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 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.
The word ”disruptive” has become a key synonym to digitalization where new technology and trends will fundamentally change the business game. 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 fill with disruptive event that has shaped the modern world and made it what is it today. These are generally small, and for the moments, insignificant events that in a historical perspective have great impact. Who would have know that Luther’s 95 thesis 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? The 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, suspicious and rivalry between the European states, decline of Austria, Russia and Ottoman (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.
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 is grows. What would have happened in Pope Leo X or Holy Roman Emperor Charles V had not reacted to the famous thesis 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 we can learn is that the fear of losing (power) or decline (of an empire) are great catalyst for transforming an insignificant event to a “disruptive” event. In the end, it comes down to unsecure 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 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. Why did the world need another phone? How can iPhone compete with Nokia, Siemens or SonyEricsson? And it probably was. But the “launch” of 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 tradition phone, many saw stagnating sales, an over-belief in their own capabilities and many phone makers saw it difficult to re-invent itself – due to poor land 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.
Today, we talk a lot about the next disruptive trend that will change the business in our industry – and that we need to be on the look out. It will put you 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 digital era – we see that disruptive events are a result of other forces than technology or an assassin. It is a result of a insecure and fearful industry who 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!
Today, 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 by past new competitors and it now on the decline. It is easy to blame technical evolution and “disruptive” for the business path but the fact is that the “disruptive” is a result of an industry unable to re-invent itself, scared leadership afraid of losing power (market shares), and an over-belief of its own capabilities. When changes comes, they react in the same way (as many traditional business dinosaurs)– cost focus rather than focus on changing culture, management and listening to what customers actually want (value). From a historical perspective, the declining journey of Ericsson is no surprise and in the end – it is all about an “old fashion” leadership, culture and management structure unable to cope with the “unknown”. Don’t blame the competitors!
- Take a movement 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 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.
- Call me – let us continue this discussion in another forum. We need to learn about the forces of digitalization and how “disruptive” trends growth from insignificant to market changers.
The word “disruptive” has become a buzzword to describe the possibilities and affects 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 “disruptive” itself that causes change but rather in the protection of the “old”. The only protection is to re-invent oneself – our leadership, culture and management structure. It is painful – but to run out of business is even more painful. The choice is yours.
Hans Gillior – Digital Though-Leader and Senior Advisor