Do business execs have disruption delusions?

Business leaders say they are sanguine about their firms’ ability to thrive in the face of disruptive forces and future competitors—yet their actions indicate they may be in a “confidence bubble,” according to a new survey of more than 340 executives at companies with at least $2 billion in revenue by growth strategy consulting firm Innosight.

The vast majority of executives (82 percent) say they’re confident their companies are prepared to change in response to disruptive trends within the next five years. In fact, 87 percent of executives say their companies are “leaders,” not “followers”; and 84 percent say they’re “innovators,” as opposed to “copycats.”

Do business execs have disruption delusions?

But a deeper look at the survey results reveals significant vulnerability among most companies and their executives, according to Innosight.

“The stated optimism may cover up what’s really on decision makers’ minds. When you dig a little deeper, you hear from executives that their companies are not alert enough to competition from new corners, not open enough to new ideas and generally not nimble or fast enough. What we may be seeing is a ‘confidence bubble’ on the part of executives,” said Innosight managing partner Scott Anthony, coauthor of recently published Dual Transformation: How to Reposition Today’s Business While Creating the Future, in a news release.

Among the vulnerabilities executives reveal:

  • Only 7 percent say their company is able to respond to marketplace disruptions much faster than the market.
  • Almost three in five (59 percent) executives say their company’s current leadership is not very well prepared to navigate change and drive growth during the next three to five years.
  • More than four out of five executives (81 percent) say new concepts, products and ideas often or sometimes get less attention than they should because management tends to favor the main or legacy business.
  • 69 percent of executives say day-to-day decision-making at their company tends to perpetuate the status quo at the expense of the stated strategy for the future.

Executives may have their heads in the sand when it comes to digital threats and unexpected competitors

“New competitors can increasingly come from left field—or a totally different game. Netflix and YouTube were anything but traditional cable TV providers. Apple and Google are likely to be future leaders in the transportation industry thanks to AI and driverless cars. While some industries could be more affected by new technology and competitors than others, few if any are ‘safe,’ and the survey suggests that executives have been slow to recognize the growing risk of competition coming from the fringes,” said Mark Johnson, Innosight senior partner and coauthor of Dual Transformation, in the release.

  • Only 10 percent of executives say they see the greatest competition in the next five years coming from entirely new industries; 84 percent say it will come from their own industry or adjacent ones.
  • 67 percent of executives say they expect they will be facing mostly existing competition five years from now. Less than a quarter (23 percent) think they’ll be facing mostly new competition.
  • Just over one-third (35 percent) of executives say artificial intelligence (AI) will be a disruptive threat to their company’s core products and services in the future, and only 10% say AI is “very threatening.”
Do business execs have disruption delusions?

Conceptually, execs know what their companies must do to survive and thrive

“We believe that to win in the future, most leaders will have to do something that represents the challenge of a lifetime: continually reposition and reinforce today’s business while, at the same time, creating the future by forging completely new markets and customers,” said Anthony. “It is encouraging that many executives are on board with this view—conceptually, at least. The rub is whether they’re really positioning themselves to do it, or just giving the idea lip service.”

  • 61 percent say they plan to grow their top line over the next five years by both “expanding within existing markets” and “entering into new markets.”
  • Nearly half (48 percent) of executives say their company’s best response to significant disruption in their marketplace would be both to reposition the main business to make it stronger and to go for entirely new markets.
Do business execs have disruption delusions?

Innosight fielded the Strategic Readiness and Transformation Survey in May 2017 in order to gauge business leaders’ impressions of their preparedness for future market change.

The 2017 Innosight Strategic Readiness and Transformation Survey is based on online interviews conducted May 11-25, 2017, among a U.S. sample of 346 corporate business executives and managers. The sample included business professionals in board, C-suite, executive (EVP, SVP, VP, director, and unit and department heads) and managerial positions in firms with annual revenues $2 billion and above. The majority of those surveyed are at firms with revenues at $10 billion and higher. Questionnaire design and data collection were conducted under the direction of Michaels Opinion Research, Inc., a New York-based market and public opinion research firm.


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