We had been asked to come up with a turnaround concept for a telco equipment manufacturer who struggled with the disruptive forces caused by a technology shift towards VoIP technology. Our client was trying to move into VoIP equipment but was facing serious strategic challenges along the way.
The Disruption-Alienation Trap
This telco equipment company was in a situation I call the disruption-alienation trap.
Companies in a disruption-alienation trap know they are being disrupted - but they face a trade-off between countering the disruption and causing internal and external alienation.
Internal alienation describes a situation in which a company’s internal stakeholders are alienated by a rapid technology shift within a company. Moving from on-premise, analog-based telco equipment to VoIP technology not only requires new technical skills but also a change in processes and content across the whole company. Therefore, a rapid technology change bears risks of alienating employees.
External alienation is a customer-facing risk when companies switch their product or service to a new, disruptive technology. Such technology changes come have implications on the whole organization - and particularly on sourcing, manufacturing, and marketing & sales.
3 Disruption Counter-Measures
In disruptive times, companies can choose one of three strategic disruption counter-measures.
1. Slow Migration
One example would be automotive OEMs building hybrids rather than diving right into electric vehicles. Another would be Adobe slowly adding SaaS features to their product suite rather than building a cloud-only, fully browser-based Photoshop.
2. Parallel Innovation
An example is Google’s “Inbox by Gmail”, a mobile-first touch enabled email client that stands in competition with Google’s Gmail product.
3. Stand-alone Acquisition
Examples include Facebook’s acquisitions of Instagram or Whatsapp as well as Google’s acquisition of Nest.
Take-away: The Impact of these 3 Strategies on the Disruption-Alienation Trap
In sum, the three strategies are all different in how they strike the disruption-alienation balance. Companies need to evaluate the disruption risk they are facing before deciding which option they go for.
Company leadership should ask these questions:
- Which disruption risk counter-measures is their company taking today?
- Are there technology shifts on the horizon?
- Which internal and external alienation risks do these disruption risks justify?