In a study released by Gilbert and Bower, the authors extrapolate that when companies face major disruptions in their markets, the way their managers perceive that disruption influences a company’s response profoundly.
Threat or Opportunity?
According to this study, disruptive change is immediately categorized as either a threat or an opportunity. And here is where Gilbert’s and Bower’s interesting findings come into play:
- If the disruption is perceived as a major threat to the core business, managers tend to overreact.
- The overreaction results in committing too many resources too quickly.
- If the disruption is seen as an opportunity, managers will likely allocate insufficient resources to their change and innovation process.
- Managers try to combine inadequate resources with a more creative approach to tackling disruptive change.
- There is hardly any middle ground to be found: The experience is perceived in stark positive or negative terms.
The authors warn that the rigidity with which a disruptive change is perceived can easily threaten the health of a business: Misallocation of resources reduces the possibility of an organizational framing that makes use of the adrenaline a threat creates and makes the creativity an opportunity promises virtually impossible.
The impact of such stark framing is tremendous: ultimately the change initiative started in response to the perceived disruption begins to stall, change fatigue sets in and the company loses its agility.
Successful organizations in the study had a different reaction:
- They established a new venture separate from the core business.
- They funded the venture in stages as markets emerged.
- They didn’t rely on employees from the core organization to staff the new business.
- They appointed an active integrator to manage the tensions between the two organizations.
While these are important findings, the question arises: Can organizations start out with a more balanced and dynamic framing? Here is our advice.
9 Tips for creating a more balanced and dynamic view of disruptive change and innovation:
- Take your time: When faced with danger or opportunity our minds are wired to act fast. While most managers argue that they must respond quickly to change, taking one’s time is indispensable for beating the mental hard-wire of our brains.
- Leverage the collective intelligence in your organization: Our brains are also hard-wired to react in extremes. While an individual will tend to gravitate to either one or the other extreme, arriving at a more dynamic and less rigid perception and framing increases with the number of people observing the situation.
- Map your opportunities: One way to step back and slow down is to map out your opportunities. Extra piece of advice: The more eyeballs you have in this activity – the more perspectives from different levels of the organization – the less likely you will end up running into a blind spot.
- Map the threats. While we often believe we have no time to waste, when it comes to a threat, we have to recognize that the true threat already lies behind us. How we react to it is not directly linked to the original threat. No disruptive change in the industry will kill a company overnight (if so, a number of things went wrong quite some time ago). Sitting down collectively to map out a more realistic response will be more effective.
- Understand your strengths: If you don’t understand your unique strengths, your reaction to change or innovation will probably be to copy what you think your competitors are doing. Copies can – at times – be better than the original, but you will do your company a bigger favor by putting your identity, culture and core competitive advantages into the equation.
- Collectively shape your future strategy: In a complex world, no one manager or group of managers can know all the answers. Your strategy is your future, it shouldn’t be prevented from benefiting from one of the most effective survival mechanisms – collaboration.
- Create Prototypes: This is the part where we can become creative again. To be better than others, we need multiple options to choose from. Create several prototypes and decide which one fits your desired future best.
- Monitor the implementation: Closely monitor the implementation of your selected prototype. Does this solution and the implementation truly reflect all your findings?
- Repeat the process often: By repeating this process, you will slowly regain the upper hand. Repeating this process, regardless of whether or not there is a perceived threat or opportunity, will put your organization into a more pro-active and agile mode and can thereby actively influence your organizational culture in a positive way.