Prism / 1 / 2015

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Becoming a Next Practice Business
How to apply the strategy and management practices of creative
disruptors to transform established businesses
Carl Bate

Everyone knows the real world is complex. And everyone knows
the digital era has created a level of uncertainty, disruption and possibility that has never been seen before. And yet management culture embedded in some of the world’s largest companies merely
serves to artificially simplify the real world and consequently limit
business potential. However this does not have to be the case. The
successful could be even more so. The companies currently breeding a better dinosaur while ignoring the oncoming comet could still
evolve.

Illustration by Sylvia Neuner

Simple ideas can transform the world, but being able to navigate
complexity to execute on them is a critical success factor which
many large companies struggle with. This article is based on workwith a number of leading companies where the common successfactor has been self-disrupting by shifting culture, capability andintent toward Next Practice. Here, “next” works on two levels:
first, referring to the kind of strategy and management practices
which are designed from the ground up to work in the digital age(everybody knows digital is changing everything, but many “bestpractices” in business were established before global information
connectivity), and second, ways of thinking and working which help
leaders and teams not only consider what has worked in the past(“best”), but what could work better now (“next”).
One of the key leadership characteristics of creative disruptors
and digital leaders is that they are complexity fluent; that is, they
are adept at understanding and engaging in real world complexity.
Leaders and managers shouldn’t try to reduce or simplify complexity; rather, they should embrace it head on.

Unlike creative disruptors
and digital leaders who
are adept at working
with uncertainty, popularmanagement culture inestablished companies
can sometimes serve to
artificially simplify the realworld and limit businesspotential. This article isbased on work with anumber of leading companies who have madebreakthroughs in criticalsituations by self-disrupting their existing ways ofthinking and working, tofocus on not only what
has worked in the past,
but what could work
better now. To be a Next
Practice business.

Becoming a Next Practice BusinessPrism / 1 / 2015

The article presents case studies of organizations using next practice, tackling complexity head on and changing the game as a result. We also highlight 25 Strategy and Management themes which
creative disruptors find helpful, and contrast these with those that
can help foster a false sense of security. We start by exploring theimportant difference between “complex” and “complicated”.

Complex
Value potential of a System

At the heart of the problem is an overreliance on the false comfort
blanket of striving for certainty of outcome. Unlike a plan to getfrom A to B on a map, business plans need to be highly dynamic
as the real world shifts rapidly all the time. We all know this to betrue, yet somehow management culture can contrive to obscure
this reality. Perhaps the real reason for this is that not many executives got fired for creating a great plan that went wrong because ofsomebody else’s inability to execute!

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Complicated
Table 1 Value potential
and predictiveness ofinnovations
Source: Cynefin, Dave
Snowden: Dimensions,Carl Bate

SimpleChaotic

Degree to which a specific outcome
is known or can be knowable

1. Complex is not the same as complicated
Horst Siebert, the German economist, coined the phrase “thecobra effect” to illustrate the effects of an incorrect understandingof the total view of a situation and the misapplication of controls inan economy.
The term stems from early 20th century Delhi. The governors ofthe day were worried about the increasing number of venomous
cobra snakes roaming the city and to solve the problem they
offered a bounty for every dead cobra. Initially this was a successful strategy, with large numbers of snakes being killed. Over time,
however, some enterprising citizens began to breed and slaughtercobras for the income and all of a sudden the governors were
faced with too many cobra skins and too many bounty payments –the scheme was becoming unaffordable and was rescinded. But by
then the cobra farmers had this large population of cobras to deal
with. And what do you do if there’s no market? You just release
them. And this significantly worsened, by a few orders of magnitude, the cobra menace in Delhi.1

1

Source: Vikas Mehrotra, Freakonomics and Wikipedia

Just like early 20th century Delhi, any business is a system of interconnected and interrelated parts and participants, connected into
markets and the global socio-economy as whole (which is itself asystem). The value potential of a system increases with the numberof its participants (see point 2 below). Each system tends to come inone of four flavors: Simple, Complicated, Complex and Chaotic, andeach flavor has some important defining characteristics:
In Simple systems, the relationship between cause and effect isobvious to all or easy to teach and master; these relationships arehighly predictable and the codification of what input will result inwhat output is straightforward.
In Complicated systems, the relationship between cause and effect is knowable, but requires the application of expert knowledge,
and the intricacies can still lead to unintended consequences.
In Chaotic systems there is no (perceived) relationship between
cause and effect.
And in Complex systems, the type and sheer number of entities
interacting, for example, millions of connected people acting with

