Outthink the Competition: How Innovative Companies and Strategists See Options Others Ignore

By Kaihan Krippendorff

Fast Company blogger, NYU Professor and former McKinsey consultant, Kaihan Krippendorff, profiles the next generation business strategists: the "Outthinkers" and reveals the secrets to how they drive innovation and create competitive advantages in business.

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• Language: English
• Publisher: Grey Rock Publishing
• Release date: May 13, 2022
• ISBN: 9781737253112

Kaihan Krippendorff

An Adams Media author.

Book preview

Praise for Kaihan’s most recent book – Driving Innovation from Within: A Guide for Internal Entrepreneurs

(Columbia Business School Publishing, 2019)

Amidst great global competition and rapid technology shifts, continuous innovation is what drives long-term impact and success. And the number one source of innovation for companies is their own employees. Kaihan shows how large organizations, not just startups, can be a place where entrepreneurs innovate, build, and adapt for the future.

—Reid Hoffman, Co-Founder of LinkedIn and co-author of Blitzscaling

This smart and wide-ranging book will convince you that it’s often more promising to be an ‘intrapreneur’ -- someone who innovates from within an established organization -- than an entrepreneur. If you work for an organization and are itching to become more creative — to tap the resources of your company to create something amazing — DRIVING INNOVATION FROM WITHIN is an essential read.

—Daniel H. Pink, Author of When, Drive, and To Sell Is Human

Innovation is the lifeblood of every great company - the key is to identify it and then nurture it to success. Krippendorff’s book is a useful guide that any business, government, and organization should read to ignite innovation from the bottom up.

—Parker Harris, Salesforce Co-Founder

Innovation and creativity can come anytime, from anywhere. Companies planning to succeed far into the future have to accept that the best ideas don’t come from working in siloes – and may even seem to go against the strategies that have driven past success. But game-changing, innovative ideas can be fostered within organizations by embracing collaboration, co-creation and diversity of thought. Kaihan provides practical, actionable steps for breaking down siloes, igniting the drive to collaborate and accepting the new opportunities that will soon come your way.

—Ajay Banga, CEO of Mastercard

Kaihan’s description of the six attributes of successful corporate intraprenuers and the seven barriers that they face make this book required reading for anyone who wants to innovate inside of a company.

—Steve Blank, Innovation Guru, Creator of the Lean Startup Movement

Driving innovation from within’ is a fresh new approach of how to succeed in our highly uncertain business climate.

—Dr. Marshall Goldsmith, Thinkers 50 - #1 Executive Coach and the only two-time #1 Leadership Thinker in the World

This book speaks a truth: most innovation isn’t the realm of entrepreneurs, it occurs as smart leaders unleash the creativity and intelligence of their teams, turning employees into world-class innovators. And, while many books offer tools that might work, this one offers tools that have been proven to work at the most innovative companies. How refreshing.

—Liz Wiseman, Author of New York Times bestseller Multipliers and Rookie Smarts

Transformation cannot happen through leadership alone. Kaihan’s work provides compelling evidence that inspiring and empowering people broadly throughout the organization is the only way to sustain change and achieve agile and innovative growth. It includes an interesting framework on how to merge the advantages of scale with the agility of a startup

—Maeve Coburn. Senior Vice President, Learning for Transformation, L’Oréal

Would-be innovators inside large organization often come to realize their organizations’ culture, mindset, and processes fight them at every turn. Kaihan offers a practical set of tools that can help internal entrepreneurs better their odds against the large corporations that seem to ask for innovation but seem to fight it at every turn. He blends critical innovation concepts, from hypothesis-based experimentation to shifting from an operational into an innovation mindset, into promising process anyone can follow.

—Vijay Govindarajan, Coxe Distinguished Professor at Tuck at Dartmouth, and NYT and WSJ Best-Selling Author

Kaihan’s book gives us two precious gifts. First, a much-needed new narrative – big organizations CAN BE and ARE innovative; the hero innovator story in fact happens more frequently and successfully within large organizations vs. startups! Second, it provides a practical path and tools for those unsung intrapreneurial heroes - and their leaders - to create innovation-enabled organizations.

—Kalina Nikolova, VP Strategy and Operations, Yahoo

Copyright © 2021 by Kaihan Krippendorff. All rights reserved.

Published by Grey Rock Publishing, New York, NY.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through the payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the web at w​ww.co​pyrig​ht.​com. Requests to the Publisher for permission should be addressed to the Permissions Department, Grey Rock Publishing, 1140 Avenue of the Americas 9th Floor, New York, NY 10036.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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Library of Congress Cataloging-in-Publication Data:

Krippendorff, Kaihan.

