Which Came First, Disruption, or Being Disrupted?
The old adage of “which came first, the chicken or the egg,” is very analogous to today’s hyper competitive and ever changing business world. There’s no question that the speed of innovation is challenging everything and forcing executives to rethink their business strategies and models.
Earlier this month, CEO, Millard “Mickey” Drexler, the legendary, fashion genius whose ability to spot trends reshaped how Americans dress, shared a humbling admission. He missed what might be the biggest trend of all — how quickly technology would change the retail industry.
“I’ve never seen the speed of change as it is today,” the 72-year-old chairman and chief executive of J.Crew Group Inc. said in his New York office. “If I could go back 10 years, I might have done some things earlier.” (WSJ).
In response, he stepped down as CEO of J. Crew Group.
He’s not alone. This week, KPMG released their annual 2017 Global CEO Outlook Survey. The survey of 400 U.S. chief executives reveals a surge in CEO confidence. Results show that most have a positive outlook on economic growth over the next three years, and possess far greater confidence in the United States and in their companies than last year.
It also shows, an increasing number of CEOs are getting more comfortable with rapid, technology-driven change, appreciating the value of disruption and the vast potential that accompanies it.
According the KPMG survey, “six out of 10 CEOs now view technology as an opportunity, not a threat. Nearly three quarters of CEOs surveyed say they are actively pursuing disruption in their own sectors, rather than waiting for competitors to do it.”
That’s a marked contrast from a year ago when two-thirds of CEOs in our 2016 survey admitted concern that their organizations were not disrupting business models in their industry.*
Which begs the question. Which comes first, disruption of your business model, or your business model being disrupted by technology or a cyber security threat?
For years, “speed to market” was defined as an organization’s ability to develop a concept, invest in R&D, the necessary commercialization resources including: market opportunity assessments, manufacturing, sales, marketing, supply chain and identify/training talent. In 1995, business futurists Clay Christensen introduced, a new phenomenon and coined a business phrase known as “disruption” or “disruptive innovation.”
Disruption is defined as an “innovation” that creates a new market, value and eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances. Disruption is often achieved by outsiders, vs. market-leaders who rely upon innovative processes and new technologies vs. product innovation. This result is most often a company’s ability to produce a product with greater efficiency, at a reduced cost and lower price. Thus, accelerating market share and growth.
Today, CEOs and companies are living in a world of constant disruption. Many are just realizing the power of artificial intelligence (AI), machine learning and cognitive capabilities as powerful tools to enhancing productivity, R&D, new products, that contributes to increased market demand.
According to the KPMG study, over the next 3-years, the c-suite is going to be investing heavily in data analytics (61%), cognitive technologies (58%) and connecting more of their products, supply chain and customer touch points into an integrated, intelligent network (58%).*
For those CEOs and companies that have the vision, foresight, talent and desire to harness these important new technologies, along with process innovation, disruption will create unprecedented opportunities for growth.
THE RISK OF BEING DISRUPTED
Within change also lies incredible risk. In the same survey, nearly 57% of CEOs are concerned that their organizations lack the sensory capabilities and innovative processes to respond to this rapid change.*
Traditionally, the job of security was to protect the network. But today, very little of that network remains inside the four walls of most organizations. As companies are looking for reduced costs and increased efficiencies, they are partnering with cloud and network service providers to host and support critical parts of their business. In this new digital world, companies, their customers and suppliers are becoming far more interconnected, sharing critical information and data in real-time. This new level of operability has created a greater operational risk, strategic risk and risk of cyber security. Not surprisingly, 59% of CEOs say they’re not prepared for a cyber event, while only 40% say they’re very prepared.
“The future is machines talking to each other, not necessarily human to machine,” according to Tony Buffomante, Principal and U.S. Leader of KPMG’s Cyber Security Services practice. “Improvements in mitigating vulnerabilities provide companies with increased assurance of product reliability…getting them at the roots goes back to a central theme of secure-by-design…not only does this increase security and consumer confidence, but it reduces costly remediation and rework post production.”
New innovations such as Blockchain are disrupting entire industries by creating a shared, immutable ledger for recording the history of transactions. Blockchain fosters a new generation of transactional applications that establish trust, accountability and transparency. Combined with Bitcoin and other CryptoCurrencies, the era of both disruption and risk are upon us.
Which begs the original question. Is your business and model ready for true disruption, or are you just waiting to be disrupted?
Jim Tsokanos is the CEO of Nu Nexus, a NYC based consultancy. Tsokanos has more then 20-years experience in transforming and counseling Fortune 500 companies, governments and industry-leading organizations during unprecedented times of change. Learn more about him @ https://www.linkedin.com/in/jimtsokanos/
