Disruption dominates the executive agenda
Future of risk series: Trend nine
Business leaders are increasingly focusing on risks that threaten to disrupt the fundamental assumptions of their organization’s strategies. Prioritizing such risks has become increasingly crucial—these risks cannot be handled in typical organizational silos, and they can destroy sources of value creation for the business. Yet, they also have the potential to form the basis of game-changing moves for an organization, if handled well. Disruptions in the forms of emerging technologies, business model transformations, and ecosystem changes will force executives to make significant strategic choices to drive organizational success.
- What forces are driving this trend?
- What are the opportunities?
- What are potential threats and pitfalls?
- Case studies: Where is this trend already in play?
- Meet the authors
What forces are driving this trend?
|Globally distributed business models are increasing dependencies on stakeholders across geographies, making brands more vulnerable to geopolitical risks|
|Growing connections between businesses are expanding the sources of potential disruption|
|Advancements in social, mobile, analytics, and cloud-enabled emerging technologies are creating opportunities for startups to disrupt incumbents|
|Traditional industries are converging to create new markets|
|Business model innovation (such as sharing-based, freemium, and subscription-based) is driving organizations to constantly reinvent themselves
|Customers are increasingly expecting more personalized products and services
What are the opportunities?
- Continuously monitor the changes in the environment to determine which could be truly disruptive
- Revisit the approach to corporate strategy development to introduce more agility, adaptability, and responsiveness to emerging threats
- Identify organizational blind spots, built-in institutional challenges, and personal biases of senior management that can get in the way of action
- Employ tools and techniques such as real-time monitoring, scenario planning, stress testing, war-gaming, and simulations to drive higher levels of sophistication in managing risk
What are potential threats and pitfalls?
- New startups and cross-industry players can catch organizations off-guard if they don’t have strategic threat monitoring and identification mechanisms in place
- Senior management can become overwhelmed by the sheer volume of complex, real-time data, leading to ambiguity and indecision
- Innovation can be stifled by the organization’s core business assumptions or structural limitations
Case studies: Where is this trend already in play?
Media companies such as HBO that were under the threat of disruption by online streaming players have now reinvented their strategies by adapting to the fast-changing business environment. They have embraced online streaming and have introduced a host of related offerings, thus posing competition to existing streaming content providers.1
3D printing is transforming the health care sector, with many incumbents adopting 3D printing for manufacturing medical implants, dental products, and bio-printed tissues.
To counter the growing threat of car sharing companies like Zipcar, German automaker Daimler has launched its own car sharing service called car2go. Through car2go, Daimler aims to disrupt the disruptors like Zipcar, not by copying their business models, but by creating its own unique value proposition—a “roving” model in which its cars have no fixed spaces and can be parked anywhere to end a trip.2
1 Emily Steel, “Netflix, Amazon,and Hulu no longer find themselves upstarts in online streaming,” The New York Times, March 24, 2015, http://www.nytimes.com/2015/03/25/business/media/netflix-amazon-and-hulu-no-longer-find-themselves-tvs-upstarts.html?_r=2.
2 Thomas Bartman, “Confronting a new-market disruption Part 3 – Car2Go,” The Forum at Harvard Business School, November 19, 2015, https://medium.com/bsse-gets-social-media/confronting-a-new-market-disruption-part-3-car2go-7e01398fb458#.recadnmfa.