Disruption need not be an enigma

What's more, the Disruptability Index shows that different industry segments within the same sector may experience varying periods of disruption. Take the automotive segment, where trends like electrification, car sharing and autonomous driving are dramatically changing the business model for carmakers more rapidly than for suppliers. As a result, the current level of disruption for automotive manufacturers is significantly higher than it is for the parts and equipment sector.

Take control: Disruption as an opportunity

In periods of rapid change, a new strategy is required: one that enables companies to act in the face of disruption, confidently. We call this strategy “rotating to the new”—it has four actions:

1. Grow the Core
2. Transform the Core
3. Scale the new
4. Pivot wisely

Each of the four periods of disruption requires a different emphasis on these strategic actions.

1. Disruption State: Viability
   Focus: Greater Emphasis on “Growing the Core”
   • Direct investments to build new capabilities
   • Activate demand for innovative offerings with existing customers
   • Use core strength to expand into adjacent markets
2. Disruption State: Durability
   Focus: Transform the Core
   • Maintain cost leadership in the core
   • Use efficiency-enabling technologies to increase profitability
   • Channel freed-up investments toward experimentation, making core offerings cheaper and better
3. Disruption State: Vulnerability
   Focus: Scale the New
   • Reduce dependence on fixed assets, and monetize those that are underutilized
   • Respond to decreased demand for core products by spotting and scaling up innovations
   • Use technology and data to build enhanced services and offerings that alleviate customer pain points
4. Disruption State: Volatility
   Focus: Pivot Wisely
   • Be bold with corporate and financial restructuring
   • Find the right pace and timing to shift to new businesses and opportunities

Three ways to take advantage of the Disruptability Index:

Don’t Wait: Act
Each disruption period brings unique challenges and opportunities. For example, for companies in the Volatility period, it is imperative to change course decisively. Meanwhile, for those in the Durability period, it is imperative to experiment and focus on maintaining existing sources of competitive advantage.

Be Brave, Be Wise
Don’t presume that the best way to respond to disruption is to become the disrupter—that is, focusing solely on scaling new businesses. Companies must balance investments required to reinvigorate the core (e.g., by modernizing existing businesses) while scaling the new businesses (e.g., by creating entirely new digital business models).

Turn Your Vulnerabilities into Advantages
Business leaders can use the index to understand their vulnerabilities and drive their strategic response. Additionally, they can identify opportunities to exploit their own core competencies in adjacent markets that are exposed to disruption today.

Are you prepared to boldly embrace disruptive opportunities—instead of fearing them? It’s time to take advantage of disruption and shape your own future.