Whitney Johnson tells InsuranceNewsNet publisher Paul Feldman how to follow the S CURVE through disruption to success
No doubt, you have heard the word “disruption” so often it ceases to have any meaning. But Whitney Johnson would say that people never had a true appreciation for what disruption actually is.
Disruption is not the Amazon of today, the monster stomping into your industry. The disruption is Amazon 20 years ago when it was a mere gnat to Barnes & Noble and Borders. Disruptors are the tiny players that serve as punchlines for the big players, until those disruptors not only have a seat at the table, but own the table.
Whitney has been interested in the art and science of disruption for more than 10 years, beginning when she was a highly respected equity analyst at Merrill Lynch. She was at the top of her hard-won game when she decided to apply disruption to her career. Whitney left Merrill Lynch and started an investment firm, Rose Park Advisors, with Clayton Christensen, a Harvard University professor who coined the term “disruptive innovation.”
It’s always scary to walk the path of disruption. According to Whitney, it starts at the low end and scales up an S curve of progress. It is not easy, but it is gratifying and financially rewarding, as she describes in her book Disrupt Yourself: Putting the Power of Disruptive Innovation to Work.
In this interview with Publisher Paul Feldman, Whitney lays out the seven steps to the nirvana of disruption.
FELDMAN: How should advisors deal with disruption and make it work for them?
JOHNSON: I’m really focused on this idea of personal disruption. So, you asked how a financial advisor can deal with disruption. The way I think about it is we all know that change is going to happen. In most cases, we want change. Change is desirable, but we all want it to look and feel linear and it isn’t.
At a very high level, this idea of disruption is actually a way of thinking about change. I have devised a seven-point framework that allows a person to harness rather than cope with change, and become an advisor who people want to work with and someone who people absolutely want to work for.
FELDMAN: How do we get started in managing disruption?
JOHNSON: One of the reasons it’s so hard for people to deal with disruption is because it seems very unpredictable at a very basic level.
Every single person is on a learning curve or an S curve. The S curve was popularized by Everett Rogers in 1962. He was using it to gauge how quickly an innovation would be adopted.
We actually can use this S curve to help us deal with the unpredictability of disruption. I’ll talk it out, and then we can talk about how you can use this framework.
At the low end of the S, that base of the S, we know that adoption is going to be very slow.
Then you reach a tipping point in a market. Once you reach a tipping point in 10 to 15 percent of the market, you enter this inflection point and you move into hyper-growth. Then, at 90 percent of saturation at the top of that S, the growth tapers off.
What we think about in terms of our products and services actually can help us understand the psychology of disruption. You might be a brand-new financial advisor, and you’re working really, really hard and you feel like you’re not getting any new clients, not closing the sale and it doesn’t seem to be working — it’s because you’re at the low end of the S curve.
When you know that, you can allow yourself to be patient. When you go home frustrated and discouraged for the first six months, you say, “It’s OK. I’m at the low end of the S curve.”
As you put in that time and that work to figure out exactly what you’re doing, you start to go into that inflection point. That’s where you’re working hard, things are happening, you feel confident, you feel competent, and that is really the exciting part of the S curve.
Typically, you’re going to hit that part after you’ve been spending about a year on an assignment and you really feel like you know what you’re doing. Then you get to the top of the S around four or five years in, after you’ve been putting in at least 40 hours a week, where everything has become very easy and you know exactly what you’re doing.
You get a little bit bored at that point. You need to consider jumping to a new S curve. Now that does not necessarily mean that you change companies. It may not even mean that you need to change roles. But it does mean that you need to be thinking about how you’re running your business.
Maybe if you’re in one geographical area alone, you look at another area. Or if you’ve been selling only one type of product, perhaps you sell another product. Or if you’ve been approaching how you prospect, perhaps you look at prospecting differently and take advantage of technology. You’re giving yourself enough to learn that you stay engaged and excited about the business that you’re in.
FELDMAN: What is the first step?
JOHNSON: The very first thing we can do is take on the right kinds of risk.
I would argue that in order to be even more successful and possibly have revenue go up significantly more over the next couple of years, you must be willing to take on market risk rather than competitive risk.
