THRIVING THROUGH DISRUPTION

INTRODUCTION

In the classic definition of disruptive innovation by Harvard Business School professor Clayton Christensen, upstart challengers use technology to offer cheaper alternatives to mainstream products or services. Disruption may also occur when more convenient means of obtaining products and services are introduced. Whatever the business, there are disrupters and the disrupted.

Disrupters are usually newcomers, and the disrupted are often the large, established players in a market, sometimes even its leaders (such as Blockbuster in videos).

But as this research makes clear, incumbents are not predestined to be victims. Sobered by how quickly new technology-driven business models can take root and leaders can be dethroned, companies of all sizes are now constantly on the lookout for disruptive trends, and many seek to be disruptive in their own right.

This report and global executive survey assess how companies view disruption and what they are doing about it. Focusing on financial services, healthcare and energy, the report analyses what is driving disruption across industries, what will shape it in the future, and how different companies respond to and exploit the challenges and opportunities it brings.

THE KEY FINDINGS ARE AS FOLLOWS:

MOST COMPANIES FEAR DISRUPTION AND REACT TO IT, RATHER THAN PROACTIVELY STAYING AHEAD

The survey reveals a majority of executives (six out of ten) stating that senior management views disruption as a threat rather than an opportunity. This helps explain why six out of ten also say their firms react to disruptive forces rather than drive them or stay ahead of them. In today's environment, that is likely to be too late. Companies must challenge themselves to see disruption as an opportunity. Many are wising up to the challenge: 60% are now investing financially in their disruption strategy, and the same percentage have created, or are considering creating, a new role to focus exclusively on disruption.

TECHNOLOGY IS NOT ALWAYS THE PRIMARY DRIVER OF DISRUPTION—CHANGING CUSTOMER DYNAMICS AND REGULATIONS OFTEN ARE

Contrary to accepted wisdom, technological change is not the main source of disruption everywhere, according to the survey. In heavily regulated sectors, such as financial services and energy, regulatory changes do more to catalyse disruption than other factors, according to respondents. Changes in customer behaviour come a close second (and first for healthcare respondents). Technology advances are never far from the surface, however; they do much to influence regulatory reviews and stimulate new patterns of customer behaviour.

OLDER CONSUMERS HARBOUR MORE DISRUPTIVE POTENTIAL THAN MILLENNIALS, OR EVEN TECHNOLOGY ITSELF

Businesses pay considerable attention to younger generations for hints of demand trends to come, but the survey reveals that it is the “silver market” (those aged over 60) which is likely to be more disruptive. Healthcare executives are certain of this—86% believe that the older generation is a greater source of disruptive change than emergent technologies such as data analytics or the Internet of Things (IoT).1

1For more on the silver market's influence on innovation, see “Can demographics drive disruption?”, The Disrupters, The Economist Films.  

PARTNERSHIP MODELS, INCLUDING RIVALS AND PEERS, ARE HELPING FIRMS ADDRESS DISRUPTION

Such partnerships can include strategic alliances, consortia and large firms working collaboratively with challengers. Among the surveyed firms, nearly one-third have formed a strategic alliance with a company in their industry, and one-quarter have partnered with a player in a different industry. Another one-fifth have engaged with disruptive start-ups in corporate ventures.

MORE COMPANIES ARE ADOPTING A “CONVERGENCE MINDSET”

The cross-industry partnering described above highlights business leaders' recognition that convergence between industries will bring change to established business models. This is causing disruption today in financial services, thanks to the innovative power of financial technology (fintech) companies, and in the healthcare sector, where incumbents and start-ups are applying big data and consumer technology (such as wearables, among other things) to patient care and other medical challenges. Convergence is likely to bring some disruption soon to the energy industry, with new models based on small-scale power distribution and renewable energy products, for example.   

ARTICULATING ORGANISATIONAL “PURPOSE” IS THE MOST IMPORTANT ACTION MANAGEMENT CAN TAKE TO FOSTER A CULTURE OF DISRUPTIVE INNOVATION.

