Reflections on disruptions
Maybe we should have called the fall 2015 issue of MIT Sloan Management Review the “disruption” issue. After all, two unrelated articles in this issue of MIT SMR prominently feature either the word “disruption” or “disruptive.” However, the two articles explore completely different aspects of management.
In “Preparing for Disruptions Through Early Detection,” Yossi Sheffi, a professor of engineering systems at MIT and director of the MIT Center for Transportation and Logistics, shares insights from his new book The Power of Resilience (MIT Press, September 2015) about how companies are learning to more quickly detect unanticipated problems that can interfere with their global operations. Such disruptions range from hurricanes to the discovery of product contamination. In fascinating detail, Sheffi describes how leading companies are using an array of detection and response techniques — everything from sensors to supply chain control towers — to become more resilient. “Using insights gained from detecting potential disruptions early, companies can respond to such threats effectively,” Sheffi concludes.
“How Useful Is the Theory of Disruptive Innovation?” by Andrew A. King, a professor at the Tuck School of Business at Dartmouth, and Baljir Baatartogtokh, a graduate student at the University of British Columbia, examines an entirely different subject. As King and Baatartogtokh note, Harvard Business School professor Clayton M. Christensen’s theory of disruptive innovation has been tremendously influential in the business world. But, the authors ask, how well does the theory describe what actually happens in business? After seeking out industry experts for 77 cases of disruptive innovation mentioned in Christensen’s books The Innovator’s Dilemma and The Innovator’s Solution (the latter coauthored with Michael E. Raynor), King and Baatartogtokh report that “our survey of experts reveals that many of the cases do not correspond closely with the theory [of disruptive innovation]. In fact, their responses suggest that only seven of the cases (9%) contained all four elements of the theory that we asked about.”
That 9% should not be considered a precise or definitive statistic, because, as King and Baatartogtokh acknowledge, some of the industry experts they consulted may be mistaken. However, the authors’ larger point is an important one: that the details of the theory of disruptive innovation may not fit as many situations as people have often assumed. In general, King and Baatartogtokh conclude, executives should be wary of relying too heavily on a management theory such as the theory of disruptive innovation. “High-level theories can give managers encouragement, but they are no replacement for careful analysis and difficult choices,” King and Baatartogtokh write in their thought-provoking and illuminating article.
Why is the term “disruption” so popular in a variety of business contexts? It may be that the word itself resonates with a sense of uneasiness business executives naturally feel during a period of rapid technological change and volatility. At any moment, the word “disruption” suggests, your business could be upended — whether by a natural disaster affecting suppliers in another part of the globe, a terrorist attack, or a competitor with a more compelling offering than yours. That’s a sobering thought, but it’s not a bad one to keep in mind.
Martha E. Mangelsdorf
MIT Sloan Management Review