Market Disruption vs. Business Disruption: The Inertial Disruption Factor
An Equal and Opposite Reaction
According to Newton's Third Law of Motion, for every action there is an equal and opposite reaction.
As with physics, so with business innovation. Whenever an innovation impacts a market, it also impacts the organization delivering the innovation.
It is as though when the organization pushes on the market, the market pushes back. Nudge the market just a little with an incremental innovation, and the organization feels a little nudge back. Rock the market with a major disruption, and there will be a corresponding rocking effect back on the organization and its supporting ecosystem.
Relative Inertial Masses
Whether nudged or rocked, whenever a market is perturbed, the extent to which the organization is in turn perturbed is a function of the relative ‘mass’ of the two entities.
A large organization (one with a solid market position and substantial resources) rocking a small market puts most of the impact on the market. In contrast, a small organization trying to rock a large market is going to put most of the impact back on the organization.
Thus there is this relationship of relative inertial masses — the mass of the market, as compared to the mass of the organization.
We call this the Inertial Disruption Factor – or IDF – and its ‘formula’ is the following…
IDF = MMKT / MORG
Watching the IDF In Action
The IDF explains why so many startups trying to disrupt existing markets face such massive uphill battles. The odds are simply not in their favor. Success requires them to work much smarter than established businesses — typically bringing entirely new business models to the market.
Take, for example, Uber – a smaller business that has been disrupting the taxi industry – a very large market. In their case, the vast majority of the stress has been on Uber, acting like an ant lifting hundreds of times its own weight. Small businesses experiencing this sort of stress would do well to emulate what Uber has done… namely leveraging the collective sentiment of the general public to win public opinion in its favor, framing the story as one of ‘us’ (Uber and the public) fighting against ‘them’ (the established and entrenched taxi industry). This hasn't worked everywhere for Uber, but it has worked in enough places to help them grow significantly — and disrupt the taxi industry. In this case, the Inertial Disruption Factor is very large, but Uber has managed the situation by, in effect, making the general public a defacto part of its business ecosystem, thus tilting things in its favor.
Now contrast this with when Samsung – a very large corporation – introduces a new LCD technology into a niche medical market. The impact may literally disrupt that particular market, but the tremor will barely be felt inside Samsung. In their case, the Inertial Disruption Factor is very small. When IDF is this small, the business ecosystem can easily absorb the change and the impact will not be felt very far at all into the organization.
In cases where the organization and the market are of comparable mass, the Inertial Disruption Factor will be closer to unity. Anything the organization can do to reduce the Inertial Disruption Factor – particularly in terms of aligning internal stakeholders to the vision and leveraging external partnerships – can help to move the balance of power more in its favor, thus improving its odds of success.
Indeed, just as there have been many cases where markets got moved out from underneath established business organizations by startups, there have been just as many cases where established organizations (facing a high Inertial Disruption Factor) have attempted the heavy lifting required to remake their markets and themselves, and the boulder they lifted over their head fell back down on them – nearly killing them. Business books are filled with these case studies, like the example of how Ron Johnson failed to remake JCPenney's market positioning.
Consider Your Own Inertial Disruption Factor
This concept of the Inertial Disruption Factor is an important one that business organizations have to take into consideration whenever prowling their hunting grounds for new market opportunities.
- Will they be able to marshal the resources and support they need to successfully move the market where they need it to go?
- What changes will they need to make (or will be forced upon them) in their own business ecosystem… new technologies, new supply chains, new production sources, new sales & distribution channels, new marketing channels, etc.?
- Will they be able to survive these changes?
- Do they have the business & management skills needed to navigate these changes?
- What other partnerships can they forge and leverage to help carry the burden?
Not Always What Separates the Winners From the Losers
While the Inertial Disruption Factor is a key concept that organizations need to understand and respect, the balance of power it represents is not always what separates the winners from the losers.
With hundreds of strategic details in play whenever trying to disrupt a market, what separates the winners from the losers is how they arrange the parts of the business ecosystem – internally and externally – to work in harmony with their mission and to scale as needed, tilting the odds in their favor. If they can do this successfully, then they will still be ‘disrupted’, but for them it will be a positive disruption and not a negative one.
In business, as in many things, there will always be winners and losers. Knowing when and where to move, and how to manage the Inertial Disruption Factor, is, quite honestly, an art… the art of disruption to be exact. Committed business leaders work hard to master this art.
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