Disruptive Innovation is as relevant to internal business functions like HR, Legal, and Finance as it is to breakthrough technologies, products, and services.
Last year I spoke at Disney. The company wanted me to teach their high potential leaders the ins and outs of breakthrough innovation. Awesome.
But the end of the session something surprising happened. A participant walked up to me and said, “disruptive innovation is great, but what does it mean for me and my function? I’m in Human Resources.”
And that’s the problem. “Innovation” today is almost exclusively about products, services, and business models.
Most companies enlist R&D and product development groups to find the next big thing that grows the business and creates competitive advantage. So if you’re sitting in HR, Legal, Finance, Marketing, or other internal functions, finding “disruptive innovation” can feel like a daunting challenge.
One of the best examples of what’s possible comes from the legal department at DuPont. Here’s an excerpt from my book, Leapfrogging:
With sixty-thousand employees in ninety different countries, not to mention a huge variety of products in everything from agriculture to electronics to clothing, the volume of legal work needed to keep DuPont’s operation going is utterly staggering. Patent law, tax law, employment law, contracts, antitrust, intellectual property, class action defense – a company like DuPont simply cannot survive without lawyers, lots and lots of lawyers.
By the early 1990’s, the company’s then-associate General Counsel, Thomas Sager, knew that things had gotten out of hand. At that point, more than 350 law firms were working on DuPont’s dime. The sheer number of lawyers and their lack of coordination weren’t the only problems Sager identified. There was also a troubling disconnect between the company’s interests and the interests of its legal advocates. For the law firms, everything was about billable hours. That meant, no matter what, they wanted to fight cases to the bitter end. If one of DuPont’s products or the way the company was doing business were truly causing harm, Sager reasoned it would be more profitable to change that product or that business practice rather than litigate the matter for years and years. But the law firms working for DuPont would never recommend such a thing because it would mean less revenue for them.
Sager knew he had a mammoth project on his hands. He also knew that he wanted to do more than just cut costs – he could run his function like most other corporate legal departments, or he could create a new model that would push his own comfort zone, a model that would ensure that his department became a core contributor to the strategic operations of the business and even influence the operating models of the dozens of firms working for DuPont.
And here’s how he did it.
First, Sager reduced the number of law firms that were working with DuPont. The ones that remained were strategic partners.
Second, he changed the method in which the law firms were paid to a structure that encouraged the firms to solve problems faster.
And, in an effort to remove the stigma of law only being an “old boy’s club,” Sager also made diversity a priority when choosing which law firms to retain as partners. DuPont now has programs and job fairs dedicated to recruiting more women and minorities.
Sager essentially disrupted the legal department. He challenged assumptions. He saved the company millions. He reinvented the corporate legal business model. He anchored his actions in business results with a greater purpose.
So how do you start to innovate your corporate business function?
1. Identify longstanding assumptions that constrain what’s possible (e.g., we pay for external legal services by the billable hour).
2. Determine the desired business results without worrying about these constraints (e.g., we need to resolve cases 10 times faster and at much lower cost).
3. Brainstorm list of new operating assumptions (e.g., what if we pay incentives to quickly resolve cases?)
4. Try it out (e.g., test the idea as a pilot project to work out the kinks)
Today, many companies mandate “innovation” across the enterprise. Internal business functions can be as “innovative” as the products and services their companies provide to the market.
How as your own internal business function innovated? How have you challenged assumptions?