The difference between Disruption and Innovation (Podcast 41 mins)

August 7th, 2017 | By

The difference between Disruption and Innovation (Podcast 41 mins)

I was very pleased to be a guest on David Frizzell’s Team Guru podcast. We talk about the difference between Disruption and Innovation with lots of examples.



Podcast Transcript

David: Hello and welcome to the Team Guru Podcast. This is episode 60. Disruption and innovation, moving with the times, and ensuring our business model is agile and smart. They're words that make most of us feel a little bit uncomfortable. Whether you're a leader in a large organisation, run your own business, or anything in between, you get the concepts. Things are changing fast, technology, the great disruptor of our time, and we're in the midst of a revolution that's more powerful than the great industrial revolutions that changed the course of humankind.

We are, quite simply, on the cusp of success or failure, relevance or oblivion. So, I thought I'd get someone on the show who knows what they're talking about. Paul Broadfoot is an entrepreneurial strategist. He helps organisations navigate the changing tide. He helps them plan to survive and thrive in an ever-changing world. In the conversation you're about to hear, we talk disruption and innovation. We learn how they're different and to whom their need is urgent. We talk business models, identifying your own, how it is today, and what it could become tomorrow. And importantly, Paul gives us some tips on innovation, the things that we in organisations should stop doing and the things we should start doing in earnest. I hope you enjoy my conversation with Paul Broadfoot.

Paul broadfoot, welcome to the Team Guru Podcast.

Paul: Thanks for having me, David.

David: Paul, I have heard you described as an entrepreneurial strategist. What on Earth does that mean?

Paul: That's not a bad name, is it, David? Yeah, look it's combining a couple of things, isn't it? Entrepreneurship is all the rage and everyone's talking startups and disruption and everything else so I certainly help people with moving with the times and changing ahead of those markets that are shifting pretty fast out there. It is about strategy and it is about being a bit bold and a bit new.

David: Paul, we'll talk in a little while about your thoughts on creating new ideas and putting those into practise, but before we get to that, I want to hit something that's really fundamental that I read in your book, and I really liked it. It was one of those concepts, when I read it I thought, "Gee, I've never thought that before but you made the distinction so nicely." What I'm talking about is the distinction between disruption and innovation. We hear so much about both those things, disruption and innovation. Tell us what they are? How are they different?

Paul: Yeah. It was getting to me a little bit that I was hearing the word and the term disruption, just banded around all the time. It becomes one of those words that becomes a little bit meaningless when everyone's using it and everyone's trying to talk in management speak of the day. I went back to its origin and disruption was defined originally as a process by Clay Christensen and essentially it's about when something changes and a new product enters a market and initially it's inferior, and so it's not a threat to a mainstream product initially. It's an inferior product and it tends to be cheaper, and people tend to start using it who aren't already in that particular market.

Over time, it generates some revenue, they improve the product, and then it starts to compete with the mainstream product. A good example of that in Australia is when Virgin Blue entered the airline market in Australia. Initially, baggage allowances, and you couldn't change your ticket and there was all sorts of reasons why it wasn't quite as good a product as-

David: Qantas.

Paul: ... buying a ticket on Qantas, but it was cheaper, and what it did was it added a whole lot of new people to the market. The people that used to drive from Melbourne to Sydney suddenly worked out it was cheaper to fly, and so they started doing it. One of the characteristics of disruption is it adds new users to a market, and generally the product's inferior in the beginning. That's disruption.

David: Yep, great.

Paul: Innovation, on the other hand, is generally a better product being added into the market but not adding in any new users. A great example of innovation is just the razor blade that we've gone from two razor blades to three, to four, to five, whatever we're up to now with the latest Gillette razor. It's still the same faces and arm pits being shaved every day in the world. There's not new users really, except for geographic expansion, but it's a better product so people switch to it.