Becoming a Next Practice BusinessPrism / 1 / 2015

a degree of autonomy and unpredictability, or physical systems
where the rules are known but only the probability of a specific
event is knowable, means that a given outcome can never be guaranteed – in fact, a given outcome is unknowable, and determinism
cannot work. While expert knowledge of how participants tend tobehave given this situation or that stimulus can provide important
insight, there is no set of rules that leads to certainty of outcome.
All real world systems – i.e., those with at least one person interacting with them – are complex, even though parts of the system,
such as the device you’re reading this on, are complicated – and, if
it’s a good device, its interface will be the art of simplicity itself.

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use those to instantly discover information, influence, experiment,
transact, socialize and commercialize.
What’s even more interesting is that “digital” has only just begun.
Less than half of the world’s population is connected today to the Internet, and the number of connected devices is expected to increase
from 10 billion to 75 billion by 2020.
This vast sea of digital and human interconnectedness manifests
itself in business and government in multiple ways:
1. Uncertainty

Sometimes, complexity can be painted as a bad thing, with businesses trying to “reduce it”. However, the real focus should beon where things are complicated. Simplifying the unnecessarily
complicated is beneficial, but mistreating the complex as if it werecomplicated only makes things worse. Try as they might to control
the cobras, unintended consequences and resourceful competitors
lurk around every corner. And in the digital age, the potential forresourcefulness has taken a quantum leap.

2. Unpredictability
3. Hard to know, or unknowable, outcomes for a given action
4. Pressures on established business, legal and government structures and boundaries
5. Super-dynamic and emergent markets, and

2. Complexity and value potential increases
with digital connectivity
If those residents and administrators of Delhi were around to telltheir tale today, they would surely testify that the real world has
always been a complex place. What’s really so different today?
Metcalf’s law helps explain just why the accelerating global pace of
creative disruption is like in no other era. The amount of value potential of a network is proportional to (the square of) the number ofconnected participants defined as n(n − 1)/2. So, a system of two
people interacting has a “value potential” of one; a system of fivehas a value potential of ten, and a dozen people interacting has avalue potential of 66. Consider then the nature of participants – theworld’s best semantic processors (people!) empowered by globallyconnected digital technology – and the number of participants. Today, three billion Internet participants can make getting on for fivequintillion connections (that’s a five with eighteen zeros after it) and6. Exceptional potential for innovation, new value creation and creative disruption.
The best, simplest ideas can transform the world, but they can only
manifest this by navigating real world complexity. In the connectedworld, being fluent in complexity and next practice2 is essential.

3. Fully embracing, not shying away from complexity,
creates game changers
At London Heathrow, one of the world’s busiest international airports,
a plane takes off every 90 seconds. Over half of these belong to British Airways (BA). Managing flight operations is highly dynamic, withmultiple inter-dependencies between on- and off-ground resources,
and communications with passengers to keep flow rates steady. With

The Next Practice concept was inspired by C. K. Prahalad, presenting in Montreal, 2006.

2

Becoming a Next Practice BusinessPrism / 1 / 2015

around 1,400 BA flights and 100,000 passengers a day, it doesn’t
need a major event to cause bottlenecks.
The winter of 2012-13 was a harsh one, and particularly difficult forpassengers at Heathrow and for British Airways. The ensuing flightdelays, cancellations and customer handling due to the weather
cost the airline millions of pounds in compensation and customer
care. Following the major disruption caused by the snow BA initiated a program to improve disruption management3.
The challenges were significant. Most operations staff were using
expert but hard to interpret technology showing large tables ofnumbers referring to schedules, in-air and on-ground aircraft movements, passengers, and other resources including airplane deicers. Some data was open to a relatively broad degree of subjective interpretation. And when operators did identify disruption, they
had to query various apps to understand the causes. As a result:• Decision-making could be inconsistent.
• Data was only available to a core group of managers.
• Communication with passengers via customer care staff, in
airport screens and BA digital channels (mobile and .com) wasat best not timely and at worst inconsistent.
• There was no real time feedback of decisions to inform the next
decisions and no understanding of the knock-on effects of eachdecision as it unfolded. Were actions actually helping or making
it matters worse?
BA operations staff are some of the best in the world, but the limited access to information made it difficult to orchestrate groundstaff and assets to minimize disruption; some aircraft werede-iced, missed their take-off slot, and had to be de-iced again.
Safety for British Airways always wins out. And so the default
was for operations staff to cancel flights early as a precaution,
countering the revenue-management and customer relationship
Source: Atos, BA

