Patterns of Disruption
Anticipating disruptive strategies in a world of unicorns, black swans, and exponentials
Established industry incumbents perpetually face the risk of being disrupted by new entrants using new technologies, business models, or approaches to capture marketplace leadership. Are there ways for incumbents to recognize the potential for disruptive strategy in advance?
The first of a two-part series, this article takes an incumbent’s point of view to understand what turns a new technology or new approach into something cataclysmic to the marketplace—and to incumbents’ businesses. Why are these developments hard to see coming, and why are they difficult to respond to effectively? In search of patterns, it looked far and wide across arenas as varied as voice-over-IP, furniture manufacturing, fantasy sports, and travel guides. The authors analyzed dozens of cases from the past 20 years, including some favorite “unicorns”—the unprecedented pool of tech start-ups with funding-based valuations of $1 billion or higher—to home in on the specific ways threats manifest in a world rapidly becoming digital. They also considered how the next wave of exponentials (including the Internet of Things, 3D printing, and Blockchain) might fit this dynamic. They looked for cases where a leading incumbent had been displaced from its market—either by being marginalized within an existing market or by failing to capture enough of a growing market—and tried to identify what they might have seen coming if they’d known where to look and what to look for.
What the authors identified are nine patterns of disruption. These patterns are more than “one-off” occurrences, but they also are not universal forces; they are disruptions that will likely occur in more than one market but not in all markets. Each delivers new value through a new approach subject to a set of market conditions. Each brings its own challenges for the incumbent. These nine patterns can’t describe every possible challenge a business will encounter, but, individually and in tandem, they do help make sense of the changing environment and competitive dynamics that many companies are experiencing.
So how can incumbents avert disaster?
- First, see it coming:
- Understand the shape new threats are likely to assume (patterns of disruption);
- understand what particular disruptive strategies your market is most vulnerable to; and
- understand what will act as catalysts for those threats.
- Armed with this understanding, you can start asking the right questions of your business and the world around you to not only anticipate changes but make the “unexpected” expected—to begin making the choices and taking the actions needed to control your destiny and see the opportunity on the flip side of the threat.
If you need to look at change in your world, understanding these patterns is a great place to start.