As companies continue to wage war with global competition and attempt to figure out their next steps due to advanced technologies, organizations are dealing with unpredictable change that is disruptive. In fact, disruptive change is impacting everyone in all walks of life, from Wall Street to entertainment. The casualties of disruptive change are evident.
In a statement to the Associated Press about joining a Silicon Valley boardroom, Serena Williams said, “I feel like diversity is something I speak to. Change is always happening. Change is always building. What is important to me is to be at the forefront of change and to make it easier for the next person.” we will examine disruptive change and what leaders can do to navigate the resulting uncertainties.
Disruptive change is wrecking traditional thinking of industries and institutions. Long-standing organizations have long attempted to maintain the status quo, allowing flagship institutions like Harvard University and Princeton lead the pack. Non-traditional institutions, like the University of Phoenix, were frowned upon by academics because it was a for-profit university growing by using non-traditional models like online learning.
Despite the flaws with online learning and non-traditional institutions, few people (outside of traditionalists) would argue that these non-traditional ways of learning are a disruptive change. In April 2017, Purdue University (PU) announced it was acquiring Kaplan University, a for-profit university.[1] Many universities were stunned, as Purdue University is one of the leading research institutions in the nation.
With more than 40,000 students, PU has a reputation for innovation in science, engineering, and technology. Many academics would call the university… traditional. However, PU has decided to launch a new, public online university targeting non-traditional students and those people looking to enhance their work credentials.
PU will absorb Kaplan’s 15 campuses and learning centers, which includes 32,000 students and 3,000 employees. PU President, Mitch Daniel, argued that the move was strategic. If they did not do something different, the university would miss out on opportunities. President Daniel explains, “Online education is growing fast and is destined to grow further in ways that none of us can fully anticipate right now.”
President Daniel hopes that the university would be in a better position to assist working adults and better position itself for future changes. He notes, “None of us knows how fast or in what direction online higher education will evolve… A careful analysis made it clear that we are very ill-equipped to build the necessary capabilities ourselves, and that the smart course would be to acquire them if we could. We were able to find exactly what we were looking for. Today’s agreement moves us from a standing start to a leading position.”
Dr. Christenson on Disruptive Change in Education
Disruptive change is quite different from the normal change that most managers are accustom to. Most managers are adapted to dealing with some change. Managers work best when the change is slow and can be planned. Thus, incremental change introduces small, gradual changes for a certain time frame. For example, an organization prepares for the retirement of their four senior executives over the next five years. The human resource department works with senior managers to develop a succession plan for their leadership transition.
Yet, in disruptive or transformation change, change is unpredictable and often rapid. Limited information and uncertainty challenges the organization. In these cases, past experience could work against the organization. Things are different. Management expert, Douge Berger, explains the impacts of disruptive change to organizations: “Disruptive change is characterized by a shift in the underlying forces of an industry segment. It is not localized. It affects the entire value network… Executives work hard and put much thought into building their enterprise toward an expected future. When disruptive change hits, that future ceases to exist.”[2]
Berger outlines the following screenings to determine disruptive change: From the perspective of an executive, the following trends are strong indicators of approaching disruption for executives: (1) Consolidation within the customer base, (2) Increased customer dissatisfaction, (3) More government involvement (i.e. policy, legislation, regulation), (4) Public perception shifts, (5) More affordable/convenient products/services, (6) Consolidation of companies within specific industries, and (7) Change in customer accessibility.
Looking at the previous example of the retiring executives, I provide a different scenario for disruptive change. In the previous case, the organization has developed a succession plan for their four senior executives over the next five years. The primary assumption was to make slow, incremental replacements for each person by having an heir apparent shadow the executive six months out toward retirement. One day, all four senior executives were traveling to a typical business conference and were in a fatal crash. All senior managers died. That scenario was not anticipated. It has been over 10 years, but the organization never completely recovered. That situation shows how powerful disruptive change can be for organizations.
If leaders are savvy enough, they can take advantage of disruptive change in leveraging opportunities in the marketplace. External forces often drive disruptive change. These environment forces include social, technological, economical, environmental, and political. If not carefully analyzed, companies will eventually survive failure due to circumstances over time.