Outthink the competition: how innovative companies and strategists see options others ignore

ISBN: 978-1-7372531-0-5

CONTENTS

Acknowledgments

Part 1 The Foundation

Chapter 1 Evolution Through Revolution

Chapter 2 Today’s Business Revolution

Part 2 The New Outthinker Playbook

Chapter 3 Move Early to the Next Battleground

Chapter 4 Coordinate the Uncoordinated

Chapter 5 Force Two-front Battles

Chapter 6 Be Good

Chapter 7 Create Something Out of Nothing

Part 3 The Five Habits of Outthinkers

Chapter 8 Mental Time Travel

Chapter 9 Attacking the Interconnected System

Chapter 10 Frame Shifting

Chapter 11 A Disruptive Mindset

Chapter 12 Shaping Perceptions

Part 4 Apply the Outthinker Process

Chapter 13 Step 1: Imagine

Chapter 14 Step 2: Dissect

Chapter 15 Step 3: Expand

Chapter 16 Step 4: Analyze

Chapter 17 Step 5: Sell

Part 5 Rebuilding the Organization from Within

Chapter 18 Phase 1: Establish Multiple Points of Differentiation

Chapter 19 Phase 2: Create Playbook Asymmetry

Chapter 20 Phase 3: Construct an Outthinker Culture

Appendix A The Research

Appendix B The 36 Stratagems

Appendix C Tools

Appendix D Industry Reports

References

Index

About the Author

Acknowledgments

When I wrote the first edition of this book in 2011, we were a handful of coaches, running a a few workshops each month —some with large companies, some with innovative newcomers the world had hardly heard of—and we were just beginning to realize the potential of the tools you’ll read about in the following pages. Now, a decade later, the Outthinker ecosystem includes over 5,000 people trained in the Outthinker Process – from individual entrepreneurs to cohorts of hundreds inside large enterprises– and a global network of coaches across five continents. Together we’ve instituted more than 500 applications and generated over $25 billion in incremental annual revenue.

This second edition, which began as the idea to update and refresh a few cases, has unfolded into a fully revamped collection of inspiring insights gleaned from clients, partners, friends, and novel companies. It would take more than a few pages to mention everyone who has been a part of the journey. Since the first publication, our network has multiplied to include more teammates, contributors, and outthinkers like you, whom I continue to learn from daily.

Above all, I am grateful my wife Pilar Ramos, for inspiring me and our three children – Lucas, Kaira, and Makar – to passionately explore and pursue our greater callings. As our children grow, they become even more of a source of inspiration and I am endlessly curious as I watch their creativity unfold and the contours of their unique life paths take shape. I would also like to thank my father, Klaus Krippendorff; my mother, Sultana Alam; and my stepmother, Marge Thorell, for their unconditional support of my work over the years.

Five years ago, the Outthinker Strategy Network was established and through the network, I’ve had the opportunity to interact with heads of strategy across a wide range of industries. I particularly want to thank Alok Agrawal, Pascal Aguirre, Tushar Amin, Jacques Antebi, Al Caesar, Tess Caputo, Sergio Castanho, Eric Chesin, Ken Eng, Mark Feeney, Tom Gallo, Norman Guadagno, Eric Goldstein, Ayman Hamid, Linday Hanson, Chris Huff, Kevin Ilcisin, Claus Jensen, Greg Johnson, Ed Knapp, Fuat Koro, Cheryl Lebens, Kalina Nikolova, Russel Noles, Chris Nuttall, Caroline O’Connell, Devang Parikh, John Penney, Jaren Pippitt, Milena Schafer, Joanne Sheppard, Tom Sholes, Sukanya Soderland, Cornell Stamoran, Roopa Unnikrishnan, Linda Ventresca, Philipp Willigmann, and Adam Zalisk, whose insights were invaluable to putting the concepts in this book into practice. As I got opportunities to apply the approaches in the original edition of this book more deeply, the process was refined thanks to collaboration of numerous clients and friends such as Heather Davis, Juan Jose Gonzales, Mike Minogue, and Robert Siegfried.

I’ve been blessed with the generosity of numerous thought leaders who, despite their loaded calendars, take time to share their thinking with myself and the Outthinker Strategy Network. I especially would like to thank Bharat Anand, Scott Anthony, Ellen Auster, Gordon Bell, Steve Blank, Sarah Caldicott, John Camillus, Ram Charan, Eric Clemons, Tom Crawford, Jack Daly, George Day, Joel Demski, Erica Dhawan, Bob Dorf, Elizabeth Haas-Edersheim, Gary Hamel, Michael Gelb, John Hagel, Gary Hamel, Verne Harnish, Linda Hill, Chuck House, Prescott Logan, Roger Martin, Chris Marquis, John Mullins, Paul Nunes, Amanda Setili, Jeff Schwartz, and Jeff Sutherland for their leadership and unending ability to provoke new ideas. Pete Fader, Rita McGrath, and Rob Wolcott, in particular, have become close collaborators and friends.

