JULY 2014 / NO. 2
TAGS: DISRUPTION, COMPANY RADAR ROOM, EARLY WARNINGS, NOKIA, STEPHEN ELOP, MI7, ANDY GROVE, ONLY THE PARANOID SURVIVE

How do we manage disruption?

“How can you make sense of the future, when you only have data about the past?”, Clayton Christensen
How do we manage disruption? Or more importantly, how do we recognize its dynamics, anticipate its likely effects, develop and manage responses and sustain the necessary changes? Disruption can come in any number of forms. These include shifts in the dynamics of competitive advantage, technological breakthroughs, shifts in cost structure, new rivals entering markets from converging sectors, regulatory upheavals, economic downturns, idiosyncratic geopolitical and natural events, unforeseen internal company events, deregulation, re-regulation, and political turbulence.
For each company in every industry the first stage in managing disruption is to learn to anticipate and recognize the signs before this occurs. This is crucial to company survival. How can we recognize disruption before it occurs? Does the company have a radar to see disruption in a timely fashion? Does the company have an Early-Warning System in place? Does the company possess the capabilities that will be needed when the time comes to act? If the answer is no, then what does it have? Or will this be the oft repeated question in too many boardrooms be: why didn’t we see this coming? One is far already too late if this question is asked, and there is no point trying to blame anyone but yourself!
Consider Nokia: when Stephen Elop became the new CEO of Nokia in 2010 he compared the company’s situation to that of standing on a blazing oil platform. There was so much disruption that he stated that Nokia had to go faster, harder and more aggressively than the company had ever gone before. He left employees with two choices: “either jump into the water even if it’s 100 meters deep and freezing cold, or get burned”; this was a clear statement that Nokia would be fearless in facing up to its dire competitive situation.
We all know many examples similar to Nokia facing such a dramatic strategic crisis. And new examples such as Nokia will surely occur in the future. What have we done to prepare companies to cope with such dramatic situations? We have a simple solution and it is simply called a company radar: MI7. However, we all tend towards complacency. One of the most famous examples of successfully managing disruption was published by Intel’s founder Andy Grove. Entitled “Only the Paranoid Survive”. This is one of the most impressive management books I have ever read.
“We have to go faster and harder and more aggressively now than we have ever gone before”, Stephen Elop, Nokia’s new CEO, in 2010
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