Management Perspectives

'Disrupt yourself first’ is so five years ago. The new motto is ‘Burn your company to the ground then rebuild it’.
COVID-19 has rapidly bent, if not broken, virtually all certainties about business.

We do not know how long the crisis will last, but even the most optimistic projections say that we are in for many more months of wrestling with the virus. And the broader ramifications are likely to be with us for significantly longer.

We have designed a paradigm to help companies rise to this era’s wicked challenges. At the heart of it is a simple idea: The essence of disruption-ready leadership is being able to ruthlessly identify current weaknesses, envisage destruction of the current business model with unconstrained resources to break the legacy blinkers, and then rise, phoenix-like, from the ashes with a new vision of renewal. Hence, its name ‘The Phoenix Encounter Method’, which is also the title of our recently released book.

Over the last few years, we have run highly successful Phoenix Encounter field trials involving over 1,500 senior C-suite executives of firms spanning the globe and a broad range of industries. Many of these resulted in a fundamental revision of the strategies of organisations—banks, agricultural conglomerates, retail chains, engineering equipment manufacturers, healthcare providers, utilities, insurers, to name a few.

A three-stage journey
The exercise is designed to be tackled in groups of four to seven people, in addition to a facilitator who directs the action. The composition of these ‘PEGs’, or Phoenix Encounter Groups, is all-important. In the classroom exercises, which are attended by leaders from various organisations, we strive to maximise diversity within each team, rather than team up people representing similar industries or sectors. The idea is to achieve the widest possible range of perspectives.

In building a PEG at your company, you should follow the same principle. Choose people from vastly different silos or business units, perhaps even different management levels, so that disparate perspectives can be brought to the table. For optimal results, consider adding external stakeholders such as customers, suppliers, investors, and regulators.

The first stage: Groundwork
Begin by thoroughly assessing the organisation as it currently stands–the good, the bad, and the ugly.

Participants should complete an initial status reflection and briefing for the organisation (current vision, mission and strategic priorities, business models for value creation and capture, etc.). A standard SWOT analysis should be a part of this.

Each participant should also complete a more introspective assessment of his or her own mindset and attitudes toward disruption.

Finally, participants can start preparing to enter the Encounter Battlefield by proactively scanning the external landscape of emerging technologies and other trends. The aim is not to perform standard intelligence gathering, but to cast a much wider net encompassing the current and evolving forces of disruption that could conceivably destroy their organisation, or be leveraged for its defence.

The second stage: Battlefield
Now, the conflagration begins. Participants proceed to develop and deploy an arsenal to entirely demolish the organisation–on paper, naturally.

For example, Amy, one of the PEG participants, was a soon-to-be CEO for a large British private hospital and retirement care business that we will call Horcomp PLC. Although Horcomp had seen growth of 30 percent in the preceding five years, the Battlefield phase brought to light the company’s hidden vulnerabilities. In playing the role of disruptive competitor, Amy discovered that a tightly integrated digital healthcare ecosystem could conceivably supplant Horcomp’s physical facilities. Her hypothetical disruptor would also deliver lifestyle wellness services, social networking for seniors, convenience-boosting tech such as drone delivery of medication, and various leisure activities via strategic partnerships and lobby regulators to break up healthcare conglomerates.

With its all-digital agility, this imaginary but entirely possible startup would make the earthbound Horcomp look ripe for extinction. After the organisation as it currently stands has been reduced to smouldering ashes, teams must come up with a commensurate plan to rebuild. This requires a transition in thought that we call ‘turning the wheel’, a mindset shift from destruction to rebirth.

The third stage: Breakthrough
Immediately after finalising their defence plan, teams are advised to prepare a future-facing blueprint covering both the big picture (via an updated future-looking SWOT for the transformed business model) and the nitty-gritty details that will make or break the change initiative.

Fired up from their fresh experiences on the Battlefield, participants may want to change everything all at once. But that is a recipe for burnout. Instead, they should focus on the first hundred days post-Encounter, identifying three action steps that can be taken in that time.

Immediate and short-term actions may include engaging stakeholders, earmarking resources, initiating pilot projects, and conducting a deepdive analysis.

Over the medium- to long-term, they can build up to more decisive actions such as acquiring new partners or competencies, monitoring progress, and revamping organisational culture.

Post-Encounter steps
To revisit the Horcomp example, imagine Amy’s surprise when, only a few weeks after returning from her Phoenix Encounter, her chairman informed her that an activist investor was pushing a programme of radical changes within the company that eerily echoed the Extreme Attack she had just been through. Her confident reply: “We need to talk. I’ve got a lot of ideas to share.”

Amy knew she would have to pick up the pace of her long-term action plan. She convened an in-house PEG within the senior leadership team, and wisely convinced the retiring CEO not to take part in it. Within one year, Horcomp built a pilot ecosystem for providing whole-of-life care, with the help of a digital partner. Taken together, the pilot projects produced service improvements that reduced costs by ten percent.

Other positive developments in that first year included: an AI-based patient monitoring system, a partnership with Apple to create health apps, and increased talent retention across the board. Horcomp also began talks with governments and insurers to advocate for tighter industry regulations focusing on trust and safety of health and life care.

Accelerating the destruction
In the midst of the COVID-19 pandemic, a great many organisations are focused on trying to claw their way back to ‘normal’ – whatever that means. We would instead recommend that they lean into the large-scale disruption the coronavirus has unleashed. The Phoenix Encounter Method is an example of the sort of unprecedented thinking companies will have to adopt if they aim to withstand the storms on the horizon–and come out on top.