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Brain circuits

How to know if your industry is about to be disrupted

Published 19 October 2021 in Brain circuits • 2 min read

The key driver to success in a changing world is whether a company can jump from one core competency to another before their competition, something I call a company’s ability to LEAP. This requires the ability to know whether your industry is about to be disrupted (or maybe is already in the disruption process). That can be a daunting prescription for some, but you can take a systematic approach to determining what the future of your industry looks like.

Consider these four factors:

  1. How many new entrants are coming into your sector? The more new entrants coming in, the higher the urgency for you to leap because some smart new entrant will figure out a new business model.
  2. Look at venture capital funding in your industry. The more VC funding coming in, the higher the chance that a startup will be able to scale a business model that disrupts the ecosystem or the industry. It’s not important whether the startup is currently making a lot of money, but rather the speed with which they can scale up, because once they do they will become a problem. 
  3. Keep an eye on government regulation. Are there changes in government regulation that favor new business models? Are there changes that could harm your current business model? You need to get in front of any changes before they happen.
  4. What is your own profitability trajectory? If your core profit is beginning to stagnate or gives indicators that it might start declining, it is a good sign that your offerings may be at risk. Consider what changes you can make now.

These four considerations will give you a good idea about how urgent it is that you LEAP.

 

Authors

Howard Yu - IMD Professor

Howard Yu

LEGO® Professor of Management and Innovation at IMD

Howard Yu is the LEGO® Professor of Management and Innovation as well as the director of IMD’s signature program, Advanced Management Program (AMP). He is the author of the award-winning book LEAP: How to Thrive in a World Where Everything Can Be Copied.

Howard Yu is the Strategic Resilience in a Disrupted World program director.

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