In innovative companies, employees want to innovate continuously rather than being forced to as part of a job. This passion is nurtured by a strong and clearly stated sense of organisational purpose that elicits greater engagement than narrow commercial goals. Internal competitions, “deep work” spaces and material incentives all contribute, but for respondents to this survey, management's ability to articulate the organisation's purpose does more to foster a culture of disruptive innovation than any other factor. Financial-sector respondents, however, appear to value material incentives more in this context, suggesting an industry out of touch with the factors that do most to motivate creative talent.

How do these disruptive forces manifest themselves in individual sectors? How do leaders of companies, both incumbents and newcomers, view the resulting challenges and opportunities, and how do they address them? Drawing from expert interviews and the survey results, this report examines how disruption is reshaping the financial services, health and energy sectors.  

WHAT CAN YOU LEARN FROM FINTECHS?

Large financial institutions may once have felt themselves insulated from disruptive change owing to strict regulations governing the sector. However, disruptive innovation is occurring in many corners of the industry, thanks to a flowering generation of financial technology (fintech) companies. In the past half-decade new market segments have been created by the likes of TransferWise in peer-to-peer remittances, by Kickstarter in crowdfunding, and by the likes of Betterment in robo-advice. Start-ups, spin-offs and challenger firms are looking to disrupt markets using crypto-currencies, artificial intelligence (AI) and predictive analytics. Many financial-industry executives in our survey expect regulatory changes to enable new business models, possibly even in what today are protected areas, such as savings.

Some large institutions are working to be early to market themselves with services based on disruptive technologies. One example is Wells Fargo, a US bank. It operates six innovation labs and a start-up accelerator, all exploring how different emerging technologies—including biometrics, augmented and virtual reality and AI, among others—can be used to improve the customer experience. The bank is working not in competition with but alongside fintechs, in several of which it has invested. Bipin Sahni, Wells Fargo's head of research and development (R&D) and innovation, emphasises that the payback the bank seeks from such investments is not financial returns but early access to innovative services and technologies.

“I CONSIDER MYSELF VERY LUCKY TO BE WORKING WITH FINTECHS. WE WANT ACCESS TO THOSE SMART PEOPLE—THEY NOT ONLY BRING US NEW IDEAS, BUT THEY'RE HELPING TO CHANGE THE CULTURE WITHIN THE BANK ITSELF.”BIPIN SAHNI, HEAD OF R&D AND INNOVATION, WELLS FARGO

Financial institutions also look to achieve the same effect by acquiring such start-ups. Asked which measures would most effectively foster a culture of disruptive innovation in their organisation, the second most popular response in our survey is “acquiring and integrating innovative start-ups and adopting their culture and approach”.

Large banks are also starting to partner with each other to try to stay ahead of potentially disruptive technology-led changes. Different multi-bank alliances have been formed in the past year, for example, to develop different aspects of blockchain payment systems. In the survey, 31% of financial-sector respondents indicate that they have formed strategic alliances with industry counterparts in the past year in order to address disruptive forces.

BIG INNOVATORS, LITTLE INNOVATORS

American Express, a US financial services corporation, is another “Goliath” seeking to learn from “David”-like fintechs in accelerators and collaborative research projects, both to capitalise on new ideas and to help inject innovative juices into the organisation. These need to flow through the entire enterprise, believes Paul Fabara, the company's chief risk officer, if innovation is to be disruptive, or if the company is to be effective at responding to disruption. “You cannot just have a single unit, or a few people, trying to innovate in isolation,” he says. “For innovation to be disruptive, it has to happen at the grassroots—people in the trenches thinking about how they can serve their customers better.”

Mr Fabara maintains that, in finance, relatively small changes in processes can result in innovation that, if not disruptive itself, helps companies address disruptive challenges in their markets. Like his peers in the survey, he believes new regulatory demands can lead to industry disruption. When regulators sought greater transparency on customer complaints, he says, the company deployed advanced analytics to meet this requirement. In the process it discovered much more about its customers' experiences and pain points, leading to significant changes in several of its products and customer services.

