Food for Thought V2: The Napster, Amazon and Apple Missiles

This month’s whitepaper is from the December Harvard Business Review by Maxwell Wessel and Clayton M. Christensen and is titled “Surviving Disruption. (My thanks to a colleague for highlighting it for me – thanks David!) You can access the article by registering for free on the Harvard Business Review website here.

Wessel and Christensen use a modern variation on the runaway train: “Disruptive innovations are like missilies launched at your business”. The paper highlights the missiles that were Napster, Amazon and the Apple Store aimed straight at record companies and the digital camera makers aimed squarely at Kodak. These are great examples of missiles that hit their targets relatively quickly, before missile defence systems could be raised or the missile dodged. Wessel and Christensen maintain that once a missile is fired, there is often time to raise our defences or dodge, duck and cover. Their examples include cinemas which have survived despite public access to movies in our lounge room soon after their release and ships traversing the globe despite the development of supersized aircraft.

Their tip for assessing how technologically advanced the missile is coming your way:

  • “Identify the strengths of your disrupter’s business model;
  • Identify your own relative advantages;
  • Evaluate the conditions that would help or hinder the disrupter from co-opting your current advantages in the future.”

In their article they go on to describe different ways of thinking about these issues including a modern spin on the old “barriers to entry” to an industry. They refer to an “ecosystem barrier” to describe a steady-state business environment where consumers and suppliers are operating comfortably with no real need to change.

Wessel and Christensen finish with a case study on the grocery industry stating: “The theory of disruption tells us that these entrants will speed their delivery times, increase their product selection, and add features we can hardly imagine today in pursuit of new customers and higher profit margins.”

For you non-risk professionals out there, I hope this concept of disruptive innovation has got you thinking. I hope the same for you risk professionals and I also hope you are thinking about how this might apply for your next strategic risk workshop. I know I am. My client’s industry is being “disrupted” by government policy changes and assessing and adapting to the disruption will be the name of the game.