Change Agent - Issue 32

My mom was also a rifter, though you've probably never heard of her. She saw and took advantage of two rifts that were probably bigger in scope than even Disney's rifts, albeit more prosaic in execution. First, a few decades ago, she saw that society was not only permitting women to go back to work -- but it was also encouraging this behavior. Some women were going back to work because they needed the money; others were doing so because they wanted mental stimulation and social interaction.

Taking advantage of an opportunity that this rift created, my mom started hiring paid and volunteer workers for her nonprofit gift shop at the Albright-Knox Art Gallery, in Buffalo, New York. Her overeducated, underpaid, super-dedicated workforce had extremely low turnover, was responsible for essentially no "shrinkage" (internal shoplifting), and displayed astonishing customer-service skills.

She was at the forefront of reinventing the way that museums and other institutions staffed and ran their stores. Not content to have a little shop that sold a few postcards each day, owners of such shops turned their businesses into full-fledged, cash-flow-positive enterprises.

My mom then foresaw a rift that would change the business of retail forever: People were no longer buying things only when they needed them. Instead, they were now shopping for fun. The experiential retail environment -- stores that were destinations for people who were bored with TV -- became an incredibly profitable phenomenon for almost every nonprofit museum store in the country. By watching for such rifts and then taking advantage of them, my mom was able to change fundamentally the marketing equation for her industry.

Was my mom the first person to notice these two rifts? Not at all! But she was a pioneer in executing against each one. And she did it with confidence and without hesitation.

So why doesn't everyone do this? If Disney and Jobs and my mom can become successful rifters, why can't you and your colleagues do the same? What stops existing companies from grabbing hold of rifts? Why didn't an established coffee company like Maxwell House foresee a rift in the way that adults would spend time and money? (If you don't drink alcohol, where do you go to hang out?) Why did it take a startup called Starbucks to see that rift? Industry by industry, we're seeing more and more startups catching up to -- and then destroying -- the old-guard market leaders.

Why do companies have to be destroyed before the way that we serve markets can evolve? Why don't the existing players see a rift when it's right in front of their eyes -- and then jump into it? One reason why companies and individuals hesitate is because they don't know how to zoom. Big, successful companies aren't organized around the concept of change, and they don't reward people who want to change the way that they do business. To them, change is bad, change is evil, change is to be feared. They have enough trouble coping with shift -- but rift? Forget about it! You can't just cope with rift. Coping is out of the question. Rift appears out of nowhere and waits for a rifter to find it, grab it, and exploit it. And companies that resist zooming and insist on merely coping will always be last to see and to profit from a rift.

But there's also an underlying architectural problem. Market leaders will always be willing to make incremental changes that please customers, employees, and shareholders. (At the very least, they want to have the support of two out of the three constituencies.) Installing air bags in cars was a smart move on the part of car companies, but it had nothing to do with a rift. Putting Federal Express tracking information on the Net was great for you, me, and the beleaguered operators at FedEx, but it didn't fundamentally change the shipping business.

The problem for established companies is that when faced with a rift, they have to make a choice. They can't please all three constituencies. And, faced with that choice, most companies just say maybe. They wait. They hope that the rift will go away, quietly. They confidently project that the startups that are jumping into the rift are overvalued, overhyped, and sure to fail.

Sometimes the old guard is right: Sometimes a rift isn't a rift at all. But, as Disney and Jobs and my mom have demonstrated, if you take advantage of all potential opportunities (and that's exactly what the venture-capital community has done with the Internet), you might find a rift -- and nail it before someone else does.

Take a look at my three-step guide to rifting for entrepreneurs, employees, and CEOs.

1. Make sure that it's really a rift -- and not just a hiccup. A rift is characterized by a fundamental change in one of the basic rules of the game. You can usually expand the first rip in the fabric by discussing it in hypothetical terms: "What if the transaction cost of auctions became zero?" or "What if everyone had a television?"