The Dark Side of Innovation

Why every business needs a corporate tsunami alert

by Ankush Chopra. PhD

Mr. Chopra is an innovation expert with nearly two decades of experience in leading and enabling transformations,including projects within Citibank and Proctor & Gamble. He is a Professor of Innovation at Fribourg School of Management, Switzerland and former Assistant Professor of Management at Babson College. His research focuses on issues such as overcoming challenges of innovation and transforming business and organizations.Dr. Chopra has a Ph.D. in Strategy from Duke University and an MBA from Indian Institute of Management, Bangalore and received his under graduate degree in Commerce from Delhi University. Dr. Chopra speaks four different languages, has lived in Asia, India, Europe and America. He can be reached at AnkushChopra.com.

Business leaders are often more afraid of the unknown threats than of the known threats. The known threats are quantifiable and can be dealt with but what about the unknown threats? Bill Gates used to be afraid of the unknown startup in the garage somewhere that would eventually topple Microsoft.

This fear is well founded too. Steve Jobs was surprised (and angry) by the invasion of its mobile space by Google. Eventually Android based devices overtook iOS based devices. And all of this happened in just a few years.

This same pattern played out in the Swiss watch industry. One day the Swiss watch makers were the dominant players in the global watch industry and within a few years they lost most of their export demand to their American and Japanese competitors. The Swiss watch makers dominated the world due to their superior watchmaking skills that allowed them to make accurate timepieces. Suddenly anyone could make an accurate watch by using a quartz crystal. In less than 10 years half the Swiss watch making firms died.

Guardian’s of the Paper

Many years ago, I used to run Citibank’s custodial services business in India. In those days stock certificates used to be paper certificates which looked like college diplomas. Our business was to safeguard these paper certificates. When traders in firms such as State Street used to trade, we enabled the transactions by retrieving, transporting and delivering these certificates to the counterparties. It was a very lucrative business. We needed large vaults and an army of people to handle these complex transactions.

When tectonic plates of industries shift they lead to a corporate tsunami

One fine day the securities regulator decided to convert all share certificates from paper to electronic certificates. The need for the vaults, armored trucks and the army of people vanished overnight. We lost most of our revenues in a short time.

These mega events are akin to corporate tsunamis which take firms completely by surprise. These firms stand in the shoes of vacationers on a beach completely surprised by the sudden tsunami. The result is often a large scale destruction for many firms.

Many lives have been saved by tsunami alert systems which warn people of such threats. When preventive action is taken – lives are saved. If your business has an equivalent tsunami alert system wouldn’t you be in a much stronger position to deal with such events? Such a system would convert unknown threats into predictable threats. Wouldn’t this allow corporate leaders to get a better nights sleep?

I have developed such a tsunami alert in my recent book “The dark side of innovation”. It relies on a systematic ways of scanning the environment to not only identity such threats but to predict them. It uses four basic principles to help you predict a tsunami event in your industry. These principles are:

  • The tsunami will arise from the possible vulnerability in your industry. It is critical to understand the vulnerabilities in your industry
  • Major changes are often preceded by small changes ahead of time
  • It is more likely to be brought about by someone who has an incentive to do so
  • When tectonic plates of industries shift they lead to a corporate tsunami. When industry boundaries shift, they often create such tectonic shifts

Using these principles you can implement a process to predict such tsunamis. Do your business intelligence processes incorporate these critical principles?