5 Levels of Disruption

In a number of recent talks and working sessions with clients we've been dancing with the issue of "disruption."  As others regularly note, both the term and notion of disruption is pretty hot and hype these past few years, and we ourselves have often referenced the work of Clayton Christian in addition to other work on technological disruption and innovation.  Partly because the term is defined differently by different writers, and partly because clients have different scales and scopes to their businesses, we do sometimes need to be both more explicit as well as more structured in our thinking (and discussions) with clients about where, how, and why change might potentially "disrupt" their business.

Figure 1: a typology of disruptions

It is in this light that we will sometimes use the following framework (figure 1) with folks to help clarify and explore both potential disruption as well as lower, more typical types of changes. Note that we normally use this in discussing disruptions to a client's business and not to broader changes in the environment or society.

At the top of the inverted triangle we have what, frankly, futurists live for: large scale techno-economic paradigm shifts that ripple through society and redefine how we do things.  These are of course rare, though they have tended to occur once every 50 or 60 years for the last 250 years. While usually not top-of-mind for your typical business decision-maker, when these occur, they affect everyone.  [If we had to make a statement about the next big shift, which is likely building steam as we write, then we would expect it to be the Age of Microbes and Machines]

Next down from those society-wide disruptions we tend to look at disruptions that drive an organization to stop and reconsider its basic reason for being.  These are understandably rare, but they do happen, and in our experience they tend to be related to an impending and dramatic change in things like core regulations that would change the structure of a market.  Again, they don't happen very often, but the question itself, "Do we need to revisit the organization's basic purpose?" is often useful just for setting the bar, as it were.

Disruptions to the business model would be one down from mission.  Here things tend to get more interesting, partly because of the amount of genuine change occurring in the world, and partly as a consequence of the notion, prevalent today, that "business models" are constantly changing.  Here again we have tended not to see a genuine need to fundamentally reconfigure a business model that often, but the question legitimately surfaces more often than higher order change.  Here of course we encounter a variety of discussions concerning technological disruption, regulatory change, unexpected competition, etc..  And certainly at this level both the source of disruptions and their impacts blur across into the next level...

...which is where we talk about potential disruption to strategy.  Planning is, frankly speaking, more art than science, and any discussion about strategy or strategic plans necessarily pivots on basic definitions.  These definitions will in no small part determine whether or not an organization traces a disruption to business model or strategy.  For our own work, and in the absence of an entrenched and differing definition within the organization, we tend to work with strategy as an abstraction, starting with a core definition of strategy as:

A concept or theory for how, in a given context and employing a given set of resources and competencies, you expect to achieve your goals.

It has been our experience that many small and some medium sized firms do not actually operate on what we would identify as formal strategies, though most are certainly focused on some set of achievements or some general direction, and many have enormous lists of initiatives and projects. Regardless of whether or not they do, however, there is a lot more action at this level when it comes to exploring potential disruptions.  And as alluded above, at this level we see a lot of conversations about technological disruption, new competition, and things like regulation and business environment.

Finally, we have the most typical changes, those that force new directions in products or services. The sources of "disruption" at this level can be broad, and because product/service portfolios can be organized in a variety of ways and oriented towards a variety of different markets, organizations will often identify a number of drivers that are fairly local or simply localized but that still require serious responses through product/service innovation.

And while there may be nothing terribly innovative about this framework (the framing is quite intuitive, after all), we do find that it can greatly help un-muddle certain strategic conversations.  This can particularly be the case when a client is facing a context of high complexity, in which they have multiple concerns across multiple domains or scales.  Separating out the different pressures, and exploring how they might be interacting across levels, can be a very useful exercise amidst a broader conversation.

As with just about all of our work and frameworks, this one is an evolution-in-process (in fact, we've been discussing whether or not to flip the pyramid to reflect the number or breadth of the sources of potential disruptions, vs the way it is now, which emphasizes the scope of impact of the specific source of disruption under review...).

Surveying the Landscape of Economic Change

Figure 1: nested political changes

In most of our work, and particularly for our original research and content, there are one or two key frameworks that help us organize and make sense of the dynamics we (and clients) are observing and experiencing.  In the Third Era one such framework is the nested view of political changes (figure 1).  This particular construct helps us separate out the various changes in political life that are often lumped together in everyday discourse while also allowing us to consider how things interact across these domains.

The Third Era also incorporates frameworks like the Three Horizons, but the above nested view is probably the most important overall framing right now.

Figure 2: education as a socio-technical system

Another framework, this time from our most recent work on learning futures, adapts a socio-technical transitions model to viewing and understanding current and likely changes in education in the United States (figure 2).  This framework provides a compelling way of not only understanding education as a system embedded in larger systems and susceptible to developments in the margins, but also for exploring how education will become ever more shaped by technical influences.  This lets us explore the issue of education becoming a more typical socio-technical system than it has ever been before.

While there are some other, more minor models at work in our learning futures content right now, the nested view above is by far the most central to our work.

Figure 3: layered economic changes

And so, in updating the Infinite Economy, one of the new framings that emerged was that of layered views of economic change dynamics (figure 3).  For the Infinite Economy, there are a number of models/theories related to economic change that we like to draw upon, and this layered view, which builds upon the common analogy of the "30,000 foot view," allows us to incorporate multiple models while (hopefully) not muddying the issue too much.  And while Perez's technological revolutions models is also central to the Infinite Economy framing and forecasts, this layered view is almost more important in the bigger picture (ha, ha) because it allows us to capture in one view some many of the different issues and changes people are confronting.

The ability to organize the many conflicting and contending signals we are receiving today about our economic futures is, to us, a critical ability if one wants to usefully talk about the futures of economic life.