Joint CEO, Mirum (India)
If disruption is sexy, is stability substance?
The last decade has seen more technology-led business disruption than we might have seen in the five decades prior! Uber, Airbnb, Swiggy, Ola, Paytm, Practo, and many more new entrants have disrupted earlier business models in their respective categories. And there is also disruption happening in traditional industries, from within more established businesses.
So guess what gets the headlines, day after day?
It’s these disrupting models and businesses.
Because disruption is sexy! It is attractive. It is fun to read about, see, and experience. Investors love it, and consumers do too. Employees want to work at such places, and the media, of course, totally laps it up.
Disruption is usually associated with startups, as these outfits are seen to possess a unique agility and a significant bent towards innovation. Disruption is also associated with out of the box thinking. Technology may be an integral part of such disruption. But not always.
Consider, for instance, how a direct-to-consumer model of sales or of distribution – in an industry that been running largely on a trade-based model – could also be a form of disruption. Executing that model well, shaving off costs, and emerging successful could be termed as being disruptive even in the absence of technological innovation.
So: in this ultra-competitive world, at a time when innovation and technology have become essential jargon in organizations, is disruption the only way to go?
What about organizations that do not necessarily “disrupt,” but which continue to deliver a reliable performance tirelessly? Are they at risk? Are they simply not sexy enough?
Well, for starters, let’s remember that a lack of disruptive changes can be associated with two kinds of businesses. First, there are the kind that are doing a fair bit of heavy lifting, and doing it efficiently as well. And then there are those that are, in fact, stuck in a state of inertia.
To be clear then, if a company is not being seen as “disruptive,” that does not necessarily mean that it is not innovating. For a company like Southwest Airlines in the U.S. to deliver good airline performance quarter after quarter, it needs to be constantly tweaking its operational model, constantly looking at ways to save money, and constantly finding efficiencies. Doing this requires innovation at its core. However, on the outside, one may not see such changes as greatly innovative, and hence a company like Southwest has no reputation of being disruptive. In reality, the truth is in the company’s results: without innovation, and without being obsessively efficient, a company like Southwest could not possibly stay on top as a leader!
So it goes with companies like Southwest Airlines, the Tata Group, HDFC Bank, and many others – companies that may not be trumpeting their disruptive strategies every quarter, but that are proving their innovation bona fides through their reliable operations and their ability to achieve stability through evolution.
Of course, there are also companies that are not known as disruptive, and that are, in fact, not changing or innovating behind the scenes, either. They are in a state of inertia, and times will definitely be tough for them! Such a state of inertia cannot be mistaken for stability or substance. If anything, it is a state of laziness or aversion to change, and perhaps one of denial. There hardly exists a business or a category today that can afford to be complacent, to not keep evolving and transforming.
One more provocative question we must confront: Are all efforts of disruption necessarily good?
There is huge peer pressure that sometimes drives efforts towards disruption. Others are doing dramatic things. How can we not do them too?
Unfortunately, the mere fact that others are innovating and disrupting may not be reason enough for one’s own brand to pursue these ends – at least absent an informed plan. Efforts towards disruption that are not planned and executed well can often lead a company into trouble. Investing big in a new, as-yet-unproven technology, and sinking big money behind it, could be a recipe for disaster. Projects of this kind are big cash suckers. They don’t stop with the initially earmarked budget, but have a tendency to demand more and more resources. And having committed decent budgets to these efforts, it is hard for an organization to back out and stop funding it. Instead, more cash usually gets drawn out of that part of a business which is already profitable, and that decrease in cash (as well as drawn-away management bandwidth) can put a brand’s profitable business segments under tremendous pressure.
Thus, we arrive at our conclusion. Mindless attempt towards disruption are not good. But neither are complacency or a lack of innovative thinking, no matter if they are disguised by an outwardly “stable” business.
The other two situations – successful disruption, as well as innovation-based, efficiently-run stable business – are both good and necessary for the economy. The former provides the impetus to transformation, and the latter keeps the engines of substance running.
- Sanjay Mehta
Jt. CEO, Mirum (India)
- Disruption is sexy! And while it’s usually associated with technology, it’s not always so.
- Innovation is essential for such disruption. However, innovation is also essential for a companies pursuing efficient stability.
- Stability cannot be construed to mean inertia. If a company does not embrace change in today’s times, it will certainly have a challenge on its hand.
- Not all efforts towards disruption are good. If not smartly thought through and planned, disruption gone awry can result in a lot of pain!
- The right combination of businesses includes ones that disrupt successfully, as well as those that provide stability in efficient, innovative ways.