August 30, 2017

Know Your Enemy: The Forces Driving Disruption

In a world where everything is constantly disrupting and being disrupted, the biggest and most terrifying risk is to stand still. To choose not to change is almost equal to accepting being swept away with the tide. Mark Zuckerberg once said: “The biggest risk is not taking any risk. In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking any risks.”

Change has surely become a defining word of our decade, and this new normal seems to withhold this position for quite a while. We can see change everywhere affecting every aspect of lives: from our world, to our climate, to our country, to technology, to consumer behaviour, to our companies and our jobs; hence, being able to keep pace with these changes has, more or less, become a part of our everyday life.

We live in an age of disruption wherein new technology and behavioural shifts that would have seemed unimaginable even a few years ago are transforming the way we live. Artificial intelligence and robotics are profoundly transforming the workforce. Driverless cars are being introduced to completely reinvent supply chains and logistics; even more so, they also challenge policymakers to rethink existing approaches to infrastructure and regulation.

Simply put, responding to disruption has become one of the biggest strategic imperatives facing today’s business leaders and policymakers. The game has now changed and we need to change our game in order to stay in the game. In other words, the only way to survive is for businesses to disrupt themselves before they’re disrupted from the outside, and the first step to respond to disruption can’t occur unless we know our enemies — i.e., the forces that drive disruption.

Disrupting technological change. We are all in the technology business now. There is no business that is not being disrupted by technology; from agriculture to banking, from education to transport, from food service to the media — the way consumers search, evaluate, interact with, purchase, take delivery, experience and pay for every business’s products and services is changing faster and more fundamentally than at any time in human history.

Technology disruption has a way of changing the very business that companies are in. You may have thought you were in a business that has nothing to do with technology, but disruption has shown otherwise.

Change is no longer linear and predictable. Technology-driven disruption of entire markets and industries can happen overnight. Non-traditional competitors appear without warning, with devastating impact. The game has changed and businesses, and their leaders, need to disrupt themselves, build their entrepreneurial spirit and embed a startup mentality and innovation capabilities to stay agile and relevant.

New competitive landscapes. As Asean integration accelerates, Thai businesses will face increased competition from powerful regional and global players. The economy will also find itself lopsided in terms of talent availability as it shifts from Thailand 3.0, or even Thailand 1.0 in the provinces, to Thailand 4.0.

Increased labour mobility will mean that top talent is more mobile in finding the best opportunities in Asean, not just in Thailand. The gig economy is on the rise, and leaders will face a tremendous transformation in the workplace and a race to integrate technology and artificial intelligence into new models of employment for a new age.

Volatility and risk. How can you prepare your business to survive when global connectedness brings greater co-dependency and elevated risk? It is not exaggerating to say that geopolitical and economic shocks in one part of the world will instantaneously impact everywhere, bringing unprecedented levels of volatility and new challenges in managing risk. Hence, building organisational agility and sustainability in these uncertain times requires new approaches.

Political, economic and environmental shocks have always been part of the business landscape; but, like everything in the new millennium, the scale, speed and impact of these threats is unprecedented.

From Brexit to President Trump, from Chinese territorial claims to global warming, we are living an era of unparalleled risks and uncertainty, an age that requires organisational agility and resilience like never before.

The rise of entrepreneurship. As mentioned earlier, with disruption your biggest new competitor will likely come from outside the industry and will compete by changing the industry business model — thus making your business irrelevant overnight — and not by improving existing products and services.

The truth is that it has never been easier to start a business. 5G networks, data clouds and algorithms enable entrepreneurs everywhere to create an uneven playing field to their advantage.

Anyone with a laptop can create a new business model and leverage networks and platforms to access a global market with almost zero investment or overhead. New competitors are turning even the largest and most established industries and businesses upside down. They turn the traditional strengths and barriers to entry of established businesses against them as their size, sunk costs and fixed assets become liabilities in the face of agile, low-cost new entrants with a better product or service.

Responding to disruption requires making the right comparisons, and this shall include comparing yourself with the appropriate opponents. As disruption attracts non-traditional entrants from other sectors, the old competitors or peer group you used traditionally may no longer be relevant. And, yes, don’t forget that you are now competing with sharing-economy startups that are disrupting their business as well.

Most companies and most leaders in my experience talk about change far more than they actually engage in it. The main reason they shy away from change is fear: fear of the wrong change or fear of leaving the safety and comfort of the known.

But in this highly competitive world, it will actually do more harm than good to conform to the status quo, as eventually it will blind us from the threat of competition or the enemy that is younger and more agile.

I’d say that if you want to seize the benefit of disruption, you need to understand the forces driving it. Understanding the full impact of disruptive trends begins with analysing disruption through its root causes. Getting to know your enemies better increases your chance of winning. After all, we should keep our friends close, but our enemies closer.

Arinya Talerngsri is chief capability officer and managing director at SEAC (formerly APMGroup), an executive, leadership and innovation capability development centre. She can be reached by email at arinya_t@seasiacenter.com, or visit http://www.seasiacenter.com for more information.