3

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teams’ incentive to delay cancellations to maximize revenues
and protect customers’ experience. Adding to the challenge was
the race against time – the winter of 2012/2013 was not going toconveniently “slip to the right”.
The first approach to cracking the problem had been identified
based on what had worked in the past; management processes
geared on ensuring certainty of the result of the project, startingwith a top down business process review and selecting expensive,“enterprise grade” analytics technology from an established big
tech name.
But by May 2013 it was clear this conventional approach weregoing to take too long – the plans were showing summer 2014
as the earliest operational date for the new ways of working andenabling technology – but clearly winter 2012/2013 couldn’t bedelayed! And BA weren’t convinced that even by then the new
approach and technology would work, given the millions of information events covering flight and passenger movements, integration with existing core technology and operational procedures,
and all the human interactions involved between pilot, groundstaff, fleet operations, revenue and customer care functions. It
was clear that to be ready for winter meant that normal businessthinking and culture had to be challenged. BA needed to self-disrupt in order to manage disruption.
In the face of this challenge a different way was proposed – toadopt next practices and act more startup than corporate, eventhough this was counter to established management culture
and governance processes. The different way comprised five key
parts. It was to:
1. Use inventive problem solving techniques to really figure out
what problems needed solving for whom (as opposed to taking
a “here’s the solution” approach).
2. Challenge conventional wisdom, and seek out innovation.

Becoming a Next Practice BusinessPrism / 1 / 2015

3. Assemble a fully empowered multi-discipline team, adopting
an agile execution approach based on “show me not tell me”
and focused on delivering value early and often, with active
decision making by senior stakeholders (as opposed to “planand forget”).
4. Seek use of leading digital and open source technologies bydefault – if everyone on the team had heard of all the technology being proposed, perhaps they weren’t looking hard enoughfor potentially helpful innovations!
5. Bypass current governance policies for business project governance, technology development and vendor selection (necessary for points 1 to 4 above).
Critically, the team was empowered to solve the problem, eventhough management did not know the answer they were going toget, rather than delivering a pre-determined solution where all thestaff, customer interaction, operational factors and technology had
been analyzed and worked out in advance. BA had empoweredand established a Next Practice team to address the situation. Thisdifferent way created two firsts for BA. It was the first time a mission critical program had been undertaken next practice style using
more “startup” than “corporate” ways of thinking and working,and second, it was the first time leading digital technologies would
be used for an operational-critical system. There was understandable skepticism from some in BA as the team commenced work,
but this was soon overcome by a combination of senior BA sponsorship for the novel approach and by the team working in a highlycollaborative and iterative fashion; continuously engaging multiple
stakeholders for their input and quickly showing how disruption
management could work in a new way. The resulting solution
leveraged information from existing information systems (including
flight data), and the use of open source “big data” technologies innear real-time provided a dashboard on passenger flow, combining
all the key information points and enabling the multiple operations
stakeholders to collaborate on the best interventions.

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On 23 October 2013, the new disruption management decision
support technology and integrated management and customer
operational capability went live. In the winter of 2013-14, thousandsof passengers flew through Heathrow that otherwise would nothave. And following the success at Heathrow, the approach has
been deployed globally across airport operations.
As a result of facing up to real world complexity and seeking new
potential in it, BA had created a game changer for one of the mostdynamic parts of its business. It now has arguably one of today's
most advanced global disruption management capabilities; aiding
competitive advantage by reinforcing one of BA’s core values ofsafely and delivering an outstanding service for customers at every
touch point, even when it snows.
So, what leadership, management and governance techniques
work best in dynamic, emergent and complex situations?

