In his 2012 article ‘Surviving Disruption’, Clayton Christiensen (with Max Wessel) explores how businesses can assess the danger level and effectively deal with disruption. At the same time maintaining competitive advantage and maximising its ‘extendable core’.
He proposes three tests to determine threat level and response:
- The strength of the disrupter’s business model
- Your own relative advantages
- The conditions which would help or hinder the disrupter co-opting your current advantages in the future
Christiensen died earlier this year, before he could know that 2020 would produce an uber-disputer to every business- not an emerging market competitor but a global pandemic. But his tests hold very true.
Knowing the nature of the disrupter, knowing your businesses’ relative advantages, and forecasting future risk and opportunity are essential to not just surviving but thriving commercially in a Covid-19 world. Navigating this process is the current major challenge for company leadership. Requiring both the capability to respond at speed effectively at the same time as aligning people and processes – often establishing new business models overnight.
As we move out from the initial defensive stage of existing business resilience strategy, organisations need to quickly and robustly apply Christensen’s tests. Setting out to fully understanding the context they are in and possible future implications. Then assessing how to maximise the extendable core of the business in the next strategic phase to enable them to ‘bounce forward’ rather than ‘fall back’ using their insights to embrace risk and so adapt to the changing commercial landscape and increase market share.
As we are beginning to see, it is becoming apparent that some companies lack both decisiveness and depth in leadership. Inadequate succession planning has created talent gaps in key areas and some company cultures have proven not as robust as expected. Strategies for organisational resilience have been found wanting and now need to be explored openly and widely across functions before being embedded as a core process. Investment in leaders with the capability to deal with ambiguity, leveraging people development and culture to be effective will be vital. From executive level down, stress, exhaustion and burn out could be extensive, so wellbeing and sustainability must be moved up the agenda even more than they have been. Talent deficiencies must be addressed and overcome, and more than ever, agility and collaboration must become embedded as core competences – across the whole organisation, not just in pockets.
Companies which have the leaders capable of moving quickly from a defensive to progressive mindset will mitigate future risk, maximise their extendable core and bounce forward from this global disrupter.
Author: Chris Stainton, Partner. April 2020