Market risk says there is an opportunity but there’s no competition. When there is no competition, your odds of success are six times higher and your revenue opportunity is 20 times greater based on the theory of disruption.
So, what could that look like for an advisor who wants more clients? A competitive risk would be, “I’m going to look in my town and at all the people who already have an agent working with them, and I’m going to try to pick them off my competitor’s insurance agency.”
But what if you went after people who don’t have insurance or who are newly married or are just moving into the area? Then you’re finding ways to take on market risk.
You’re playing where other people aren’t playing, where they haven’t necessarily thought of playing. Then your odds of success go up significantly. You’re not trying to dislodge people from what they’re already doing. You’re inviting them to do something brand new.
When you take on market risk, it may seem less certain because you don’t know whether they want insurance or not, because you’re playing where other people aren’t. But it becomes a higher odds prospect and higher odds opportunity for you.
FELDMAN: What are the difficulties of market risk?
JOHNSON: For the individual, often when you go in and you do something new, you look like a silly little thing and people think you’ve lost your mind. It doesn’t make sense. It’s not logical. You’re attacked more frequently.
But that’s where the opportunity is — doing something that doesn’t necessarily appear logical immediately.
A few years ago, I was talking to a business that was building nursing homes. They were trying to get outside funding for the business. The consultants and bankers would come in and say, “This market doesn’t support these nursing homes.”
What the business was saying was, “Well, the market doesn’t support it based on the demographics of this area, but it does support it based on the demographics of the children who are supporting the people in this area.” So, they were playing where other people weren’t playing and looking where other people weren’t looking.
FELDMAN: No. 2 is play to your distinctive strengths.
JOHNSON: The way that you start to move up your S curve now is to play to your distinctive strengths, meaning what you do well that other people around you do not. A great example of this is the koala. So, the koala we all know is this great, cuddly little animal. It sleeps up to 20 hours a day.
You look at a koala and you think, “How can it possibly make a living for itself? How can it possibly survive?” Well, it survives because it eats eucalyptus leaves, which are poisonous to pretty much every other animal in the animal kingdom, including humans. So that just becomes the koala’s distinctive strength.
Going back to the financial advisor. Say you’ve got a lot of people in your area who are approaching the market in one way, such as focusing on their connections; then you have someone come in who can think about this in a very math-oriented way and talk people through what the opportunities are.
That becomes their distinctive strength because it’s something that they do well that all the other people around them don’t do well. So, they can differentiate themselves and become a go-to person in that marketplace.
FELDMAN: Not everyone knows what their strengths are. What’s the best way to find them?
JOHNSON: I think what’s so interesting about our strengths is we don’t know what they are. Even if we do know what they are, we don’t actually value them because there are things that we do so naturally and so habitually that it’s like the air that we breathe. We don’t actually value the air that we breathe until we don’t have that air anymore.
People can ask themselves, “What makes me feel strong? As I go throughout my day, when do I feel invigorated and when do I feel energized and when do I feel strong generally?”
And if you still can’t answer that question, when you finish an activity, make a note like, “I feel I have a lot of energy right now. Good. That makes me feel strong.”
Over time, you will see this pattern of what makes you feel strong and that’s when you are in direction with your strength. The trick is to be willing to actually use that strength on purpose, and not just when you’re in a bind and need to get yourself or the people around you out of some sort of predicament.
Another way you can know what your strengths are is to listen to the compliments you get. We as human beings tend to deflect compliments because it’s sort of unseemly to listen to what people say we do well.
I think there’s also an evolutionary reason for not listening to compliments. If you focused on what you did well, you would become prey instead of becoming a predator. And yet the compliments we get are really people identifying for us what we do very, very well instinctively and naturally.
For at least a week, write down the compliments you receive, because you’ll say, “Wow! I’m really good at this.” Then ask yourself, “Am I actually using this thing that I’m really good at every single day of my life?”
I’ll give you a super simple one that I think is really applicable. I was doing a facilitated session at a construction firm. I asked people, “What compliments do you get?” This one young man, probably about 30 years old, raises his hand.
He’s surrounded by all these construction workers and he said, “Well, people tell me I have nice eyes.” Well, first of all, everybody started laughing, but then I said, “OK. So, what’s the distinctive strength here?”