4. Adopt Next Practice over Best PracticeOn the one hand, startups have it very hard as the majority will fail.
But they do have one critical advantage in that they have no choice
but to take their core idea and work in the unknown. This leads toa business culture which naturally embraces complexity and realworld dynamics.
But, as established businesses well know, as the successful ones
grow, with scale comes different opportunities, challenges and expectations. Becoming better and better at a thing naturally leads to
its mastery; with mastery comes practices and expectation basedon past performance; but mastery can also bake in the inability tosee, respond to, or create new disruptions.
“Acting more startup than corporate” is a helpful mantra adopted
by pioneering digital companies who were not founded as digital
native startups. However, the mantra can be easier to speak thanto live and breathe by. The complication is that many establishedor “best” management practices – and the culture, measurement,
governance systems and decision-making they promote – wereBecoming a Next Practice BusinessPrism / 1 / 2015

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never designed to embrace highly dynamic, emergent, digitallyinterconnected and complex value systems. More seriously, someof these techniques can even make situations much worse.

If you were to think about some of the leadership, management
and governance styles and approaches in the table opposite in yourbusiness, which would you say tend to dominate?

Consider the culture of an organization. Many factors go into
making up the cultural mix. Some of these will include leadershipstyles and management practices that help master the complicated, and some of these that help engage with complexity. And
while individual leaders may have different styles, in the end, manyorganizations tend to gravitate towards a dominant culture.

On the left-hand side of the table we see strategy and management themes that assume the world is complicated but that withenough specialist knowledge outcomes can be knowable up-front.
If I do A, B, C and D I always get E. These codify “best” and help
when the answer wanted from outcome is already known. The
practices also tend to promote more and more precise views of
the things that can be controlled.

Leadership and governance focusing on the
ComplicatedLeadership and governance focusing on the
Complex

Strategy theme (where to play and how to win)
Allocating resource to deliver a solution

1.

Allocating resource to answer a question“Best practices” based on what has worked

2.

“Next practices” on what could work better

Digital as a “bolt-on”

3.

Living digitally

Grand designs

4.

Emergence

Inspiration from the specific5.

Inspiration from the abstract and patterns

Learnt behavior

6.

Learn, unlearn, relearn

Playing and winning the game

7.

Changing the game

Primary perspective on the parts

8.

Primary perspective on the whole

The business/economy as a machine

9.

Human and behavioral factors

Strategy as a noun 10.

Strategy as a verb

Management theme
Assuring an outcome

11.

As-is and to-be plans 12.
Automatic response to events 13.
Byzantine rules and determinism 14.
Command and control 15.
Consequence of a decision 16.
Discipline specialization and favoritism

17.

Fail-safe 18.
Internally focused first 19.
Organization model 20.
Process

21.

Promoting stability and predictability 22.
Theory X Management 23.
Transform by stick and carrot 24.
Working with known data 25.

Sensing feedback from actions
Vision, “next state” plans and agile execution
Intercepting the subconscious
Simple checklists and guiding principles
Influence, enable and empower
Consequence of the sum of decisions
Cross-discipline collaboration
Safe-failExternally focused first
Professional and social networks
Behavior and interconnections
Promoting agility and adaptability
Theory Y Management
Transform by carrot and stick
Seeking out new data

Table 2 25 strategy & management themes for Next Practice Business

Source: Carl BateOn the right-hand side of the table we see strategy and management themes which assume the world is complex, dynamic andemergent. These help guide “next” where the answer is as yet unknown or there is no mechanistic way to get the desired outcome.
The practices also tend to promote a Systems Thinking perspective, including more holistic views of the external world and theinteractions across the system, of which the organization is a part.
Of real danger to business is that the practices of the “complicated” often create an artificially simplified view of the real world.
Consider a business process map. Where are motivations or trust
relationships defined? Or an as-is and to-be business plan where
the to-be plan is most certainly not going to happen – yet many still
persist in its use. What of the organizational chart versus the social
network of an organization: which describes the most important relationships to deliver organizational goals? Or how about undertaking change management? Somehow, employees never seem to doquite what was expected from the center but find ways to get thejob done that they believe to be most effective. While the businessmodel, the plan for change or the contract may look great on paper,in the real world outcomes rarely match it.
Such models can be helpful and plans are needed, but only as
an input to, not a primary driver of, leadership and management
in a situation. Applying practices designed for the complicated tocomplex situations can not only artificially simplify what’s really
going on, but also lead to a false sense of security, as Siebert’sBecoming a Next Practice BusinessPrism / 1 / 2015