David: All right. I really like that. It's worth pondering for a minute, so disruption is a new product that's introduced to a market but it's usually or often an inferior product. Therefore, it's not a threat to the existing whoever's owning that market, the existing players, but because it's inferior, it's cheaper, and it brings new people into the marketplace. As you said, Virgin when it started in Australia, brought a whole bunch of new people with their cheaper airfares, people who used to drive to holidays now catching planes. That's disruption.

Innovation, though, is bringing better products into the market, so they're disrupting the people who used to service that market, but because they're replacing existing products with better ones, they're not really bringing new people into the marketplace. Fantastic.

Paul: Spot on.

David: You gave us the example of those two. I like it. Now, I know, because I've read your book, what are some examples that we all know of, of people or organisations that have done both? They've disrupted and innovated. I've you're listening right now, I'm wondering, is anything jumping to mind? You'll kick yourself when Paul talks you through the answers. Organisations that we've all heard of who've been both disruptors and innovators at the same time. Hit us, Paul. Who are they?

Paul: Well, there's a couple of ones that I'm sure as you said, your listeners will be kicking themselves that they didn't think about it. Uber's a good one. A lot of people describe Uber as a disruptor, but I really think they've done both. As they've entered the marketplace, they've been cheaper than taxis. They're that disruptive product in the beginning, so more people are taking them. For example, if I'm running late for work and I normally take the train or the bus to work, and it's raining, running late, it's raining, I might just jump in the Uber.

Or, the kids who are going out onto a Saturday night into the city who would've really caught the train home, now they can tend to take an Uber. Uber's been disruptive in that its added new users into the market, but many would also say it's innovative because it's a better product. It's easier to see when the ride is going to arrive at your home from their app on the phone, it's convenient. You've just got to hit a button. It's cheaper, it's adding people to the market, and a lot of people would say it's better. You're offered a water or something like that, in some of the Ubers. That's a good example of something that does both.

David: Before we move on, I couldn't agree more. People who listen to this podcast regularly would have heard me talk about Uber a number of times. In relation to the taxi industry, of course, is one of the great non-innovators of our time. Uber has done exactly what you said. They've disrupted the market by bringing in a cheaper product. It is cheaper to that point where as you say, if you're running late for work, in days gone by I would never have considered catching a taxi. It just wouldn't have popped into my mind, unless I was going somewhere that was inaccessible by public transport.

But these days, exactly as you said, just the other day I caught an Uber to work where I'd normally catch the bus, just because I could, and it was easy. I wonder in my mind, is it because it's 15-20% cheaper than a taxi? Or is it because it's a better service? Or is it a combination of the two? I really don't know. I'm sure studies would tell you. What is the answer their Paul? Why do I find it more likely to use an Uber?

Paul: I think it's two things we love when we're consumers in general, is cheaper and faster. Better, cheaper, and faster. You could argue Uber's all three. When I used to live in Singapore, I was a bit amazed when I first went there. It was so easy getting out of the airport because all the taxis would park in a diagonal line. Any one of them could take off at any given time, and it was cheap. We didn't even think about driving when we lived in Singapore, because it was $10 anywhere, and Singapore's not a-

David: Yeah, I've heard that.

Paul: ... great big place either, but it was $10 and we just jumped in. That was it.

David: Yep. Does that mean something like Uber might not have got as strong a foothold in Singapore because the market wasn't agitated with the old service?

Paul: I can imagine that, because it was almost like you walk out your front door, stick your hand in the door, and there'd be a taxi coming past in three nanoseconds in most places. Yeah, I imagine it might not get as fast a foothold there.

David: I love to bash the taxi industry here on this podcast, and they really laid a fertile ground, didn't they? For Uber to come along and disrupt them.

Paul: They did and that's really what I guess I'm always trying to do, David. I'm shouting from the rooftops about the sky is falling to all the incumbents in industries and markets out there, especially in corporate Australia, just, "Hey, we've got to start disrupting now. Don't wait for it to happen to you. Go out and make it happen."

