When studying “disruptive” events from a historical perspective, we see a surprising trend! The event is often insignificant but grows into a “disruptor” by the nature of the environment (declining powers), insecure leadership and their inability to re-invent itself. Digitalization is hence not about advances in technology but rather about “old fashion” leadership trying to cope with the unknown. By understanding the nature of “disruption” we can prepare and protect ourselves from its forces.
A History Lesson
The word ”disruptive” has become a key synonym to digitalization where new technology and trends will fundamentally change the game of business. We see “disruptive” as new business predators or viruses that will ultimately change everything we know and management – to something new and unknown. If we take a historical perspective to the word “disruptive” we can learn to locate the “disruptive” trends, foresee its affects and how to protect ourselves. History is filled with disruptive events that shaped the course of history. These are generally small, and in the moment, insignificant events that from a historical perspective have great impact. Who would have know that Luther’s 95 theses on the Wittenberg’s All Saints’ church door in 1517 would divide Christianity, affect the power balance in Europe and lead to the brutal 30 year war? That event is an excellent example of a “disruptive” event that changes the game. But why do these events have such impact on history?
My favorite “disruptive” event is the assassination of Austria Archduke Franz Ferdinand in Sarajevo on June 28th, 1914. We all know the story of how Gavrilo Princip (a member of the nationalist movement Mlada Bosna – “the black hand”) shot Franz Ferdinand and his wife on the streets of Sarajevo and that the event launched Europe into the First World War. The story is partly true. The fact is that the assassination was an insignificant event that did not even make the headlines in the major newspapers. Many Austrians were quite happy to get ride of an unpopular Archduke (even though he was considered a reformist). So why did the insignificant event launch Europe into war? Obviously, there was the uprising of Germany, suspicion and rivalry between the European states, declines of Austria, Russia, and the Ottoman Empire (many with insecure leadership) – and frankly Europe had not had a major war for 100 years to redistribute the power between the major states. The scene was set! But still the “disruptive” event might have gone unnoticed if it wasn’t for Oskar Potiorek – the governor of Sarajevo (responsible for the agenda and security of Franz Ferdinand). To save his career, he blamed Serbia for the assassination and engaged the Austrian senior generals in his views of who was to be blamed for the assassination – and that Serbia should be punished (something he could arrange). The generals with support of Emperor Franz Josef place a harsh ultimatum on Serbia – with back up from Germany in case of conflict. The rest is history! The war raged for 4 years and killed around 20 million people.
What If?
When studying the “disruptive” events that change the paths of history, we see a pattern. These “disruptive” events are often quite insignificant but grow in magnitude by the way the society (and especially men with power) interprets and acts upon these events. The way it grows is a result of the conditions of the environment that nurtures the event. What would have happened if Pope Leo X or Holy Roman Emperor Charles V had not reacted to the famous theses in Wittenberg? What if the Austrian generals did not act upon the words of Oskar Potiorek? What if the Austrian-Hungarian Empire was not on a deadly decline with “old fashion” leadership? Very little! But what we can learn is that the fear of losing (power) or decline (of an empire) are great catalysts for transforming an insignificant event to a “disruptive” event. In the end, it comes down to insecure and traditional leadership that is challenged by new “unknown” powers that has the ability to re-distribute power. We see the same pattern over and over again. Do you agree?
So, when studying “disruptive” in a digital context – do we see the same patterns? Well, let us study the latest “disruptive” trends such as mobility (with the launch of the iPhone), streaming music (with launch of Napster and Spotify) and Internet telephony (with Skype). We can also add Uber, AirBnB and other disrupters. I remember when iPhone was launched in 2006 and how I saw that an insignificant event. And it probably was. Why did the world need another phone? How can iPhone compete with Nokia, Siemens or SonyEricsson? But the “launch” of the iPhone was transformed into a “disruptor” in the mobile phone industry by the response of the traditional phone makers – something they did not understand and feared. It was the “traditional phone killer”! What is also interesting is that the “iPhone” hit the market in the exact right time when consumers where a bit tired of the traditional phone and many saw stagnating sales, an over-belief in their own capabilities, and thought it difficult to re-invent themselves – due to poor and insecure leadership. We see the same trend in other industries such as teleco, hotel business, taxi/transportation, music/publishing, etc. Industries that were wide open for a “disruptive” to conquer the market.
The Next Disruptive Trend
Today, we talk a lot about the next disruptive trend that will change business in our industry – and that we need to be on the look out. It will put our Company out of business! We try to understand the new business model of AirBnB and Uber to reposition and protect ourselves from the next disruptor. But studying examples in history and the digital era – we see that disruptive events are a result of other forces than mere technology or an assassin’s bullet. It is a result of a insecure and fearful industry that has lost the energy to reinvent itself and listen to the demand of its consumers. Technology might be an enabler but it is in the leadership where the real force is created. Digitalization is not a technical revolution – it is a revolution in leadership, culture and management!
We read in media of Ericsson sacking 800 people in Sweden to cope with the new digital competition. Cost savings is key to survival. Ericsson, with a proud history of innovation, has been bypassed by new competitors and is now on the decline. It is easy to blame technical evolution and “disruption” for the business path but the fact is that the “disruption” is the result of an industry unable to re-invent itself, scared leadership afraid of losing power (market shares), and an over-belief in its own capabilities. When changes come, they react in the same way (as many traditional business dinosaurs do) – look to cost rather than changing culture and management. Most importantly, listen to what customers want and value. From a historical perspective, the declining journey of Ericsson is no surprise. In the end, it is all about “old fashion” leadership, culture, and management structure unable to cope with the unknown. Don’t blame the competitors!
My Recommendations
Take a moment to study the industry you are positioned in. Does the industry have all the elements of being disrupted? What is the best way to react (scenarios) to new technology or events? Are they a threat or opportunity?
The way to protect a company from “disruptive” trends is to “disrupt” your own leadership, culture and management structure. It is a painful journey but it makes you survive in the digital era.
The word “disruptive” has become a buzzword to describe the possibilities and effects of digitalization. But “disruptive” events, technology or business are often insignificant when they occur and grow in stagnated industry, leadership or power structure. It is not the “disruption” itself that causes change but rather the reaction to it – the protection of the “old.” The only protection is to re-invent oneself – our leadership, culture and management structure. It is painful – but to be run out of business is even more painful. The choice is yours.
Tag/s:Digital Disruption
