AUGUST 2014 / NO. 1
TAGS: NOKIA, INTEL, ANDY GROVE, ONLY THE PARANOID SURVIVE, NOKIA, HUAWEI, CHINA, BOOZ & CO, NETFLIX, FOX TV

How to lead the organization through the dynamics of disruption?

“One cannot manage change. One can only be ahead of it. In a period of upheaval, such as the time we are living in, change is the norm. To be sure, it’s painful and risky, and above all it requires a great deal of hard work. But unless it is seen as the task of the organization to lead change, the organization will not survive”, Peter Drucker, Managing Challenges for the 21st Century
In the previous post “HOW DO WE MANAGE DISRUPTION?” we described how Nokia’s market position in 2010 was compared with a blazing oil platform leaving employees the choice of either jumping into the water even it was 100 meters deep and freezing cold, or staying on the rig and getting burned. In 1996, Intel’s Andy Grove of Intel published “Only the Paranoid Survive”. Intel is the global market leader in semiconductors and rumors speculated that Nokia might be acquired by China’s Huawei. Nokia and Intel both faced strong disruption. However, in the late 1990s Intel successfully managed to deal with this fierce disruption. Booz & Co. recommends three ways for management to successfully lead one’s organization through disruption:
  1. Preparation: anticipating potential disruption and putting those capabilities in place that will be needed if and when the time comes
  2. Response: when a disruption occurs, management must develop the appropriate strategic and operational plans. These could involve be fewer products and services, launching new waves of innovation, business transformation or initiating M&A activity
  3. Implementation: setting the response in motion and carrying it out sustainably to ensure that the company realizes its objectives.
Consider the following example of disruption: in the Netherlands the television sector is dominated by the Dutch Broadcasting Organization, the commercial channels/stations, the internet providers and the cable operators. Some years ago, two new players announced they were entering the competitive arena, which could cause disruption in the Netherlands: Netflix and Fox.TV. The key question was to what extent the current players were prepared? The success of a company’s strategy often depends greatly on the strategies of its competitors. I had assumed that at least some of the current players would have had state-of-art Competitive Intelligence Capabilities as well as a radar for monitoring their business environment. However, they did not.
Our recommendation was: firstly, to find out what the current and future strategies were of your rivals in the competitive arena, and secondly, to fine-tune your own strategy and take a different position than your rivals did. One must start immediately and take care not to fall into the confirmation trap.
“The confirmation trap is what many decision-makers fall into when they look only for information that supports their hypothesis”
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