1 st Paragraph: Executive Summary of Your Selected Article. What Is The Economist’s viewpoint? (Cannot cut/paste from the article)2 nd Paragraph: What Is Your Viewpoint? Do you agree or disagree with The Economist’s point? Why?3 rd Paragraph: read another different article,(The article name is The 11 Sources of
Disruption Every
Company Must
Monitor )Excluding Technology, What Other 10 Sources Of Technology Do You Think Is Most Important And Why? 1 Paragraph
The 11 Sources of
Disruption Every
Company Must
Monitor
SPRING 2020
ISSUE
Think you’re aware of the forces that might disrupt your
company? Your lens may be far too narrow.
Amy Webb
Vol. 61, No. 3 • Reprint #61309 • https://mitsmr.com/2v9nTid
DISRUPTION 2020: PICKING UP SIGNALS
The 11 Sources of
Disruption Every
Company Must Monitor
Think you’re aware of the forces that might disrupt your company?
Your lens may be far too narrow.
BY AMY WEBB
R
ecently I advised a large telecommunications company on its
long-term strategy for wireless
communications. The company
was understandably concerned
about its future. A half-dozen new streaming
TV services were in the process of being launched,
and bandwidth-hungry online gaming platforms
were quickly attracting scores of new players.
Possible regulatory actions seemed to be lurking
around the corner, too.
Changes like these meant disruptions to the
company’s existing business models, which hadn’t
materially evolved since the dawn of the internet
age. As a result, the company worried that it might
be facing an existential crisis. To get in front of the
risk, its senior leaders wanted to dispatch a crossfunctional team to produce a three-year outlook
analyzing which disruptive forces would affect the
company and to what degree. It was no simple effort. First, the leaders had to galvanize internal
support. At this company, any change to standard
operations required lots of meetings, presentation
decks, and explanations of concrete deliverables.
Once they had buy-in and the cross-functional
team was in place, they spent months researching
the company’s competitive set, building financial
models, and diving deeper into consumer electronics trends.
MICHAEL AUSTIN/THEISPOT.COM
SPRING 2020 MIT SLOAN MANAGEMENT REVIEW 65
DISRUPTION 2020: PICKING UP SIGNALS
Finally, the team delivered on its mandate. A detailed, comprehensive three-year plan projected
that new streaming platforms and online gaming
would cause a drastic increase in bandwidth consumption, while newer connected gadgets —
smartphones, watches, home exercise equipment,
security cameras — would see greater market penetration. It was a narrow vision that would take the
company down a singular path focused only on
streaming and consumer gadgets without considering other disruptive forces on the horizon.
The findings were hardly revelatory. Streaming
platforms, gaming, and gadgets were a given. But what
about all the other adjacent areas of innovation? In my
experience, companies often focus on the familiar
threats because they have systems in place to monitor
and measure known risks. This adds very little value
to long-term planning, and, worse, it can lead to organizations having to make quick decisions under
duress. It’s rarer for companies to investigate unfamiliar disruptive forces in advance and to incorporate
that research into strategy.
I was curious to know how the company had
initially framed its project. The objective was to investigate all of the disruptive forces that could affect
telecommunications in the future, yet it had really
focused only on the usual known threats.
There were plenty of outside developments
worth attention. For example, some clever entrepreneurs had already deployed new systems to share the
computer processing power sitting dormant in our
connected devices. Using a simple app, consumers
were selling remote access to their mobile phones in
exchange for credits or money that can be spent on
exchanges. (This literally allows consumers to earn
money while they sleep.) Since the systems are
distributed and decentralized, private data is safeguarded. On these new platforms, anyone can rent
their spare computation resources for a fee.
What’s most interesting about distributed
computing platforms is that they can also harness
the power of other devices, like connected microwaves and washing machines, smart fire alarms,
and voice-controlled speakers. As distributed computing platforms move from the fringe to the
mainstream, this would have a seismic impact on
the telecommunications company’s financial
projections. While the team was accustomed to calculating the cost per megabit for streaming and the
cost to maintain its networks, it didn’t have formulas to calculate the financial impact of billions of
connected devices that could soon be a part of giant
distributed computing platforms.
Looking at the future of telecommunications
through the lens of distributed computing, I had a lot
of follow-up questions: How should existing bandwidth models and projections be revised to account
for all of these devices? Would customer plans still
earn the same margins with all these new use cases for
existing bandwidth? Would the company mine all of
the device data for business intelligence? If so, what
would data governance need to look like?