He said, “Not everybody has nice eyes.” Then the question was, “All right. So, if people enjoy looking at your eyes, do you make sales calls over the phone or in person?”
And everybody was like, “Hahaha, in person.” And yet, so often we don’t lean into that thing we do naturally, instinctively well.
As a manager, one of the things you can do to make sure people are as productive as possible is to identify their strengths. Let them know you value that strength and you want them to lean into it because it’s going to make them and your organization that much more productive.
FELDMAN: What are some ways a manager can help identify those strengths?
JOHNSON: What’s fun is if you were to do an activity with your management team, for example, say, “Tell me the superpowers of every person on our team.”
And then you ask the person, “So I have this list of eight superpowers that your colleagues say you have. Are you using your superpowers systematically every single day you’re on the job?” This is a super fun exercise that might be fun for you to do in your next management meeting.
FELDMAN: The next one is embracing constraints. That one is a surprise. How do you leverage constraints?
JOHNSON: It’s so interesting, isn’t it? Let me illustrate what I mean by this and help people get into this mindset.
The most famous scenes in the movie Jaws came about because the mechanical shark that Steven Spielberg wanted to use simply didn’t work.
Spielberg was completely over budget. He was out of time. He needed to get this done. So, he finally decided to shoot all the scenes in the film from the shark’s point of view and let the music — which I’m sure is playing in your head right now — and our imagination do the rest.
You look at that and ask, “Was he successful in spite of his constraints or because of his constraints?”
There was this postmortem of 200 failed startups. They divided them into funded startups and unfunded startups — the ones that had money from external sources and the ones that didn’t. The No. 1 reason that the funded startups went out of business was that they ran out of cash. It was only the No. 10 reason the unfunded startups failed.
There is a pattern here. People are successful not in spite of, but because of, their constraints. If you think about it, the law of physics says you need friction. You have to have friction in order to climb a mountain, in order to drive a car, in order to climb an S curve.
So, one of the things that we can do inside the workplace is say, “What do I feel like I don’t have enough of? Do I feel like I don’t have enough time? Do I feel like I don’t have enough expertise in myself or on my team? Do I feel like I don’t have enough buy-in from people inside the organization to get things done that I want to get done?” Then say to yourself, “How can I turn this ostensible lack into a tool that will allow me to actually become that much more effective and become that much more profitable?”
FELDMAN: The fourth one is battle entitlement. Does that happen when things are going really well?
JOHNSON: Yes, this is when you’re in the sweet spot on the S curve and everything is working. Your revenue is growing and it might even be accelerating. Your margins are expanding.
The inclination is to say, “This is the way things will be and they should always be this way.” Things are so comfortable that we need to battle our entitlement and ask questions like, “What could I be doing differently?”
This whole notion of battling entitlement comes in many, many guises. You might have some people say, “Well, I worked hard for everything I have. I’ve bootstrapped myself.”
Sometimes we show up late for meetings and make people wait. That’s a form of entitlement as well because we’re saying my time is more valuable than another person’s time.
But you need to think, “I don’t want to get too comfortable, so how can I disrupt myself and disrupt my business so that I don’t get fat and happy, but continue to grow?”
FELDMAN: That is a great point because many of our readers have been in the business for 20 years or more. They have their book of business and their clients and they’re not innovating within themselves. They’re not pushing themselves. How can they do that?
JOHNSON: We’ll go to No. 5, stepping back to grow. You step back in order to move forward. It’s sort of a natural law because you crouch before you jump and you bring a golf club back in order to swing forward.
It can be to let people who work for you do something else. Maybe you have people you have trusted and who have been working for you a long time and they want to try something new. It’s important to let them try something new because that loss of productivity in the near term can help productivity overall in the long term.
A way to get ourselves to step back in order to grow is to recognize that there really is no such thing as standing still. If we’re not moving forward, we’re actually moving backward.
While our business over the short term may be just fine — like if we’re making $200,000 this year and we will next year and the year after that — we need to be disrupting ourselves in some form. Maybe it’s not exactly how we’re changing our business, but how we are finding ways to make sure we’re not staying stuck in our personal lives as well. Because if you’re willing to stay stuck in your personal life, that’s going to impact your professional life.