cobras neatly illustrate. Such a misapplication reduces the chances of desired outcomes being achieved, increases the chances ofunintended consequences and helps to speed along the process of
today’s giants becoming tomorrow’s dinosaurs.
But why would a business leader promote a culture that artificially simplifies the real world when it is so self-evidently complex?
Despite the best intentions a desire for surety and the politics ofleadership can collude here. A strategic plan with prescribed whats
and hows that multiple parties sign up to can feel like the best way
to ensure an outcome. But flawless execution of such plans by
all parties is rare, and control systems tend to mask issues until
it’s too late – everyone wants just one more management update
period to fix their issue before declaring it.
What can be done? The culture, practices and KPIs of a Next
Practice Business tend to lean heavily to the right-hand side of thetable. Next practice does not mean throwing away today’s bestpractice, but, rather, placing it in today’s real world context; being
informed by what’s worked before but not constrained by or tied
to it. As BA found, creating a bubble of “next practice” culture,empowered and focused on a strategically important issue or opportunity, can create a game changer without disrupting the entire
company. And in so doing, it can inspire others to disruption thatcan benefit the business more broadly or inform more widespreadnext practice adoption.

5. Perfect skills, embrace the imperfect
Nobody wants an “expert experimenter” at the controls of theflight we’re about to board. Many operational situations in the complex world demand well-defined rules, checklists and sequential actions where the outcome, as far as we can humanly assure, really
does need to be certain. So, what does the right balance between
a culture of the complicated and a culture of the complex look likeafter we’ve created the next new thing? Is flying an airplane complex or complicated?

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Meet Suren Ratwatte, a veteran pilot and expert in human factors.
On this particular day, Suren had an appointment with Malcolm
Gladwell at a New York hotel, but he was late – he’d been flying a
jumbo to New York from Dubai when a passenger had been taken
seriously ill en-route. When he finally arrived, Suren shared what
had happened4. The first thing he had to do was to try and determine whether the passenger was likely to die unless immediate
medical attention was received, or whether the passenger was
likely to be stable until arrival in New York in several hours’ time.
Fortunately there was a doctor on board, and he confirmed thaturgent medical attention was needed. Suren decided to land at thenearest viable airport at Helsinki.
The first problem Suren had was that the plane, still over half full offuel, was sixty tons over its specified maximum landing weight. He
decided to “land heavy” since dumping fuel was messy, unpopular and in any case would take too much time. This meant manual
landing since the automated landing system couldn’t handle theplane at this weight. Suren then described the following forty minutes as they approached Helsinki:“It was a lot of work. You’re juggling a lot of balls. You’ve got to get
it right. Because it was a long flight there were two other pilots. So
I got them up, and they were involved in doing everything as well.
We had four people up there, which really helped in coordinating
everything. I’d never been to Helsinki before. I had no idea how the
airport was, no idea whether the runways were long enough. I had
to find an approach, figure out if we could land there, figure out theperformance parameters, and tell the company what we were doing. At one point I was talking to three different people – Dubai (thecompany), talking to MedLink, which is a service in Arizona where
they put a doctor on call, and I was talking to the two doctors who
were attending the lady in the back. We were lucky the weather
was very good... and Helsinki were very flexible”.
Suren’s situation illustrates that proficiency in using the machine– mastery of the complicated part of the system – was clearly essential. But the overall system in which the outcome was achieved
4

Source: Outliers: The Story of Success, Malcolm GladwellBecoming a Next Practice BusinessPrism / 1 / 201556/57

was complex. In this case, Suren’s ability to adapt to emerging
circumstances, and to communicate and influence outside of his
direct control, saved the passenger’s life.

pelling storytelling – is absolutely necessary. But its businessculture is fully centered on unleashing this talent into the complex.
Pixar is a next practice business, and is complexity fluent.

How might we interpret this for business?

6. Become a Bi-Modal Business: Explore and Exploit

Pixar, the groundbreaking computer animation studio behind hits
that include Toy Story, Up and Ratatouille provides a fascinating
example5. Ed Catmull, co-founder and president, has revealed how
Pixar subverts traditional top-down management structures inorder to get the most of its creative talent. Instead of a hierarchicalsystem of communication through which ideas must filter, everyone is encouraged to speak directly to everybody else. And insteadof focusing on controlling his staff’s output, Catmull sees his jobvery much as removing the impediments that prevent them fromperforming to their full ability. He writes:

While successful startups show how to disrupt the market, companies like BA are showing how to “self-disrupt” in bubbles of nextpractice, to challenge themselves to exploit not only new (to them)ways of thinking and working, but also established leverage as wellas emerging digital technologies.

