Entrepreneurship never sleeps

The phenomenon of disruption occurs when successful firms fail because they continue to make the choices that drove their success. In other words, it does not apply when firms are poorly managed, complacent, fraudulent, or doing things differently because they are now shielded by barriers to competition. To be sure, firms can fail because of those circumstances, but that is not what we mean by disruption. (...) a “disruptive event” occurs when a new product or technology enters the market, causing successful firms to struggle. (...) an organization strains most to assimilate new architectural knowledge when it has been successfully focused on exploiting innovations based on the previous architecture.

The key to dealing with disruption is to understand that it emerges surrounded by uncertainty. While hindsight often suggests that certain disruptive events were obvious, this is far from clear when those events are emerging. (...) Some firms may be shielded from disruptive events because they possess key complementary assets, the value of which is not changed and may be enhanced by those events.

Self-disruption was proposed by Christensen as a means of proactively avoiding the consequences of demand-side disruption. The idea is that the firm takes control of disruption by charging a new division with the competitive role that would otherwise be taken by a new entrant. While establishing an independent new division can appear to be an effective response, firms often fail to translate it into successful and sustainable models as they kick the dilemmas associated with disruption down the road. Managerial conflicts emerge, and established firms find themselves unable to resolve them effectively.

If a firm wants to ride out continual waves of disruption, it needs to maintain organizational structures that preserve and can evolve architectural knowledge. Integration and continual coordination of component-level teams in product development has been shown to be an effective way to avoid existential threats to successful firms. But what has not been appreciated is that integration and coordination stand diametrically opposed to the independence and self-disruption mantra many firms have adopted to mitigate disruptive risks. It stands to reason that if your problem is how the parts fit together, adding another unit charged with doing its own thing is not going to solve it.

Dealing with disruption to ensure a successful and sustainable business involves more than just taking some additional bets with autonomous units that may get you slightly ahead of the game. (...) you need to bake your response to disruption into your mainline organization. The dilemma you face is that betting on sustainability is not without cost to short-run competitive advantage and profitability. Not all businesses will take the same path. However, once you have gone through the journey of disruption—its intellectual history, its practical reality, and the way leaders have dealt with it—you will have the two paths clearly laid out for you. What you do at that point is up to you.

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