Disruptive innovation, entrepreneurship and organizational transformation
Disruptive innovation, entrepreneurship and organizational transformation
Disruptive innovation, entrepreneurship and organizational transformation
Why do some organizations survive and thrive while others falter? The question has long been asked, and the proposed answers are many, but one factor that seems to play a very strong role is the ability to maintain a creative connection with the changing reality of one’s environment. A historical example is the survival of the Byzantine Empire.
(more…)The Covid shock in the spring of 2020 shattered strategic plans. The continuing uncertainty, exacerbated two years later by the invasion of Ukraine, has led some executives to question the very possibility of having a strategy when everything keeps changing. Are we living in a post-strategy world? The short answer is no; we need strategy more than ever, but it depends on how you define strategy. The Apple turnaround in 1997 provides a useful lesson.
(more…)Faced with the legitimacy challenge they currently face, companies are often tempted to react defensively, bow to the zeitgeist, and hope for the best. Often, the only solution is to build a mask to protect themselves. The problem is that it creates a chasm between who they really are and who they pretend to be, which only increases suspicion. The story of Coinbase, a U.S. startup that found itself in the spotlight, shows that a radically opposite approach of asserting one’s uniqueness is not only possible, but pays off.
(more…)Clayton Christensen, the man behind the work on the notion of disruption, died on January 23, 2020 at the age of 67 of cancer. He was a major management theorist, like giants such as Peter Drucker or Michael Porter, and his work is more relevant than ever at a time when large companies continue to find it difficult to respond to the multiple ruptures in their environment. In what follows, I propose a synthesis of his work to show how it can be very useful.
(more…)It is a story repeated many times: “Our transformation strategy is perfectly clear. But we have a big execution problem” as the member of the executive committee of a large multinational was telling me a few weeks ago. He added: “Now, disruptions are coming from everywhere, we spend millions on transformation plans, we put ‘digital’ and ‘startup’ everywhere, and nothing – nothing! – happens.” Implicitly, of course, and soon very explicitly, the explanation fuses: it is down below that people are incapable! Managers ‘down below’ are not ‘aligned’, so goes the explanation. They do not know how to execute. Or worse: they are resisting change. We must identify the culprits, the traitors! The plan must be executed!
The reaction of an organization to a major disruption in its environment (technological, regulatory, etc.) has long been studied by scholars and consultants. An important concept has recently emerged, that of Frames. The idea is that, when facing a disruption, the organization needs to rethink the way it sees the world. Old concepts don’t apply anymore, new competitors emerge seemingly from nowhere, major uncertainties exist in the marketplace, etc. Consider the case of Kodak, struck by the digital revolution, who had to change from a core competence of chemistry to that of electronics and software. The challenge for the organization is to dump old frames and create a new one, which will guide the strategy.
The concept of frames was introduced in the psychology and cognitive literature, but it applies well to the field of strategy. Among the interesting work in this field, let’s mention that of Clarke Gilbert, from Harvard, who wrote his PhD thesis on the reaction of traditional newspapers to the rise of the Internet and digitization. Gilbert shows how newspapers had to rethink their environment, which some did while other didn’t. Unfortunately, the thesis is only available in paper form (Clarke, a pdf on your page would be cool). Gilbert is also the author of a working paper titled “Can competing frames coexist” (free download) where he shows that the difficulty for an organization to react to a disruption is not always or not necessarily due to a problem of commitment to its value network that hinders change (unlike Clayton Christensen‘s explanation).
On the contrary, the difficulty seems to reside in the way the disruption is perceived by the organization. If the disruption is seen as a threat, the reaction will be one of rigidity (hence the name threat rigidity). If, on the contrary, the disruption is framed as an opportunity, the organization will react more positively and will more easily embrace change. On this notion of frames, the work of Sarah Kaplan, from Wharton, is also worth noting. Kalpan is the author of “Framing contest: micro-mechanism of firm response to technical change“.
The idea is that when facing a new world, or rather an emergent world where everything is so uncertain, the strategy making process consists in a framing contest within the organization between individuals, departments, groups, etc. If everything goes well, at the end of the process, a common frame emerges that forms the basis of the new strategy. Sarah Kaplan also wrote an interesting article on the cognitive factors influencing an organization’s response to a disruption, in the particular case of the pharmaceutical industry: “Discontinuities and senior management – assessing the role of recognition in pharmaceutical firm response to biotech“. It can be downloaded for free and is worth reading.