“We start from the presumption that our people are talented andwant to contribute. We accept that, without meaning to, our company is stifling that talent in myriad unseen ways. Finally, we try to
identify those impediments and fix them.”
This is taken even further in the way that Pixar works on its stories,
which has much in common with agile methods of software development. Instead of refining each script to a point of fixed perfection
and then animating it, work is done in an iterative, adaptive fashion, allowing the material to develop as the writers incrementally
discover what proves stronger or weaker. “Show early and show
often” is the watchword. And if necessary, failure is embraced: thefilm Newt was cancelled in favor of Inside Out when it was decided it simply couldn’t be fixed. This willingness to continuously failand rebuild in a supportive environment has made Pixar one of themost innovative and successful companies in the industry.
At Pixar, technical skill – mastery of the complicated aspects ofcomputer animation and the patterns of creative writing and com5

Source: The Long View column, Marc Sidwell, managing editor, City A.M.

Today’s disruptor, just like today’s giant, can fall foul of paradigm
shift. It is one of the oldest conundrums going. The better you get
at a thing, the harder it can be to see new threats and opportunities and thus opening yourself up to disruption. Worse still, competitors can copy what you have perfected, often without the debt
that you have in financial, technical and business complexity terms.
In addition, the very practices than ensure efficient running also
serve to diminish strategic agility.
Facing a double whammy of new disruptors changing the gameand of barriers to entry collapsing, businesses are looking to perfect not only what they know, but also to seek out what they do
not yet know. In the age of complexity, a bi-modal business seeks
to get the best of both worlds, by consciously operating in two
ways at once: exploit innovation in the current business model,
which can also lead to evolution and even business mutation into
new models, and to explore new business models in parallel.
For many established businesses operating in the “exploit” mode
is often triggered by a situation so obviously not treatable bycurrent approaches that self-disruption can be an easy decision –“what have we got to lose?” approach. For established businesses
that aren’t currently exploring new models, either through investment, acquisition or their own pioneering teams, and where theplatform is merely not burning but smoldering around the ankles,
there lies a deeper challenge. In these cases, “reframing” thebusiness situation, going through steps to set out not only theBecoming a Next Practice BusinessPrism / 1 / 2015

Apply “exploit”
approach to help
further evolution as
the emerging
business establishes

Risk of unwitting“de-agility””

As next practice principles
are applied, seek out
potential to evolve new
business models from theestablished business
Value Potential

Risk of unwitting“de-agility”dhelis ssbaet
Es usinb

Failure of bestpractices andknown knowns

Use next practiceprinciples from emerging
business and exploit
digital innovation in theestablished business tohelp avoid decline

EXPLOITing
erg sEm sinesbu

EXPLOREUse next practice principles
from emerging business to
explore new ventures andbusiness models
Time

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Step 1: Promote “Next Practice Maxims” as memes in yourbusiness culture
Working with business and digital leaders who have delivered“next” on a global scale, we find that a handful of “maxims”, frontof mind themes (memes which can spread and infect the culture),
can really help a more complexity fluent culture to establish andflourish. Examples include:“What Would the Web Do? (WWWD)”➜

to think “connect” as a default“What problem are we solving for whom?”➜

to avoid “known” solutions looking for problems“Intercept the subconscious”➜

to help break with habits and embrace innovation“Tell me why not”➜

to help challenge conventional wisdom“Better not best”➜

to help create something better and evolve“What’s the story of the strategy?”➜

to help engage everyone in the new approach“Show me not tell me”➜

less time on plans, more on visualizations/product“Consider not what has only worked of before,
but what could work better now we are here”➜

for maintaining sustainable competitive advantage& navigating the innovator’s dilemma“Who says it can’t be done!” (Arthur Dehon Little)➜

to maintain a stance of realistic optimism

Table 4 Memes for Next Practice Business

Source: Greg Smith & Carl Bate

Table 3 Bi-model business: explore and exploit in parallel Source: Arthur D. Little analysis

economic benefit of addressing it but also the disbenefit of not,and using patterns, often from digital leaders industries, can create
the belief that self-disruption could not only work, but that it is the
only way to avoid death by a thousand cuts and the only way to act
before it is too late.

