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Strategy and leadership for a disruptive world

Advances in technologies such as artificial intelligence, robotics, nanotechnology and biotechnology have the potential to disrupt the rules of the game for every industry.

Challengers with big dreams, new tools and a "can do" attitude are creating new sources of value, changing the face of competition and disrupting the foundations on which our industries and institutions are built.

To prepare your business for the changes ahead you need to adopt a fresh approach to strategy and leadership, and be ready to disrupt your business before someone else does it for you.

Let disrupt it help set you on the right track to the future.

BCG's "Digital Disconnect"

Research published this past week by the Boston Consulting Group (BCG) reveals the true story about the preparedness of companies around the world to respond to the looming disruptive threat posed by big data and mobile technologies. As stories go, it is extremely sobering. The data suggests a major disconnect, firstly between the reality of technological change and the level of threat perceived by senior executives, and secondly between their perceptions of threat and their organisational response to it.

The article forms part of BCG's 2014 report on the world's most innovative companies and is based on a survey of 1,500 companies from a broad cross-section of industries right around the world. Given BCG's status as one of the world's most elite strategy consulting houses, it's reasonable to assume that the list of companies surveyed includes a large number of industry leaders and blue-chip established players. That only serves to make the results even more astonishing.

The Exhibit (below) is taken from the research and contains two graphs. The first shows the percentage of survey respondents expecting a significant impact from big data in the next three to five years on the horizontal axis and the percentage of respondents actually targeting big data in their innovation programs on the vertical axis. The second graph shows exactly the same thing but this time for mobile products rather than big data. A diagonal line through the middle of each graph shows the point at which the behaviour of respondents is matched by their espoused beliefs about the impact of big data and mobile in the next three to five years. 

Source:  BCG,  "A Digital Disconnect in Innovation?"  October 28, 2014 by Kim Wagner, Andrew Taylor, Hadi Zablit, and Eugene Foo

Source:  BCG, "A Digital Disconnect in Innovation?" October 28, 2014 by Kim Wagner, Andrew Taylor, Hadi Zablit, and Eugene Foo

There are two things that are extraordinary about what the graphs show in the context of disruption:

The first is the relatively low number of respondents for all industries who expect that either big data or mobile will have a significant impact on their business in the next three to five years. It's hard to imagine how the senior executives of large, established companies could draw the conclusion that big data or mobile aren't issues with the potential to have a significant impact on their businesses in the next three to five years. My thesis is that these leaders fall victim to two common traps:

  • Trap number one is to treat the future as being largely unknown or unknowable and, as a result, to spend way too little time identifying and contemplating the impact of those trends that are long-term, well-established and inexorable. The reality is that, while there's much about the future we can't know, there are a number of things we can be reasonably certain of. The trends toward greater mobility and application of big data are two such trends. The evidence is easy to find and compelling. Ericsson is a great example of a company that does understand it and their "Capturing the Networked Society video at the bottom of this post illustrates the weight of evidence out there for leaders who make an effort to look. But the results of BCG's research suggests Ericsson are the exception rather than the rule. In my view, there isn't a business on the planet that shouldn't have these trends, together with a handful of others such as the rise of artificial intelligence front and centre on their strategic agenda.  It's incomprehensible that so few actually do.
  • Trap two is to assume that the rate of impact of greater mobility and more big data will be linear in nature and therefore too far out to worry about in the short term. It's this assumption that continually gets leaders and their organisations into trouble because, in a world where technological change tends to be exponential rather than linear, it leads them to conclude that the pace and magnitude of change will be slower and smaller than it inevitably is. It's the unexpected speed of change when it hits and it's breadth and magnitude that catches leaders and their organisations unaware and leaves them disoriented and disrupted.

The second thing that's extraordinary about the BCG data is the fact that, even for those who say they believe that big data and/or mobile will have a significant impact, very few match that expectation with a similar level of focus on those areas in their innovation programs. It's difficult to understand how the senior executives of large organisations can say that they believe a technology or trend will have a major impact on their business in the next three to five years and then fail to match that concern with a commensurate focus on doing something about it. There's no doubt a long list of potential explanations but, based on my experience, the following may provide some initial clues:

  • A very large number of leaders acknowledge that technologies such as mobile and big data are important but are constrained by forces, both individual and organisational, beyond their control (old world mindsets, untested assumptions, blind spots, inertia, entrenched power structures, leadership politics etc.). These forces make it very difficult for leaders and their organisations to let go of things as they currently stand (for example a business model that has been successful and profitable for decades) and embrace a new world of commercial and organisational possibility. This is a massive issue and, in my experience, perhaps the single most significant reason for the all-to-common disconnect between the rational, objective answer to an organisational challenge and what actually finishes up happening. There is a book to be written on this area alone but perhaps that's a topic for another time.
  • Leaders often assume that they don't need to do the innovating themselves because they'll have plenty of time to acquire someone who has done it when the time comes. I think that's a dangerous approach. Not only is there the risk that they won't see the new thing until it's too late, there's also the fact that bolting a new world product or competence into an organisation or culture that hasn't done the hard work getting itself ready for the future doesn't generally work - at least not over the mid to long-term.

At the end of the day it seems to me there are two things organisations need to be able to do to be able to say that they're ahead of the game and are well placed in terms of disruption. The first is that they have to understand what's going on around them and how that creates both vulnerability and opportunity. Having gained that understanding they then need to be able to actually act on it. The BCG research demonstrates that gaining an awareness isn't as straightforward as we might think. It also demonstrates that actually acting on the awareness is similarly not as straightforward as we might think.

The fact that a relatively small number of senior executives seem to fully comprehend the import of what's going on around them and that even fewer seem to be responding appropriately is great news for entrepreneurs and start-ups looking to challenge incumbents. The chances are pretty good that they completely underestimate the vulnerability and opportunity being created by the technological changes we're likely to see in the next three to five years.  

It's also great news for senior executives that "get it" because it's highly likely that their competitors don't "get it" and will be left behind, flat-footed.  

For consultants it's challenging new because it means that just creating a level of awareness about the world around us and lighting a fire under the senior executives in an organisation isn't enough. Without addressing fundamental assumptions, dogmas, power structures, mind sets etc. organisations runt the very real risk of delivering something that looks like change but ends up really being little more than a flurry of colour and movement.

These aren't trivial points. For most organisations they will be the difference between survival and failure in the years ahead. The real question for business leaders is which group you fall into because if you're anywhere below the diagonal line in the BCG graphics you and your organisation are at real risk.

Ericsson's "Capturing the Networked Society" explores mobility's power to radically change our world

Explore the journey http://ericsson.com/networkedsocietystories This film is part of a global Ericsson project where we have traveled to over 25 different countries in order to find the real-life change-makers who are transforming our world through mobility.

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