I also asked the team to think about the future of
telecommunications through another adjacent lens:
climate change. Existing data centers, like all buildings,
were developed using guidelines, architectural plans,
and building codes that will likely need to change in
response to severe weather events. Data centers must
be housed inside temperature-controlled environments that never deviate. Heat waves, flash floods,
hail, high winds, and wildfires have become more
common — and harder to predict. This poses a
threat to critical infrastructure.
While the team could build predictive models to
anticipate bandwidth spikes, predicting extreme
weather events would be far more difficult. How was
the team tracking weather and climate? Had they
built uncertainty into their financial projections to
account for extreme weather events? Was there a crisis plan ready to implement if the power got knocked
Companies often focus on the familiar threats because they
have systems in place to monitor and measure known risks.
This can lead to organizations having to make quick decisions
under duress.
66 MIT SLOAN MANAGEMENT REVIEW SPRING 2020
SLOANREVIEW.MIT.EDU
When faced with deep uncertainty, teams often develop a
habit of controlling for internal, known variables and fail to
track external factors as potential disrupters.
out? What if a long stretch of exceptionally hot days
strained the air conditioners? Did it make sense for
the company to continue building and maintaining
data centers? Was there a case to be made for adding
a small team of climate scientists to the company’s
existing data science unit?
I could see from everyone’s reactions that this
line of exponential questioning was beyond the
typical scope of their research. The reason the company had not considered these and other areas of
potential disruption had to do with its entrenched
habits and cherished beliefs. The team was accustomed to a rigorous — but narrow — approach to
planning. They built financial projections, tracked
their immediate competitors, and followed R&D
within their industry sector. That was it.
What I observed is hardly unique. When faced
with deep uncertainty, teams often develop a habit of
controlling for internal, known variables and fail to
track external factors as potential disrupters. Tracking
known variables fits into an existing business culture
because it’s an activity that can be measured quantitatively. This practice lures decision makers into a false
sense of security, and it unfortunately results in a narrow framing of the future, making even the most
successful organizations vulnerable to disruptive
forces that appear to come out of nowhere. Failing to
account for change outside those known variables is
how even the biggest and most respected companies
get disrupted out of the market.
Futurists call these external factors weak signals,
and they are important indicators of change. Some
leadership teams lean into uncertainty by seeking
out weak signals. They use a proven framework,
are open to alternative visions of the future, and
challenge themselves to see their companies and industries through outside perspectives. Companies
that do not formalize a process to continually look
for weak signals typically find themselves rattled
by disruptive forces.
SLOANREVIEW.MIT.EDU
As a quantitative futurist, my job is to investigate
the future, and that process is anchored in intentionally confronting uncertainties both internal
and external to an organization. I do this using
what I call the future forces theory, which explains
how disruption usually stems from influential
sources of macro change. These sources represent
external uncertainties — factors that broadly affect
business, governing, and society. They can skew
positive, neutral, or negative.
I use a simple tool to apply the future forces theory to organizations as they are developing strategic
thinking. It lists 11 sources of macro change that
are typically outside a leader’s control. (See “The 11
Macro Sources of Disruption,” p. 68.) In 15 years of
quantitative foresight research, I have discovered
that all change is the result of disruption in one or
more of these 11 sources. Organizations must pay
attention to all 11 — and they should look for areas
of convergence, inflections, and contradictions.
Emerging patterns are especially important because they signal transformation of some kind.
Leaders must connect the dots back to their industries and companies and position teams to take
incremental actions.
The 11 sources of change might seem onerous at
first, but consider the benefit of a broader viewpoint:
A big agricultural company tracking infrastructure
changes could be a first mover into new or emerging
markets, while a big box retailer monitoring 5G technology and artificial intelligence could be better
positioned to compete against the big tech platforms.
Sources of macro change encompass the
following:
1. Wealth distribution: the distribution of income
across a population’s households, the concentration
of assets in various communities, the ability for individuals to move up from their existing financial
circumstances, and the gap between the top and bottom brackets within an economy.
SPRING 2020 MIT SLOAN MANAGEMENT REVIEW 67
DISRUPTION 2020: PICKING UP SIGNALS
THE 11 MACRO SOURCES OF DISRUPTION
This simple tool shows the 11 sources of macro change that are typically outside a leader’s control.
Because technology is so intertwined with everyday life, it is shown as intersecting with all the other
sources.
1.
WEALTH
DISTRIBUTION
10.