Hit with an onslaught of uncertainty in the marketplace, some managers seek the following behaviors when dealing with disruptive change: (a) minimize the disruptive change, (b) recognize the disruption but underestimate its consequences, or (3) ignore the disruption in hopes of it going away (i.e. digging a head in the sand). Under the backdrop of disruptive change, large companies are overtaken in the market by unassuming smaller companies. In this case, leaders fully utilize lesser, novel technologies.
Ian Palmer, Richard Dunford, and David Buchanan, author of Managing Organizational Change, further argue the challenges of these types of changes: “Aligned with the rise of e-commerce and the Internet, organizations are faced with global changes in consumer preferences, industry boundaries, social values, and, as mentioned earlier, demographics. Organizations are forced to deliver goods and services more quickly, more customized, and more flexibly. But hypercompetition means that market leaders cannot be complacent.”
Technology is disruptive too. Dr. Clayton Christensen, the author of The Innovator’s Dilemma, provides a framework for understanding the interrelationship between disruptive change and technology innovation. Penning the term disruptive innovation, Dr. Christensen outlines how successful, established companies are being upseated by small, less funded businesses.
In modern times, the Internet is a powerful disruptive technology. Individuals do not need to look further than at Amazon.com and its impact on traditional retailers. Amazon’s business model has created changes throughout the ‘brick and mortar’ universe. Amazon.com, Inc. provides online retail shopping services, targeting four primary customer sets: consumers, sellers, enterprises, and content creators.
Additionally, the company also serves developers and enterprises of all sizes through Amazon Web Services, which provides access to technology infrastructure that enables virtually any type of business. In 1994, Jeffrey Bezos founded Amazon.com, which is headquartered in Seattle, Washington. Buyers are willing to shop in the convenience of their own homes and a way that best fits their lifestyles.
If brick and mortar companies, like Wal-Marts and Barnes and Noble, cannot figure out how to maneuver better under disruptive change, they will be unraveled in the marketplace. Dr. Christenson further explains, “It’s not that managers in big companies can’t see disruptive changes coming.
Usually, they can. Nor do they lack resources to confront them. Most big companies have talented managers and specialists, strong product portfolios, first-rate technological know-how, and deep pockets. What managers lack is a habit of thinking about their organization’s capabilities as carefully as they think about individual people’s capabilities.”
If leaders want to sustain success, they must be willing to apply non-traditional methods and think strategically when dealing with disruptive change. Yet, researcher Paolo Aversa argues that innovation in an industry riddled with turbulence is dangerous. Disruptive change is the stimulus for turmoil and uncertainty. Dr. Aversa suggests that leaders should evaluate this turbulent environment with the following questions:
- Are any of the forces that shape competition undergoing a radical shift?
- Is the industry experiencing major changes in its structure, technological standards, or competitors?
- Are regulations stable?
- Are there major fluctuations in demand or prices?
- Does the industry change before you’ve fully implemented an innovation?
- How many changes has the industry experienced in recent periods?
- Are they releasing innovations much faster than you are?
- Can you foresee how industry forces will change?
- Can you predict when the next changes will happen?
- Was there a pattern in competitors’ recent moves?
- Can you influence the nature and timing of future industry events?
With these questions, a thoughtful leader can evaluate the current situation of their organization as they deal with change. Sadly, more executives are unwilling to think strategically about disruptive change because they are too comfortable with the status quo.
In summary, companies that want to compete in this time frame need leaders who understand and can maneuver in disruptive change. Disruptive change is making its way throughout various industries, including banking, commerce, retail, health/medicine, and education. If a leader underestimates the impacts of disruptive change, he or she could soon become a victim of this transformational change. In this article, I demonstrated that disruptive change is an ongoing occurrence that effective leaders can navigate with the proper knowledge, attitude, and actions. Additionally, disruptive technologies exist, which put lesser-funded businesses in a better position for success. Therefore, organizations, regardless of their size, can thrive in disruptive change with the right preparation. Pray that it is not too late.
Please share your insight on this subject of disruptive change.
© 2017 by Dr. Daryl D. Green
[1] “Purdue University acquires for-profit giant Kaplan University” by Lauren Camera
[2] “Leading in Times of Disruptive Change” by Douge Berger
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