Beth Viner, general manager of Kickstarter, a disrupter in its own right, agrees with Mr Fabara's sentiment. This not-for-profit helped to bring crowdfunding mainstream, but pursues innovation today in small as well as big ways. “Innovation isn't always about being new or novel. Sometimes it might involve tiny incremental changes, but they have significant impact; sometimes they might be radical changes that also have significant impact. It's about constantly reorienting ourselves to the outside world.”

IS THE HEALTH SECTOR UP TO THE CONVERGENCE CHALLENGE?

Disruptive forces are battering the health sector from multiple directions. In some countries, governments are changing traditional models of healthcare provision, leading organisations to rethink their business models. In an era of “smart health”, consumers (patients) are increasingly empowered in how they obtain health information, advice and care, thanks largely to technology advances, including telehealth and mobile health. They have greater access to data on everything from hospital waiting times to reading “reviews” of surgeons and specialists. Technology is also making possible enormous changes in how health organisations, from life-sciences firms to hospitals and primary-care practices, deliver medicines and care.

Convergence between the health and technology industries is both cause and effect of these forces, creating a new innovation ecosystem with an increasingly varied cast of actors. Innovative newcomers utilising big data and consumer health technology, for example, are challenging traditional health and life-sciences organisations to operate in different ways. The latter, however, are using the same technologies to respond. The opportunities offered by such developments outweigh the threats, but health organisations need to embrace collaboration with innovative firms in other industries, notably technology, but also financial services, insurance and even manufacturing, to take full advantage.

WHY SILVER IS GOLD

The survey reveals that the over-60s generation is an important driver of disruption in different industries, and nowhere more so than in healthcare. The “baby-boomer” generation is a massive market that is leading the adoption of new healthcare technologies: 87% of survey respondents from this sector say people over 60 are likely to be the first adopters of one or more of their products. This challenges the popular perception of the older generation as being uncomfortable or unfamiliar with technology. People in their 40s, 50s or 60s today are largely at ease with technology, which means that each over-60 generation is becoming more digitally astute than its predecessor.

Cost and efficiency are driving the need for in-home care among seniors. If an elderly person's health status can be monitored at home rather than in a hospital or care facility, the costs are lower for the healthcare institution and the insurance company, not to mention being more humane for the individual. Some monitoring services use basic wearables to detect when a person suffers a fall, and where; however, such devices do not indicate why such an episode happened. More specific wearables, such as those designed for diabetes or heart conditions, report information specific to the disease and to the person, enabling earlier intervention.

GSK, a British pharmaceutical company, is using wearables and other consumer technologies during clinical trials to better understand disease at a personal level. “The emergence of telemedicine, urgent-care clinics, the way your phone is now a health device, and then the very affordable wearable devices that have become commonplace—this sort of consumerisation of healthcare is pushing against what we do in clinical research,” says Julian Jenkins, vice president and head of innovation, performance and technology within the clinical platform of GSK. “We're trying to work out which bits of it might make it easier for us to engage with patients and actually do our clinical research.”

Mr Jenkins describes a recent study, in which stroke patients wore an accelerometer on their spine over two or three days instead of doing periodic ten-metre walk tests between two chairs. This, he says, provided insight into patients' level of activity on the side of the body in which movement had been affected by the stroke. “The wearable is incredibly revealing and could potentially change the way that we understand the response to drugs in that disease.”

AI and robotics are two other technology families that are likely to be disruptive in healthcare provision. IBM Watson AI has been used to identify at-risk patients using information contained in medical health records. In Japan, robots are assisting nurses, and in Belgium they are greeting hospital patients. “Digital assistants”, or AI bots, are being developed that are capable of conducting conversations as well as understanding and expressing human-like emotions. Beyond responding efficiently to immediate patient issues, these electronic companions will help to develop an understanding of patients' rationale for engaging in unhealthy behaviour, such as failing to exercise or neglecting to take medication.

