The dinosaur in this metaphor, is every company that is either unaware of, or unwilling / unable to respond, to disruptors. Disruptors are change events that are occurring as a result of technology progress, geopolitical situations, or a range of other systemic events. These comets, could impact the company’s ability to meet with strategic success.
The dinosaurs were completely unaware of the comet. They lived their lives oblivious of the risk that the comet posed to their lives. The result was that they were happy enough, and then they were gone.
Being aware is the easiest step for companies to take. Even the dinosaurs might have seen the comet, if they had looked up!
Board members are positioned to govern a company in order to objectively guide the company in meeting strategic objectives which includes managing risks that could impact the strategy.
Awareness…then what?
Being aware is as simple as paying attention. Paying attention to systemic changes, competitive changes, technology changes and recognizing real disruptors versus something that will come and go. This takes a commitment in identification, arguably the easiest step, compared to what happens after identification.
- Be honest
- Examine the risks, including the risk of time
- Listen to advisors
- Reimagine changes big and small
Be honest
What this means is don’t be overly attached to your current path. You may have a strategy, and a business model, that has always served you and your shareholders well. There is no guarantee that this will continue. So you need to examine your business, honestly, in full context of the disruptors.
Examine the risks, including the risk of time
This is about strategic risk; the risks attached with making potentially very big changes, and the risks associated with doing nothing at all or delaying action such that the disruptive change impact is realized.
Listen to advisors
Embedded management is biased. Biased toward what is essentially the thing that they designed, but energy and time into, and what has worked historically. Change is very difficult under the veil of this bias. Engaging with a diverse set of advisors and truly listening to them can support framing a view of the risks.
Re-imagine changes big and small
As a board it’s important to envision the disruptive changes as scenarios – exploring all aspects, action and inaction, and asking questions like these:
- What are the implications on the business strategy?
- How will this impact customers and drive customer behaviors?
- What are the advantages and disadvantages to customers?
- What is the time-frame for the change?
- What are the implications operationally? On technology?
- How much will action (response to disruptor) cost? How much will inaction (hoping that disruptor really isn’t) cost?
- Are there regulatory or reputational implications?
- How will the risk profile change?
- How well can the risks be managed within the existing organization? What are the gaps?
This re-imagination is essentially the step that transitions an organization from acceptance, that a disruptor is real, and change must occur, to actualizing the change that needs to occur. This is a difficult step as the tendency will be to try to pull back on progressing in favor of the status quo. So the changes must be re-imagined in detail and with a clear and structured path forward aligned to requisite investments at each step.
A company that does not recognize disruptors at all is doomed to be a dinosaur. A company that recognizes a disruptor and does not go any further, is doomed to be a dinosaur.
Boards must ensure that appropriate measures are taken by management, to routinely identify potential disruptors, and to align actions, reflective of time and organizational limitations, in order to meet key stakeholder expectations.
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