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Posts tagged with ‘christensen’

Postnormal Disruption Calls For Postnormal Strategy

I am leery of pronouncements coming from Harvard Business Review, but I found a recent piece pretty smart:

Larry Downes and Paul F. Nunes, Big-Bang Disruption

The Innovator’s Dilemma, Clayton Christensen warned incumbents to recognize new entrants’ picking off low-end customers as an early indicator of industry transformation—and as a signal to begin experimenting with emerging technologies while there was still time. Surviving disruption, his research showed, often required a separate organization to incubate a competitive response. If you did everything right and the stars aligned, you could then move the new product into the market using your company’s existing infrastructure and advantages of scale, making up quickly for lost time.

None of that was easy, but it was at least possible. Today, given the potential for “sudden death” from a big bang, you may have no time to develop an incubated alternative.

And the new footing for this postnormal age? The authors make some suggestions:

See it coming — Go find some visionaries — which the authors call ‘truth tellers —  because early market-based experiments will fail. They mention Yukiyasu Togo of Toyota, who pressed for the launch of Lexus, but had to threaten to quit to get them to listen.

Slow the disruptive innovation long enough to better it — You can’t stop it, but you can deflect. For example, an established company can lock customers in to long-term contracts based on lowering prices. But this is just a stalling technique, to buy time.

Get closer to the exits and be ready for a fast escape — Some times the only way to win is not to play at all. Instead of selling itself off while it still had value, Border was liquidated. 

Try a new kind of diversification — ‘Think again of Amazon, which isn’t so much a set of businesses as it is a technology platform that allows the company to repurpose its intangible assets—its expertise in e-business, its remarkable efficiency in forming collaborative partnerships with thousands of other businesses, and its leadership in software virtualization—as market conditions change.’

The authors offer this:

You can’t see big-bang disruption coming. You can’t stop it. You can’t overcome it. Old-style disruption posed the innovator’s dilemma. Big-bang disruption is the innovator’s disaster. And it will be keeping executives in every industry in a cold sweat for a long time to come.

In a world moving so quickly, and where everything is connected, the lag between the moment when all the factors in a market niche come together to allow a big bang change and the moment of widespread adoption of that innovation has fallen to just a year or so, today, and in the near future it could be even less.

Long-term strategic planning is obsolete. Near term strategies based around speculative design is the only hope, and yes, companies should be looking for ‘truth tellers’ who have consistently presaged major market shifts. That vision, to see the ‘turning point’ in markets, is the only means to future proof a company, now, not planning.

We are in the capitalist’s dilemma today. Investors continue applying doctrines that were appropriate when capital was scarce. But because today capital is abundant and the cost of capital today is essentially zero, the same rules are the wrong rules. It’s as if our leaders in Washington are standing on a beach holding fire hoses full open, pouring more capital into an ocean of capital.

Clayton Christensen writing on why pouring more money into banks won’t jumpstart the economy. Money has become a commodity, and investors have lots of it, but no safe (‘relatively safe from uncertainty’) investments.

We have uncertain tax policies, uncertain political alignments, uncertain geopolitics: so everyone is waiting on the sidelines as the temperature rises, droughts continue and the water wars start, food prices rise and the poor begin to go hungry, and the liberal/conservative face-off yields no answers.

The postnormal is an era defined by dilemmas to face and straddle, not problems to be solved. Our analytic approaches — that worked reasonably well in the postmodern industrial era and earlier — bring little insight here, if any.

And the majority of the elites and nearly all of the average citizens think we are still in the past era, expecting a conventional roller coaster ride through boom-and-bust, wondering ‘when will things get back to normal?’. But we have moved past that, into a time where we can’t get back to normal. The only way out is ahead, into a postnormal frame of reference, postnormal responses, and a postnormal realignment of the challenges and resources we share, and new perspectives on how to get clear of the trappings and entanglements of the past.

(Source: CNN)

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