David: When you talk about disruption and innovation in the workplace, to people who are leaders in large organisations, or people who run their own organisation, what are they getting wrong? When they're thinking innovation and disruption, what aren't they doing right? Or, is the question really, "Geeze, it's hard to come up with an Uber and an Airbnb?" Because in hindsight they seem like such wonderfully obvious ideas, but we didn't come up with them, someone else did. What's going on in organisations that are struggling to innovate? Is it because it's just really hard to do, or are they falling flat because they're not going about it the right way?

Paul: There's definitely a couple of things in there. There's an issue around when we do look at say Uber and Airbnb, two good examples, there's probably actually a whole long list of reasons that we need to think about to change those. Uber and Airbnb are examples of companies that didn't invent a new product. They didn't come up with the technology that's used, so take Airbnb. Booking rooms over the internet is nothing new. Yet, they completely changed and flipped the prevailing norm in that accommodation market, about how things operated. Basically, that was a business model of innovation, and so one of the things around disruption is it's generally a business model that is disrupted.

It's often not a brand new widget that's invented, so I try and use the analogy that it's not about inventing the next gun that beats the bow and arrow. It's more about a superior strategy and a change of business model. As you said, it was there for anyone to invent, wasn't it, Airbnb?

David: Yeah.

Paul: It was just changing the way they did that, and Uber as well. They didn't invent the location based services or the passengers, or the A to B car. They just changed where the car capacity came from, and flipped the model and the industry. That's one thing. People are focused on product innovation instead of business model innovation, instead of flipping the way the market operates. That's a perspective that can be different. The second thing is yes, change is hard. The bigger you get, the harder it is to change, and so I think companies are focusing a lot of their innovation efforts on idea generation.

The hackathons and those events, those events where they're pitching or they've got panels going on. That's not going to cut it because we're not short of ideas. We're actually short of the traction of getting them into practise and into operation, and that's the trick.

David: Right, that's fantastic. You're so right. When we think innovation, we think we've all got to get in a brainstorming session and throw ideas around, but as you say, ideas aren't the problem. It's getting traction, having someone invest, having someone move with the times and put some weight behind it.

Paul: Yeah, and one of the things I tried to do for people, David, is that is a very legitimate form of innovation is you've got four types of innovation. You've got company innovation which looks like improving processes and getting better and optimization and efficiency. That's company innovation, or process innovation it's sometimes called. Then, you've got product innovation, invent the next best mousetrap and you're on a winner there, the next Apple iPhone, iPod. You've also got customer innovation that's getting a lot of traction now around observing customers, surveying customers, finding out how customers use products and then trying to innovate around what would make their life easy.

That's customer centric, often called user design or user centric design, UX. That's quite popular now, and startups are very nimble. They're very good at that, but where I was coming from is what Uber and Airbnb and Netflix and people like that have done is they flipped markets in the way they operated, so I came up with a table if you like, or a definition around a business model so that people had a finite set of choices. They had 24 business models, plug in where you think you are now, and then have a look at the other 23, and then it might not be so accidental to find an Airbnb.

Instead of brainstorming and expanding all the options available for innovation in a one day innovation fest, I'm saying let's just start with a finite set of choices. "Here's 24 business models, where's your current one? Where's the market? And let's try a few different ones." That's very quick.

David: When people talk about, and I've read you talk about finding your business model in under three minutes, when people go through that process, what surprises them most about what their true business model is? What are people fooling themselves about?

Paul: Yeah, I think it's business models a lot like disruption. It's one of those terms that's used so much it's really hard to define. But I went about doing that and essentially the definition of a business model, according to what I think's easy for people to get, is you have an asset and you have an activity. Your asset that you sell, your income generating asset, that can be a physical product or it can be a digital product, or it can be your own knowledge, or it can be a marketplace. There's six different types of assets and you pick which one you currently have.

