Self-disrupt or self-destruct

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Self-disrupt or self-destruct

Disruptive M&A is the future of consumer business

Disruptive M&A will be key to retaining the future consumer for established companies. We will help you make disruptive M&A a success. Download our report to get started.

Technological advancements, changing customer preferences and an evolving regulatory landscape are reshaping how products and services are developed, delivered, and consumed. Well-established consumer product companies are finding that their household name brands are vulnerable in this new environment and that their traditional advantages of economies of scale and scope are no longer enough to ensure revenue and future growth.

Challengers

As traditional sector boundaries blur, opportunities emerge for non-traditional competitors to enter markets with new offerings. Asset-light, digitally-native start-ups, unhindered by organisational inertia such as standard operating procedures, risk controls, approval processes and multiple layers of decision-makers are rooted in disruptive technologies and agile business models. Their offerings don’t use retro-fitted applications of technologies such as artificial intelligence, cognitive computing, IOT, Big Data or robotics, they are using them by design. And with consumer behaviour and large capital investments shifting, these challenger start-up brands are rapidly capturing market share in every major product category. Traditional companies often struggle to respond as innovations are stifled within large product divisions or organisations simply fail to recognise them as necessary.

Self-disrupt or self-destruct

Facts, figures and strategic M&A opportunities in Consumer Business

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Collaboration over competition

For sheer survival, traditional companies should adequately respond to the disruptive innovation threats. As Darwin already noted, “It is not the strongest of the species [..], nor the most intelligent that survives. It is the one that is most adaptable to change”. The problem is, these traditional incumbents need to innovate while they are not designed to do so. It requires seeing the new challengers as an opportunity instead of a threat, of seeking collaboration over competition. 

The basic underlying concept is a make-or-buy decision for critical organisational capabilities. ‘Make’ is traditionally considered to be less risky. Roger Martin gauges the failure rate for mergers and acquisitions (M&A) between 70 and 90 percent in a 2016 Harvard Business Review article. Unfortunately, the speed of new players leveraging those disruptive technologies implies time is scarce. Bring on ‘Buy’.

M&A and corporate venturing allows for investing in disruptive technologies and related service models. It provides a way to capture innovation-led growth opportunities and take advantage of the shift in consumer trends. Because, beyond purely providing financial returns and capturing market share, such M&A investments provide access to strategic capabilities, technologies, market channels and talent. This is all needed for today’s and tomorrow’s battle for the consumer.

Making disruptive M&A a success

While ‘disruptive M&A’ is intuitively appealing, making it a success is hard. As Roger Martin notes, “What the acquirer puts into the deal determines the value that comes out of it”.

Our report ‘Self-disrupt or self-destruct: Future of consumer business’ provides a valuable insight into the various developments and innovations, case studies, facts & figures, and other useful information about the changes in the consumer business landscape.

We will help you

We can help you evaluate the strategic choices for capturing innovation-led growth. Our advisers have extensive experience in advising on M&A transactions, optimising business models, and supporting post-merger integrations. Get in touch with our expert team below for more information on how we can help you.

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