oncoming upheaval rather than act. They worry about the negative consequences of change. They overestimate the resilience of the status quo and underestimate the driving need for innovation. They make excuses, close their eyes to the world around them, and lull themselves to sleep with naive clichĂ©s such as, âThings will get better on their own,â or, âIâm sure the worst is behind us.â When those phrases begin floating around your mindâor your organizationâyou can expect that the calamity of unforeseen change is barreling forward, and ready to mow you down.
When it comes to reinvention, getting started is the hardest part of the task, but itâs also the most important. In todayâs warp-speed world, swiftness wins. If you wait to try a new idea until youâve carefully orchestrated every possible maneuver, the world will pass you by while youâre busy planning. As Rupert Murdoch said, âBig will not beat small anymore. It will be the fast beating the slow.â4
The clichĂ©d deer-in-the-headlights meets an untimely death not because it lacks capability, but because it lacks the courage to move. It doesnât really matter which direction the deer moves in as long as it unfreezes and gets moving. Individuals and organizations face the same challenge as they approach the process of reinvention. The first step is always the hardest to take, but it unleashes the momentum you need to overcome stagnationâs looming threat and enact meaningful change.
Myth: Achievement occurs through a gigantic epiphany or an all-at-once breakthrough.
Fact: Most things worth accomplishing involve a persistent stream of small advances that lead to something transformational over time.
Even after making a first leap toward innovative change, many of us get discouraged when we canât reach our goals at Internet speed. We get frustrated with the slightest pothole or delay and are too quick to stop trying. We fail to understand tha...