Wearables, AI and robotics are good examples of how convergence between industries—in these cases health and technology—is altering long-established practices and models.

Companies from other industries are also being drawn into such convergence. Insurance providers, for example, utilise data generated by wearables to tailor premiums and policies to individual customers. Manufacturing has long been tied to the health sector, but some care providers and medical practices are beginning to master the manufacture of material and device implants themselves, thanks to 3D printing. Other examples include medical-device and telecommunications companies (see below).

COLLABORATE OR DECLINE

Collaboration between equals, particularly within the same industry, has traditionally not been a widespread practice in the health sector. That is changing, however, partly as a result of the convergence-related disruption described above. Nearly one-quarter (24%) of health-sector executives in the survey say that their companies have formed alliances with partners outside their industry in the past year. As many as 28% have struck an alliance with an organisation inside the industry. “We don't think we can solve everything ourselves, so we look outside to other pharma companies, and maybe even to other industries as well,” states GSK's Mr Jenkins. “That's not something we did much of four or five years ago, [but] we tend to do a lot of it now. I talk to colleagues at Pfizer, Bristol-Myers Squibb, Merck and Janssen on a regular basis,” he says.

Since 2014 GSK's work with competitors has included an in-licensing agreement with Janssen for an antibody used to treat severe asthma, joint cancer treatment research with Merck, a joint venture with Pfizer that is advancing HIV treatment, and a consumer healthcare joint venture with Novartis (part of a larger deal that includes a swapping of other business assets). This collaboration enables GSK and its partners to disrupt the status quo of disease treatment through the joint development, testing and delivery of more effective and new medicines.

Pharma companies are also pairing up with telecoms companies to take advantage of data flowing from connected devices. For example, Qualcomm, an American telecoms equipment company, is working with Novartis, a Swiss pharmaceutical company, on a connected inhaler for chronic obstructive pulmonary disease (COPD) patients, and with Roche, a Swiss healthcare company, on “connected therapy” to improve the monitoring and management of patients with chronic diseases. The boundaries separating health and other industries are becoming increasingly blurred.

THE ENERGY SECTOR WRESTLES WITH DISRUPTION

The energy sector, particularly its large oil and gas producers and power utilities, has arguably proven more impervious to disruptive change than other sectors, thanks partly to its high capital intensity and partly to heavy regulation. Industry structure and some business models are beginning to shift, however, in response to disruptive forces. For example, the use of hydraulic fracturing technology has enabled small oil and gas producers to establish a foothold in the US energy market. Renewables technologies, decades in development, are now commanding the attention of utilities and oil and gas majors owing to their declining costs.2 Residential solar-power generation and storage are beginning to impact markets in some countries. The same is true of business customers' growing use of peer-to-peer (P2P) energy exchanges to obtain electricity, and the prospect that blockchain technology (which underpins the Bitcoin cryptocurrency) is soon to be used for the same purpose. The latter three are likely to change existing power-distribution models.

2Some European utilities are responding by separating their renewables and traditional businesses, ostensibly with a view to prioritising the former. See “New power generation”, The Disrupters, The Economist Films.

As elsewhere, industry convergence is making such advances possible. While the technology and financial sectors are helping to develop P2P energy exchanges and blockchain-supported microgrids, the aerospace industry and car manufacturers are behind other advances, such as the solar roof tiles recently introduced by Tesla.

That said, data from the survey show that the energy sector is somewhat less responsive to customer trends than financial services and healthcare, even if it is responding broadly to disruption. For example, 20% of energy-sector executives cite changing customer behaviours as a disruptive force in their industry, a figure far below those cited by their peers in other sectors. Similarly, while energy-sector C-suites and boards discuss disruption reasonably regularly, they do so less frequently than their counterparts in other industries, such as healthcare and financial services. This is particularly the case when it comes to customer behaviours or the potential for self-disruption—making radical changes to the business. Slightly more energy respondents than their peers in other industries acknowledge “complacency among incumbents” to be a disruption enabler.