My colleagues, collaborators, and fellow coaches provide the practical experience and insights to help ensure that this book and the Outthinker Process presented here actually works in real life. I thank Robin Albin, Anna Drabarek, Susan Drumm, Roberto Erario, David Greene, Jill Helman, Nadia Laurinci, Luiza Pacheco Zequi, Elizabeth Schumacher, and Adam Siegel for their contributions to advance the work.

I would like to thank my team at Outthinker— Cori Dombroski, Jimmy Bereolos, Wes Fabb, Zach Ness, Karina Reyes, and Karyn Strait —for always being willing to experiment with the crazy ideas and for testing, challenging, and refining the messages and tools contained in this book. Additionally, the support and collaboration of an extensive network of researchers, writers, editors, and friends such as Bill Ardolino, Mike Brassaw, Jody Johnson, Vered Kogan, Margaret McIntyre, Victor Saavedra, Jameson Daugherty, and Shannon Wallis has been invaluable.

In addition to the global community of Outthinkers mentioned above that is, I hope, become a force that will bring tools and new thinking to help create a future in which our companies, communities, and humanity thrive, many busy entrepreneurs and CEOs agreed to sit down with me to discuss their organizations, strategies, and thought processes. I’ve included their names and stories in the following pages, so I will not list them again here. But to them, once again, I say thank you for allowing me and all those who read this book an opportunity to learn from you.

Part 1

The Foundation

A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.

—Max Planck

Every domain—war, science, business—evolves through periods of radical change, revolutions. Such times divide us into thinkers and outthinkers. Outthinkers step outside of the accepted paradigms in which thinkers operate. They act differently because they see the world differently. Revolutions unfold in a predictable four-step pattern that ultimately leads to outthinkers toppling thinkers.

First, people grow rigid, adopting a set way of doing things. They fall into a pattern—1, 2, 3—and stop looking for a better way.

Then, someone (an outthinker) questions what others have accepted and finds a new strategy (a fourth option).

The new strategy proves superior.

The competition tries to copy but can only do so slowly.

We are in the midst of such a revolution right now in the domain of business. The winners of today are competing with a new set of rules and are flustering their traditional competitors as a result.

CHAPTER 1

Evolution Through Revolution

One thing is clear: If our ideas and thoughts matched perfectly with what goes on in this world, and if the systems or processes we designed performed perfectly and matched with whatever we wanted them to do, what would be the basis for evolving or creating new ideas, new systems, new processes, new etc.? The answer: There wouldn’t be any!

—Colonel John Boyd

In August of 2004, a two-year-old company with a brash idea was preparing to go public. Everyone in Silicon Valley and most investors around the world were debating the same questions: What is Google worth? Should I invest?

In hindsight, of course, we know the answer. Shares that were $85 at the IPO now trade at around $2,000 (as of this writing). But in the summer of 2004, even smart, forward-looking investors could not predict Google’s success.

I’m not buying, Stephen Wozniak, co-founder of Apple, told The New York Times in the weeks before Google’s IPO. Past experience leaves the taste that a few people—never ourselves—will make out the first day, but that it’s not likely to appreciate a lot in the near future or maybe even the long future.

Jerry Kaplan, a well-known Silicon Valley entrepreneur who proved himself as the principal technologist at Lotus and went on to launch multiple companies, said, I wouldn’t be buying Google stock, and I don’t know anyone who would … My experience is that when you step outside the bounds of normalcy, you are in very dangerous territory. A lot of things can go wrong.

Why the hesitation? Because to investors, the company’s explosive growth—from $439.5M in 2002 to $1.46B in just one year—looked too much like the rise-and-fall trajectory of Netscape, which started out far ahead of slower incumbents but was soon defeated by Microsoft’s Internet Explorer. Was Google heading the same way?

Just months before the IPO, the narrative of Google’s slowing revenue growth appeared to be setting in: In the quarter ended June 2004, that growth was just 7.5 percent compared to 27 percent the prior quarter. Randy Komisar, a well-known technology entrepreneur, said, You can’t hide the fact that this thing is slowing down. There was a year of hyper-growth, and then it rolled over.

A look at the company using traditional financial analysis supported the view that the Google IPO would fizzle. But since then, Google has positioned itself at the center of the Internet world. It has transformed the advertising industry. It is the only large, profitable, publicly traded company to average over 100 percent annual growth over the past 10 years. Its $27B IPO valuation in 2004 once viewed by educated investors as excessive, just a few years later is overshadowed by its current market value of more than $1T, as of 2020. And along the way, the company has created thousands of millionaires.

Why didn’t Google fizzle, as a lot of smart people predicted? Because its leaders looked hard at the competition and the standard model of doing things, and saw there was a new way – a better way.

