Disruption is the new normal. The business landscape we live in is not a stable one, and stories abound on the increased speed of change. A recent graph published by Martin Reeves, Simon Levin and Daichi Ueda in HBR summarised the story (slide below): (listed) companies today die younger. Where in the past they stayed for ~55 years, today that is closer to 30 years. Companies in the past often outlived their employees, with multiple generations of a single family working for the same company. Today, people are more likely to outlive their organisation. This article dives into the fundamental certainty that will always be present when we create organisations: the intentions with which we do business in the first place.
Disruption is a lack of continuity in the existing landscape. Examples can be found in many markets/industries, with the most noticeable for Dutch consumers being the complete change in the retail landscape. In our Dutch shopping streets; we were used to brands like V&D (chain of department stores), Polare (books), Mexx (clothing), DA (drug store, beauty products), Miss Etam (fashion) and Perry Sport (sports products). All these brands are currently closing shops rapidly, or being sold. Shopping streets are becoming empty. Instead, retailers are becoming ‘etailers’: the most memorable shopping sprees in recent history were online: Americans spent 2,65 billion dollars online after Thanksgiving, and the Chinese firm Alibaba recorded a whopping 9,3 billion dollars in sales on China’s Singles Day. Similar stories unfold in the music industry, where physical copies of music albums have disappeared rapidly over the last 12 years (see first slide), or in newspaper companies that are struggling to keep up with online publishers, although the decline there is progressing more slowly (see second slide).
The current disruption is not necessarily a bad thing. Many good stories are to be told as well. Companies can grow in value much more quickly (think Über, Snapchat, Spotify, and WhatsApp – which was purchased for 19 billion dollars by Facebook), entrepreneurs find it much easier to start a company (see slide below) and the accompanying growth in technology proves beneficial for many on our planet, with over 3 billion of us contributing to our collective wisdom online.
We believe the answer to dealing effectively with the speed in change is to be found in staying closer to the original intentions of the organisation: it’s purpose. As Victor Frankl, a survivor of the holocaust and psychiatrist, said beautifully: ‘everything can be taken from a man except one thing – the last of the human freedoms – to choose one’s attitude. To choose one’s own way.’ We believe for organisations, this freedom is to be found in the value it chooses to represent for all it’s stakeholders (clients, shareholders, employees, society and possibly others). Having a clear purpose is where it all starts – and it is where the battle should be fought when things go sour. Companies rich in purpose pivot much more effectively, show higher growth rates over time (see our Business Case for Purpose), and have more engaged (or even inspired) employees. We feel many companies wrestle with the abstract nature of the topic (‘levels of granularity’); and therefore fail to align their top teams with the company’s original purpose. However – as any psychologist will tell you – aligning on the most abstract level first is critical to ensure alignment down the line.