Complacency not only weakens established producers' safeguards against disruption, but it can also blind them to energy-provision opportunities emerging in unexpected places. A good example can be found in Africa.

A NEW MODEL TO POWER AFRICA?

Little more than a decade ago, few telecommunications companies thought Sub-Saharan Africa offered much of a market—apart from a few middle-class enclaves. They were very wrong, and their failure to spot deeper changes was typical of incumbent firms focusing on day-to-day market-share protection and not seeing bigger shifts. As the cost of mobile handsets fell and smarter pricing and payment models came into vogue, including through mobile money, Africa developed into a hugely profitable telecoms market.

We may be at a similar juncture with power. Like telephony in previous years, power infrastructure is weak across much of the continent. Grid access tends to be limited to major cities. Most people in Sub-Saharan Africa live without access to reliable electricity. The lack of grid infrastructure mirrors the lack of traditional telecoms infrastructure, both of which create significant market opportunities, rather than being deficits. Most Africans who own mobile phones never had a landline, and those who had one probably switched to mobiles because they provide more capabilities. This mobile infrastructure is enabling connected solar-power energy systems that can be managed remotely, paid for via mobile devices. They have turned energy provision into a viable private-sector business, which the major utilities had long thought to be unviable.

The cost of a basic commercial solar home system must rival kerosene, the commonly used (but very unhealthy, in terms of respiratory disease) alternative, which M-KOPA, a Kenyan solar-energy company, and a competitor, Berlin-based Mobisol, both offer. They sell solar-powered appliances and solar-powered consumer electronics, so that customers can enjoy some of the conveniences that citizens in first-world countries take for granted, such as irons, energy-efficient cooktop stoves and TVs. The solar-power units are Internet of Things (IoT) devices that can be monitored and turned on or off by the provider.

“There's no way the traditional grid infrastructure is going to reach 50% of the population, let alone 100%, so we can fill that gap with this type of model because there is this mobile network,” says Nick Hughes, co-founder of M-KOPA. “It's a fascinating context, because it's going to allow people to reinvent some services.”

Driving the products forward has involved a broader communications campaign to encourage people to value, and be prepared to pay for, reliable services and products. As Thomas Deveau, head of business development at Mobisol, explains: “In Swahili, the local language in Tanzania, there is no word for warranty. When we came in three years ago and said, ‘You know, we're selling this thing and it comes with a three-year warranty’, they said, ‘What is warranty?’ That was a profound moment for me. If you don't have the word in your language, you probably never experienced the service.”

The payment model is innovative. Many citizens do not have formal bank accounts, but they do have mobile phones, which means they can pay M-KOPA and Mobisol via mobile phone-based payment services. Both companies offer pay-as-you-go payment plans, since most customers could not afford to buy even a basic system outright.

The basic M-KOPA kit can be paid off in a year or less; Mobisol offers a 36-month instalment plan. M-KOPA's payment model has a twist: once a system has been purchased in full, it can be used as collateral against a future purchase. Essentially, it's a secured credit line for those who have no access to traditional lines of credit.

“Once they purchase that first asset, we can help them get many things—from cook stoves to smartphones to soil-testing kits,” says Mr Hughes. “It isn't microfinance, it's lending against a couple hundred dollars' worth of kit, but if you don't pay us, then that kit is not going to work.”

M-KOPA and Mobisol may well extend their business models. M-KOPA could extend its secured credit concept to any product it sells to a home or small business. That way, farmers could buy seeds or fertiliser using their solar kits as collateral. Mobisol may extend its customer relationships into other areas, such as education and health insurance. In the case of health insurance, Mobisol could negotiate a group rate and offer premiums as another product to its customers.

SHOULD YOU RESPOND TO DISRUPTION?

Much of the disruption narrative implies that large companies are at fault: they were complacent, too slow to spot changes, or too focused on protecting market share. Illustrative examples have been provided elsewhere in this report. But there are also examples of very large companies which do not fit the trend—which find ways to stay sharp or respond in an agile way to new trends and dynamics.

