Why so many companies fail to disrupt and grow

by Nigel Hollis | July 31, 2019

I recently presented about adding value through branding to the Malaysian Timber Council annual conference (it is a long story as to why). The keynote presentation was given by the serial entrepreneur, Mr. Azran Osman Rani, CEO of Naluri, and he offered a compelling viewpoint on why so many companies find it difficult to create the disruption necessary for growth.

Rani’s presentation was titled, “The Breakthrough Mindsets for Breakthrough Performance” and, just as I did, he offered a neuroscience argument for why many people continue to do the same things even when they desire different outcomes. Faced with uncertainty, he stated, we revert to what is familiar; past experience becomes the lens through which we view the future. We take our first impression and then reject new information that does not fit with what we believe.

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As proof of this he offered the case of the launch of AirAsia X. When value airline AirAsia founder Tony Fernandes approached his board with the idea of extending the business into long haul flights they rejected it. They did so because, as Mr. Rani put it, “They were limited by data points”. From Freddy Laker on, no value airline had ever successfully extended into long haul. The math simply did not work out: the longer the flight, the less cost advantage could be realized by a value airline.

Faced with this rejection, AirAsia X was created as a separately funded, sister company of AirAsia with Rani as CEO. Starting with one plane the airline now has over 20 and has placed orders for more. How did it succeed? By putting customers first and not playing the same game as other long-haul airlines. Start with the customer and figure out how their different needs might give you an advantage.

For instance, while business people might value consistent departure and arrival times, people flying on a budget value low prices more than regular schedules. So a schedule that changes across the days of the week in order to maximize flying time means that utilisation can be 70 percent instead of the industry standard of 50 percent, and without those business and first class seats you can pack 30 percent more people on board and make money.

Rani’s next venture was to set up the internet TV company iflix. Again, the idea of setting up a business to compete with Netflix met with rejection from investors – 115 of them. However, the 116th decided that the venture was a good bet. As Rani put it, if you leave the upmarket, English-speaking bubble, it turns out that there are millions of people who would appreciate relatable, local comedies and dramas. While Rani, like many before him cast doubt on the value of market research, favouring observation instead, there is little doubt that he values consumer insight. Not the data that lock us into an established viewpoint but the ability to look at how people think, feel and behave and figure out how things might change.

But what do you think? Why do we find it so difficult to step outside the accepted rules of the game? Please share your thoughts.

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  1. Jeremy Diamond, July 31, 2019
    Companies find it difficult to step outside the accepted rules of the game because they reach a point where they are more concerned about losing what they have than gaining something they don't.  Because of our financial, managerial and educational culture decisions are made based on data points rather than judgement.  And because the only thing that can be measured definitively is the past, not the future, data becomes, as Rani said, a limiting factor rather than a starting point and springboard.  Being devil's advocate, the reason Rani is successful is because he values insight, which guides what could be, rather than market research which usually measures what has been.  On the other hand, this is also something to celebrate because the cautious mediocrity of established companies is why there is always an opportunities for entrepreneurs willing to break the mould - until they sell up or sell out and the professional management brought in to run the business gets caught in the same trap.  

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