The Disruption Game Plan

New rules for connected thinking on innovation and risk

Ruth Murray-Webster, Eleanor Winton

• Publisher: Practical Inspiration Publishing
• Year: 2021
• ISBN:
  9781788602471
• Topic: Business
• Subtopic: Leadership
• Index: Business

***BUSINESS BOOK AWARDS 2022 SHORTLISTED TITLE***

Disruption is everywhere: it presents both great opportunities and significant threats.
Do you know how to shape your strategy to respond?
What if you had a game plan to navigate disruption?

The Disruption Game Plan presents a tried and tested framework to help senior leaders think differently about disruptive trends and emergent risks, and to act differently when making decisions, joining up thinking on innovation, risk, sustainability and strategy.

By revealing how we can more effectively deal with challenging business environments, this book will help any curious and ambitious senior leader to go beyond a short-term, fire-fighting response, and instead set out to 'change the game'.

Ruth Murray-Webster is a consultant and expert in risk and organizational change. A former head of the Risk in the Boardroom practice for a major consultancy with extensive senior practitioner experience, Ruth now works with a wide range of public, private and third sector clients through her consultancy Potentiality UK to unlock the potential performance from uncertainty and change.

Eleanor Winton is a consultant and expert in disruption, innovation and foresight and the former head of the Future Institute for a major consultancy. She has extensive experience of working with senior teams to stimulate creative thought and action. Through her consultancy Foresightfully, Eleanor works with organizations to understand what the future might hold for them and to develop innovative strategies in response.

Part 1

The call to action

1

Why the need for a game plan?

There is no escaping the fact that disruption has already radically transformed the global business landscape. We’ve watched household names collapse and disappear from view whilst whole industries have been redrawn, reshaping our own behaviours in ways that we never thought possible.

Perhaps you’re reading this instead of settling down to watch your favourite Netflix show? If so, of course we thank you! Ten years ago, Netflix was the disruptor, killing off Blockbuster and blazing a trail towards the digital future. Today, Netflix sits in a crowded market of digital streaming services and must constantly evolve to remain successful. Once the disruptor, now potentially the disrupted?

Often, when people think of disruption, they think of the financial value that has been lost rather than considering the broad range of potential categories of value that can be created. And maybe it’s seen as a binary situation? Win or lose, disruptor vs. disrupted, the new kid vs. the slowcoach incumbent. The word, in the business context, carries a primarily negative connotation – certainly one with high stakes.

As a society, we have created lots of regulation, structure and process to manage the change that follows disruption. In our experience, the way that businesses respond to threats and opportunities in reality is fundamentally human. In other words, it’s driven less by process than by the willingness of the leadership team to explore new value rather than protecting what they have. Setting out to protect what you have all too often becomes a strategy to protect margins rather than value. In a stable environment, when barriers to entry are high, that might work… for a while. In the current environment, full of emergent trends and risks, it leaves the door wide open for disruption.

Why did Uber take the taxi industry by surprise? Why were traditional retailers so slow to adapt to e-commerce? Why did newspapers have to scramble to compete online? Because they failed to look up and out at the opportunity to create new value in a new environment.

Perhaps your organization is missing something too? Ask yourself:

■ Are you delivering ‘good enough’ because delivering ‘great’ feels too risky?

■ Is your risk register full of things you already know?

■ Have you disconnected from your customer because you ‘know what’s good for them’?

■ Are you ignoring new entrants because you can’t believe they’ll be successful?

■ Do you truly understand how and where your business delivers value?

Our experience tells us that it’s not luck that determines whether you are a winner or a loser, a disruptor or the disrupted, it’s your ability to truly engage with, and connect, risk and opportunity – now and into the future. We’ve been frustrated in the past when we’ve seen opportunities missed by organizations we’ve worked with and in. That frustration has fuelled our passion to help you to seize those opportunities. Here’s our story.

When we met in 2014 as Directors in a London-based ‘Big 4’ consultancy, the way we were positioned in the organization typified the problem we’re describing. Eleanor was responsible for the ‘Future Institute’, helping Boards and senior teams to understand global mega-trends and stimulating them to be more curious, inventive and strategic about disruption. Ruth was responsible for the ‘Risk in the Boardroom’ practice, helping Boards and senior teams to have better conversations about the threats and opportunities facing them, and to clearly communicate to shareholders and stakeholders how much variation from plans would be too much (their risk appetite). We knew that our service offerings were two sides of the same coin – but in our firm, we were considered two separate departments, two profit centres, two completely distinct client offerings.

Our firm knew, as did all its competitors, that successful strategies are informed by the available data, however weak the data signal. Effective Boards therefore need to think about potential futures and make good decisions in the light of the possibilities open to them.

That things were broken, and that one joined-up conversation was needed, was blindingly obvious to us, but not to everyone.

We both moved on from that firm, but then had this experience.

We were asked individually to work with a major logistics company.

Working with the Commercial Director, Eleanor was asked to lead an exercise to scan the horizon for global trends and innovations which could be relevant for the organization. The work generated around 50 ideas, each with a high-level business case. The senior team then worked to determine which of those ideas were in or out of scope in the context of the business’s appetite to implement.