It seems revolutionary—in part because Google created a business not even imagined just a couple of decades ago. But Google was, in fact, following in some well-established footsteps, dating back not just decades, but centuries. Because at its core, finding a better way is nothing more—and nothing less—than a bold new way of thinking.

In all domains of competition—from business to sports to war—breakthrough success evolves through the same pattern. First, the players fall into a routine, adopting the same practices. They are the thinkers, who think inside the accepted paradigm. Then, outliers emerge—a few innovators who defy the standard practices. We will call them outthinkers, because that’s what they do. Outthinkers don’t outmuscle their competitors, or outspend them; they outthink them.

The thinkers first dismiss the outthinkers. Then, they ridicule them. But eventually, they realize the outthinkers have figured out something new, then they try to copy what they’re doing. But if the outthinkers play their game right, by then, it’s too late. The outthinkers have won.

Outthinkers in War

Many of the strategies outlined in this book originate from warfare tactics. We’ve sought to translate those into modern language. The paradigm of business has changed from competing against peers to competing against common barriers and societal challenges, but there is still much to be learned from strategic innovation in warfare. For example:

Hannibal’s Defeat

Around 200 B.C., when Scipio Africanus was asked by the council of Rome to lead Rome’s defense against Hannibal, he already knew that the traditional approach would be ineffective. A series of military leaders had tried, and failed, to put an end to Hannibal’s attacks. So Scipio set aside the obvious strategies. Instead, he turned his back to Hannibal—literally—and led his men into what is now Spain, laying siege on New Carthage (modern-day Cartagena).

Why would he make such a seemingly backward move? Because Scipio understood better than his predecessors the strategic value of doing so. Carthage, the north African power at that time, supplied Hannibal’s campaign through New Carthage. So when Scipio overcame it, he cut Hannibal off from his supply lines. It was this counterintuitive choice—to turn his back on his target and instead attack New Carthage—that led to Hannibal’s fall and, arguably, to the end of Carthage itself.

Genghis Khan’s Victory

The European knights awoke before dawn. They climbed up into heavy, well-crafted armor and mounted oversized horses. They gathered their foot soldiers and archers and walked toward the battlefield.

As they lined up facing the trees through which their adversary would soon emerge, they felt great confidence. They were fighting close to home and so had supplies within a few miles; their opponents had stretched their supply lines across hundreds of miles. They had studied the arts of warfare from books and through years of formal training; their aggressors were savages, with tactics that had evolved little from those of early hunters. How could they lose?

But when the Mongols blasted out of the woods, the knights’ confidence turned to surprise and then fear. They had never before seen an enemy fight like the one they were facing now.

The Mongols made three key strategic choices that flummoxed traditional armies.

Surround rather than confront. At a time when battles were fought by two armies lined up face to face, the Mongols preferred instead to surround their opponents. What led them to this formation was not calculated strategy but instinct. The Mongols viewed warfare as hunting, and they fought the same way they hunted —by surrounding their prey, herding them toward the center, and then showering them with arrows.

Shoot from horses rather than ground. It was otherwise accepted military theory that archers must shoot with their feet firmly planted on the ground to ensure accuracy. But the Mongol soldiers had spent years training to hunt with bows on horseback, and they could shoot accurately even while galloping.

Full cavalry rather than foot soldiers. Armies at the time were composed of a mixture of archers, foot soldiers, and cavalry. Battles were typically fought by deploying each of the men in sequence: first archers would launch volleys to weaken their opponents, then foot soldiers would march in to engage in close combat, and finally cavalry rode their horses into battle, usually by flanking, to finish the job. But in the Mongol army every soldier rode a horse, and the knights of Europe had no idea how to engage such an army.

The central lesson of the Mongols’ success—and the lesson that this book intends to make clear—is that to win any strategic game, be it war, business, or chess, you must make strategic choices that will disorient your competition, leaving them unable to respond effectively.

What gives you an advantage, is doing what your competitors will not do, or what they will not respond to intelligently. In that sense, the Mongol strategies provide a perfect model for today’s business leaders. Rather than match the traditional strategies of their adversaries, they diverged from tradition and, in so doing, forced their enemies into a dilemma: Do we stick with what we know or do we change our approach? Do we break the straight fighting lines our men have practiced for years in order to start surrounding our opponents? Do we start shooting from horseback even though we have never practiced this before? Do we tell our foot soldiers to go home and leave the fighting to cavalry? The armor-clad knights could not adapt with sufficient speed—even if they had wanted to—and so they found themselves sticking to their standard methods, with disastrous results.

Outthinkers in Sports

Dick Fosbury Turns His Back on Tradition

In 1968, Dick Fosbury literally turned his back on tradition. The 21-year-old U.S. Olympian ran toward the high-bar just as all of his competitors had. But as he approached his mark, he twisted his back awkwardly and flopped over backward.

Until that moment, every gold medal winner had cleared the bar using one of three forward