Today’s disruption requires both a broader perspective and a narrower focus. How do you resolve this apparent duality? Where do you start?
We are surrounded by the everyday miracles of smartphones and sensors. We see retailers swept away by the relentless tide of e-commerce. We are so inundated by stories about driverless cars that they seem like old news — years before anybody in the world has even owned one. Change is constant, and we are inured to it.
Disruption requires a wider but more focused point of view
Corporate leaders have not always viewed disruption as a top business challenge. Today, executives and board members recognize disruption as both an opportunity for differentiation and an existential threat.
Responding requires a view that is simultaneously wider and more narrowly focused.
Disruption — from innovative startups and technologies to political events and climate change — is already widening the playing field. They shift market power among competitors, challenge existing business models and approaches, realign trade patterns, reorient supply chains, drive business relocations and more.
Yet, even as disruption demands a broader perspective, it calls for a narrower focus. It necessitates prioritizing and emphasizing the most important challenges in an ever-expanding universe of potentially disruptive trends.
To harness disruption, you need a framework
EY believes that harnessing disruption requires a framework to bring order to the chaos — distinguishing between causes and effects, and prioritizing among a seemingly endless set of disruptive forces.
EY’s framework highlights four distinct kinds of change: primary forces, megatrends, future working worlds & weak signals.
The vast majority of disruption originates in some combination of three primary forces: technology, globalization and demographics. These forces aren’t themselves new; they have been around for centuries or millennia. But they evolve in waves and each new wave is disruptive in different ways. We identify the latest waves occurring in each of the primary forces as: human augmentation (technology), populism (globalization) and aging (demographics).
The interaction between new waves of primary forces engenders new megatrends. We’ve identified seven new megatrends. Some are entirely new topics. Others are new aspects of prior megatrends, brought to the forefront by the continuing evolution of the primary forces. These megatrends include: industry redefined, future of work, super consumer, behavioral design, adaptive regulation, human geography, innovating communities, health reimagined, food by design and molecular economy.
Future working worlds
The effects of these megatrends lead to a broader reshaping of the political and economic landscape, which we analyze through three future working worlds: next global system, renewed social contracts and superfluid markets. The future working worlds are broader in scope and occur on a longer time frame than the megatrends.
Weak signals are waves of primary forces whose biggest impact is further in the future. Their likelihood and the scale and nature of their impact are therefore subject to a greater degree of uncertainty.
The four elements of our framework occur in different time frames, with different levels of uncertainty and different scales of impact. Most significantly for corporate decision-makers, they call for different kinds of responses.
The upside of disruption
To seize the upside of disruption, you need to know where disruption is coming from, where it’s headed and what it means for you. EY’s framework helps you to pick the right baseline for a strategy that can turn downsides into upsides; threats into opportunities.
Read the full report here.
EY legal contacts:
Cornelius Grossmann – Global Law Leader