UPS and United Way: Transformation Imperative and "Disruptive Innovation"
When we in the UWA Center for Community Leadership were casting about for keynote speakers for the SLC we thought about a leader from one of our National Corporate Leadership companies--and were delighted to learn that Mike Eskew, CEO of UPS, was both available and interested in speaking. His interest was not just a signal of his company's continuing commitment to United Way, but also because he's in the midst of a 70 city "barnstorming tour" across UPS to talk about their own transformation--and transformation is what we are both worrying about, big time.
As we heard in his remarks this afternoon, there were many similarities between UPS challenges to change and United Ways: both are venerable organizations, both are major market players in their industries, and both face ongoing threats to position by nimble and entrepreneurial players in a fast changing world. Eskew several times used the phrase "disruptive innovation"--and the way a business game can suddenly change when some discontinuity (technology, business model, new entrants, etc) suddenly arises. The phrase "disruptive innovation" was first developed by a Harvard Business School professor, Clay Christensen whose now classic volume on the topic--the Innovator's Dilemma (http://http://www.amazon.com/Innovators-Dilemma-Revolutionary-Business-Essentials/dp/0060521996/ref=pd_bbs_sr_1/103-7453986-8611028?ie=UTF8&s=books&qid=1179343412&sr=1-1 )-argues a case which a business consultant friend, talking with me recently, referenced saying "it fits United Way to a T."
The basic idea is that every successful business over time gets entrenched in a co-dependent relationship with its biggest and best customers--they like us to provide certain services at a certain price, and we aim to please in return; and over time we each get deeper and deeper into each other's arms. Meanwhile, lower cost or more efficient competitors start to nibble away at the edges--first with cheaper, perhaps less desirable solutons--but which can suddenly explode if the market, seeking innovation, suddenly embraces the new alternatives. And as business pours into the new offerings, they in turn gets better and better--which only makes the incumbant hold on tighter and try to incrementalize itself better and better to its former position of strength. You know how the story ends...incrementalizing doesn't win (at least long term).
So the challenge for incumbents--which all started at one point as innovators--is to figure out how to maintain position but at the same time create their own radical alternatives that will ultimately disrupt themselves. Our United Way strategic question becomes--is "community impact" a disruptive innovation, or merely an incremental improvement over a status quo model for donors whose days are ultimately numbered ? There was a time when United Way vaulted over many other charities with the then disruptive innovation called "payroll deduction." It its day it was a brilliant advance; will history regard community impact as the next one in the world we seek to make better? Or does the real disruptive innovation we need still lie ahead?
As we heard in his remarks this afternoon, there were many similarities between UPS challenges to change and United Ways: both are venerable organizations, both are major market players in their industries, and both face ongoing threats to position by nimble and entrepreneurial players in a fast changing world. Eskew several times used the phrase "disruptive innovation"--and the way a business game can suddenly change when some discontinuity (technology, business model, new entrants, etc) suddenly arises. The phrase "disruptive innovation" was first developed by a Harvard Business School professor, Clay Christensen whose now classic volume on the topic--the Innovator's Dilemma (http://http://www.amazon.com/Innovators-Dilemma-Revolutionary-Business-Essentials/dp/0060521996/ref=pd_bbs_sr_1/103-7453986-8611028?ie=UTF8&s=books&qid=1179343412&sr=1-1 )-argues a case which a business consultant friend, talking with me recently, referenced saying "it fits United Way to a T."
The basic idea is that every successful business over time gets entrenched in a co-dependent relationship with its biggest and best customers--they like us to provide certain services at a certain price, and we aim to please in return; and over time we each get deeper and deeper into each other's arms. Meanwhile, lower cost or more efficient competitors start to nibble away at the edges--first with cheaper, perhaps less desirable solutons--but which can suddenly explode if the market, seeking innovation, suddenly embraces the new alternatives. And as business pours into the new offerings, they in turn gets better and better--which only makes the incumbant hold on tighter and try to incrementalize itself better and better to its former position of strength. You know how the story ends...incrementalizing doesn't win (at least long term).
So the challenge for incumbents--which all started at one point as innovators--is to figure out how to maintain position but at the same time create their own radical alternatives that will ultimately disrupt themselves. Our United Way strategic question becomes--is "community impact" a disruptive innovation, or merely an incremental improvement over a status quo model for donors whose days are ultimately numbered ? There was a time when United Way vaulted over many other charities with the then disruptive innovation called "payroll deduction." It its day it was a brilliant advance; will history regard community impact as the next one in the world we seek to make better? Or does the real disruptive innovation we need still lie ahead?