Take a Coles, their asset is a physical product. They're selling a physical product. Then, you ask yourself, "What's the income generating activity that goes with that asset?" You've got distribution and creation, and contracting and connection. If you take Coles again, their activity is distribution. They have physical product distribution is their business model. The people who make the products, the food products that go to Coles, again, have a physical product as an asset, but their activity is actually creation. They've created the product, they're not distributing it.

That's an example of if we took those two and we're a manufacturer and we said, "Okay, instead of physical product creation, why don't we try physical product distribution?" Then all of a sudden, they're looking overseas for great suppliers, potentially importing, developing a wholesaling business, and bang, they've got a new business model that they can look for new growth in.

David: That's fantastic. That gives such a nice structured way to re-examine your business, and have a look at some of the options.

Paul: Yep, and that's what I'm trying to do is help people with that change.

David: Tell me about some of the success stories you've had where just talking people through their business model and what it really is made up of, just the way that you did there, with distribution, creating, contracting, and connection. Is that correct?

Paul: Yes, yep. Yeah, so I had a client that was in the mining industry and as we all know, mining went through quite a deep downturn over the past few years. They're a manufacturer, one of the last manufacturers of their type in Australia. They were faced, they new the downturn would be at least a couple of years, and so they were faced with losing very high double digit percentage of their sales revenue, unless they did something. When I sat with them and we looked at what they could possibly do, so their business model was physical product creation.

We got to another couple of options for them. They knew the customers really well, and they knew how their products were used, and so they had this whole application knowledge base that they were delivering value in. They had another option of knowledge, as the asset, and contracting as a service. That was a completely new business model, so getting paid for service, turning a physical product business into a service business. That was along the lines of a consulting model. That was one option available to them.

Another option available to them was the example I just gave around distribution. Instead of manufacturing the product locally, they could source for alternate products. Not the exact same type of product that they had today, but allied products that they could put into a portfolio of products that went to the client. That automatically expands their revenue, of course, if they're not just ...

The one thing they were selling, big downturn, but if they can add product A, product B, product C in there, through high quality players overseas, and get some sort of exclusive distribution arrangement with them, then they're in business. Those were two powerful, new revenue streams for that business that was otherwise just going to have to wait it out.

David: That's incredible. I really like that. I'm just going to dwell on that for a minute. You talk about there being an asset and an activity. That's at the core of our business model, and within the asset, it could be a product, could be knowledge, could be a service, and then that's the asset. Then, in the activity it could either be creating it, distributing it, contracting it, or connecting it.

Paul: Correct.

David: You've played around with different combinations of those things, so if you're in an industry, say you're doing something within the mining industry and you used to make a product and you used to sell it, you used to distribute it, and you were going gangbusters. But the rest of the industry has slowed down, so therefore your business has slowed down, you have a look at the combination of your asset and your activity, and there within that, and the skills and the knowledge you've picked up along the way within the industry, within that combination of asset and activity, often lies the opportunity for innovation.

Paul: Yeah, absolutely, and it's deceptively simple, deceptively quick. In fact, I say you can identify your business model in under three minutes and you come up with a completely different idea in the same amount of time. It almost seems like it's too quick and easy, but those are the ideas that are market innovation, the ideas that are going to flip the way the prevailing industry works, as opposed to inventing a new product, which is very powerful if you can do it, but not everyone can do it all the time.

Speaker 2: If you want to inject some energy and leadership expertise into your next event, why not invite David to speak? He'll get things moving.

David: You know, there's a tone in your book that suggests if you're not changing, if you're not innovating, if you're not thinking right now, you are going to die. That makes me really nervous. I was reading that thinking, "Oh, my goodness, I am just being too comfortable?" Do we really all need to be thinking like that? Are we really all under an existential threat in the near future?

Paul: Yeah. Look, that's very much, thank you for picking that tone out. That's definitely my tone. I really am trying to grab business by the scruff off the neck and say, "The change is exponential." The thing about exponential change is it starts small, and if it doubles and doubles and doubles and doubles, until the point where it's so fast, it just swamps us. You can see that now. 12 months ago I was talking about autonomous vehicles and driverless cars. Audiences would look at me and think, "Yeah, well that's really super cool. Sounds cool, but it's not going to affect me."

