The last Prince of Lampedusa (Sicily) said: “For things to remain the same, everything must change.”
The most critical role any leader and team is not just equipping the organisation to sustain its growth in long-term value but embedding the art of disruption into its DNA. Why? Because market or sector leadership today does not give the divine right to compete for a share of the future. The casualties littered over the commercial battlefield who were not disruptive enough are testament to that. They didn’t remain the same, leaders, because they didn’t change.
In this briefing we will show why you need to be thinking about disruption across the three phases of growth: the here & now, the medium term, and the disruptive future.
What do we mean by future?
Long-term does not mean the next 2-3 years, or even 5, it means much longer; think 10-20 years – the disruptive future. We often see this being forsaken for the expedient, less complex, and some would say easier, route of maximising shorter-term objectives. The real future is put off to another day or for another management team.
Disruption is at its highest level and fastest pace
The world is evolving at an unprecedented rate and it is hard to see another historical period where future opportunities and threats had been as challenging or uncertain. Our research shows that we have never seen this rate of disruption, which is only going to accelerate. Dynamic and fundamental developments in artificial intelligence, 5G, inter-connectivity, computer processing, nano and quantum technologies aids will drive the current levels of disruption to new heights. The societal and demographic forces surrounding a rising middle-class, a rapidly growing but ageing population and increasing consumption levels as well as a rising sense of inequality leverages the current levels of disruption. The issues of climate change, the scourge of pollution and land degradation as well as the world’s dwindling natural resources, including rare earths impact the current levels of disruption.
Transformations which once took 100 years are now routinely taking 10-20 years, or less, and all sectors, industries, and enterprises are impacted. Product and service life cycles are going to be shortened dramatically and new operating models are going to be highly disruptive, even for those businesses considered disruptors, today. Historically, it is hard to see a period where the importance of disruption and its impact on the future has held such significance; especially as the depth and rapidity of change is so dynamic and all consuming. For leadership teams, not to think about what the disruptive future means for their organisation and how its current operating models will become redundant is to invite failure. Especially as organisations have much less time than they think.
If organisations don’t challenge the very fabric of what and how they do things today, then they are in grave danger of being at best marginalised and at worst going the way of the dinosaurs.
The journey needs to be faster
Evolving at a faster pace than your competitors is critical; competitors that are both seen and unseen; traditional and upstart; even those currently operating in a completely different field. This means having an appropriate intelligence platform and a clear picture about what the disruptive future holds. Not just for current operating models, but the ecosystem that the organisation operates within, its industry value chain and adjacencies.
Journeys have a start and end point. To take a step without understanding in which general direction you are aiming for is to invite, at best, a high degree of wasted effort and extra cost or, at worst, abject failure. Organisations need to be thinking and taking a reasoned view of what the disruptive future (10-20 years) looks like and then work backwards to the here & now. Organisations need to be developing a level of insight on the critical competencies and architecture that are required for getting to this destination. They also need to be thinking about the various stopovers – the next 6 months, 1 year out, 5 years out etc. Even if the end point moves the organisation will be in a much better place to pivot.
The commercial battlefield is littered with the corpses of successful, efficient, effective and well-run businesses. Another thing they had in common is that they probably thought of strategy in terms of the current ecosystems and norms. A form of ‘stick to the knitting’ and continuous improvement strategy; they did not think in terms of wholesale value-chain disruption. It is imperative that organisations do not fall into this trap of entropy or orthodoxy; everything should be challenged and there should be no ‘sacred cows.’ A case in point are the highly successful compact disc and vinyl record retailers like Virgin and HMV who had every opportunity to be a Spotify. Or Blockbuster, the video rental business, who had the time and resources to be a Netflix. But they missed the boat and their journeys were cut short. Even these disruptive businesses should, if they aren’t already, be thinking about how their business models can be broken and be putting in place the steppingstones along their own disruptive journey.
New upstarts are rarely as efficient or command the economies of scale and resources that the market leaders benefit from. However, they don’t come with corporate baggage, they are willing to challenge the status quo, they spot opportunities in the disruptive forces that are shaping the future and they are willing to look over the horizon at what this future looks like. They bring to bear relative strength against relative weakness and importantly they build the competencies and architecture in a planned and phased way.
Organisations need to consider the platform and skills required for their disruptive future
It is this last point that is critical – organisations need to be thinking in terms of how they can destroy their own business, industry, value-chain, and ecosystem. Leadership teams need to be concerned enough about the future to put aside quality resource and time from the whirlwind of managing the ‘here and now’ to consider the (primary) forces that will impact their disruptive future. Not to do so invites the high likelihood that the future boat will be missed and will set in motion the organisation’s inexorable decline. This means building an intelligence platform, teams and skills to decode some of the key patterns and trends you see today and how these inform us about tomorrow’s new patterns and trends.
We have worked in, and with, many organisations over the years where the refrain, we’re too busy with the whirlwind of today, or our 2–3-year strategy is what we are judged on and nothing else matters, is a standard mantra. Worst still is the claim that we need to focus on today; the long-term future will look after itself. Not starting the journey today misses the point that to set a course for a disruptive future you need to take the first step, even a baby one, in the right direction. This includes optimising the ‘here & now’ and beginning the bridging towards your destination. We have been involved in many turnarounds and growth businesses and while it is important to prioritise the ‘here & now’ it should not be at the expense of the future. Downsizing and restructuring without regard for the future is just a form of corporate anorexia, it makes you thinner not healthier and doesn’t provide a platform to pivot from. Make no mistake, others have already started, and teams most probably haven’t even heard of them. Three years will fly by and before management know it, they are a long way behind the development curve, even if they recognise it.
In the turnaround and optimisation projects we have been involved in we prefer to talk of re-generation. This holds out hope for the future but doesn’t ignore the need for pruning or a good dollop of fertiliser. Leadership should make room within the organisation, small or large, for unorthodox, contrarian and reasoned thinking. Leadership should ensure their intelligence platform is regularly updated; and with all stakeholders involved, set aside quality time at least every other year to war game far flung future scenarios and reflect on what that means for the phases of development that precede it. Leadership should also ensure that those early steppingstones are not ignored in the ‘here & now’ and 2–3-year strategy. Lastly, never underestimate the importance of what children are learning, thinking, and doing today; they are the disruptors of tomorrow.
“In war there is no prize for the runner up.” (General Omar Bradley)
In this briefing we have shown the importance of planning for and thinking about disruption in the three phases of the future: the here & now, the medium term and the disruptive future. General Douglas MacArthur said, “We are not retreating, we are advancing in another direction”; to know whether you are retreating you need to know where the destination was. For organisations and leadership teams this can only be done through the type of thinking that we have described already enabled by the right intelligence platform. Unashamedly we give the last words to Sun Tzu who said, “The art of war is of vital importance to the state. It is a matter of life or death, a road to safety or to ruin. One ignores it at one’s peril.” Treat disruption as if you are at war with it; know your enemy.