The survey reveals a number of strategies companies are currently using to address (or take advantage of) disruptive forces. One-quarter of the companies in our survey, for instance, have merged with or acquired a competitor in the past year, and one-fifth have acquired an innovative start-up for the same purpose.

Industry convergence is helping to drive disruption strategies. Recognising the inexorable diminishing of boundaries between industries, companies are actively forming partnerships or involving themselves in networks with other organisations. This is certainly the case in the technology industry, where big companies seek to draw others to their platforms, where they share ideas and help each other improve their products. Among the surveyed firms, nearly one-third have formed a strategic alliance with a company in their industry, and one-quarter have partnered with a player in a different industry. Another one-fifth have engaged with disruptive start-ups in corporate ventures.

Software giant SAP is an example with a cloud platform it calls HANA. According to Steven Shute, its North America chief operating officer, SAP is “co-innovating” with dozens of partners (of different sizes) on the platform and is investing considerable time and money to expand this ecosystem. “Our smaller partners really help us innovate on top of that platform,” says Mr Shute. “We have great technologies, but we're more powerful with partners around us.”

Some acquirers of and investors in start-ups, such as Wells Fargo, also seek to absorb the innovative spirit of their target in the hope of bringing about culture change in the parent company.

However, the ability to be disruptive or respond effectively to disruption mostly originates internally from targeted and sustained efforts to foster a culture of disruptive innovation.

CAN PRACTICE MAKE PERFECT?

Companies take many practical measures to encourage innovation and foster a culture of disruption. Some offer financial or career development incentives to employees towards this end. Many hire in talent from other organisations in the hope of infusing innovative practices perfected elsewhere. Others organise internal competitions to generate ideas; this is considered the most successful action the surveyed companies had taken in the previous 12 months to encourage disruptive innovation.

At Atlassian, an enterprise software provider, competitions take the form of quarterly 24-hour hackathons (“ShipIt Days” in company terminology), during which all staff stop their normal activities to do nothing but generate ideas. Dominic Price, the company's head of R&D, says that the company regularly changes major elements of the exercise to keep it fresh. It does the same, he adds, with other rituals established when the company was young and small. “We hack at our innovation rituals to continually make them more fun, more interesting and more challenging.”

“WHEN YOU THINK ABOUT DISRUPTION, YOU THINK ABOUT INNOVATION. I THINK IT IS VIRTUALLY IMPOSSIBLE TO DO THAT TODAY WITHOUT HAVING A DIVERSE WORKFORCE. ONE THAT NOT ONLY MIRRORS YOUR CUSTOMERS BUT CAN TAKE ADVANTAGE OF ALL THE BEST AND GREATEST IDEAS, NO MATTER WHERE THEY COME FROM.”STEVEN SHUTE, COO, SAP NORTH AMERICA

Among the surveyed firms, other steps that have a significant impact on the ability to engage in disruptive innovation include the temporary seconding of workers to other organisations. For nearly half of respondents, going outside the company's four walls is vital to avoid group-think and to stand a better chance of identifying disruptive trends. Shutting out “noise” is also important, which is why most surveyed firms create isolated spaces where employees can engage in “deep work”. 3

3Cal Newport, Deep Work: Rules for Focused Success in a Distracted Word. Grand Central Publishing, 2016.

There is less consensus among executives about the merits of organisational change as a means of encouraging disruptive innovation. For example, just under one-half of the firms in the survey have a dedicated unit responsible for monitoring potentially disruptive technologies, but the majority (52%) do not. The larger the enterprise, the more likely it is to have such a unit. (And in the majority of cases, such units report directly to the CEO.) GSK is one large corporate without such a unit. Mr Jenkins believes it would be too unwieldy, and thus ineffective. Instead, he says, each business unit and function has people tasked with monitoring emerging technologies and other potentially disruptive trends that are specific to their area. “Having one central group would be so general that you would miss the opportunities.”