You pick up the Royal Auto Magazine, or the Herald Sun, or anything, you read an article on the web at the moment, and you will see it everywhere. It's just about to enter our daily lives. That's one thing. Change is coming on fast, and I really think it's not that it's going to be bad for everyone, David, at all. Because obviously some people are going to do very, very well out of the changing technology and the changing consumer behaviour, but what I think's going to happen is the middle's going to get squeezed. You're going to see some big losers and you're going to see some big winners, but I think the middle bit, when everything gets cheaper and more competitive and more players enter the market and change is more rapid, it's going to be hard to be that beige, vanilla middle.

David: What's going to happen to people, Paul, when we move into the next phase? As you talk about, we're in a new revolution, a new industrial revolution, change is happening quickly. Even those of us who think we're aware of what's going on can probably not really guess the extent to which change is happening, and then there are others who are completely not switched into it. They go to work, they get their bus, they come home at 5:00 and they turn on the TV and forget about work until the next day. They're not in tune, they're not thinkers about their career or their business. What's going to happen to all of us? I'm starting to get a bit concerned about this. There is no job that exists today that could possibly not be taken over by machines within the next decade.

Paul: Yeah, I guess there's good news and good news on all that. The consumer's going to be an amazing winner out of this, in that their lifestyle's going to improve, things are going to be cheaper, everything's going to be delivered to them exactly as they want it, very, very fast. In general on average, the consumer is going to be benefit big time, but if they're working for a company that's disrupted, and they lose their job, that's going to be really tough.

There's going to be parts of the marketplace when Amazon enters early next year, that are going to be helped, so small businesses that sell through them may do very well, but large retailers are going to be really heavily hit. It is going to depend where we are and what affects us, and we're not going to be able to see all change coming. What I'm advocating for people, though, is that they just keep mobile and they keep moving. It's a lot easier to adjust course when you're already motoring along, as opposed to if you're sitting still and you're oblivious and you're not trying to keep up with change, then it's a lot easier to get hit from the side.

What that means for someone is stay on top of the trends, have a look at how your company's doing, read a lot, try and stay up to date on everything that's shifting, because it might not prevent you being impacted, but it might help you deal with that impact when it hits.

David: I like that advice. That's very sage advice. We can't see all of the changes that are going to happen, sure, get that, but what you can do is ensure that you're moving. Ensure you're someone that can move around in your career. You're not just stuck motionless in the same position, learning nothing, going nowhere. Because if you do get hit with change, and you're already in motion, you're already agile, used to moving around, being flexible with the way that you work, then you're going to adjust to the new change. As you say, there's going to be winners and losers.

The middle is going to get squeezed out. There's going to be a lot of people who are doing okay, and a lot of people who just are not doing okay. We all know which end we want to be in, and the whole middle class losing out is a whole political discussion that is probably not right for now, but it is a sad reality that that looks as though that's where we're headed. Hey, I love this concept of the consumer winning. I'm a terrible consumer, I love stuff. I love stuff that makes my life more enjoyable. I'm not a great buyer, I don't go around spending money willy nilly, but I do buy things that I think will make my life more enjoyable or easier, or more convenient.

I love the idea that in the future, things will only get better for the consumer, and that is obviously a no brainer. What's happened to us as consumers in the last 10-15 years is mind blowing, and as you say, this growth just continues to speed up.

Paul: It does. You know, I'm not sure if you're a gadget man, David, but I think the birthday present of the year next year's probably likely to be Amazon's little artificially intelligent Alexa cylinder that sits on your kitchen bench, that you can ask about the weather and order groceries, and do all sorts of fun things with.

David: Wow.

Paul: I guess that's going to be a sign of the times when those things start popping up on people's benches and that [crosstalk 00:26:35].

David: What's the idea behind it? What's it going to do?

