Volatility, the Digital Age and Disruption: Are some industries more prone to disruption than others? Yes, but it’s only a matter of time before all industries face disruption because the endconsumer is becoming the same for all mass market products and services.

Consider a smartphone user – she derives a great human-machine interaction as well as instant gratification from the smartphone. Or a shopper on Makemytrip.com or Amazon.com – he accesses everything at his fingertips and can extract high value from transactions, while cutting out the middleman. They are also automotive consumers who expect similar experiences from their car or truck as from a smartphone or an online marketplace.

Industries such as software, retail, and communications are already facing high disruption. Highly regulated industries such as banking, capital markets, chemicals and oil, and healthcare (in developed economies) might be less prone to disruption. But even in these industries you can follow non-market activity from activists, the government, and judiciary for regulatory disruption.

Digital transformation has been driving the convergence of consumer experiences over the past decade. The consumer who is seeking better value, access, and work-life balance is driven to products and services that offer similar experiences and conveniences as his smartphone. Employees have also changed – expectations of integrated work-life balance, instant or quick feedback, and more empowerment are the norm.

The Game Has Changed: So, how does an organization deal with disruption from technology, and market and non-market forces? Understand trends in disruption and predict themes around which disruption might take place. For example, digital or automation experience, and value transparency and realization are two key areas around which consumer disruption is high. In addition, environmental concerns are high on the agenda of the government and the non-consumer public. Major themes may vary, depending on the specific industry and its relative positioning compared to the class-leading consumer experience (e.g., the smartphone). In the automotive industry, for example, digital/ connected and autonomous vehicles, electric or lower emission vehicles, product as a service, improved/transparent fuel economy, and cost of ownership are critical factors.

Take on the Disruptor Avatar: Identify potentially disruptive themes for an industry. Such a list is not prescriptive but probabilistic. Non-market forces should also be considered in this perspective. These themes then become the basis for an organization’s plan to handle potential industry disruption.

The second step is to align the team around these focus areas. The core competencies of yesterday and tomorrow may not be the same. Internally, we need to reconstruct the make/buy scenario (including in design and engineering) and focus sharply on areas where we need to develop new internal capabilities and jettison or outsource areas which are not core to the future. Even if we choose to retain such domains within the organization for cost advantage, clearly identify and ring-fence the disruptive domain areas from the domains where incremental improvement is the game.

The third aspect is about organizing the team for innovation in the identified areas of potential disruption. Given the nature of disruptive technology and domain specialization, adopt a flatter and simpler organization so that domain expertise can flourish, and ideas around identified themes can find management sponsorship. To be a disruptor, an organization has to invest disproportionately higher resources in selected areas of disruption.

The final and most important aspect is about leadership in disruptive times. Leaders (not managers) play a critical role in leading self, others, and the organization. Since a disruptive environment potentially can turn a “safe project” into a risky one or even a failure, leaders must recover quickly from setbacks and learn from failure. At a personal level, curiosity about these themes and their interdependencies on other aspects of business need to be probed and understood. One has to upskill oneself in these new fields. Re-visit the decision-making style – away from intuitive decision-making to one that is combined with insights from data and analytics. This is a significant mindset and behavioral challenge for leaders as it involves adopting human-machine collaboration in decision-making.

Leading others needs a higher degree of connectivity and experimentation, keeping in mind that this is not a prescriptive journey. A higher degree of trust and leadership by example is a must to facilitate one’s peers to also make this transition. Leading the organization requires simplicity, agility, and empowerment. Failure, especially failing fast, has to be celebrated to ensure that the team gets a strong and consistent message that taking measured risks is not just acceptable, but also required. Leaders and team members need to get used to being in a discomfort zone and learn to make decisions in an ambiguous, uncertain context.

Managing the Fuzzy Front-end: It is particularly challenging to integrate disruptive solutions in existing or traditional business models or product categories, which by definition follow a more prescriptive and relatively risk-averse approach. To bring in disruptive elements requires a high degree of adaptation and process flexibility. The fuzzy front-end of a disruptive project might stay fuzzy for a long time, much to the discomfort of traditional process-oriented practitioners of product development. It requires strong leadership, conviction, and direction to make such an integration happen. Risk management and mitigation in such projects would play a larger role than in traditional work streams.

In conclusion, volatility and disruption are here to stay. It is possible to anticipate potential areas of disruption and gear up the organization towards being the disruptor, rather than being at the receiving end of disruption. Internal organizational realignment is required to get ahead of the disruption curve and build required skills and competencies. Most importantly, leadership styles have to be a healthy balance of intuitive and big-data-driven and analyticsbased decision-making. Leading peers and the team through this requires simplicity, agility, and empowerment. Learning in a discomfort zone and decision-making in uncertainty, while managing risk, are critical to thriving in the new disruptive digital age.

(Dr. Venkat Srinivas is principal chief engineer & head – product development, Mahindra Truck & Bus Division, M&M Ltd. He has 28 years of research and product development experience in the United States and India. He has a B.Tech from the Indian Institute of Technology - Madras; MS and PhD degrees from the University of Maryland, USA; and an MBA with high distinction from the Ross School of Business, University of Michigan, USA.)