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.

jg.png

The great leap backwards.

In 1957, a billion Chinese were going hungry.
Mao Zedong couldn’t admit this was because of the failings of his communist agricultural policies.
The reason must be something else.
He heard that sparrows were eating lots of grain.
That must be the reason.
So began ‘The Great Sparrow Campaign’.
The people must do whatever was necessary to rid China of sparrows.
That way the people would have plenty to eat.
It became everyone’s responsibility to help wipe out sparrows.
Masses of schoolchildren were taken on outings to destroy nests, to smash eggs, to kill chicks.
Everyone with any kind of gun was told to shoot sparrows wherever they saw them.
Poison was put wherever sparrows lived.
The Chinese organised in thousands to visit the areas where the sparrows gathered.
They did anything to stop them landing in the trees.
They made vast amounts of noise: sounding horns, thumping drums, even banging old pots and pans.
Propaganda films of the period show entire villages participating right across China.
They wouldn’t let the sparrows land and eventually the sparrows exhausted themselves and dropped to earth dead.
All over China, towns and villages were given recognition for the amount of sparrows they killed.
One day alone, in Shanghai, they killed 198,000.
Eventually, sparrows in China were eradicated, around two billion birds.
So that was the end of the problem, now food would be plentiful.
Well not quite.
What Mao Zedong hadn’t allowed for was what else the sparrows ate, besides grain.
They ate locusts.
Without the sparrows, the locusts had nothing to stop them.
They multiplied on a massive scale.
And locusts were many times more destructive than sparrows.
Plagues of locusts took over huge areas of Chinese farmland.
Each swarm covering hundreds of square miles made up of trillions of locusts.
It resulted in the Great Famine.
Which resulted in thirty million people dead from starvation.
Which created a new problem: what could be done to control the locusts?
The only solution was for China to import millions of sparrows from Communist Russia.
To try to put everything back the way it had been.
Because the solution had been worse than the problem.
Which is pretty much what’s happened to advertising.
Advertising was good, but we were looking for a way to make it better.
So we had to replace intuition and normal common-sense.
We had to make everything rational and verifiable, measurable and accountable, sensible and scientific.
And what happened?
We killed off the intuitive, the common-sense, the fun.
Advertising became formulaic, dull, invisible and predictable.

We killed off the sparrows and the locusts were worse.

Dave Trott (2015) Dave Trott's Blog.