Business leaders today often think disruption is beyond their control. While 93 percent of executives say they know their industry will be disrupted at some point in the next five years, only 20 percent feel they’re highly prepared to address it.
But what if you could get under the surface of disruption?
Our research shows that disruption follows a discernible pattern. To better understand the nature of disruption in an industry context we created the Disruptability Index. We analyzed 3,269 companies—across 20 industries and 98 industry segments—and looked at 15 factors to gauge both the current level of disruption and susceptibility to future disruption.
To identify the opportunities that disruption brings, business leaders should recognize where in this pattern of disruption their industry is positioned and why. By reaching under the surface of disruption, business leaders can confidently address its risks.
What's more, the Disruptability Index shows that different industry segments within the same sector may experience varying periods of disruption. Take the automotive segment, where trends like electrification, car sharing and autonomous driving are dramatically changing the business model for carmakers more rapidly than for suppliers. As a result, the current level of disruption for automotive manufacturers is significantly higher than it is for the parts and equipment sector.
Each of the four periods of disruption requires a different emphasis on these strategic actions.
Each disruption period brings unique challenges and opportunities. For example, for companies in the Volatility period, it is imperative to change course decisively. Meanwhile, for those in the Durability period, it is imperative to experiment and focus on maintaining existing sources of competitive advantage.
Don’t presume that the best way to respond to disruption is to become the disrupter—that is, focusing solely on scaling new businesses. Companies must balance investments required to reinvigorate the core (e.g., by modernizing existing businesses) while scaling the new businesses (e.g., by creating entirely new digital business models).
Business leaders can use the index to understand their vulnerabilities and drive their strategic response. Additionally, they can identify opportunities to exploit their own core competencies in adjacent markets that are exposed to disruption today.
Are you prepared to boldly embrace disruptive opportunities—instead of fearing them? It’s time to take advantage of disruption and shape your own future.
Should disruption be feared? We think not.
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