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In a sun-filled boardroom overlooking lower Manhattan, I was sitting with a group of chief strategy officers for part of our Outthinker Roundtable discussion. Professor George Day, leading expert on innovation and marketing, and faculty member at Wharton Business School, shared a concept about disruption that has been infecting my thoughts ever since.

We hear the word “disruption” thrown around profusely today. Harvard Business Review knows the word sells magazines. Startup entrepreneurs know it helps them raise capital. Executives fret about pending disruptions from blockchain, artificial intelligence, and platforms.

But how much of the uncertainty we are experiencing really is disruption?

What is disruption?

The term disruption, coined by Clayton Christensen, speaks to a very specific strategic dynamic. A disruptor targets a customer site that is considered of little value to the incumbent. The disruptor offers a product that’s considered inferior by the incumbent. By doing so they gain a foothold and from that beachhead, expand incrementally upward, improving their product, capturing ever more valuable customers.

Disruption occurs when incumbents find themselves on the horns of dilemma: to protect their core business or embrace a new innovation that may put their core business at risk.

Not all change is disruption

But we throw around the term too loosely today, labeling anything seemingly new, that incumbents may be slow to respond to, a disruptive innovation. George Day argues that much of the activity that we call “disruption” instead is simply “turbulence” – changes that fail to meet the criteria of a disruption. Some are new, yes, but that does not necessarily force incumbents into the innovator’s dilemma.

We are experiencing an historic volume of turbulence because multiple technologies are now interacting with each other and when innovations collide, their impact multiplies. Consider, for example, mankind’s original transformative innovation: the scratch plow. This simple stick, when dug into dirt, creates a line in which you can plant seeds. Those seeds grow, and you have a garden. You could argue that this innovation led the way to the transformation of humankind from hunter-gatherer societies into agricultural ones.

But what enabled the scratch plow to transform society was another innovation underway at the same time: the domestication of the ox. Until we had an ox that could pull the scratch plow, we could not grow gardens or farms at significant scale. When two innovations collide, radical transformation begins.

And today we are experiencing multiple interdependent innovations emerging at the same time. The Internet of Things (IoT), for example, is of little value until you have the ability to make sense of massive amounts of data (data analytics). It is made even more valuable when you add artificial intelligence that can respond to the insight from the data.

Responding to turbulence

Such rapid change creates turbulence, but not necessarily disruption. You CAN respond to turbulence. Your struggle to do so comes not from a dilemma but from the speed with which you can make sense of what is happening and respond. Calling it “disruption” implies we are helpless. But calling it “turbulence” can guide us toward action.

And incumbent companies are waking up to this realization. You see this in the fact that blockchain technology, which many consider disruptive, is proving to not be disruptive at all. Its advance is being led by giant incumbents like IBM, Amazon, and Morgan Stanley. IoT is similarly being driven by behemoths like DHL, Google, Hitachi, and Huawei.

Turning turbulence into opportunity

Once you enable your organization to distinguish disruption from turbulence, you can turn today’s rapid change into opportunity. This requires three steps:

  1. Sensing the environment. Distinguishing weak signals from noise, making sense of the flood of new information, to orient yourself to what is really going on. Cisco, for example, sees that the growth of IoT with analytics, the cloud, and artificial intelligence is opening up for it the opportunity to lead what it calls the “intelligent network.” Its bet is paying off. Its stock price has nearly doubled in the last three years.
  1. Deciding on a response. As a new future emerges, assessing what opportunities and threats that represents, and deciding how to take advantage of the former and shield yourself against the latter. Consider Adobe, which assertively transformed its business model, abandoning perpetual licenses for a cloud-based subscription service. Its stock price has quadrupled in three years.
  1. Taking action. Rallying the resources, activating the minds of your people, building a sense of urgency so that you act on your decision. Microsoft, for example, has moved mountains to reprogram its core office programs to prepare them for the cloud and build a cloud service business that, at over $17 billion in revenue, is now larger than Amazon Web Services. Its stock price has more than doubled in the last three years.

So be honest. Don’t get caught up in the “disruption” hype. Don’t confuse disruption for turbulence. Gather information to create a possible vision of the future, decide what your company might do in response, and activate a response.

Leverage
Point
“8Ps” of StrategyOpportunity
for Disruption
Recommended Leverage Points
Position- The farmers, individual and corporate, that you are targeting.

- The need of the agricultural industry that you seek to fill.
3- What technologies do you control that can help you tap into market
segments that you previously thought unreachable?

- What are the potential business alliances you could think about with key players in the segment to serve your customers with integrated solutions? (Serving customers with more integrated solutions example: serving farmers with fertilizers, crop protection and other).
Product- The products you offer, and the characteristics that affect their value to customers.

- The technology you develop for producing those products.
8- What moves are your organization taking to implement Big Data and analytics to your operations? What IoT and blockchain applications can you use?

- What tools and technology could you utilize or develop to improve food quality, traceability, and
production?

- How can you develop a more sustainable production model to accommodate constraints on arable
land?

- What is the future business model needed to serve new differentiated products to your customers?
Promotion- How you connect with farmers and consumers across a variety of locations and industries.
- How to make consumers, producers, and other stakeholders aware of your products and services.
8- How are you connecting your product with individual and corporate farms who could utilize it?
- How could you anticipate market and customer needs to make customers interested in accessing your differentiated products?
PriceHow consumers and other members of the agricultural supply chain pay for access to agricultural products.7- What elements of value comprise your pricing? How do each of those elements satisfy the varying needs of your customers?
Placement- How food products reach consumers. How the technologies, data, and services reach stakeholders in the supply chain.9- What new paths might exist for helping consumers access the food they desire?
- How are you adapting your operations and supply chain to accommodate consumers’ desire for proximity to the food they eat?
- How could you anticipate customer expectation to make products more
accessible to customers/agile supply chain?
- Have you considered urbanization as a part of your growth strategy?
Physical
Experience
- How your food satisfies the needs and desires of your customer.
- How the services you provide to agribusiness fulfill their needs.
9- Where does your food rate on a taste, appearance, and freshness
scale?
- Could the services you provide to companies and farms in the agriculture industry be expanded to meet more needs?
- What senses does your food affect besides hunger? How does your
customer extract value from your food in addition to consumption?
Processes- Guiding your food production operations in a manner cognizant of social pressure.8- How can you manage the supply chain differently to improve traceability and reduce waste?
- How can you innovate systems in production, processing, storing, shipping, retailing, etc.?
- What are new capabilities to increase sustainability (impact on the environment, or ESG) components?
People- The choices you make regarding hiring, organizing, and incentivizing your people and your culture.- How are you leveraging the agricultural experience of your staff bottom-up to achieve your vision?
- How do you anticipate new organizational capabilities needed to perform your future strategy (innovation, exponential technologies needed, agile customer relationship, innovative supply chain)?
- How do you manage your talents to assure suitable development with exposure in the agrifood main challenges/allowing a more sustainable view of the opportunities/cross-sectors?
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