Disruptive innovation is reshaping the global economy at Fortune 500 and macroeconomic levels. According to Deloitte’s 2013 Shift Index, half a century ago the average life expectancy of a Fortune 500 company was 75 years. Today, it is less than 15 years, and it’s heading towards five years if ‘nothing is done’. We talk to Alex Chenevier, who has found a new way to approach it all
‘The strategic planning of today’s leading corporations is fatally flawed. Internally, they focus too much on brand alignment and short-term results to satisfy the balance sheet and investors. But changes in the industry will blind-side them sooner or later. Externally, too much attention is put on ‘adaptability’, meaning that many organisations are building tomorrow’s business at the expense of today’s. At the other end of the spectrum, disruptors are using digital media to circumvent the traditional way of doing virtually everything in business’. This is Chenevier’s starting point.
In 1997’s ground-breaking work, The Innovator’s Dilemma, Harvard Professor Clayton Christensen pinpointed the reasons why so many companies fail against the odds. He demonstrated how successful, outstanding companies can do everything ‘right’ and yet still lose their market lead, and even fail as new unexpected competitors rise and take over the market that they shouldn’t, perhaps, even be in.
Why? Chenevier continues, ‘Because the technological capabilities of these established organisations had been stymied by board-member decisions, which were arguably based on old interpretations and cognitive limitations. The solution is to reconcile the organisation with its technological potential by providing a workable framework that is – essentially – systematic and non-judgmental.’ And that’s a revolutionary thought.
‘Researchers have been able to disentangle the relationship between knowledge that is explicit (all the usual things like patents, key performance indicators, etc) and that which is tacit (external to the organisation),’ Chenevier says. ‘This knowledge is determined by considering the what, why and how. And so, it’s possible to reconstruct the historical and economical trajectory of any organisation given these fundamentals.’
‘Any company’s knowledge comes from extensive experience with its core technology and various products’ attributes,’ he adds. ‘Therefore, each company can quantify its quality and creates mechanisms to measure its success over its history. Indeed, most Fortune 500 companies have encountered dramatic changes in the past and more recent, unsettled times. Yet, despite this, the same path dependency remains.’
‘Now we can cut through this path dependency, using intertwined research tools to reassess disruptive innovation opportunities,’ Chenevier says. ‘For example, the chance that a tulip would form part of the research at Microsoft is highly unlikely. It wouldn’t fit their remit or reputation, so it wouldn’t even be considered. Yet studying it might revolutionise many things in not such an abstract way as one might expect.’
‘This disruptive innovation methodology is a simple a way of melding any organisation’s unique internal knowledge with other external examples. The combination opens up an opportunity for exploration – maybe for the first time – into what might be definite, quantifiable, measurable and therefore applicable in the business sphere (the scientific equation of the K³ Performance Indicator℠ being knowing the what, why and how). The use of this new economic model offers Fortune 500 companies and the like the chance to mature disruptive models effectively, in tandem with developing new patents – and even disruptors,’ Chenevier concludes.
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