MEDIA AND
TELECOMMUNICATIONS
9.
ENVIRONMENT
2.
EDUCATION
11.
TECHNOLOGY
Your
Organization
8.
DEMOGRAPHICS
4.
GOVERNMENT
5.
GEOPOLITICS
7.
PUBLIC HEALTH
2. Education: access to and quality of primary,
secondary, and postsecondary education; workforce training; trade apprenticeships; certification
programs; the ways in which people are learning
and the tools they’re using; what people are interested in studying.
3. Infrastructure: physical, organizational, and
digital structures needed for society to operate
(bridges, power grids, roads, Wi-Fi towers, closedcircuit security cameras); the ways in which the
infrastructure of one city, state, or country might
affect another’s.
4. Government: local, state, national, and international governing bodies, their planning cycles,
68 MIT SLOAN MANAGEMENT REVIEW SPRING 2020
3.
INFRASTRUCTURE
6.
ECONOMY
their elections, and the regulatory decisions they
make.
5. Geopolitics: the relationships between the
leaders, militaries, and governments of different
countries; the risk faced by investors, companies,
and elected leaders in response to regulatory, economic, or military actions.
6. Economy: shifts in standard macroeconomic
and microeconomic factors.
7. Public health: changes occurring in the health
and behavior of a community’s population in
response to lifestyles, popular culture, disease,
government regulation, warfare or conflict, and
religious beliefs.
SLOANREVIEW.MIT.EDU
8. Demographics: observing how birth and
death rates, income, population density, human
migration, disease, and other dynamics are leading
to shifts in communities.
9. Environment: changes to the natural world or
specific geographic areas, including extreme weather
events, climate fluctuations, rising sea levels,
drought, high or low temperatures, and more.
Agricultural production is included in this category.
10. Media and telecommunications: all of the
ways in which we send and receive information and
learn about the world, including social networks,
news organizations, digital platforms, video
streaming services, gaming and e-sports systems,
5G, and the boundless other ways in which we connect with each other.
11. Technology: not as an isolated source of
macro change, but as the connective tissue linking
business, government, and society. We always look
for emerging tech developments as well as tech signals within the other sources of change.
This may seem an unreasonably broad list of
signals to track to prepare for the future, but in my
experience, ignoring these potential sources of
change leaves organizations vulnerable to disruption.
My favorite example of what comes to pass when
companies ignore these signals happened in 2004,
when there were a number of emerging weak signals
that pointed to a drastic shift in how people communicated. Two senior leadership teams had access to
the same information. One looked for external factors actively, while the other simply used trends
within its industry to make incremental improvements to its existing suite of products. Those
decisions would result in the end of one of the world’s
most loved and respected companies and the rise of
an unlikely competitor that no one saw coming. The
signals included the following developments:
• New software made it easy for anyone to rip content from CDs and DVDs.
• Peer-to-peer file sharing websites, like BitTorrent,
isoHunt, The Pirate Bay, and LimeWire, that were
first used by hackers had become popular with ordinary people who were sharing music and movies
widely.
• Demand for digital content was growing fast; sales
of physical media were starting to decline.
SLOANREVIEW.MIT.EDU
• Game developers were experimenting with haptic
technology that responded to pressure and touch.
In a combat game, for instance, when a player got
hit by enemy fire, they’d feel the controller buzz.
Developers were also building haptics into early
touch screens: Players could simply touch an icon
to advance, move back, turn, or stop.
• In Korea and Japan, consumer gadgets were being
built with dual functions: There were digital cameras with MP3 players; cellphones had retractable
metal antennas to receive broadcast TV signals.
One of the senior leadership teams connected
those signals with its existing work and foresaw a
world in which all of our existing devices converged
into just one mobile phone that had enough power
to record videos, play games, check email, manage
calendars, show interactive maps with directions,
and much more. That team had no cherished beliefs
about the existing form factor of our mobile phones
and was willing to accept alternative ideas for how a
computer-phone could work. That team worked at
Apple, and in 2007, a product that had baked all of
those weak signals into its strategy went on sale: the
first iPhone. By the end of the decade, a company
that once was mostly known for its sleek desktop
computers had forced the entire mobile device market to bend to its vision of the future.