Insights for the Executive:
Three steps to becoming a Next Practice Business
Established businesses can usefully take three steps towards
transformation into a Next Practice Business:

The penultimate meme sets out a critical cultural shift: it embodies
the notion of next practice over best practice, using best where it
makes sense to do so but really challenging it where it is limiting
potential or getting in the way. Hard earned wisdom is not dispensed with, but it doesn’t have to constrain the future either. For
next practice businesses, maxims like these are fused with a belief
that the problem is solvable, that a “stance of realistic optimism”
is the right one, and that emerging digital innovation and businessmodel thinking is where you start, not where you go to, if mainstream and already known approaches aren’t cutting the mustard.

Becoming a Next Practice BusinessPrism / 1 / 2015

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Step 2: Tackle complexity head on, even if it means
challenging current governance• Expressing the heart of hearts´ wish, so as not to potentiallylimit where the answer can take you

Confusing the complicated with the complex is a dangerous andslippery slope. Trying to “reduce” complexity not only makes little
sense, it only serves to limit the value you can generate in the realworld.

• Challenging conventional wisdom – everywhere

Tackling complexity head on comes from a leadership style, incentive structure and talent in the business which promotes waysof thinking and working consistent with the right-hand side of the
Next Practice table.

• Assembling a multi-disciplinary and empowered team
• Adopting an agile execution approach based on “show me nottell me”, delivering value early and often• Supporting the team in challenging “that’s not how we dothings here” culture

Leaders often need to be prepared to evolve current governancestructures, or seek to establish new “bi-modal” governance. In
many companies governance structures are designed to create
certainty, maintain the status quo, and quell any internal varianceor disruption. A successful pattern we have seen is to agree “onetime” governance permission for a next practice bubble, and thenuse this to inform evolution of broader governance structures.

• Seeking to take as many people along on the journey as possible through show me, narrative and storytelling

Step 3: Re-think an intractable problem, Next Practice style• And finally, being prepared to fail-fast or to make course corrections along the way.

Whether in the context of an emerging or mature business, there
can sometimes be no better way to transform than by tacklinga seemingly intractable problem head on or really going for thatgame changing idea, particularly if prior attempts based on “bestpractices” and “what we know” haven’t yet made the breakthroughs. We find the ingredients for success typically come from:• Tackling the problem or opportunity head on; not leaving it on
the “too hard” pile
• Having a senior stakeholder who is willing to explore new artsof the possible• Challenging the problem statements themselves; are we really
addressing the right issue?

• Respecting colleagues who are not part of the “creative disruptive bubble” and not invalidating their efforts• Adopting a stance of realistic optimism; there is normally a way!

We find that senior sponsorship, using “inventive problem solving”
techniques and applying full digital innovation against a challenge
or opportunity statement, can bring these ingredients to create asuccessful outcome. It’s about continuously working with the artof the possible rather than the art of what happened before. Or,
as Alvin Toffler puts it, “The illiterate of the 21st century will not
be those who cannot read and write, but those who cannot learn,
unlearn, and relearn.”Becoming a Next Practice BusinessPrism / 1 / 2015

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Act now, even if the platform is only smoldering
Great leaders and creative people solve problems, create new opportunities, and make change happen. They always have and they
always will. What’s different today is the pace of innovation continues to accelerate – digital disruptors abound.

Illustration by Sylvia Neuner

By promoting a culture that promotes next practice and embracescomplexity, and then focusing this on the biggest challenges andthe most exciting and game changing opportunities, emerging
innovation can be better brought into the heart of today’s business,
and new innovation can flow through into the seed of tomorrows.
Every new connected person and device increases value potential
and real world complexity. And the more you engage with it, thefewer the cobras that will be biting round your ankles.

Carl Bateis a Partner in Arthur D. Little’s London office, co-lead for its Digital Strategy& Transformation Practice and a member of the ADL’s global Technology &Innovation Management Practice. He specializes in addressing intractableproblems and realizing new opportunities “next practice” style. Carl is authorof next practice approaches to help with strategy and business transformation.