In 1903, an adviser to the Ford Motor company remarked, “The horse is here to stay but the automobile is only a novelty – a fad”. Over the last 100 years such miscalculations have almost become a norm with firms often paying huge prices.
Over the Easter Term, Cambridge MBA students had the opportunity to investigate why managers keep underestimating threats in the ‘Disruptive Technology and Innovation’ elective course jointly delivered by Faculty members Dr Kamal Munir and Professor Shahzad Ansari.
The course aims to get students thinking about the dangers existing organisations face from possible sector disruptions – organisations such as Airbnb and Uber seeking to re-invent entire industries, and new platforms springing up such as the smartphone – using personal experiences to illuminate the ideas being discussed.
It follows on from core MBA courses in strategy, where students learn common strategy frameworks, such as the Five Forces model. Students are encouraged to challenge these frameworks and ask themselves if the same models apply in an environment where competitive advantage is found through disruption.
Dr Kamal Munir, Reader in Strategy & Policy says, “Disruption is one of the big challenges to large companies now; they are incredibly scared of being disrupted. The pace of change has increased and the sources have multiplied because there are no longer industry borders – the lines between sectors are blurred – which makes it much harder to survive.”
Munir illustrates this fact when he tells students that 30 years ago, the life expectancy for a company in the Fortune 100 was around 75 years, and that today it’s less than 15 – and declining.
Professor Shahzad Ansari, Professor of Strategy & Innovation, plays devil’s advocate and flips the conversation, encouraging students to think about the business landscape from the disrupter’s point of view. He asks students “if you want to disrupt an industry, how do you decide where to start? In terms of platforms, how do you compete, especially with the biggest ones?”
Both Munir and Ansari encourage students to come to conclusions themselves and develop a larger perspective, rather than providing answers, simply because the answers change all the time. A great example of where students bring their average of six years’ work experience to the forefront of the discussion.
As part of the class, students take part in a simulation where they work for a company where the industry landscape is changing. Students must balance whether to keep going with their existing strategy or focus on a new one – the sunk cost fallacy that many companies face when faced with new technologies on the horizon.
As part of the assessment, students are asked to submit an article to a business publication. Munir says “We want students to be communicating things at a level where other people would find benefit from their analysis, maybe the kind of analysis you wouldn’t usually find in business press. It encourages students to say something relevant and timely.”
Current student Christopher Martens, a consultant for McKinsey says “One of the biggest takeaways was the way in which companies try to protect their old ways of working rather than embracing innovations. It was interesting looking at both sides – the market disrupters and the incumbents and discussing the impact for each.”
The course ends with students considering new and evolving business models and the shift from product to platform, as well as coming away with the tools to deal with disruptive technology and innovation in the careers they pursue.