According to Scott Anthony, the “Great Disruption” refers to the current time when tumultuous change is “ripping through markets at unprecedented pace. Competitive advantage that took decades to build disappears seemingly overnight. While output might shrink and unemployment is sure to rise, companies that master these forces still have a chance to thrive; those that don’t are sure to struggle.” As Richard Florida suggests in The Great Reset, there have been three periods (in the 1870s, the 1930s, and now) when a tumultuous economy destroyed many companies but also created abundant opportunities for others. The key to survival during a process that bears striking resemblance to Charles Darwin’s concept of natural selection was and continues to be the ability to adapt and the methodology for adaptation is innovation.
Anthony observes that “every crisis presents opportunities” and cites several examples of companies that took full advantage of theirs: “3M, General Electric, Microsoft, and Walt Disney were formed in a year that featured an economic downturn.” Those that were founded during a recession include Black & Decker, ConAgra, Dow Chemical, Electronic Arts, Eli Lilly, Enterprise Rent-A-Car, Harley-Davidson, McKinsey & Company, Texas Instruments, and Whole Foods Market.
So what? A great deal. “The biggest silver lining for innovation is the scarcity that is sure to result from the current economic climate is actually a good thing for innovation.” Why? “Abundance is actually the root cause of many corporate struggles with innovation. Too much time or money allows companies to continue to follow fatally flawed strategies for too long or create overly complicated solutions that actually overshoot customer needs.” I wholly agree with Anthony that constant innovation need not be expensive and probably is most productive when initiated under limitations of hours and dollars. That’s why I also agree with him that “there’s never been a better time for innovators to face tighter purse strings.” While the bears are ensconced in their caves awaiting better economic conditions, the bulls create (something new) and innovate (make something better). Finally, I agree with Anthony that “guidance about innovating in uncertain times is actually guidance for innovating in any economic climate.” During good times and bad, the most important question to ask remains the same: “Is this the right business decision to make?”
I commend Anthony’s relentless focus on explaining how to
• Identify the “different approach to take when prudently “pruning” by obtaining the answers to five questions (Pages 30-31)
• Recognize the four business unit portfolio “traps” and know to avoid or escape from them (Pages 34-35)
• Conduct four specific analyses that can help to determine the degree to which an existing business has unexploited or under-developed potential (Pages 38-39)
• Learn from three important lessons for cost cutting as revealed by the basic pattern of disruptive innovation (Page 52)
• Follow the three-step process to drive “intelligent cost cutting” (Pages 52-63)
• Follow the three-step process that innovators have used to drive disruption to create “spectacular success” (Pages 75-82)
Note: Table 4-1 (“Identifying constraints on consumption”) on Page 76, all by itself, is worth much more than the cost of the book. The same is true of Tool 4-1 on Pages 88-89
• Recognize and avoid the four common strategic traps that may appear (Pages 96-98)
Here’s the challenge that all business leaders face: Invention or re-invention and transformation. “Perpetual transformation [i.e. constant adaptation] is the only way to thrive during the Great Disruption…Unfortunately, the brutal reality is that most efforts at transformation fail.” There are exceptions (e.g. Apple, IBM, Procter & Gamble, and Nokia. “More often than not, companies fail when they try to go beyond their core business. But in the Great Disruption, companies don’t really have a choice. Investing in transformational efforts in a brutal market appears difficult, but the alternative isn’t stagnation, it is extinction.”
As the book’s narrative clearly indicates, Anthony is a relentless empiricist and a world-class pragmatist who is determined to understand and then share with others what works, what doesn’t, and why when companies attempt to survive – if not thrive — during the current Great Disruption. Innovation offers a “silver lining,” albeit a slim one more often than not, but an opportunity nonetheless. And Anthony offers a “tool kit” (enclosed within a bound volume) for those who refuse to accept the current economic situation as “the beginning of the end.” He also provides a “kick start to transformation” but, obviously, what happens next is up to his reader. Anthony concludes, “The choice is yours.”
Tags: 3M, Apple, Black & Decker, Charles Darwin’s concept of natural selection, ConAgra, Dow Chemical, Electronic Arts, Eli Lilly, Enterprise Rent-a-Car, General Electric, Harley-Davidson, Harvard Business Press, IBM, McKinsey & Company, Microsoft, Nokia, Procter & Gamble, Richard Florida, Scott D. Anthony, Texas Instruments, The Great Reset, The Silver Lining: An Innovation Playbook for Uncertain Times, the “Great Disruption”, Walt Disney, Whole Foods Market