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7.29.2010

How Reframers Unleash Innovation in Their Companies (And Beyond) by Navi Radjou, Jaideep Prabhu, Prasad Kaipa, Simone Ahuja

There is a quiet revolution unfolding in your industry — led by some of your smartest competitors. If you are a manager, you may be completely unaware of it because you can't see it in the streets, nor watch it on the news. This new revolution is actually happening inside the heads of the leaders running your rival firms. We call it a mental model revolution. Let us explain....

A select group of smart leaders are reframing their mental models — i.e., radically shifting their perception of the world — to conjure up disruptive business model innovations that could rewrite the rules of the game in your industry. We call them the "Reframers." Here are examples of three:

Indra Nooyi, CEO, PepsiCo. Nooyi, ranked by Fortune as the world's most powerful woman, is reframing the very essence of what the food and beverage industry should be — shifting its vocation from feeding people to nourishing them. She is taking a cue from Ayurveda (India's 5,000-year old traditional medicine system) which states that "food is medicine and medicine is food." Until now, the food and medical industries have operated separately; Nooyi wants to bridge them by reframing PepsiCo as a wellness solution provider. To deliver this commitment, Nooyi is radically shifting PepsiCo's business model by flipping the ratio between "fun-for-you" products (e.g., Pepsi drinks and Frito Lay chips) and "good-for-you" products (sold under brands such as Tropicana and Quaker). Specifically, Nooyi wants to increase revenues from good-for-you products from $10 billion today to $30 billion by 2020.
 Jeffrey Immelt, CEO, GE. Escalating healthcare costs in the West are due to the "more for more for less" (MML) innovation model currently pursued by Big Pharma and medical device makers that charge more money for more resource-consuming and complex solutions which only a few people can afford. Immelt realized that this MML model can't be sustained as GE enters the Age of Scarcity dominated by eco-friendly and frugal consumers. This insight led Immelt to reframe GE's MML innovation model as more for less for more (MLM) — that is, delivering more experiential value to more people for less economic and environmental cost. Since adopting the MLM paradigm GE Healthcare has developed and marketed several breakthrough products such as the MAC 400, a low cost, portable CT scanner with super-long battery life and Vscan, a tiny and inexpensive ultrasound device that operates as simply as a mobile phone.

Ratan Tata, Chairman, Tata Group. A whopping one billion people from across emerging markets are expected to join the middle class over the next decade. Since these Next Billion consumers haven't yet risen to the income level of current mainstream buyers, most companies are waiting before they develop and market products for them. But Ratan Tata reframed these Next Billion users, viewing them not as low earners but high yearners who would readily buy quality products that are reasonably priced and meet their aspirational needs. That mental switch led him to conceive the Nano, the $2,500 car initially aimed at two-wheeler drivers yearning for a more comfortable and safe driving experience. Since it was introduced in early 2009, Nano has been a runaway success, forcing car makers all over the world to rush to their drawing boards to design a rival budget car.

What's noteworthy about the leadership of Reframers such as Nooyi, Immelt, and Tata?

First, Reframers dare to question well-ingrained business truisms and industry paradigms. As they experiment with radically new business concepts, Reframers constantly ask themselves "why not?" For instance, Tata shattered the century-old car manufacturing paradigm: rather than completely producing the Nanos in its own factories, Tata Motors will distribute component kits that entrepreneurial small businesses can assemble close to customers. By questioning the conventional wisdom, creative leaders like Ratan Tata help their organizations navigate an increasingly complex business environment that places a premium on leaders with a flexible mindset.

Second, Reframers think not only with their minds but also with their hearts. After all, the heart of change begins with the change of heart; as Mahatma Gandhi eloquently put it: "Be the change you want to see in the world." As such, Reframers are erecting what we call a mental (and heart) barrier to entry for competitors. For example, you can bet that leaders at major food and beverage companies are busily hatching new business models to compete with PepsiCo's wellness strategy. But these rival business models won't be sustainable unless the leaders who developed them sincerely care about the wellness of consumers. In the dawning Web 2.0 world where authenticity is the new source of competitive advantage, a heartfelt business model transformation will be more readily accepted and handsomely rewarded by consumers than a disingenuous me-too competitive offering.

Third, Reframers catalyze massive social innovation. To borrow from chaos theory, the change in the minds and hearts of Reframers is akin to the butterfly flapping its wings over Hong Kong that can unleash a tornado in Texas. Even a minor reframing can yield a disruptive business model that can revolutionize not only an industry but entire societies — a massive chain reaction captured in the following formula:
Mental model innovation → business model innovation → industry innovation → social innovation
For instance, GE Healthcare's MLM innovation model will not only threaten the industry's well-entrenched "more for more" business model but promises to finally make health care affordable and accessible to more people in emerging as well as developed economies. Equally, the Nano is not just a disruptive product innovation, but a disruptive social innovation as it empowers low-income consumers worldwide and accelerates their social mobility.

In our next post, we will explain how you too can become a Reframer and continuously practice mental model innovation. Meanwhile, tell us about the opportunities and challenges for Reframers in your own industry.

Navi Radjou is Executive Director of the Centre for India & Global Business (CIGB) at Judge Business School at the University of Cambridge where Dr. Jaideep Prabhu is the Jawaharlal Nehru Professor of Indian Business and Enterprise. Dr. Prasad Kaipa is a CEO Coach and advisor; he has worked with over 100 CXOs and 30 Fortune 500 companies in the areas of leadership development and innovation. Dr. Simone Ahuja is the founder of Blood Orange Media and Advisor to CIGB.

Source: http://blogs.hbr.org/cs/2010/07/how_reframers_are_unleashing_a.html

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