I love reading articles about how disruption has killed well-intentioned organizations. How Nokia didn’t pick the success of a touch screen phone, or how Kodak missed the onset of digital photography. What strikes me almost everytime, is that these organizations have bright successful leaders driving them, they are passionate and ambitious. In fact, if you were to talk to these leaders on a one-on-one basis about our world, they might say words such as “unprecedented”, “nationalism”, “social media”, “globalization”, “innovation”,”i-something” or “Trump”.
Such a list would be easy to come with, as everyone understands these words, their meaning and the change they represent. They are unavoidable as we are all in our own way driving the change, as it is making our lives more connected and easier. Many of us love buying digital books, even though it puts local bookshops out of business. We may have simultaneously bought into digital music (from iTunes to Spotify) while lamenting the loss of record and CD stores. Most of us understand this world- we get it, we participate in it, we benefit from it, and we help shape it.
So why then, when you bring individuals together in an office or business environment, they think their organization, their market is somehow immune from the dramatic shifts of the twenty-first century. Its almost as if groups of leaders believe somehow their industry is somehow vaccinated against the changing world. They do this as a collective, while ironically, as individuals they are using their smartphones to order lunch on an online app. How is it, they ignore the signs, get so blinkered, and get so afraid- when they are all simultaneously driving and participating in redrawing landscape?
There is no doubt many reasons for this, and they would differ from individuals to individuals, market to market, country to country. Whether it is leadership, a focus on short-termism or even a reliance on a “wing and a prayer,” it does not negate the final, inevitable outcome.
One fundamental reason I think that is often forgotten by commentators is the impact of an organization’s view of a market; a view which is often driven by its leaders by a belief system molded by their experience and success in a market. At its most basic level, a market is merely a social structure to exchange goods and services. Moreover, like any social structure, it has a cohesive set of beliefs and actions on how it works, and how it holds together. The seller understands how to manufacture a product, how to attract customers and how to provide a provide a level of service. The customer knows how the market works, warts and all, and they have a confidence and trust in the processes (or not). Competitors know how to compete, you can even predict what and when they will do it. Even the government understands the market social structure, and they regulate to ensure it continues to operate efficiently and effectively, that it does no harm and that it has enough structure, to be taxed.
This is what a market is; it is not special; it does not really have a magic formula, and it just is held together by a gravity of beliefs that binds it for everyone. This is a cohesive, well-ordered, predictable market, in a cohesive well-ordered, world.
Of course, it is not all sunshine and lollipops. The world is not predictable, market order and cohesion can be broken, disrupted, ripped apart- just like that. The norms can be thrown out the window as accepted conventions, such as buying printed books from bookshops, are ignored. For the organization which didn’t respond, it is a revolution, full of death and destruction.
As a new market rises, it can be beautiful, enticing and fast- in ways that can not be imagined. It can create enormous value and for the consumer, it could mean convenience, speed, and lower prices (or all of the above). For a government and regulators, it is confusing. Regulations that kept a market operating are now outdated, and as shown recently, they are not even sure how to tax sales or profit on the products and services of the new world.
It is not easy for any leadership team to know when the market cohesion they so love, is going to be outdated as a video store. They will seek solace in the annual strategy view with slides that will say they have done enough in their two-dimension view of the market. They will perhaps hold on to it like a ‘blanky,’ while reading the news on their iPad, riding in an Uber.