Ignoring disruption is not an option – but too much haste can destroy value, so companies should adopt a measured strategic response.
Today, an unprecedented level of disruption is impacting virtually every industry and every aspect of our personal and professional lives. The confluence of a range of interconnected forces – demographics, social values, urbanisation, regulation, politics and technology – has catapulted the broader issue of disruption onto the C-level agenda.
CEOs are under pressure to act quickly and decisively, to embrace digital, to adopt new technologies and to reinvent their business and operating models. But with new, disruptive ideas coming thick and fast, how should they determine where the real threats or opportunities lie – and what actions to take?
Those who are too slow to act could see their market share, and sometimes their personal fortunes, swiftly eroded. Those who focus only on the unwelcome consequences of disruption, and fail to embrace its potential, risk missing out on the chance to transform and build value. ‘Do nothing’ may no longer be an option, but the desire to move fast can cause leaders to abandon the analytical rigor that typically precedes major strategic decisions.
This article looks at some of the successful – and less successful – responses that a range of different industries have made to disruption. Drawing on our experience advising many world-class companies, along with research into the views of senior executives, we argue that to decode disruption, companies should take a more holistic view, by adopting the following four-step approach:
1. Map the disruption landscape: Filter through the noise to identify the relevant underlying signals
2. Conduct a threat assessment: Study the likely impacts of potential disruptors
3. Chart the course: Recalibrate your strategy and realign ongoing initiatives
4. Transform the DNA: Embed the capabilities required to recognise and harness disruption
Disruption is not a passing phase. The rules of engagement have changed fundamentally, and companies cannot afford to play at the edges of change, but must embrace it fully – even if it means dismantling their own, historically successful business and operating models.