Disruption Is Transformational. Everything Else Is Experience.

The Thunderbird Global Series on Disruption

“May You Live In Interesting Times” was meant as a curse in ancient China. Now, we must think of it as a prophecy.

Disruption and losing may look the same.

When you get disrupted, it doesn’t knock you out of the game, it knocks you out of the stadium.

When you merely lose, you get traded to another team. When you are disrupted, you never play the game again. The warning signs are clear, so why do we miss them? Abraham Maslow did us a favor by describing the five stages of grieving and they nicely parallel the ways we delude ourselves about disruption: ignorance, arrogance, indifference, resistance, and tolerance.

The stages give us a handy tool to see the disruption cycle in a laboratory. Most of us respond to the early stages in ignorance or arrogance. When things get dicey, we feign indifference. Then stuff starts to collapse. Customers don’t renew, the board asks you to leave the meeting, they want to hold a private session. Just good governance.

That’s when we trot out those old standbys, anger and insult. How dare they isolate me? What do you mean you want to know more about customer complaints? Do you know who you’re talking to? (they do, they’re talking to the one who’s about to be disrupted).

When we are shown the door is when most of us realize, so that’s what they call disruption?

Most disruption is self-inflicted.

We invite disruption into our lives. In fairness, it is hard to detect. There are inklings at first, each of which is a subset of the one that preceded it. It often starts with some crazy innovation that looks cheap and doesn’t solve big problems.

Slowly, over time, the innovator fine tunes the hard things because his team is motivated. Soon they are iterating at a higher level. Your business is built on a legacy platform that doesn’t morph so easily. Your engineers are glued to one vendor. If you do switch, you’ll have chaos. If you’re a public company, shareholders won’t stand a down quarter. Just stick to your game plan, TRY HARDER.

Now, you’ve turned disruption into something else: losing.

That part is dangerous. Losing is something we say we will bounce back from and fight the next day. Disruption means there is no next day. Do you know which one you are dealing with?

Take the example of my friend, the unicorn angel investor, Gil Penchina, who describes how stealthy the mobile phone crept up on people who understood the business, but not the timing:

Think about how many times in the last 20 years you’ve heard, “This year mobile’s going to be big.” I heard it in 1991. I heard it in 1997. I heard it in 2000 and I heard it again in 2003. Each time they were teams with good products going after that market and failing miserably. Then all of a sudden, it’s 2006 and the iPhone comes out and boom… Mobile is BIG.

When did we let politicians decide what was risky?

The global financial crisis could be called a case of juvenile risk management. I say this because only a four year old believes trees grow to the sky, right? The impression mortgages could go to anyone anywhere and for any length of time hat to huge losses however, not disruption. We should have turned the nose up and out of the spiral, as we have done before. Why did it go so horribly wrong?

Disruption came because politicians compounded greed by lining the coffers of special interests with cheap mortgage money and fees. That made it a problem on steroids. Before turning off the lights on the economy, they did what any good politician would do knowing his head is on the chopping block: hold Senate hearings, name an anti-banking law after yourself (Dodd Frank), and make sure to pin the blame on everyone’s favorite ogre, bankers.

Get the Attorney General to fine them a cool quarter of a trillion, half a trillion if you add legal fees. Then divvy that out to special interests and campaign coffers. The media was too busy watching Occupy Wall Street protests, so why not. America paid a steep price, including lost savings, homes, and lives. The people who create the disruption often try, as they did this time, to shift blame. That makes recognizing disruption so much harder.

Defining disruption for this era.

Our challenge is to define disruption, identify its path, and help inspire young people to conquer it. We must begin by recognizing the people we trust can be compromised.

The two a vital skills in the C suite and the Oval Office that could make a difference are a bookmaker’s ability to judge odds and an ego that knows when you are playing against a more powerful force. Smart and humble may sound like old fashioned virtues, but they beat chaos and totalitarianism.

For someone like Warren Buffett, disruption is paradise because he hedges against it better than anyone in the world. It is why he “tap dances to work every morning.” He is maniacal about focusing on the long term, and as he says, his core competency is knowing he does not know the future. So instead of conflicts, he places bets against those who are conflicted because he can read their next move. Think of those attributes as a ‘disruption prevention’ kit.

I’m pretty sure he also knocks on wood and carries a rabbit’s foot.