The Other Disruption

Most managers are well versed in the defensive playbook for confronting disruptive innovation. Most commonly, they either acquire the new entrants or “disrupt themselves” by setting up autonomous units charged with developing their own new technology that can be rolled into their principal operations once the disruptive innovation begins to dominate the industry.

But quite often, adopting a new technology requires companies to fundamentally change their mainstream operations—the way they manufacture and distribute their products. In these cases where the organizational model changes along with customer expectations and preferences, the playbook often falls short.

In this article Joshua Gans of the University of Toronto’s Rotman School of Management identifies three prescriptions for surviving “supply side” disruption: Companies must have an integrated organizational model, ownership of a product feature important to the end customer, and a broad and flexible sense of corporate identity.

Though less commonly understood, supply-side disruption is arguably more dangerous than the kind described by Clayton Christensen in The Innovator’s Dilemma; indeed, disruption of a product’s architecture threatens a company’s very survival in a way that changes in customer demands do not.