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The Great Disruption
11:48 AM Tuesday December 16, 2008
A recent New York Times article mentioned how the media still hasn't found a compelling way to describe today's economic climate. Everyone agrees that something important is going on, but no one has found a simple, memorable phrase that captures that importance.
A Thursday Times blog calling for nominations has generated more than 150 comments. My suggestion: the Great Disruption.
Why the Great Disruption? In the Great Depression, demand, output and wages declined across the board. Today's times are different. It isn't just that demand is sagging. It's that change is ripping through markets at unprecedented pace. Competitive advantage that took decades to build disappears seemingly overnight.
The Great Disruption didn't start in 2008. Over the past decade, technological improvements have made starting and scaling businesses easier than ever. The rise of China, India, Brazil, and Russia mean market leaders have to deal with more sharp-elbowed competitors than ever before. And industries are frantically converging and colliding.
Certainly the pace of change has accelerated over the past few months, but leaders in media, retail, defense, health care, automotive, and high-tech can attest that they have been grappling with the Great Disruption for some time.
The Great Disruption creates real challenges for managers who have made a career out of focused execution. Smart management and prudent cost controls might have been enough to survive the Great Depression, but they are wholly insufficient for surviving the Great Disruption. For example, all the operational acumen in the world won't help U.S. newspaper companies handle the seismic shifts in their industry.
For many companies, the Great Disruption requires nothing short of transformation. It requires fending off attacks from below and making the creation of new growth systematic. It demands embracing new forms of innovation, such as business model innovation, and dramatically improving the productivity of innovation efforts. Investing in transformational efforts in a brutal market appears difficult, but the alternative isn't stagnation, it is extinction.
Over the coming months I'll describe some of tools and techniques to help companies more confidently navigate through the Great Disruption, drawing on material that will be summarized in a book Harvard Business Press and I are pushing to bring out early next year called The Silver Lining: An Innovation Playbook for Uncertain Times.
What do you think we should call today's economic climate?
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Scott Anthony
Scott D. Anthony is the president of Innosight, an innovation consulting and investing company with offices in Massachusetts, Singapore, and India. He has consulted to Fortune 500 and start-up companies in a wide range of industries. During 2005–2006 he spearheaded a yearlong project to help the newspaper industry grapple with industry transformation (Newspaper Next).
Anthony is the lead author on The Innovator’s Guide to Growth: Putting Disruptive Innovation to Work (Harvard Business School Press, 2008). He previously coauthored (with Harvard professor Clayton Christensen) Seeing What’s Next: Using the Theories of Innovation to Predict Industry Change (Harvard Business School Press, 2004).
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Comments
Interesting post. Now I can't wait to get my hands on the book. If you are looking for someone to review/proof-read the draft of the book, count me in.
- Posted by Saqib Ali
December 16, 2008 4:49 PM
The Great Disruption ain't half bad, but can we really afford to waste time on adjectives like "great" these days? But then, The Disruption without the Great sounds a bit too sci-fi. How about The Shakeout? Um, perhaps that's a better name for a dance move or breakfast cereal...
- Posted by Jim MacArthur
December 17, 2008 8:53 AM
Why try to find another term for a permutation of an existing phenomenon? This is on scale with a massive recession or depression only it has a different life cycle and justifiably so due to the maturity and complexity of the markets and banking system. These events occur and they always seem different to the generation experiencing them due to the scope and magnitude.
I believe next year will define it to be on par with the 29 crash.
Just my 2 cents.
- Posted by Kyle Edwards
December 17, 2008 9:23 AM
Let's keep it simple. What we have is a credt correction.
- Posted by Joe Bianco
December 17, 2008 11:41 AM
What we see is actually a Credit Implosion. Using the word 'great' for the enormity of the event makes it the Great Credit Implosion.
Implosion to me is...similar to the fact that few really know what caused such a big crisis when everything was going fine just a few years back.
To me these are the Big Implosion years. And the Big implosion is painful.
- Posted by Ashutosh
December 18, 2008 5:58 AM
Scott, thanks for getting The Silver Lining: An Innovation Playbook for Uncertain Times up on Amazon for pre-order... placed my pre-order this morning! :)
- Posted by RKirk
December 18, 2008 1:27 PM
The Big Implosion rightly defines the scenario.
- Posted by Ashutosh Pandey
December 19, 2008 1:18 PM
Hi Scott, great article, I am looking forward to the rest, and to the book. BTW, is there a way to subscribe to this feed via e-mail? I don't use a feed reader any more...
- Posted by Stephen Smith
December 30, 2008 3:37 PM
Well, I think the real problem was the excessive ambition and the Risk fallacy togheter. If you remember, 5 years ago or something else, the International markets believed in the Hedge funds and another similar funds for invest and take money without credit risk. However, there is no lunch for free. The risk is an important reality. In resume, for me "The Risk Fallacy" is a good title.
- Posted by Fer Per
January 1, 2009 11:13 PM
Scott, I love how you describe the transformation we are currently living: "The Great Disruption". No matter how much we want things to go back to the "way they were", they won't, thankfully. Because we were living under the illusion of control. Those who succeed are those who learn how to dance with chaos, and love it! Best wishes for your book project, it is on my list to read when it comes out.
- Posted by Davender Gupta
January 2, 2009 4:14 PM
it seems correct to say that this is simply a 'credit implosion'. ...but what caused us to demand all that credit? isn't it because returns and wages (without debt) were 'too low'? but why were they 'too low'? ...they weren't 'too low' in the BRIC countries. isn't it because BRIC countries are disrupting the developed world?
..i wonder if it is true that incumbent firms tend to try to pump up returns with debt when they are being disrupted...
- Posted by lance durham
January 15, 2009 12:13 AM