Joshua Gans’s new book The Disruption Dilemma is aimed at business readers. It takes the famous Clayton Christensen analysis The Innovator’s Dilemma – a change in the competitive landscape that even a well-managed business might not survive – and sets out the possible strategies the defensive firm might successfully deploy. In doing so, Gans argues that the original disruption story is too simplified, and there are different kinds of challenge, some more threatening to incumbent survival than others.
The Disruption Dilemma
As Gans points out, ‘disruption’ has become an over-used term, so he is specific about addressing fundamental shifts in the landscape. Where Christensen and many of his successors have focused on defences against the demand side of disruption where a new entrant offers a product to a niche group of customers, Gans is interested in the supply-side, when the disruptions use an entirely new technology or approach to production. For this means the incumbent businesses find it very hard to respond. To do so effectively means completely redrawing the fundamentals of how they produce their product or service. The book advisers readers not to worry about ‘demand side’ disruptions but to focus their efforts on how to prepare for a ‘supply side’ event
Counter-intuitively, one of Gans’s defensive strategies is to run a highly integrated organisation that is in the habit of working on a sequence of innovations – which runs contrary to the usual advice to ‘disrupt yourself’ with some kind of skunk works. This is the dilemma of the title: if you run a highly integrated business, then you can’t try the independent unit option. The other strategies are: ensure you have some unique complementary assets (something John Kay has always emphasised); and don’t tie your corporate identity to your technology.
This all seems sensible advice and the case studies cited are very interesting. I have to say, though, that although Gans concludes than Andy Groves overdid the paranoia – “academic research and market experience demonstrate that the fear of inevitable and imminent disruption is unfounded” – I’m not so sure. Or at least, labelling management in a time of technical change as ‘disruption’ might well be exaggeration, but it doesn’t meant the job of managing a business is easy. Stuff happens all the time, and the really difficult decisions need to be made when the stuff has started happening but your business is still doing fine. Paranoia seems the right attitude.
Even for the non-paranoid and possibly over-relaxed, this is a nice, concise overview of the disruption debate and possible responses. It is firmly rooted in proper research, the best kind of business book.