By contrast, these very same weak signals never
caught the attention of Research in Motion (RIM),
which at the time made the world’s most popular
phone, the BlackBerry. (In fact, we loved their
phones so much we called them crackberries and
were proud of our digital addictions.) It was the
first device that allowed us to stay truly connected
to the office. Perhaps most important, it had a full,
physical keyboard. All other phones at that point
simply had numbered buttons; to type letters required hitting a few buttons to access one of the
three letters assigned to each number. Before the
BlackBerry, a simple three-line text message could
take several minutes to type.
Because of the BlackBerry’s enormous popularity,
RIM had become one of the largest and most valuable companies in the world, valued at $26 billion. It
controlled an estimated 70% of the mobile market
share and counted 7 million BlackBerry users. With
its great run of success, the organization’s culture did
SPRING 2020 MIT SLOAN MANAGEMENT REVIEW 69
DISRUPTION 2020: PICKING UP SIGNALS
not allow for alternative versions of the future, and
internally, there was an aversion to contradicting
cherished beliefs. Managers who did connect those
weak signals to the BlackBerry didn’t have credibility
outside their departments. As a result, all of the disruptive external forces Apple was actively tracking
never broke through to the senior leadership team of
RIM. RIM continued innovating narrowly, selling a
smaller BlackBerry Pearl with a tiny, pearl-shaped
mouse embedded in the keyboard and releasing
BlackBerries in new colors. It was, in hindsight, the
defensive strategy that Clayton Christensen explained
in his Theory of Disruptive Innovation. Threatened
by a disruption, incumbents retreat to the strategy of
what Christensen called sustaining innovations —
new bells and whistles that allow the incumbent to
keep its customer base and, more important, its profit
margin. But such innovations virtually ignore the
disruptions breaking into the incumbent’s market.
Once the iPhone launched, Apple kept listening
for signals while RIM never recalibrated its strategy.
Rather than quickly adapting its beloved product for a
new generation of mobile users, RIM continued
tweaking and incrementally improving its existing
BlackBerries and its operating system. That first
iPhone was in many ways a red herring. As is so often
true with successful disrupters, the first product to
break through is often low quality and barely “good
enough” for consumers. That’s what enables incumbents to justify ignoring them. But the ascent to
quality is rapid. Apple swiftly made improvements to
the phone and the operating system. Soon it became
clear that the iPhone was never intended to compete
against the BlackBerry. Apple had an entirely different
vision for the future of smartphones — it saw
the trend in single devices for all of life, not just business — and it would leapfrog RIM as a result.
The ways in which RIM and Apple planned their
futures are what sealed their fates, and what happened to RIM is a warning that applies to every
organization. Senior leaders can choose to lean into
uncertainty and methodically track disruptive forces
early, or they can choose to innovate narrowly and
reinforce established practices and beliefs.
Many companies around the world use the future
forces theory to help them make sense of deep uncertainty and break free from the tyranny of narrow
innovation. Some use it at the start of a strategic
70 MIT SLOAN MANAGEMENT REVIEW SPRING 2020
project, while others use it as a guiding principle
throughout their work streams, processes, and planning. The key is to make a connection between each
source of change and the company and also to ask
questions like Who is funding new developments
and experimentation in this source of change?
Which populations will be directly or indirectly affected by shifts in this area? Could any changes in
this source lead to future regulatory actions? How
might a shift in this area lead to shifts in other sectors? Who would benefit if an advancement in this
source of change winds up causing harm?
I have seen the most success in teams who use
the macro change tool not just for a specific deliverable but to encourage ongoing signal scanning.
One multinational company took the idea to a
wonderful extreme: It built cross-functional cohorts made up of senior leaders and managers from
every part of the organization all around the world.
Each cohort has 10 people, and each person is assigned one of the sources of macro change, along
with a few more specific technology topics and topics related to their individual jobs. Cohort members
are responsible for keeping up on their assigned
coverage areas. A few times a month, each cohort
has a 60-minute strategic conversation to share
knowledge and talk about the implications of the
weak signals they’re uncovering. Not only is this a
great way to develop and build internal muscles for
signal tracking, it has fostered better communication throughout the entire organization.
It might go against the established culture of your
organization, but embracing uncertainty is the best
way to confront external forces outside your control.
Seeking out weak signals by intentionally looking
through the lenses of macro change is the best possible way to make sure your organization stays ahead of
the next wave of disruption. Better yet, it’s how your
team could find itself on the edge of that wave, leading
your entire industry into the future.
Amy Webb (@amywebb) is the founder of the Future
Today Institute and professor of strategic foresight at
the New York University Stern School of Business.
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Copyright © Massachusetts Institute of Technology, 2020.
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