Disruptive Growth and M&A
A Market Survey
Changing customer demands, technology shifts and industry convergence put pressure on corporations and whole industries. However, these challenges can also be an opportunity. This article provides insights on how corporations can leverage disruption and its potential for exponential growth.
Disruptive trends offer potential for exponential growth
Disruptive Growth is characterized by a new business model that is different from the core business, based on disruptive trends and driven on a corporate level. Keeping its transformational nature in mind, it offers the potential for exponential growth, which can be experienced via four key growth channels: Build, Partner, Buy, and Invest.
Corporations need to establish the right capabilities to fully leverage disruptive growth opportunities
In order to capture the full growth potential, all channels require certain capabilities along the deal and venture lifecycle. The foundation of the lifecycle is the company’s disruptive growth strategy, which requires the right leadership mindset and risk appetite as well as a clear vision of the future. Based on the strategy, deal and venture screening capabilities have to be built up. These allow to filter targets quickly and at an early stage so the deal or venture can then be executed utilizing a suitable operating model. In the long term, returns can only be delivered by establishing an effective portfolio management.
Despite the existing awareness of the growth opportunity, common factors hinder Disruptive Growth
Most industries have understood the great potential of Disruptive Growth as our study shows that nearly all participants see disruption as an opportunity. Furthermore, they believe that their industry is already or will be disrupted very soon. However, having analysed the capabilities of the surveyed companies, the results indicate a significant mismatch between reality and self-perception. While most of them feel well prepared for the challenges ahead, the majority is not yet using all channels and therefore does not realize the full potential of disruptive growth. Besides, common factors, such as silo thinking, failure intolerance as well as mismanagement of funding allocation hinder disruptive growth. Thus, corporations leave behind major opportunities. To fully leverage the potential of disruptive growth, they must optimise their capabilities along the deal and venture lifecycle as well as across all four growth channels.
The objective of the study was to assess the industries’ perceived readiness for disruptive growth based on the defined capabilities, as well as the current utilization of growth channels. Company leaders across several industries, such as Financial Services or Consumer and Industrial Products, were asked how they react to disruption and how they use those channels to remain competitive.