FELDMAN: That is a tough one because nobody wants to step backward.
JOHNSON: We don’t, and this goes back to this idea of people thinking you’ve lost your mind. In our society, we say we want forward movement. Climb the ladder, keep climbing the ladder.
So, the one example of a personal disruptor who I think is really important is Lady Gaga. We all know Lady Gaga whether we like her or we don’t like her. It doesn’t matter. This is a person who climbed the ladder way to the top of the charts.
And then what did she do? She jumped to the bottom of a new ladder, one her fans could have hated because she’s collaborating with Tony Bennett on a jazz album. She’s doing a Sound of Music tribute at the Oscars. You think that Lady Gaga is trying to channel Julie Andrews. Then she’s producing country albums, and yet this step back she took completely paid off because she goes to the Super Bowl, and that performance had the largest audience ever, ever, ever in the history of music.
People might laugh at you in the short term. But think about net present value, what do you have to do with net present value? You give up some cash in order to get more cash in the future.
It’s the same for you in your life and your business. You give up something in the near term to get something more in the long term.
FELDMAN: Let’s go to No. 6, failure, because failure is so much fun.
JOHNSON: Right, failure is so not fun. Failure is a big step back. So that’s the first thing. It’s also important to realize that whenever we start something new, there’s this fantasy of it being simple and linear, and then it isn’t.
I think that when it isn’t simple and linear, we need to give ourselves the space to be sad that it didn’t work. I’m not talking about day-to-day stuff. I’m talking about stuff that we’re really emotionally invested in but it doesn’t work.
We need to allow ourselves to be sad because the sadness means that we had energy in it and it mattered to us. If we try to pretend that we’re not sad, then we lose the energy, and then we need to take that step back to move forward.
I think about my failures, such as bombing a speech in front of hundreds of people. People totally hated that speech. I had all of these terrible comment cards.
Yet, because of that, I completely reworked what I was doing, I doubled down to the point that last week I was in Mexico City giving a speech to 1,200 people and they loved it.
But I had to take that step back. I had to have that failure. I needed to give failure its due in order to move forward.
We have to get rid of the shame that we sometimes feel when things don’t work out, because when we allow a mistake to become a referendum on us, our identity, the core of who we are — that’s when we lose. It’s shame that limits disruption.
It’s shame that limits moving forward and disrupting yourself. It’s actually not failure.
Now there’s a good reason why we do that; because as kids, we were exposed to the notion that if you get an A on your test you’re good and you’re a success. If you get a B on your test, you’re bad and a failure. So, as we go through life, we think if we don’t get A’s then we’ve become a failure.
Part of becoming an adult and disrupting yourself is to separate those two. Separate how I did this year with my business from the core piece of who I am.
FELDMAN: No. 7 is driven by discovery. How does that fit into this?
JOHNSON: That is this willingness to take a step forward and gather feedback and adapt.
When you’re playing where no one else is playing, that means you’re trying to create a market that doesn’t yet exist. So, you have to be discovery-driven.
What’s so fascinating to me is that 70 percent of all successful new businesses end up with a strategy different from the one they started with.
You have to conserve enough cash so that, as you’re figuring out what the best business model is and how to run it, you still have enough cash left over so you can lock and load and move up your S curve.
FELDMAN: Does a person have to do all seven to succeed?
JOHNSON: Almost every individual has one or two of these accelerants that they do better than others.
Some people are great at taking risks, so they lean into taking risks. Some people are going to be really good at bouncing back from failure. So be willing to do lots of little tests because you know you’ll be resilient.
Find out which of these seven accelerants you do well and lean into them when it comes to change. Then, you’ll be that much more successful in riding the waves of disruption that are always present for every single one of us who are in the business world.
One of the things that textbooks on disruption don’t tell you is that disruption is by definition scary and lonely.
But remember, when you’re on the path to disruption, your odds of success are six times higher and your revenue opportunity is up to 20 times greater.
If you’re scared and if you’re lonely, you’re on the right path. So, there you go. Those are words for you to live by over your next year.