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Ever since the 1997 publication of The Innovator’s Dilemma, researchers, management experts, and businesspeople have discussed, dissected, and debated Clayton Christensen’s Theory of Disruptive Innovation. By now, the arc of disruption is well established: We know how disrupters enter the market, and we know how incumbents typically bungle their responses to such seemingly insignificant competition. Numerous books and articles have offered to solve the dilemma of disruption, including Christensen’s own The Innovator’s Solution (a 2003 book coauthored with Michael Raynor), which suggests that leaders who understand how disruption transpires can inoculate themselves against the threats and seize the opportunities.
Yet, despite so much insight and advice, the dilemma persists: 63% of companies are currently experiencing disruption, and 44% are highly susceptible to it, according to research by Accenture.1 And in a thorough analysis of more than 1,500 publicly listed companies, growth strategy consultancy Innosight found that only 52 of them, about 3% of the sample set, had made material progress in strategically transforming their organizations.2 The default positions, it seems, are to squeeze extra points from profit margins, search for companies to acquire, or simply pay lip service to innovation by setting up token incubators or having executives wear jeans and the occasional hoodie.
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Why are companies still so vulnerable to disruptive threats? Our view is that it isn’t about not having the right playbook. The problem is that well-intentioned leaders often delude themselves by downplaying disruptive threats or overestimating the difficulty of response. In simple terms, leaders lie to themselves. This means that dealing with disruption is not just an innovation challenge; it is a leadership challenge. This article explains these delusions about disruption and offers ways to help leaders avoid self-sabotage.
Cautionary Tales Persist
“Christensen and Raynor have done a superb job of creating a framework for helping to understand industry dynamics and for planning your own growth alternatives.” This quote appeared on the back jacket of The Innovator’s Solution, attributed to Pekka Ala-Pietilä, then president of Nokia. The Finnish company had much to be proud of back then. It was on the brink of taking over the booming cellphone market. Over the next few years, the company would grow into a seemingly unstoppable force. Its stock price surged.
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1. O. Abbosh, M. Moore, B. Moussavi, et al.,“Disruption Need Not Be an Enigma,” Accenture, Feb. 26, 2018, www.accenture.com.
2. S.D. Anthony, A. Trotter, R.D. Bell, et al., “The Transformation 20: The Top Global Companies Leading Strategic Transformations,” Innosight, September 2019, www.innosight.com.
3. “Interview With BlackBerry Co-CEO Jim Balsillie,” CBC’s The Hour, April 1, 2008, www.youtube.com.
4. S.D. Anthony, C.G. Gilbert, M.W. Johnson, et al., “The Courage to Choose,” chap. 5 in “Dual Transformation: How to Reposition Today’s Business While Creating the Future” (Boston: Harvard Business Review Press, 2017).
5. M.D. Lord, S.W. Mandel, and J.D. Wager, “Spinning Out a Star,” Harvard Business Review 80, no. 6 (June 2002): 115-121; R. Casadesus-Masanell and K. Elterman, “Walmart’s Omnichannel Strategy: Revolution or Miscalculation?” Harvard Business School case no. 720-370 (Boston: Harvard Business School Publishing, 2019); J. Russell, “Walmart Sells Yihaodian, Its Chinese E-Commerce Marketplace, to Alibaba Rival JD.com,” TechCrunch, June 21, 2016, www.techcrunch.com; and D.B. Yoffie and D. Fisher, “Walmart Update, 2019,” Harvard Business School case no. 719-504 (Boston: Harvard Business School Publishing, 2019).
6. D. Barton, J. Manyika, T. Koller, et al., “Where Companies With a Long-Term View Outperform Their Peers,” McKinsey Global Institute, February 2017, www.mckinsey.com.
7. M.J. Mauboussin and A. Rappaport, “Transparent Corporate Objectives — A Win-Win for Investors and the Companies They Invest In,” Journal of Applied Corporate Finance 27, no. 2 (spring 2015): 28-33.
8. Anthony et al.,“The Conviction to Persevere,” chap. 8 in “Dual Transformation.”
9. Harvard Business Review Staff, “The Best-Performing CEOs in the World 2018,” Harvard Business Review 96, no. 6 (November-December 2018): 37-49.
10. “Leading Transformation: CEO Summit 2018,” Innosight, Aug. 2, 2018, www.innosight.com.
11. S.D. Anthony, P. Cobban, R. Nair, et al., “Breaking Down the Barriers to Innovation,” Harvard Business Review 97, no. 6 (November-December 2019): 92-101.
12. R. Kegan and L.L. Lahey, “An Everyone Culture: Becoming a Deliberately Developmental Organization” (Boston: Harvard Business School Publishing, 2016).
13. M. Putz and M.E. Raynor, “Integral Leadership: Overcoming the Paradox of Growth,” Strategy & Leadership 33, no. 1 (2005): 46-48.
14. J. Carter and R. Hougaard, “The Misconceptions of Mindfulness at Work,” Greater Good Science Center, Feb. 12, 2016, www.youtube.com.
15. S. Abrams, “Mindfulness Is Aetna CEO’s Prescription for Success,” HuffPost, Jan. 11, 2018, www.huffpost.com.
16. T. Hindle, “Guide to Management Ideas and Gurus” (London: Profile Books, July 2008).
17. P. Wack, “Scenarios: Shooting the Rapids,” Harvard Business Review 63, no. 6 (November 1985): 139-150.
18. C. Machmeier, “Mastering Digital Transformation With Mindfulness,” SAP, Sept. 3, 2018, www.sap.com.
19. J.A. Quelch and C. Knoop, “Johnson & Johnson: The Promotion of Wellness,” Harvard Business School case no. 514-112 (Boston: Harvard Business School Publishing, 2014).