In the week or 20 – 24th March 2017 if have tweeted intensively about hrdisruption. That twitter discussion is the basis of a series about hr disruption. This is the first one.
Let’s first start with disruption. What is it? Is it another word for change? Is it intense change? Is it fast or deep change? There’s a lot of talk about disruption. The term disruptive innovation was coined by Clay Christensen. It’s a word used to describe the process “whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses”.
That’s it. And by doing so that smaller company disrupts not only the smaller company, but also the bigger one.
In the face of disruptive change established companies seem to have difficulties in responding. Why is that, one might ask.
When a company is confronted with a new product, it often does not see the risk. That is because the company focuses on another customer segment.
But the customers become interested anyway, when the product is good enough. And when is that? When the product is good enough in terms of performance and superior in one element such as price, size, emotional benefits, …
So what a company should not do is to neglect that new offer. Instead, it should compare its product to what the customer wants. The problem of established companies is often that it over-engineers its product by adding features that make the product more expensive without having an advantage to the customer.
In this HBR article you can find a summary of disruptive change theory. But these are some conclusions from that article:
- 1. Disruption is a process.
- 2. Disrupters often build business models that are very different from those of incumbents.
- 3. Some disruptive innovations succeed; some don’t.
- 4. The mantra “Disrupt or be disrupted” can misguide us.
It’s the last point that is intriguing. We hear that phrase a lot. But it’s not a dichotomy.
Disrupt or be disrupted?
It’s a mantra. When facing disruption, companies should not panic and dismantle their existing business. It’s commonly accepted that when companies want to disrupt, they should do it next to their existing business. So companies will manage both a traditional and a disruptive business.
I strongly believe that every sector and industry will be disrupted some day. I’m not sure that this is in itself new. There have been disruptive technologies before. These technologies have replaced incumbent technologies. However, these changes took some time. That has changed. Some disruptions are extremely fast. The traditional process of adoption has been replaced by a shark-fin shaped innovation curve.
Should we be afraid of Disruption?
There are basically two ways to look at disruption. We can fear it and be paralysed. Or we can embrace it and see it as an opportunity. Probably you need to do both. If you’re in a traditional business you might dread the day a young start-up eats away your market share and your profits. But instead of dreading, an established company should innovate, change, disrupt, check the disruptors, … A passive approach is never the right approach.
My next blog will be on HR Disruption: 3 Lenses on HR Disruption.
I am a bit puzzled by the concluding remarks. You suggest that we should both fear disruption and be paralysed by it, and embrace it and see it as an opportunity. You also say that a passive approach is never the right approach. The first option seems to contradict your conclusion: isn’t being paralysed by fear adopting a passive approach? And what would you say are the benefits of not just embracing disruption and pursuing the opportunities it offers, but also fearing disruption and being paralysed by it?
As you say earlier, disruption as a phenomenon is not new. Blacksmiths were disrupted by the advent of motorcars. Corner shops were disrupted by supermarkets. Book stores were disrupted by Amazon. Flag carriers were disrupted by EasyJet and Ryanair. European and American automobile manufacturers and makers of consumer electronics were disrupted by Japanese ones.
Is this different from the natural evolution of products and services that is inevitable in a market economy? I’m not sure. Perhaps the shock of a rapid, destructive disruption is the result of deep complacency of the incumbents. Nothing’s forever – whoever you are, your customer will always be attracted by a better or a cheaper product. The thinking that enables a disrupter to disrupt is not the exclusive domain of new startups. The best way to defend against being disrupted is to cultivate progressive thinking and to not be complacent.
So I think fearing disruption and being paralysed is not a good approach. I agree with you that being passive won’t help, but being active is not necessarily about “embracing disruption” either. Disruption is the consequence of an innovative competitor catching out a complacent incumbent. Perhaps the better approach is to avoid being disrupted by ensuring you stay attuned to your market, and understand and indeed anticipate the evolving needs of your customers.
That applies in the actual commercial market out there, but just as much to the HR profession and its internal ‘customers’ within an organization: management and employees.
Thanks for your comment. The phrasing might be strong and maybe I’ll adapt. But what I want to say is that there are two approaches that are parallel. On the one hand we should hold on to what we have (even when disruption is going on, and surely when it’s still profitable) and pray it’s not going to be disrupted fully. But that alone is not enough because it’s passive and I expect every industry will experience some kind of disruption.
So organizations should not wait and try and create or be a part of disruptive processes.
I assume you need to do that in a separate part of the organisation or even in a different organisation.
I think I see what you mean, but I wouldn’t recommend any of my clients just pray they won’t be disrupted fully. 🙂 Disruption is an instance of natural evolution of supply meeting evolving demand, and a more effective way than praying to avoid being obliterated is to be vigilant and read the market proactively.
The Skunk Works concept is an example of a two-pronged strategy in which the legacy product or service is maintained while a new, disruptive one is being launched. But I don’t think it is necessarily the right or the only way to do this—it depends very much on the external conditions, as well as on the nature of the company (e.g. its structure, culture and size).
Maybe you can use the literature on organizational ‘ambidexterity’.