DISRUPTION!

The ultimate buzzword, Bogeyman, and source of confusion.

Disruption. Just the sheer word can cause a 62 year-old middle manager to shuttlecock himself through a plate glass window screaming about his compound growth rate and value-driven business model. By the way, if you want to have some real fun at a bar, do this anytime sometimes mentions Uber:

• Friend: “I’m calling an Uber.”

• You: “Disruption.” (said in Batman voice.)

Believe me, it’s more fun than you think.

The fact is, disruption is legitimate. There are certain industries that are somewhat protected against it, sure — like airlines, maybe. You can argue that Southwest “disrupted” airlines and maybe they did, but you can’t really “digitally scale” a person flying around the globe, so … it’s a little bit different.

You’ve got this paper from Cisco and IMD called “Digital Business Transformation” — in other words, disruption — and it’s arguing that 4–5 in 10 standard companies can be disrupted in the next decade.

There are a few issues with how we talk and think about disruption, though, so it’s time to get a little frank on the topic.

Disruption: Some facts

I mentioned some of these in a post I did on change management, so if you read that, apologies. Here’s a new article from Wharton connected to some of those same authors and thinkers. Right up top, they outline this:

• A decade ago, the five most valuable companies on the S&P 500 were: Exxon, GE, Microsoft, Gazprom, and Citigroup.

• Today, those five most valuable are: Apple, Alphabet/Google, Amazon, Microsoft, and Facebook

That’s a big shift — but kudos to Microsoft, eh?

Similar stat: 88% of the 1955 Fortune 500 companies no longer exist.

At this point, hopefully we’ve somewhat established that disruption is (a) real and (b) seemingly moving faster than before.

Disruption: The psychology

Now, though, you need to consider the mindset of guys (predominantly men) who run companies. It’s impossible to do anything except generalize here, because thousands of men run companies, and they’re all somewhat different. In general, though, research has shown us that people who rise to senior leadership roles tend to:

• Really fear incompetence (i.e. they’re human beings)

• Worry greatly about their relevance (again, most human beings)

At that intersection point, usually what happens is people cling to the things they know and understand. This makes you feel good/relevant, and it prevents feelings of incompetence. But when you cling to what you know/understand, well, you don’t let new ideas in. That’s why you leave your digital exposed, get blind-sided on customer experience by some startup out of a coffee shop, and start losing market share.

That right there is disruption. Disruption, you see, comes from psychology. Remember: work ain’t logical, it’s emotional.

Most executives, when confronted with the idea of disruption, pound their chests and talk about how they slayed it last quarter. That’s great. It’s also super myopic. Disruption might happen five quarters from now, or 15. I don’t know. Your industry is different than what I do. But if you focus on the stuff you know and understand, as most senior leaders do, well … disruption is coming. It’s just a question of when.

Disruption and business models, industries