How Smart Businesses Embrace Disruption

Note: This is the first of a 6-part series on How to Harness the Power of Change Waves to Accelerate Growth.

Disruption is the new norm.

There’s no doubt that technological and economic disruptions are coming faster than ever before in human history. Robert Safian once wrote in Fast Company that “the pace of change in our economy and our culture is accelerating…to thrive in this climate requires a whole new approach…a mindset that embraces instability, that tolerates–and even enjoys–recalibrating careers, business models, and assumptions.”

At every point in time, in every industry, we are somewhere on a change wave — the result of some breakthrough in our knowledge and our ability to apply it.

Learning to understand, anticipate and use these change waves is the key to succeeding in this New Economy. When you have tools and processes for discerning trends and forecasting their impact, you’ll be in a better position to make sense of the world, and plan your personal and organizational responses to it.

Like a world class figure skater, having a solid reference point keeps you upright and in control. Even if the world is spinning around you, you can find the pattern and position your business for success.

Mapping the Lifecycle of a Disruption

In every significant technology-led change there are two discernible periods — a breakthrough which triggers a period of initial learning, and an echo boom which is characterized by commercialization and adoption.

The key challenge is to sort out the important and long-term trends from the transient and passing.

To be a full-fledged disruption, there needs to be a huge upside to the change and a release of unanticipated amounts of energy once the breakthrough is validated. This is why the most important, pre-business case metric for research is the size of the revolution if it works.  My rule of thumb is that if it doesn’t improve a key performance variable by a factor of at least two, don’t spend research effort on it.

The people at Gartner have coined the term “hype cycle” to show how each new technology coming to market usually hits with a big splash that results in a sharp, peaking first-wave of expectation but relatively narrow adoption and limited economic impact. It is only after the technology works its way through “the trough of disillusionment”  that it comes to market in a rich and mature way to impact history, economics and society.  Others have used back to back triangles to show the two peaks, the key being two peaks of activity with a period of time for digestion in the middle.

Let’s take an example: x-rays are a fantastic tool that have had a profound impact in many areas including, medical, industrial and scientific.  When we go back to understand the timeline, we find that the initial science foundation for X-rays was done in the late 1800’s, specifically 1895.  It took until 1927 for the first dosage limits to be established and the 1950’s for a crude “portable” unit to be developed. This was the first wave.

The second wave hit in the later part of the 20th century with the introduction of the CT Scan in 1972, and the MRI in 1981.  The technical impact of this medical marvel arguably peaked in the late 90’s, but continues to be augmented by several other long wave technologies – Moore’s law (integrated circuits have doubled their capability every two years) and Metcalfe’s Law (the value of a network is proportional to the square of the users).   An enormous amount of engineering, science and mathematics pushed these breakthroughs forward into the fantastic, widely-used tools we have today.  It is also worth noting, that an economic tipping point was reached as well, when the clear and specific diagnosis available from these tools moved them from luxury to mainstream for practicing medicine.  This kind of business lock-in is essential to the second wave.

Mapping the breakthrough and echo boom points involves some interpretation, but when you begin to practice mapping trends to these constructs, it becomes easier to see and soon you’ll be doing this real time.

Here are the key takeaways:

  1. Fundamental technical changes that impact society have a very long maturation cycle.  One could argue that the echo boom of the X-ray was on the order of 100 years.
  2. There is a major “lull” between the initial discovery and its large scale impact on society.  This is not a period of waiting, but a period of intense effort when the depth and breadth of the discovery is being explored, modelled and made useful.
  3. A very significant part of the front edge of the second wave is the establishment of a investable business model that allows the necessary capital to come forward to scale the invention.

Where is Your Company in This Cycle?

Are you in the uptrend or downtrend?  Which wave — early stage first-wave or second wave?  Is there an investable business model present?  Which part of the wave are your skills and abilities best suited for?

I’d love to hear about your experiences using the hype cycle and spotting change waves. Please drop me an email, or tweet me.

Coming up in my series, How to Harness the Power of Change Waves to Accelerate Growth, I will share how to get a handle on where your industry is, where your organization is and what your role and actions might be. A distillation of years of research into technological and macroeconomic forces combined with my first-hand observations, we’ll talk about how to incorporate these forces into your roadmaps and strategic options, building an organization for implementation, and how to be an ongoing student of change.

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