Every established organization gets disrupted eventually. If you’re lucky enough to survive it, you’ll probably wonder why you didn’t see it coming and what you can do differently next time.
A disruption management plan helps you combine elements of strategy, innovation, change management and scenario planning to clarify what you need to do — and when. A good disruption management plan allows you to respond to volatile and ambiguous situations with focus and rigor.
Discover why successful businesses struggle with disruption, what goes into a disruption management plan and how the Whole Brain® Model can help.
What Is Business Disruption?
Disruption in business occurs when the status quo is interrupted by new technologies, services or business models. These disruptions aren’t always obvious, especially to the incumbents who became market leaders with their tried-and-tested approach. Companies can also disrupt themselves by iterating on their existing offerings, making acquisitions, entering new markets or pivoting their strategic focus.
Clayton Christensen’s classic concepts of “disruptive innovation” and the “innovator’s dilemma” address one common type of disruption, in which a startup is able to successfully challenge more established businesses. These smaller companies often target aspects of the market that the incumbents aren’t paying attention to. By the time the incumbent notices the effect the challenger has had on the market, it’s often too late for them to do much more than reactively try to keep up.
3 Common Mistakes Leaders Make in the Face of Business Disruption
Disruption can doom your business or create opportunities for innovation and growth, depending on your response. But executives in established organizations often struggle to recognize true disruptive innovation, much less manage it effectively, and make these common mistakes.
Ignoring the Market Disruption
Incumbents might have good reasons for not focusing on less profitable or low-demand segments, which are often what startups target. However, the risk is that new entrants use this foothold to eventually move upmarket, undercutting incumbents’ core markets and stealing their best customers.
Established companies may ignore these disruptions not because they don’t care or notice. These firms are understandably focused on high-margin customers and don’t see minor innovations as a threat. But even if incumbent leaders notice the disruption in their target markets, entrenched processes and mindsets may prove too resistant to change.
Refusing to Collaborate With Industry Disruptors
When incumbents do finally recognize the disruptors in their market, their first instinct is often to fight back. But competing directly isn’t the only option. They can explore collaborative opportunities with these new entrants or even acquire them.
Collaboration with a disruptive entrant requires different ways of thinking and a willingness to explore and accept new perspectives. Too many businesses refuse to consider collaboration, perhaps because they don’t trust outsiders or don’t accept outside ideas. Perhaps the most famous example of this failure is when Netflix offered to sell itself to Blockbuster in 2000. Blockbuster failed to see the value of combining its market leadership in physical stores with this online startup’s advantages. The mistake ultimately led to the demise of Blockbuster.
Failing to Leverage Innate Advantages
Established companies aren’t doomed to fail just because disruptive newcomers emerge. IBM, General Motors, 3M and Apple are just four examples of long-lasting industry leaders that are vastly different today than they were decades ago. These incumbents have outlasted many disruptions — sometimes reshaping markets themselves.
Moreover, incumbents are not without advantages. As Thomas W. Malnight and Ivy Buche of IMD write, incumbents can address multiple problems simultaneously because they have the resources and scale that no disruptor can match. Incumbents can indeed struggle to be agile and fast-moving. But what they excel at is crafting long-term vision and strategy — and sticking to it. Incumbents might not move as quickly as disruptors, but they can win by being more patient, avoiding obvious mistakes and applying their vast collective experience to new business conditions.
How to Use Whole Brain® Thinking to Create a Disruption Management Plan
The Whole Brain® Thinking model can be a powerful tool to help leaders in established organizations swiftly identify disruptive threats and compete in a fast-changing environment. Here’s how it can guide your process.
Experimental: Explore All Options
Start by assembling a cross-functional team, one that is multigenerational and multidisciplinary. This team must prioritize diversity and inclusion.
Give that working group the freedom to generate a wide variety of experimental business ideas, outside of the constraints of your current business practices, products or services. Give them the freedom to cast a very wide net and explore those concepts without pre-emptive judgment.
Relational: Socialize the Best Ideas to Build Your Business Case
Once the core group has a set of ideas they want to explore, it’s time to present them to potential stakeholders and gather feedback and buy-in.
This is where your team begins to prototype, socialize and analyze their best ideas. The more innovative the idea, the more likely they are to encounter resistance to the change, so it’s important to be prepared for that.
At the end of this stage, you should have what you need to create a compelling business case for your proposed innovation. You may even find that more than one idea holds up and decide to hedge your bets by investing in multiple options. (This is the advantage of being an incumbent, after all!)
Practical: Execute Your Business Transformation
This step of the disruption management process requires putting all your investigation and planning into action. It’s time to plan and supervise the execution of your business transformation.
In this step, you’ll need to define the reasoning, requirements and definition of success for a culture transformation and a parallel systems transformation. Because of the scale and complexity of business restructuring, each system — operations, technology, finance, logistics, etc. — will need to plan and execute its own transformation.
The initial core team will need to work with subject matter experts in the technologies and disciplines the new model introduces. Cognitive diversity and inclusion remains critical here, too.
Analytical: Evaluate the Results
This is arguably the most critical step in the whole process — and it's often overlooked. Here, you’re double-checking that you completed the transformation and measuring its results. Did everything go to plan? What needs to be adjusted, redone or scrapped?
Even after you give the all-clear, don’t rest on your laurels. Innovation should be a continuous process. If you can be disrupted once, you can be disrupted again. Retaining the systems transformation people on your disruption management team will keep you vigilant and one step ahead of further disruptions.
Eliminate Blind Spots With Whole Brain® Thinking
The classic story of disruption involves challengers who wreck the status quo while incumbents are clueless or helpless in the face of change. But this doesn’t have to be your fate. Many incumbents stay relevant and even reach new heights of success while managing disruption.
The Whole Brain® framework can help you recognize disruption, examine the landscape of options, make an informed decision and act decisively to transform yourself into a disruption-resistant, resilient organization that makes its own future.
Learn more about the Herrmann platform and how your teams can experience a new way of thinking.