The ‘winning’ projects were presented to leaders within the commercial function. Ideas, representing a range from incremental to radical, were received with enthusiasm by that group. Some looked to the long-term future of the industry as a whole whilst others explored adjacencies in unexpected places. All were accompanied by a rational business case.

Only one idea lived beyond that session and none were ever implemented, although we see other companies doing the very things that could have been achieved now.

At the same time, Ruth was leading work with the senior team to explore the threats and opportunities that would have a material effect on company objectives in the next five years. Framed as risks and communicated through the company governance to the Board and their Audit & Risk Committee, the threats to sustaining performance were clear. It was absolutely accepted that new ways to create value were needed.

To us, the two pieces of work were inextricably linked and were both critical to addressing how the company was being disrupted, and could be a disruptor. Some of the innovations were a direct response to some of the threats. Some of the innovations, although looking promising in isolation, would have caused more problems than they solved. The CEO agreed, yet attempts to join up the pieces of work fell on bemused and deaf ears.

This was a significant missed opportunity to be a disruptor – to build resilience into this company at that time – an opportunity that would be reaping value now.

Figure 1.1 highlights the challenges of this siloed thinking and our driving objective for this book.

Figure 1.1: Connecting innovation and risk: joined-up thinking, process and culture

Our experience is that this is not an isolated incident. In many ways innovation and risk can seem like unnatural allies. Ask yourself, how well does your business make these connections?

Beyond missed opportunities to be a disruptor, there are a growing number of factors that mean that your business could be disrupted.

Consider this story from the past that gives a sense of what’s at stake.

In 2011, severe flooding in Thailand took the lives of hundreds of people and devastated those of millions more. It also dramatically impacted global supply chains in the increasingly interdependent automotive and technology sectors. They had placed heavy reliance on the manufacturing area in Thailand’s Chao Praya river basin, home to more than 800 factories serving international supply chains.

As a result of the disruption caused by the flooding, factories were no longer able to operate. By October of that year, Reuters was reporting that automotive businesses would be delaying product launches and halting vehicle production until alternative supply chains could be established. In an effort to get production moving again, some businesses were forced to resort to unusual and unexpected methods. Teams of divers searched the murky waters for valuable steel injection moulds which could be flown to manufacturing locations elsewhere in the world – employing the divers was more cost effective than creating the moulds anew. Meanwhile, technology businesses faced worldwide shortages of hard drives and other key components – in some cases production of which had been moved to Thailand in the wake of Japan’s Tohoku earthquake.

Financial losses were significant. In 2012, Lloyd’s of London said that it expected the total insurance cost of the disaster to be US $2.2 billion.

How might connected thinking have helped to mitigate this disruption?

Before 2011, we were both working with clients in industries where additive manufacturing (more commonly known as 3D printing) was being actively explored. In Oil and Gas, Mining and Healthcare it was becoming clear that investing in this alternative approach to manufacture could help to mitigate a number of costly risks as well as creating opportunities to add value to existing products. Realistic 3D printed bones that are less likely to be rejected by the human body as just one example.

In the automotive industry pre-2011 and taken as an innovation endeavour only, 3D printing could be seen as a risky alternative to existing technologies (e.g. for creating those very expensive injection moulds). Adding the risk lens, and supply chain risk in particular, would create a different and broader conversation about the potential return on investment. What was a ‘risky alternative’ might be more easily seen as a ‘valuable mitigation’.

There are two aspects of connected thinking we’d like you to consider here with respect to your own business.

■ First, the fragility that is caused when players, processes and products in supply chains are deeply dependent on each other. Where might your paths to value be disrupted?

■ Second, the missed opportunities that are caused when the potential for disruption, whether that’s good or bad, is only considered by a sub-set of relevant organizational talent.

Why do organizations need new rules?

Despite armies of consultants and lots of internal talent, it seems to us that many elements of how we practice strategy, innovation and risk are broken. Personal and organizational barriers prevent leaders from doing the things that each and every one of us would recognize as sensible. People resort to lazy thinking and false confidence. Businesses are full of really smart people, so what are the barriers to making a change? What is fundamentally broken? And why do we need to deal with it now?

Taking the long view, recent major disruptions represent just the latest in a string of seismic shifts – realized risks – with the potential to fundamentally change the way that societies and economies operate into the future. For example, we know, thanks to the Intergovernmental Panel on Climate Change’s special report on global warming, that we have just nine years remaining to take action to limit global temperature rise to 1.5 degrees Celsius. We also know that our experiences tackling Covid-19 are not isolated incidents, that we need to be better at spotting potentially disruptive situations, and better at preparing to adapt in the face of disruption.

Understanding this shifting global context is the foundation of a resilient and effective game plan. But to take advantage of the potential opportunity and to effectively influence the future, as businesses and business leaders, we need to move away from the existing metrics which are focused on the short term and on profit in particular. Let’s explore that assertion further.

The beginning of the end for profit at all costs?

Throughout recent history, leading thinkers have pushed back on the notion that the corporate entity has a responsibility that stretches beyond generation of profit.

Professor Milton Friedman, a Nobel Prize-winning economist, encapsulated this view when he wrote in 1970 that ‘There is one and only one social responsibility of business – to use its resources an...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• Preface
• Part 1: The Call to Action
• Part 2: Developing and Maintaining your Game Plan
• Part 3: Getting Started
• Acknowledgements