By Exec Edge Editorial Staff
As defined by Investopedia, disruptive innovation “transforms expensive or highly sophisticated products or services — previously accessible to a high-end or more-skilled segment of consumers — to those that are more affordable and accessible to a broader population.” You don’t have to be a genius to know the kind of change that redefines the status quo of how companies conduct business won’t always be welcomed by members of the management and the workforce who are used to things being a certain way and don’t want to step outside their comfort zones. According to Jack Truong, a seasoned CEO who reinvented the corporate personas of the three global companies he’s led, the true genius behind implementing successful disruptive strategy is having the courage and foresight to make difficult decisions — and also to be able to back those decisions up with a well-thought-out plan that achieves measurable results.
“You’ve got to have a strategy that really takes into consideration the strengths and weaknesses of your business, and then be able to drive there,” Truong says. “But then, you’ve got to put the execution together to get the whole company, the [whole] organization, aligned to execute toward that direction.”
Truong concedes taking action and getting your troops to fall in line can be easier said than done, especially when change is met with resistance. To make sure everyone’s on board, he cautions, a leader has to be relentless. Once a corrective action is in place, everyone must align with it. If that doesn’t happen, difficult but necessary changes will be required. “Otherwise, you have what I often call a ‘short circuit,’” he says. Truong’s analogy is akin to a string of dead Christmas lights. Basically, it doesn’t matter how much voltage you have to power it up, if there’s one broken bulb somewhere in the strand, you’re not going to be able to light up the rest of them until the circuit is made complete.
When Moving Forward Means Letting Go of the Familiar
Thanks to rapidly developing technology and the novel exigencies of the postpandemic distributed workforce, the global marketplace continues to evolve. As a result, many tried-and-true business strategies that could once be relied on to generate profits simply no longer work. Jack Truong cautions CEOs and other high-profile stakeholders who cling to outmoded agendas that they’re running a serious risk of becoming irrelevant to consumers who are eager to embrace the latest advances, no matter how loyal such customers might have been in the past. Likewise, leaders who keep their heads in the sand are also missing out on the chance to open up as-yet-untapped market sectors, potentially attracting a broad new customer base who have never purchased their products or services previously.
“It doesn’t matter what the economic condition is, it doesn’t matter what type of business it is, whether it’s a stagnant or growing business, it can be transformed into a profitable growth business,” Truong said in a profile interview with CEO Magazine. “Every company I have had the opportunity to run, I have transformed it into a very big, profitable, growth business and created a lot of value for what I call the three CEO stakeholders: customers, employees, and owners.”
Convincing Your Team To Pivot Can Reap Huge Rewards
Case in point: the transformative overhaul Truong set into motion as president and CEO of Electrolux’s North American division. When Truong came on the scene, the company’s appliance sales were flatlining. Unable to keep up with competitors whose technology-forward product lines had captured the consumer zeitgeist for gadgetry, Electrolux’s upper management had resigned themselves to the notion that the firm’s market share had run its course and the future held only diminishing returns. But where they saw stagnation, Jack Truong saw opportunity.
“Back in 2011, when I joined, it was about a $4.2 billion business. The company saw North America as a mature market and didn’t expect any growth. In fact, when I took over, the company wasn’t growing and profit was declining,” Truong explained.
During his first meeting with Electrolux’s top 200 global leaders, Truong made his stand, telling them in effect that “there was no such thing as a mature market, only mature business managers.”
Although they were met with initial resistance, Jack Truong’s assertions proved true in the end. Rather than trying to compete where the firm was outmatched, he rebranded its appliance division, focusing on its core strengths. “Some washing machines are packed with fancy electronics, but what consumers really want is simplicity of use. And, at the same time, they wanted their washer and dryer to look good,” Truong recalled. “So we put more focus on the design, to make our products eye-catching, beautiful, and easy to use.”
While bells and whistles continued to appeal to some buyers, reliability, ease of use, and superior aesthetics proved to be strong selling points for others. By amplifying Electrolux’s long tradition as a classic, cream-of-the-crop product line, and highlighting sleek, decor-friendly design, Truong was able to elevate the company ranking to second place in the global market and double its valuation in a very short space of time.
When an Irresistible Force Meets an Immovable Object
Jack Truong achieved similar feats of financial legerdemain at Australia-based building goods manufacturer James Hardie, where he transformed what had primarily been a B2B company supplying planks to builders and contractors to a B2C target market. The pivot, while radical, was extremely successful.
James Hardie’s market capitalization grew from $4.5 billion to $18.5 billion in the three years Truong was CEO; however, acceptance of his vision within the company ranks wasn’t universal. “Even though more than 99% of employees supported the transformational initiatives that I was leading, there were a few legacy employees who didn’t like all the big changes and new ways of doing things,” Truong told CEO.
While the dynamic tension between Truong and the old guard led to an eventual parting of ways, Truong remains philosophical. In the final analysis, he still believes effective leaders must be ready and able to make the tough calls — and stick by them.
“You can’t please everybody, and I think there are a lot of leaders out there that are afraid to make those tough decisions. [But when they don’t], then they delay, delay, delay … and that’s when businesses falter,” says Truong. “That’s when you create chaos and dissatisfaction among the employees, because they have no clear direction.”
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