Disruption. It is a bit exciting, a bit cool and – if you are leading a large corporation – more than quite a bit scary. Luckily, there is no shortage of consultants-turned-disruption-experts, who will bring a standard slide pack with AirBnB, Uber, Tesla, Amazon, Netflix, Facebook, Google and of course the former darling of Apple. Some of the better ones bring a business model analysis of a few key players in your own industry to see, what they do differently as inspiration.
What most people do not realize about disruption is that it has happened for thousands of years – you can probably imagine the reception of language, fire or the wheel. In the past century companies have been disrupted based on changes born from global mega trends such as urbanization, individualization or immaterialization, but we have now seen an immense acceleration partly driven by globalization and technology advancement.This is the reason that average life expectancy of Fortune 500 companies went from 75 years in 1960 to 15 years in 2010 – and is expected to reach 5 years based on the current trajectory in about 2035.
When Clayton Christensen coined disruption in Innovators Dilemma, he was mostly concerned about agile entrants attacking the least attractive market segments in an industry with a sub par solution at lower cost. The incumbents would then abandon this unattractive market to seek segments with higher primary needs and profits, starting a cycle of attack and abandonment for each higher segment, as the entrant solution grows more advanced while keeping a cost advantage. This challenge is still very much alive in our clients and the classic solution is to disrupt yourself or follow the customer onto secondary need categories such as reliability and convenience.
But we like to take a wider approach to disruption, because many of the greatest corporate successes of recent years do not fit into framework such as Uber, AirBnB, Apple or Tesla. And as a corporate leader, the framework really could not be less important – it is the insight and the move to specific action that counts. The trick is to focus on how the mega trends impact your industry and individual business directly to generate a powerful set of key themes and scenarios to drive your strategic initiatives. Finally, use a debiased process to ensure the strategic initiatives are robust, fast and implementable.