Paul: They're already in the US now. It's a little cylinder, sits on your bench top and it's powered by Amazon's artificially intelligent. Alexa is the name. You can just say, "Hey Alexa," just like you can say, "Hey Siri," "Can you tell me what the weather's going to be like tomorrow? Can you add choc chips to my shopping list?"

David: Wow.

Paul: "Can you tell me how many teaspoons in a tablespoon? There's that Elvis song that goes like this, here's some lyrics, I can't remember the name of the song. Can you play that for me?"

David: Wow.

Paul: It'll find the song and play it for you. "Can you turn the lights down?" We're not far away from this at all, 12 months I reckon.

David: That's cool. I love that kind of stuff but it makes me sad at the same time. We talk about living in this consumer world where there's all these cool gadgets that make our life awesome, but there's going to be a huge percentage of the population that can't afford to buy anything.

Paul: Well, I've got a story for you there, David. My daughter went over last year with school, she went over to, lucky enough to go over to San Francisco. Saved up her biccies and she went over there for a couple of weeks and stayed with a host family. Christmas last year, the host family decided to send her over by herself, the young girl that my daughter stayed with. She came over at Christmas time, and as Christmas was approaching, I kept asking, "What day is she coming? What's the flight number?"

It soon turned out that the flight hadn't been booked 'til the very last minute, and that was to save some money and to try to get a special deal. It turns out that young Hannah's family wasn't that well off, and so two things amazed me. One was, once she got out here, the return flight changed again, but the story behind that was that her mom had planned on affording to get her back via whatever means, but she didn't have the money basically.

David: Right, wow.

Paul: So she put up a story on GoFundMe to raise the money to get Hannah back home.

David: Wow.

Paul: Quite a heartfelt story about trying to be a good mom all her life and different things there, but the end result was I guess family friends and complete strangers saved up the $800 US to get Hannah back. But the interesting story about that is when I said to Hannah, "What'd you get for Christmas?" She said, "I got Alexa."

David: Wow, right. Yeah.

Paul: Because they're 99 bucks, and so yeah, it's interesting that that was in the mix of someone who couldn't quite afford to get her daughter home, but there was an artificial intelligent gadget for Christmas, so I wonder.

David: Yeah, wow. I don't know quite what to make of that story. I mean, it was nice that people stumped up and got her home, but mom essentially sent her away without the means to get her back. I don't know. I don't know whether that's a great story or not.

Paul: There's a lot of questions to be asked.

David: And then she gets as you say-

Paul: I heard about selling a car. I heard she was willing to sell her car, should it be necessary.

David: Okay, but then as you say, then she gets the latest, fancy, new fangled technology for Christmas. Incredible. All right, Paul, now I want you to imagine for a moment, neither of us are this, but let's say we're a leader in a large, large organisation, and we can feel these changes coming. We know that we're at risk of doing nothing and being on the big organisations gobbled up by innovators and disruptors, but our organisation is slow moving. Our organisation thinks ideas are amazing, but no one can get any traction, no one can get the investment required to give ideas a go. What do I do?

Paul: Okay. Well, there's two things. One thing we stop doing, and one thing we start doing. The thing we stop doing, as a CEO of this large organisation, is getting up in front of everyone and saying, "Hey guys, I really want you to change more. I want you to innovate more, and I want you all to take more risk." Because most people in that organisation are going to be busy doing their day-to-day stuff, and they're coming to work and they're going to do a great job at their job. Then, they're going to go home.

But there's a very small subset of people within that organisation who would change anything if they possibly could, and they'd change it all the time, and they'd change it even if it's not broken. They're called the intrapreneurs. Those people with an entrepreneurial tendency, so in a big company we'll call them intrapreneurs, so there's a percentage, a small percentage of people in that big company that just want to change stuff. They don't have to be convinced. The CEO doesn't have to tell them to be more innovative, they come and do it, breakfast, lunch, and dinner.

