Disruption And Value Creation: Unlocking The $5 Trillion Opportunity

In today’s world, the word “disruption” can stop a meeting in its tracks. As things change at what feels like lightning speed, company leaders can feel the pressure to react quickly to keep up. After all, Covid-19 spurned a rapid technology evolution that seemingly occurred overnight, allowing video chatting platforms and collaborative tools like Zoom and Slack to thrive as organizations quickly pivoted to address data concerns in a remote work environment and in-person providers like doctors moved to telemedicine approaches to meet patient needs.

However, it’s critical for companies and leaders to not get caught up in the chaos of quickly evolving technology. This past year has taught us that true business disruption isn’t linear, and it is often leadership decisions—not new market entrants—that determine if a business will thrive. To succeed, leaders must stop chasing the disruptors and instead make bold and proactive choices now to ensure stability in the long term. Through strategic execution and comprehension of the current environment, companies can harness their full potential.

Simply digitizing what you currently do or incrementing your way to the future will not create a sustainable advantage over your competition. Success is achieved by focusing on capabilities and outcomes, not just digital initiatives. For example, Best Buy didn’t just digitize its operations when faced with fierce price competition from online retailers. It went beyond selling electronics to help consumers address the challenges they faced following the moment of purchase, building the Geek Squad. Best Buy deepened its customer relationships by reimagining its role in the world and how digital could help fulfill that role. As a result, it thrived as other big box retailers shuttered stores.

Disruption doesn’t happen overnight

While it may feel like disruption happens at a rapid pace, the reality is that true business disruption actually happens much more slowly than we think. Looking deeper in a diverse set of business sectors, we see this disruption occurring in waves—periods of disruption balanced by periods of stabilization and adoption. But in almost all cases, it is not a random actor that brings about disruption, but thoughtfully built value propositions developed by other leaders.

A prime example is the taxi industry. As GPS and smartphone app technologies undermined taxis’ previous advantages of knowing how to navigate the streets and having a dispatching and hailing system, many companies were left without little to wow (or in many cases satisfy) their customers with. After all, taxi services aren’t known for their consistent customer service, clean cars, or innovative technology solutions, and many cabbies and fleet owners saw little need to change, because they felt that regulation would protect them against the threat of new entrants. The lack of real advantage left the industry highly vulnerable to disruption for years, until, more recently, when faced with ride-sharing companies, many municipal cab companies raised their game through hailing apps and improving other amenities. What position would these companies be in if they had reimagined their place in the world and started transforming years ago?

Instead of focusing on the disruptors, it is important to focus on your organization’s competitive advantage and how you are addressing the problems your customers face.

Thriving during disruption

A new approach to disruption encourages executives to make some of the hard choices now to ensure future success and ensuring the simple question “Do we bring fundamental advantage to our customers?” is answered. If you’re worried about disruption, this is absolutely the best defense that we have seen, and more importantly, it positions you, your leadership team and your organization to shape its own future. Make sure your team answers this question honestly—because the greatest danger of leadership may be not confronting some of the hard realities of your current position.

This approach of shaping your future is well documented in the research that was done in the recent book Beyond Digital (reference here), with twelve leading organizations that each developed a meaningful, differentiated and unique value proposition to shape their own future.

The first leadership imperative is for leadership to reimagine your place in the world. There are two big tasks for you as a leader to consider:

1. Challenges
2. Capabilities

The companies we studied of course had to go beyond just reimagining their place in the world, and the seven imperatives below were required to be addressed together—to ensure that these organizations delivered on their new promise to the world.

1. Reimagine your company’s place in the world. Redefine what problems your company is here to solve and what differentiating capabilities are needed for that. Phillips was a known name in the audio, video, lighting, and medical equipment space. But with changing times and technology rapidly evolving, Phillips needed to find its own place in the world. The company decided to focus on the healthcare sector and brought in new talent, coupled with data and technology, to help achieve the goal of improving 2.5 billion lives by 2030. The reimagining of the business focus resulted in higher profitability, business sustenance and long-term relevance.

2. Embrace and create value via ecosystems. Collaborate with other organizations to deliver value propositions no company could offer by itself, and access needed capabilities. Between 2012 and 2013, Komatsu, a leading construction company in Japan, was faced with the dilemma of a projected skilled labor shortage by 2025. To combat this trend, in 2015 Komatsu collaborated with customers and other stakeholders to launch its Smart Construction Promotion Division. As a result, Komatsu introduced Lanlog, an open program platform designed to gather data from people, machinery, competitive equipment, building materials, and geography, along with other aspects of the construction process. This provided the insights needed to enable Komatsu to better coordinate and manage construction programs, shifting its role from just another player in the space to orchestrating a construction ecosystem.

3. Build a system of privileged insights with your customers. Build trusted relationships with customers to gain unique insights on their true wants and needs to increase the value you create. To elaborate more on this, think of products and features that stem from customer feedback. A successful example of this is the Saudi Arabian start-up, STC Pay. The company started by narrowing personas and identifying their needs. With privileged insights in the form of customer feedback, the company took prompt action to incorporate or add features to improve its products and offerings. As a result, in just under two years STC Pay became the first privately-owned startup in Saudi Arabia to reach a valuation exceeding $1 billion, and the first FinTech company to reach this achievement in the Middle East.

4. Make your organization outcome-oriented. Bring together multidimensional skills in outcome-oriented teams that deliver the required differentiating capabilities. Microsoft took this as approach as it set out to itself with a new approach of AI/Cloud. To do this, the company restructured and repositioned teams in a manner that would target each of the customer segments, going against the traditional team structure of presales, sales and post sales functions. The team restructuring provided an opportunity for shared dialogues along with a more collaborative environment that encouraged team achievements and greater customer success stories.

5. Invert the focus of your leadership team. Rethink the composition of the leadership team to drive collaborative performance and shift the team’s focus to propelling the transformation. In a pivotal moment that may make or break the business, it is important for your leadership team to quickly make decisions that allow the company to transform for the future. To set up the business for optimal decision-making success, breakaway from traditional approaches to your leadership team. Instead, look inversely at the current structure and how it functions, identifying areas of opportunities to add or remove members to ensure the right parties have a seat at the table, helping to expedite and improve decision making.

6. Reinvent the social contract with your people. Reinvent your relationship with your people, putting them at the center of your value creation model and giving them the means to lead and drive the transformation. An example of this imperative in action is Cleveland Clinic, which conducted daily tiered team huddles to empower employees of all levels across the health care system to identify and solve patient problems. This method gave every person on the team an opportunity to voice concerns, which would be taken to up the chain to identify solutions, with the topmost issues brought to the C-suite if still unsolved. The clinic reinvented the way it engaged its own people, improving job satisfaction, building a better work culture, and ensuring employees at every level felt heard. 

7. Disrupt your own leadership approach. Leaders need to disrupt primitive management skills to navigate through today’s shifting landscape. By doing so, they can take on a broader approach and balance a range of paradoxes. Disruptive leaders are always looking to improve their leadership approach, finding better solutions and creating a positive impact on their workforce, business, societies, and ecosystems at large.

Investing with a holistic approach can assist in driving business insights to achieve your goals and help your organization evolve into an agile learning culture. Information and knowledge are invaluable assets in value creation and will accelerate competitive outcomes and aid in building trust with stakeholders.

Waiting for disruption is clearly not a workable path, but by reimagining your value creation model through these innovative techniques, you can maximize your business potential and accelerate growth for years to come.