Patterns of Disruption
How can I anticipate the unexpected threats that could devastate my business?” This is the question that keeps us up at night. We fill our days with managing the expected, the things we can control: having the right talent, developing the right capabilities, getting resources to the right place at the right time, maintaining margin, growing revenues, delighting customers. These expected challenges are challenging enough. But what about the unexpected, the disruptive?
Unexpected, disruptive types of threats tend to be based in a new approach, a disruptive strategy, that was not previously feasible or viable in a given market.1 Something changes in the larger environment - technology or customer preferences or supporting infrastructure/ecosystem - to make the new approach possible and profitable. The incumbent, preoccupied with the status quo, doesn’t recognize that the ground beneath it is shifting. Hampered by the nature of the existing business, the incumbent struggles to respond effectively as the new entrant takes market share. The same aspects of the incumbent’s business that made it successful also make response difficult and tend to act as blind spots, preventing it from fully recognizing the threat when it is still on the horizon.
As the first of a two-part series, this article takes an incumbent’s point of view to understand what turns a new technology or new approach into something cataclysmic to the marketplace - and to incumbents’ businesses. Why are these developments hard to see coming, and why are they difficult to respond to effectively? In search of patterns, we looked far and wide across arenas as varied as voice-over-IP, furniture manufacturing, fantasy sports, and travel guides. We analyzed dozens of cases from the past 20 years, including some favorite “unicorns”—the unprecedented pool of tech start-ups with funding-based valuations of $1 billion or higher2—to home in on the specific ways threats manifest in a world rapidly becoming digital. We also considered how the next wave of exponentials (including the Internet of Things, 3D printing, and Blockchain) might fit this dynamic. We looked for cases where a leading incumbent had been