Managing the Threat of Business Disruption

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The 4 steps of Disruption Management

This article is a guest post from our partners Dr. Jay Chopra, of Making Shift Happen, and Damian Costello, of Decode Innovation. View their blog series here.

Are your past successes making you more susceptible to being disrupted? Does your position in the market make you a more attractive target to disrupt? Has COVID-19 given your potential disruptors time to find new ways of undermining you?

COVID-19 has caused havoc to all businesses, but that does not make it a disruption. If your business is prepared to remain resilient during a period of disruption—in hindsight, the disruptive phase may be viewed as simply an interruption.

COVID-19 will only become a disruption for your company, if subsequent events conspire to permanently ruin your business model, or worse, make your entire marketplace obsolete. Expedia’s introduction of self-service air travel bookings did both. It disrupted the airline industry by forcing it to accept the low fares business model, while at the same time making retail travel agents obsolete. It saw giants such as Delta, and United Airlines go bankrupt, while leaner and more customer-aligned players like Southwest and Ryanair went on to dominate the skies. Any business, lean or extravagant, can use Disruption Management to ensure it comes out of a disruption soaring like Southwest, rather than grasping for survival like United. 

Disruption Management is a systematic process, but it differs from other disciplines in that it requires a business to take action before knowing what the endgame is. Faced with a complete market disruption, like the emergence of digital technology in air travel, organisations will need to make speculative investments in new ways of doing business. Timing is the most difficult issue in these situations. Act too soon, and you can make very expensive mistakes, but wait until the right move is clear and the lead gained by the competitor who showed you what that move was, may be unassailable.

How does disruption management work?

Disruption Management combines cutting-edge Strategy, Innovation, and Change Management with Scenario Planning to help clarify what you need to do, and when you need to do it. It allows you to control a situation that is more volatile and ambiguous than most leadership teams have ever experienced. 

While a post-disruption future is difficult to predict, a spectrum of possible future business models can be defined, and a small team can be prepared to specialise in each model. These teams can then look out for the weak signals that might indicate what is about to happen. Easily overlooked signals in social media, in academia, from customers, or from other sources, provide critical clues to the most appropriate business model to follow. Market volatility may force your company to act before your options list gets reduced to one clear winner, but by following the Disruption Management process, you will have a team prepared for every eventuality.

Herrmann’s Whole Brain® Model four thinking styles (the experimental, the relational, the practical, and the analytical) are represented in the four steps of the Disruption Management process. Furthermore, each step has four subsections that also represent the four thinking styles. In this way, the transformational power of Whole Brain® Thinking is fully integrated into Disruption Management. The four steps of which are:

  1. Create a wide range of potential business models
  2. Collaborate on the choice of business model
  3. Complete the transformation to the chosen business model
  4. Confirm that the new business model performs as predicted

Step 1: Create a wide range of potential business models 

(The Experimental Mindset)

A core team is first formed from a multi-generational and multi-disciplinary group of the most trusted individuals in the company. This program considers Diversity and Inclusion critical to the responding organisation’s ability to manage disruption, as it is the diversity of potential disruptors that makes disruption so dangerous. This new team will initially have to operate confidentially, as some of their options may be too dangerous to share, until they have been researched properly. 

The plan here is to generate and present a diverse list of potential business models, under the assumption that if a broad enough list is created, the business model that eventually wins out in the marketplace will be in there somewhere. 

This program provides your in-house team with all the tools, frameworks and supports needed to stand up to even the most creative of the competitors.

This step delivers five distinct business model options.

Step 2: Collaborate on the choice of business model 

(The Relational Mindset)

This step sees the core team collaborate with relevant internal and external stakeholders. It is about preparing for, and collating, the views of anyone who’s opinions may impact the success of your business. 

The plan is to select the business model that is the most honest reflection of the emerging market’s needs. The challenge to in-house teams is that they, and any customer they might talk to, will have a bias towards what they already know. Henry Ford who disrupted the entire fabric of American society with the affordable automobile, famously said, “If I had asked people what they wanted, they would have said faster horses.” This step in Disruption Management makes sure that your people consider automobiles, as well as fast horses.

The program provides the tools, frameworks, and support to cost-effectively prototype, socialise, and analyse the options and to build the business case for the best one. They may also suggest that you hedge your bets by investing in more than one future business model.

This step delivers a business case for one or more new business models and the transformations required to make them a reality.

Step 3: Complete the transformation to the chosen business model 

(The Practical Mindset)

In this, the biggest of the four steps, the Disruption Management process helps plan and supervise the execution of a complete business transformation. To do so, the initial core team will need to be upgraded by the addition of subject matter experts in the technologies and disciplines that the new model introduces. Here again is an opportunity to tap into the power of Diversity and Inclusion by ensuring that the Whole Brain® thinking styles of the experts enhance the cognitive profile of the team. 

The plan here is to set out the reasoning, the requirements, and the definition of success for a Culture Transformation and a parallel Systems Transformation. Because of the scale and complexity of business restructuring, each system; operations, technology, finance, logistics, etc. will need to plan and execute its own transformation, with the Disruption Management team coordinating between systems to ensure that the transformed organisation and its offerings are what the new market needs.

The program provides the tools, frameworks and supports they will need to plan and coordinate a successful company-wide Culture Transformation and a successful company-wide Systems Transformation.

This step delivers a transformed business with competitive offerings and processes as well as an aligned and highly motivated Whole Brain® workforce.

Step 4: Confirm that the new business model performs as predicted 

(The Analytical Mindset)

This is the simplest, but arguably the most important step in the process. It involves maintaining the excitement and engagement generated in the transformation, while providing an honest critique of the efficacy of the new model. If the model is not living up to expectations, the Disruption Management team needs to advise leadership on whether the problems can be addressed locally or if more systemic changes will be necessary. 

Transforming a company, a division, or a site successfully is a huge achievement, but one that must not lead to complacency. The market that did not care about disrupting you once, will not care about disrupting you again. Retaining the Systems Transformation people on your Disruption Management team will keep you vigilant and one step ahead of further disruptions, while retaining the Culture Transformation people will allow you to continually reinforce the agile and effective Whole Brain® culture that the transformation created.

Fortunately, major disruptions are rare and most of the transformed companies who manage to take a strong position in the new market get to sustain their successes, illustrating just how big a difference mastering Disruption Management can make.

For more information about how your business can harness cognitive diversity as a method of disruption management, both during and after the COVID-19 crisis, please contact us here.

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This article was originally published on our US site. It has been updated and republished here to ensure our readers don’t miss out on valuable information.