PURPOSE MAKES THE DIFFERENCE

Responding to disruption is not just about incentives, competitions, organisational reforms or acquiring innovative companies. There is a critical cultural factor at play, which affects how innovative a company is.

Restructures and tweaks to the “organisational chart” alone will not make a company more innovative. An atmosphere which inspires and engages the workforce will.

For many start-ups and small businesses, a culture of innovation is part of their DNA. For big ones, developing and sustaining it—and especially regaining it once the organisation becomes larger and more multi-layered—is extremely hard.

Success relies on motivating employees, both through inspiration and through practical measures. Foremost for survey respondents is inspiration, involving management's ability to articulate the organisation's high-level aspirations and purpose. Tammy Erickson, executive fellow in organisational behaviour at the London Business School, believes that to attract, motivate and retain innovative people, senior managers must articulate a sense of purpose that keeps staff energised, committed and passionate.

From her research, Ms Erickson has identified specific categories of workers who are integral to an organisation's ability to innovate and disrupt: “world changers”, who care deeply about the broader social purpose of the work they are doing, and “risk-takers”, who are disruptive in order to win big. Clarity about the purpose of the organisation matters deeply to both, and organisations must articulate how they offer such outlets.

Kickstarter, according to Ms Viner, seeks to hire and develop both types of people. Uniting them and the rest of the staff, she says, is a strong set of beliefs about the organisation's mission. “What I think differentiates us, and has helped us to be disruptive, is a belief system that is foundational. Everyone who works here has that belief system in what is right and moral.”

Atlassian management, too, reinforces the message that the firm's activities serve a higher purpose, and this is reflected in its hiring practices, says Mr Price. “We hire people who have an innate curiosity, a desire to change the world in some way and have an impact, even if a small one.”

As part of articulating organisational purpose, it is also helpful for companies to show to employees how their work impacts their customers and improves their lives. “We're keen to share customer stories with employees regularly,” says Mr Price. “The ones that turn heads are where customers relate how they've used our products to enable and drive change in their business. They not only give you inspiration about what you've achieved, but they've then forced us to think: How can we do this for other organisations, and with other products?"    

LESSONS IN DISRUPTION

There is no fail-safe formula to ensure that a new, technology-enabled business model or product will prove disruptive, or to protect an incumbent from being dethroned. The past two decades are dotted with examples of potentially trailblazing products, services or models that either failed to gain traction or, after initial success, could not be sustained. There is likewise no assurance that deep pockets, access to brilliant and innovative talent and big R&D budgets can enable incumbents to successfully fend off disrupters.

However, a handful of lessons emerge from our research that could apply to companies, whether incumbents or challengers, in any industry or market where disruptive forces are beginning to make themselves felt.

CAN YOU SEE DISRUPTION COMING?

Disruptive forces can emerge from where executives least expect it. The innovators in electronic micropayments worked not in financial services but in the mobile industry. And their business model first took root not in Europe or North America but in Africa. Trend-spotters must cover the globe and many fields of activity.    

ARE YOU LOOKING OUTSIDE YOUR INDUSTRY?

The most disruptive threats to and opportunities for companies are more likely to originate in a different sector from their own. Companies must actively seek out innovative ideas and partners in other, innovative industries. Collaboration in loose alliances and networks may be more fruitful than acquisitions.

IS YOUR ORGANISATION COMMUNICATING ITS PURPOSE CLEARLY?

Company leaders must articulate a clear sense of the organisation's purpose. Practical steps to cultivate a culture of disruptive innovation are important, but it is purpose that attracts creative people and makes them want to “dig deep” and innovate.

ARE YOU FIGHTING COMPLACENCY?

No matter how regulated or capital-intensive, all industries will be disrupted in some way during the long course of their development. Clayton Christensen believes that business success eventually breeds complacency, even among disrupters. Fighting complacency may be the toughest disruption challenge that businesses have to face.

Link: https://eydisrupters.films.economist.com/thriving/