Beyond Disruption: Innovate and Achieve Growth Without Displacing Industries, Companies or Jobs is an interesting and insightful book for board members, which has been written by two professors at the Institut Européen d’Administration des Affaires (INSEAD), a business school with campuses around the world. It focuses on nondisruptive innovation and growth, which, unlike classic disruption that typically creates winners and losers, has a win-win attitude toward external parties, including competitors.
The authors are faculty members at INSEAD's campus in Fontainebleau, France. W. Chan Kim is distinguished professor of strategy and international management (emeritus), The Boston Consulting Group Bruce D. Henderson Chaired Professor of International Management (emeritus), and codirector of the INSEAD Blue Ocean Strategy Institute. Renée Mauborgne is affiliate professor of strategy and an INSEAD distinguished fellow of strategy and international management, as well as codirector with Prof. Kim of the INSEAD Blue Ocean Strategy Institute. Their previous book, Blue Ocean Strategy, was a global bestseller translated into 20 languages, presenting corporate strategy as a means of establishing markets and gaining customers without focusing solely on competitors and defeating them.
The book's focus on non-zero-sum thinking is perhaps timely, given today's polarized political climate and the increasing acceptance of governance concepts such as ESG and stakeholder capitalism. Such concepts are often claimed to be a departure from strict profit maximization, although arguments to the contrary abound.
The text cites examples of nondisruptive innovation that may have resulted from scientific development, such as sanitary products for women that revolutionized their availability to participate fully in education, work and other activities. Examples involving application of existing concepts in a new way include microfinance, which made establishing and growing businesses available to a much lower economic scale of companies and individuals. New markets may be created outside of or beyond the previously understood boundaries of existing markets. In the case of microfinance, the boundary was a lower one — the inability of previously existing finance to serve small companies and individuals, especially in developing countries.
It is perhaps ironic that the authors describe and recommend a view of business success that does not focus mainly on competition or market share when one of the author's academic titles references Boston Consulting Group (BCG) and its founder, Bruce Henderson, who emphasized market share as the key to cost advantage and competitive success through the “experience curve.” In Henderson's time, BCG operated with an “internal market mechanism,” whereby consultants were not obligated to accept any particular case assignment and case leaders were not obligated to invite them to join their case team. However, consultants' performance evaluations and compensation were based on their “billability,” so one competed with others to be invited to join case teams, and then to bill as much as allowable and proper. (Full disclosure: I was at BCG in the mid-'70s and worked for Bruce Henderson, one of the best experiences in my career.)
New ways of thinking are critical if one is to surmount old obstacles, and boards benefit from having a culture that welcomes new ideas and ways of looking at things. Beyond Disruption is an excellent book for promoting that culture among board members. It provides an opportunity for boards to take a fresh look at how their company approaches innovation. There may be areas of opportunity that don't necessarily require head-to-head competition or the conventional limitations of market dynamics. The book potentially provides a paradigm shift in thinking about innovation and growth.
When boards review their company's corporate strategy and continued effectiveness, which they should do regularly, they should take into account changes in their industry and environment, but they also would do well to think outside the box and inquire about opportunities for innovation and growth that may be found in areas not previously explored. Beyond Disruption will help board members understand what those areas are and how to find them.
Howard Brod Brownstein is president of The Brownstein Corporation, nd M&A and turnaround management firm, and serves as an independent corporate board member of Merakey and P&F Industries Inc.