Disruption from companies with new business models, an outrageous way to compete, or an innovative way of serving your customers is heading your way. If it’s already knocking at your door, it will only become louder. Your core business might vanish or lose much of its value because of changes underway in markets, supply chains, and the competitive environment.
If disruption in your business or industry appears to have a lot to do with new technology, don’t rely on your IT team to handle the challenge. When companies make that mistake, it usually exposes them to a following wave of disruption that might be far more consequential or even damaging. Your company’s entire leadership team, including IT, should be involved in addressing disruptive challenges.
Thomas Honoré, CEO and President of Columbus, and Tune Hein, the well-known Danish leadership and change management consultant, have collaborated on a book called “Disrupt or die: Your guide to digital leadership challenges.” They note that 88 percent of business managers are afraid of disruption, but very few have a strategy to deal with it. And, 9 out of 10 businesses cannot keep up with the most recent developments in their industry.
If that sounds threatening, take heart. Some of the oldest and most established companies and their brands have set great examples for thriving through disruption. Disruption is not the chaotic, random event that we sometimes imagine. Disruptions fall into a pattern. There is a limited number of business models and a certain repertoire of business behaviors that disruptors rely on. What’s more, the companies dealing successfully with disruption also fall into certain patterns and take advantage of repeatable strategies.
One thing that’s clear is that disruption calls for changes in your business model and for a new approach from your leadership team. Some time-honored practices and perspectives may fall away as no longer helpful. Business leaders may find that their career has not prepared them for disruption, so they need to learn or put the company at risk.
Disruption has a way of compressing time. You need to act quickly, or you might not easily catch up to the changes impacting your business. In the retail industry, 54 percent of business leaders expect their industry to be significantly disrupted over the next two years, and 39 percent believe their current business model has less than five years to operate effectively.
In manufacturing, the numbers are comparable – only 31 percent expect disruption within two years and 42 percent assess that their current business lifecycle stage has fuel for less than five years. The differences are likely because of the different experiences of disruption in the two industries: Retail has been disrupted repeatedly and for a long time, whereas disruption in manufacturing has been slower-moving but radical for the companies impacted by it.
Leadership in companies facing disruption – which is all of them, really – is challenged to find new ways to lead effectively and direct the organization to adapt, refocus, and create value in a new era of the business. The best response to disruption, Honoré and Hein find, is transformation. How do you go about that practically?
Download a free excerpt from “Disrupt or die: Your guide to digital leadership challenges” here. You can also view and download our infographics about disruption and transformation in the manufacturing and retail industries.
If you have any feedback or want to discuss disruption and transformation in your business, send us a note.