The Golden Triangle of Business Disruption

Disruption has become the watchword of the new millennium, a fad. But this phenomenon does not do the concept justice. Of all the important skills mankind has developed over time, our ability to actively disrupt and transform antiquated and moribund organizations and systems has been the number one reason our species has survived and flourished for so long.

Unfortunately, this often comes at a price. Large-scale disruptions can cause significant short-term pain. Companies are forced out of business. People lose their jobs. Whole communities can be decimated.

But the long-term benefits are indisputable. Disruption – especially in business – has made it easier, faster and cheaper to get food, clothing and many other goods and services we want and need. It has made education available to billions of people and helped eradicate most life-threatening diseases. We can travel more quickly and inexpensively, be entertained 24/7, and generally lead more fulfilled lives than previous generations.

And because of the incredible value these activities unleash for millions, even billions of people around the world, the greatest disruptive companies also generate enormous wealth for their leaders, employees and investors.

But business disruption is not for the faint of heart. The risks of failure are very high. Only a handful of CEOs such as Jeff Bezos, Elon Musk and Reid Hastings have mastered The Golden Triangle of Business Disruption by developing first-class leadership skills, ideas and organizations.

1. At the top of the triangle are great disruptive leadership skills.

Contrary to popular opinion, disruptive leaders aren’t particularly innovative in the traditional sense of the word. They generally don’t invent “things” the way Thomas Edison or Orville and Wilbur Wright did and they almost never create a new industry or market. Disruptors are first and foremost business people who like to fix things that already exist – usually business systems and processes that have stopped adding much value except to a few dominant and entrenched players.

Michael Dell did not create the computer – he didn’t even make any major changes to the hardware or software of computing. Dell did something far more important: he developed a better manufacturing and direct-to-consumer distribution system that made computers cheaper, faster and more customized for the average consumer.

Disruptive leaders not only challenge the status quo, they also challenge themselves and those who work with them. They deal quickly with counterproductive beliefs that might get in the way of success and are known to push generally accepted behavioral, cultural, legal and ethical boundaries to the limit.

It’s easy for such men – and most disruptive leaders are indeed men – to divide the world into winners and losers since their actions do exactly that. It almost goes without saying that the great disruptors are committed to being on the winning side.

Although a few very famous disruptors never finished college, many received PhDs from the best universities in the world. But all of them are “brainiacs” who know perfectly well that no one individual can ever hope to have access to more than just a fraction of the world’s knowledge.

2. This is the trait that pushes excellent disruptive leaders to constantly look for those things that make up the second corner of The Golden Triangle: disruptive and transformative ideas.

For an idea to be truly disruptive it must significantly improve a system that is inefficient or prohibitively expensive for the vast majority of consumers or end-users. We usually think of industries being disrupted – usually those that are dominated and controlled by a handful of powerful organizations with little or no incentive to change an “accepted” way of doing business. No wonder the publishing business was so easily disrupted, with the automotive, energy, healthcare, entertainment and many other industries following close behind.

Disruptive ideas start by putting the customer back at the center of an entrenched and seemingly intractable ecosystem or process. This deceptively simple idea sets off a chain reaction that, when worked through to the end, has the power to transform the lives of thousands, millions and even billions of people.

While most big business disruptions during the past 25 years are a direct result of the development of the internet and digital technology, technology doesn’t actually disrupt anything. On the other hand, without advances in technology our ability to develop innovative applications and business models or combine elements already in existence in new and valuable ways would not be possible.

The true test of whether the time has come for an important disruptive idea is whether it can be implemented properly and on a large enough scale. Is the addressable market large enough to warrant the effort? Can the idea attract the talent and funding necessary to ensure success? How easy is it to communicate the benefits of the disruption to a large and diverse population?

3. In the end, a great disruptive idea can only become a reality when the third corner of The Golden Triangle is in place: a highly effective disruptive organization.

In many ways, disruptive organizations are subject to the same basic principles as other well-run companies. They develop cultures based on core values that are inspiring, respectful, and constructive. They need to have the right people doing the rights things at the right time. And like every other company, they have to maintain a healthy cash flow and reserves to pay employees, suppliers, cover expenses and survive a major unexpected disruption or downturn.

But truly great disruptive companies go way beyond the merely well-run ones. They are more powerful, agile and resilient. Employees are expected to not only manage the day-to-day business but to also define and implement large key strategic initiatives. Many of the structures that are put in place one day are disrupted and changed the next moment in order to keep up with the tremendous growth that many successful disruptive companies experience.

And unlike most businesses, disruptive organizations and their leaders must understand and respect the regulatory, legal, and ethical limits of the society in which they operate. If they don’t pick their battles carefully, then disruption can turn quickly into destruction.

Travis Kalanik, the former CEO of Uber, almost destroyed his company because he was too disruptive. Eight years after it was founded, Uber was still operating without a CEO, COO, CFO, CMO or president. Kalanick’s success and ego blinded him to the need to build a culture of accountability and ethics and adhere to local and state employment laws. The company was sued, investors left in droves and many municipalities threatened to cancel their licenses.

And therein lies the great paradox of disruption. Despite all the current hype, excitement and myth-making, Jeff Bezos cut to the truth when he said: In a disruptive world, more stays the same than changes.

Have you read?

John Frederick Furth’s book Owning Tomorrow: The Unstoppable Force of Disruptive Leadership.