What we need to do is get those intrapreneurs. We find to find them, we need to give them a few skills and we need to put them in a little speedboat, and we get them off the side of the mothership, and we need them to go hard after new business models, flipping markets, and creating new growth. It's not about the whole organisation moving and trying to do that stuff. It's kind of ridiculous when you think about it, right?

David: Yeah.

Paul: Because the core business still needs to keep going. It's where the money's coming from today. All that needs to keep happening. Let's get a few of these other ones off the mothership, and have them charting new territories for us, and let's give them a different set of rules.

David: That's very sensibly laid out, Paul. What sort of organisations are you aware of, or have you worked with or read about, who do that well and have had these little teams of intrapreneurs, the small percentage people who just want to change things and have been smart enough to detach them from the mothership?

Paul: There was a good example actually, came out of Britain in May, so Barclays Bank, the second biggest bank in Britain, have an accelerator. So, they fund startups to come into this accelerator, run them through a 13 week programme with an external consultancy, and they're helping them out. They get mentored and then they have some sort of event at the end of that, and they agreed to fund the best of them. They funded eight FinTech, financial technology, startups in May. One of them was an intrapreneur team. They got a team out of the bank, they put them the accelerator, and then they funded them into a new business.

That's an example of something happening out of Europe and I've actually interviewed innovation centres in Europe before that have been doing this sort of thing for 10 years. What they do is they bring together startups, they bring together corporates, and then they bring together investors. The investors fund the technology and the startups staff. The corporates get to choose whether they invest in it, whether they buy it and keep it, whether they sell it, so there's all sorts of different financial models behind all of this, but it all starts with somewhere that people can go, that are outside of the mothership where they can innovate.

David: What about organisations that aren't doing this? I'm imagining that the examples across the globe are many of large organisations who think they can just plodding along doing the same thing that's made them big and healthy for the last 50 years.

Paul: Well, look at some of our biggest ones, David. It's time to get controversial, I think.

David: Please.

Paul: You look at our big four banks and I keep asking people, "Which is the best? Which is the cheapest? Which is the best service?" Inevitably what we come back with is certain people have certain views, I'm sure, but we've had these big organisations in Australia for ages, focused a lot on company innovation which is optimization, efficiency, linear, straight line kind of stuff. And now they're faced with the need to innovate, and they're probably as aware as anyone, the big banks, of having to do things differently. I think they're all doing good stuff now but to the consumer out there looking at them now, it's really hard to pick them apart.

David: Of course.

Paul: They all seem the same, and you could do the same thing for the supermarkets. They're all trying to be the lowest price. And the petrol companies, they're all the same. Who's got the best petrol? Cheapest petrol? Best service? It's all getting very, very, in my favourite words, beige and vanilla. It's time to shake things up and be different.

David: With something like the fuel stations, petrol stations, what can you do differently? I mean, you can put milk and bread, and some even have basically a small convenience store there, but people are essentially looking for the lowest price fuel, right?

Paul: Well, when I go to my local café and they remember my particular coffee and they give me a smile, and we have a bit of a chat, it's not an extended interaction, is it? It's just walk in, get a takeaway cup of coffee and off I go. I'm not sure why individual service station outlets can't-

David: Why can't they do that?

Paul: ... introduce that type of service.

David: Yeah, you're right.

Paul: It wouldn't take a lot. I've been convinced so many times there's no such thing as a commodity, or no such thing as a plain way to do business. You see so many things every day where people are innovative and change how they're perceived.

David: Yeah, you're right. Just little things like that, like going to the service station, buying your fuel, and the guy saying, "Nice to see you again, David. How's your car going?" And he names your car, because he knows what type of car you drive. That would be the equivalent to someone at the coffee shop remembering my order and remembering my name. You're right, it does feel great when you go to the coffee shop and they know who you are, and there is something that gets you going back in that circumstance.

Paul: It is, it is. It's always the little things-

David: It is.

