Each year, the London Business School hosts the Strategy Summit, a one-day event that brings together the leading thinkers and practitioners in business strategy. During the event, these leaders foster debate and generate actionable insights for the attendees. This year, the topic of discussion was “How the World’s Leading Companies are Adapting to Disruption,” and welcomed speakers such as:
- Costas Markides, a professor of strategy at LBS,
- Jean-Claude Biver, President of Watches at LVMH (a leader in luxury products)
When speaking about disruption in business, the summit focused on two strategies: defending the threat of disruption and attacking the disruptive opportunity.
When it comes to business, disruption is part of the process. For small entrepreneurial firms, they want to create disruption in the marketplace: take Uber and Airbnb as examples. However, established organizations also have to deal with disruption, and it’s how they respond that makes the biggest difference.
“Disruption to a business model is both a threat and an opportunity,” said Markides. “It’s almost impossible to address both with one strategy. There are outliers that can, but I call them magicians. The rest of us can’t do it. You have to defend the threat to the core business with one strategy and attack the disruptive opportunity with another.”
As an example, Biver used the Apple smart watch as both a threat and opportunity for the watch industry. Biver not only runs the Watches Division at LVMH Group, but he’s also the Chairman of Hublot’s Board of Directors and the CEO of TAG Heuer and Zenith.
“We have two strategies,” explained Biver. “The best way to fight is to create a connected watch. The difference between a TAG and an Apple Watch is huge because the Apple Watch looks like a phone on your wrist. The connected watch from TAG looks like a real watch.”
For the watch industry, to handle the disruption, they had to fight becoming obsolete while also creating something new so they could stand out in the marketplace. So, TAG created a modular watch as a way to attack the opportunity in the tech space while offering something new and unique. It allows people to buy into the smart watch world without starting all over again.
At the end of the London Business School Strategy Summit, Markides shared six takeaways for reacting to disruption:
- Be clear about the disruption.
- Create a sense of urgency.
- Frame the disruption as a threat and opportunity.
- Defend your core business and attack the disruption.
- Come up with new ideas about what to do.
- Disrupt the disrupter.