When it suddenly changes

Disruption.  Is it good or bad?

While listening to Michael Raynor of Deliotte make a presentation on his great new book, The Innovator's Manifesto, I got to thinking about the two-sided nature of disruption in markets.

One can easily argue that it's bad because it dramatically changes the landscape and the likely outcomes of strategies in place.  MF Global fails and trading accounts are frozen.  If you are a trader, that's bad news!  Child abuse is revealed at Penn State and the college president and worshipped football coach are canned.  If you are a Penn State board member, that's bad news! Greek political turmoil causes Italian borrowing costs to soar.  If you are the prime minister or finance minister of Italy, that's bad news!

But that same sudden shift in landscape and effect on embedded strategies can also be good.  The competitors of the trader with the frozen MF Global account may see new customers.  Incoming students who might have chosen Penn State suddenly favor another school with their acceptance.  Speculators who sold Italian bonds short make a killing.

And then there is the opportunity for "planned disruption," where the strategy is to cause the sudden landscape change to a gain a competitive advantage.  Innovation of this type is difficult to achieve but holds the potential for great competitive success and differentiation.  Think 3D television or carbon fiber airplanes or gene therapy or LinkedIn or the iPad.

So where do my musings lead?  To thoughts of scenario planning, that's where.  Organizational strategists are wise to consider how their major assumptions and strategies can be disrupted and what they might do in advance to mitigate the damage and when disrupted for quickest recovery or new advantage.  They are wise to look at what might disrupt market leaders and offer a new opportunity for competitors.  And if they can find innovation strategies that disrupt the leader's strategies, so much the better!

 

Comments

[david k waltz]

Lee,

I am in full agreement that it is wise to question, challenge, and validate assumptions and imagine alternatives.

However, it has been my experience that there are relatively few who are willing to do this on a regular and disciplined basis. Most don't seem to want to think about it until they have to (in which case it might be too late!).

Folks who brush their teeth have better oral hygiene, yet we do not laud this in the press and on our blogs because brushing teeth is pretty much accepted as a matter of course by alomost everybody.

Is assumption evaluation wise only because it is rare?

[Lee Crumbaugh]

David, thanks for your input.

My take is that everything we do in life is based on a calculus of risk and effort. Consider this as well as what it takes to instill good habits and the necessary knowledge that will turn our focus to wise actions. We need to understand that scenario planning is good for us, see that it will reduce risk for a reasonable amount of effort and then practice it over time until it becomes a habit and, as you observe, "accepted as a matter of course."

I find it a bit baffling that there is not more emphasis on "assumption evaluation," as you term it. Getting it right the first time around and continuing to question whether we still have it right as we get more data and evidence seems to me to be so wise!

[restaurant system]

My take on this is that disruption has its advantages and disadvantages also its both good and bad depending on its use...

[Lee Crumbaugh]

Restaurant System, thanks for the comment. Assuming you mean "planned disruption," can you elaborate on its advantages and disadvantages and how using planned disruption can be "both good and bad"?