Paul: ... and it's always the things that aren't scripts, or there aren't practised processes. The upsell that we're all asked to do as we exit the fuel shop is not the right way to go.

David: Yeah, that's right. They're just trying to squeeze one last 10 cent piece out of you. The banks are an interesting example, actually. I had a guy called Anders Sorman-Nilsson on the podcast way back. He's a futurist, back in the mid 40s episodes. He was fantastic and he was telling me that any industry where there is friction between the service provider and the customer is ripe for the picking in terms of disruption and innovation. We talked about banks being ripe for the picking.

They are so old fashioned, there is so much friction between the customer and the bank, they're just setting themselves up for ... And I'm sure they're all doing little things, little pockets of innovation, but no one of the big four, as you say, have stepped out of that little circle and differentiated themselves, so that we all look at them and go, "Oh yeah, the big three banks are terrible, but at least X, such and such, has changed its ways." None of them are doing that and when one of them can step up and do that, or a new player comes on the scene and is able to do that, then I think they'll do pretty well.

Paul: Yeah, absolutely. The minute I don't have to get on a call and wait for half an hour with some sort of terrible music you listen to, and not know if I'm going to be answered in 20 minutes or 60 minutes, the minute, the second everyone has an option on that, they will run.

David: Yeah, or not have to make those calls at all. All right, now before we finish up, Paul, I want to know about you, mate. Are you a plumber with a leaky tap? Or, is your own business model agile and always moving and always thinking?

Paul: I always love plumbers as clients, because they keep it real, actually. I know that's not the question, and they do. They do have leaky taps. Yeah, business models, I guess I put my money where my mouth is in many ways with a couple of startups that I work with. That's how I get my business model in gear. When you're a startup, you get to choose your business model from scratch and you often get to trial and experiment a little bit.

I'm an angel investor in one startup and an advisor to another, and yeah, that's how I leverage business model. Other than that, I'm a consultant, so I guess there's not too many business models that that can look like.

David: Nope, you just sell your time.

Paul: Yep.

David: All right, Paul. I have four quick questions before we finish up tonight, mate. Number one, are you ready to go?

Paul: Yes.

David: All right, now tell me about the Saturday night you most look forward to? Is it a big party with lots of people you know, or an intimate dinner with your closest friends?

Paul: It's definitely an intimate dinner with my closest friends. I love deep conversations.

David: Do you? Not the big party guy?

Paul: Oh no, I'd probably go out to a party rather than have that at my own house, probably.

David: All right. Now, are you more likely to get bogged down in detail or caught daydreaming?

Paul: Daydreaming, yeah. Definitely always thinking, yep.

David: All right. What about this one, making decisions, are you a slave to rational thought or do you make decisions based on emotion?

Paul: Yeah, I'm the old sort of rebel, Dave. I will go the different way just to go the different way.

David: Really? So based on emotion?

Paul: Yep.

David: Yep. Good, like it. Very last question, Paul. You're going on a road trip, do you like to book the hotels, know exactly where you're going, or do you just get in the car and drive?

Paul: Yeah, I reckon you could guess this one. Get in the car and drive.

David: Yeah, nice one. Paul Broadfoot, it's been an absolute pleasure.

Paul: David, thanks for that.

David: And that was Paul broadfoot. I loved learning finally the difference between innovation and disruption, and I loved the simplicity of understanding our business model and our options for the future. Those two key elements, assets and activity. Asset is either a product, some knowledge, or a service, and our activity is one of these four. Distribution, creating, contracting, or connecting. Understanding our business model through these terms and thinking about our options for the future is so remarkably simple, but it gets you thinking, doesn't it? As always, I'll share the lessons I took from my conversation with Paul on the lessons learned page from this podcast.

You'll find it on the Team Guru website, that's Teams with an S, .guru/podcast. Connect with me on Twitter, Facebook, SoundCloud, or LinkedIn, and join me for the next episode on this, my mission, to bring to life the principles and theory of leadership. This is David Frizzell for Team Guru. Bye for now.

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