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February 10, 2014

Disruptions

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No amount of planning or intelligence can predict everything. When Earl Woods began to coach his young son, Tiger, he employed an interesting technique. In a game known for quiet and focus, Earl introduced noise and distraction. As this USA Today article recounts, “He tossed balls in front of Tiger while he putted. He dropped bags of clubs behind Tiger when he hit tee shots. He’d cough during the backswing.” Why? Because disruptions happen. They happen in golf. They happen in life. They happen in business…no matter how careful you are. Imagine you are a U.S. manufacturer, who was hoping to gain a competitive advantage by moving some of your products to the lower-labor-cost environment of East India. A week before production was set to begin, a monsoon wiped out the factory. Or, perhaps you’re a leading jewelry manufacturer who was feeling good about your position and adopted a more-of-the-same policy.

 

But then you were stunned when you began losing share to an upstart company that was marketing jewelry through new channels such as wine bars, sporting events, and college sororities. Maybe you’re a small, independent film company that invested your borrowed capital in a movie with a story topic no one had ever seen on the big screen before. Then you found out from Variety that a Hollywood company with far deeper pockets was coming out with a similar movie at almost the same time. Disruptions.

 

The Inevitability of Disruptions

In his 1895 play, An Ideal Husband, Oscar Wilde wrote, “To expect the unexpected shows a thoroughly modern intellect.” Given the realities of today’s marketplace, we might add that such an expectation reflects not only a modern, but also a necessary intellect. If you think you can roll out your strategy without the unexpected sooner or later impinging on it, you’re not living in the real world. Sure, there was a time when business was largely predictable. Few competitors, slow advancing technology, and predictable markets made for reliable forecasting. Those days are gone. In the Strategy 3.0 world, disruptions are inevitable. Disruptions can be devastating or merely frustrating. They can be long lasting or temporary in their influence. They can come from inside or outside the organization. But one way or another, disruptions will come. You can be the smartest person alive, and have the most well thought-out strategy ever, but you’re still vulnerable to disruption. Why? Because you’re not in control of everything. None of us is. Here is a sampling of areas that regularly hand out I-didn’t-see-it-coming surprises:

  • People’s health. What if the visionary founder starts showing signs of dementia?
  • Macro economics and markets. Not even Warren Buffett has more than a minuscule influence over these. We can only react.
  • Weather. It’s tough to be an outdoor wedding organizer in the middle of the rainiest June in decades.
  • Accidents, production mistakes, and plain old bad luck. Pulping the entire print run of a book with a misspelled title on the cover is going to further slim an already anorexic profit margin.
  • Competitors. This is a big one—and the main reason that disruption is becoming more and more common these days. There are others out there who are deliberately trying to alter the playing field under your feet. One article said, “Disruptive innovations are like missiles launched at your business.” And in fact, because there is so much innovation in the world today, a pervasive entrepreneurial spirit, and social media at our fingertips, the time lag to learn and try is practically nothing. Somebody else can disrupt your strategy, or at least a part of it, overnight.

Are you scared yet? Dealing with Disruptions The solution to disruption is not to become fearful or fatalistic. You can, and should, keep planning. You can, and should, keep looking for ways to minimize risk. But at the same time, stay alert to what’s going on all around you. Make sure your strategy is flexible enough to allow you to do some improvising when the unanticipated shows up at your door. And remember, disruption is not all bad. If you’re smart enough, fast enough, and agile enough, maybe you can find a way to take the new reality that has been sprung on you and turn it to your advantage.

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