14 Sources of Disruption

As the COVID-19 pandemic continues to cause significant or catastrophic disruption to many organisations, it is almost crazy to think that COVID-19 represents one source of disruption. Obviously it is a major shock and is inter-related with other forces (e.g. economic). However, from a crisis response perspective and the need to re-set short and longer-term strategic plans, it is important for leaders to always look at the bigger picture.

Why? According to Amy Webb, founder of  The Future Today Institute:

If leaders think that they are aware of the forces that might disrupt their company, their lens’ may be far too narrow…

To support such analysis, I use a tool called The Strategic Forces Framework (SFFF) which Amy Webb discusses in detail here

MAG-webb-essay-s1

Clearly, the SFFF builds on long-standing (and less comprehensive) frameworks including PESTLE. Many forces will seem obvious, but others less so.  

Amy Webb provides context on using the tool:

The SFFF helps clients identify external uncertainties which broadly affect business, markets, and society across positive, neutral, or negative dimensions. In over a decade of strategy consulting and research, I have observed that all major or ‘disruptive changes’ are the result of one or more of the 11 forces. 

For leaders and executives, the critical skill is being able to look for areas of convergence, inflections, and contradictions, with emerging patterns especially important because they signal ‘transformation’ of some kind. People must connect the dots back to their industries and companies, and position teams to take incremental – or transformative – actions as required.

Whilst many of the 11 sources of disruption might seem obvious or onerous at first, taking a broader viewpoint provides perspective as the tool can help identify critical growth opportunities (e.g. market-creating innovations) or areas of potential disruption (e.g. new business models). For example, an established regional farming equipment firm tracking eco-friendly infrastructure trends could be a first mover into new or emerging markets, while a traditional electronics retailer (with online operations) monitoring 5G, IoT and AI plus segments of non-consumption, could be better positioned to compete against the big e-commerce platforms.

Whilst Amy uses 11 forces, I add 3 more to make 14. See below for details but I believe that Legal, Industry, and Business Models deserve their own line of enquiry. You only have to think about the music-industry in the early 2000s to understand why that matters.

Sources of macro change encompass the following:

  1. Prosperity: the distribution of income and wealth across a society; asset concentration; and the gap between the top and bottom of the pyramid in within an economy.
  2. Education: access to and quality of primary, secondary, and postsecondary education; workforce training; trade apprenticeships; certification programs; the ways in which people are learning and the tools they’re using
  3. Infrastructure: physical, organizational, and digital structures needed for society to operate (bridges, power grids, roads, Wi-Fi towers, closed-circuit security cameras); the ways in which the infrastructure of one city, state, or country might affect another’s.
  4. Government: local, state, national, and international governing bodies, their planning cycles, their elections, and the regulatory decisions they make.
  5. Geopolitics: the relationships between the leaders, militaries, and governments of different countries; the risk faced by investors, companies, and elected leaders in response to regulatory, economic, or military actions.
  6. Economy: Standard macroeconomic and microeconomic factors, including interest rates, inflation, exchange rates, taxation
  7. Public Health: changes occurring in the health and behaviour of a community’s population in response to lifestyles, disease, government regulation, warfare or conflict, and religious beliefs.
  8. Social: Life-style, trends, ethics, norms, religions, diversity and inclusion, culture, religion, demographics, population rates and density, human migration, and other dynamics are leading to shifts in communities, markets (including non-consumption) and societal needs
  9. Environment: changes to the natural world or specific geographic areas, including extreme weather events, climate fluctuations, rising sea levels, drought, high or low temperatures, and more. Agricultural production is included in this category.
  10. Communications: all of the ways in which we send and receive information and learn about the world, including social networks, news organizations, digital platforms, video streaming services, gaming and e-sports systems, 5G, and the boundless other ways in which we connect with each other.
  11. Technology: not as an isolated source of macro change, but as the connective tissue linking business, government, and society. We always look for emerging tech developments as well as tech signals within the other sources of change.
  12. Legal: Privacy, health and safety, labour, consumer rights, product safety 
  13. Industry: Suppliers, buyers, non-buyers (e.g. non-consumption), competitors (current and new), substitutes, distribution channels, partners, ecosystems and value-networks 
  14. Business Models: The incredible pace of technological change continues to open up more ways to make money and go-to-market. Combined with the tremendous disruptive impact business model innovation can have on traditional firms and industries, I believe it is critical to include it as a separate category for investigation e.g. Software-as-a-service, Direct-to-consumer, Pay-as-you-go

How best to use the SFF?

Most companies we encounter use the Strategic Forces Framework to help make sense of initial or deep uncertainty, optimise existing planning processes, or reinvent how that is typically performed. Some use it at the start of a strategic project at corporate levels, while others use it as a guiding principle throughout their functional or departmental work streams, processes, and planning. The key is to make a connection between each source of change and the organisation with questions such as: 

  • Who is funding new developments and experimentation in this source of change? 
  • Which populations will be directly or indirectly affected by shifts in this area? 
  • Could any changes in this source lead to future regulatory actions? 
  • How might a shift in this area lead to shifts in other sectors? 
  • Who would benefit if an advancement in this source of change winds up causing harm?

Here are some good examples of use in business as usual (BAU) provided by Amy Webb:

I have seen the most success in teams who use the macro change tool not just for a specific deliverable but to encourage ongoing signal scanning. One UK-based multinational professional services firm took the idea to an amazing extreme:

    • It built cross-functional cohorts made up of senior leaders and managers from every part of the organization all around the world.
    • Each cohort had 10 people, and each person is assigned one of the sources of macro change, along with a few more specific technology topics and topics related to their individual jobs. 
    • Cohort members are responsible for keeping up on their assigned coverage areas. A few times a month, each cohort has a 60-minute strategic conversation to share knowledge and talk about the implications of the weak signals they’re uncovering. 

Not only is this a great way to develop and build internal muscles for signal tracking, it has fostered better communication throughout the entire organization.

Whilst this process might go against the established culture of your organization, embracing uncertainty is the best way to confront external forces outside of your control. Seeking out weak signals by intentionally looking through the lenses of macro change is the best possible way to make sure your organization stays ahead of the next wave of disruption. Better yet, it’s how your team could find itself on the edge of that wave, leading your entire industry into the future.

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