Strategy and Change: Finding Opportunity in Disruption Through Insight, Choice, and Risk, reviewed

Strategy and Change reviewed by David Stephen. See more about the book here. 

Strategy and Change: Finding Opportunity in Disruption Through Insight, Choice, and Risk, reviewed

Does disruption — by a tech company — always come with profitability? If so, how immediate? If not, why? An appropriate example of a major disruptive business in this recent era is OpenAI, with ChatGPT, a technology of broad knowledge. However, OpenAI is not a profitable company, with some analysts wondering if they would ever be. One observation though is that if a company is seeking to disrupt say Google search, the company should be ready to give away services for free, for as long as possible.

Now, the problem is not that there have not been consumer internet companies that took a while to break even, but that OpenAI has to run on huge compute and utilities, signing deals recently totaling $1 trillion, while only around 5% of 800 million ChatGPT users pay. How does OpenAI have an excellent product, solving tasks, professionally and personally across, but most users would rather not pay?

In the book, Strategy and Change: Finding Opportunity in Disruption Through Insight, Choice, and Risk by Aaron K. Olson, Ward Ching, Richard Waterer and B. Keith Simerson, there were several lessons about disruption, including with case studies. Disruption was generally correlated with staying power, [“Corporations like Montgomery Ward, Blockbuster, and Kodak have disappeared due to new forms of competition brought on by innovative technologies.”]. However, certainty of some of this, so far in this AI era, seems unclear.

There were points on “visionary, incubating, directive and collaborative types of strategic leadership”. They also wrote, “In its most fundamental form, we define disruptive change as the aggregate impact of all forms of environmental change on the decision ecosystem. By this we mean both instances of disruptive innovation that affect the competitive viability of an organization’s core business and any disruptive innovation that alters the way that business operates. Importantly, we are also referring to the fact that these forms of disruption are likely to arise more frequently due to the accelerating and compounding nature of technological innovation.”

They gave an example of a company that went under that did not recover from a situation, “In 1990, the Food and Drug Administration informed Perrier Water that carcinogenic benzene had been found in US lab samples. This contamination was subsequently traced back to clogged filters that had gone undetected for six months. Perrier issued a recall for 160 million bottles from 120 countries, but following a rocky period of recovery, the company was eventually sold to Nestlé in 1992, for $2.6 billion.”

They also mentioned that, “In his 1994 critique of the field of strategic management, Henry Mintzberg argued that strategy cannot, in fact, be planned. Rather, he emphasizes the role of experiential learning in the development of strategic insight. Mintzberg’s view was reinforced by other popular management thinkers of the time who promoted ideas like “management by walking around” and rejected what they viewed as the professionalization of management in ways that increased formality and distance from everyday work at the expense of direct experience.”

“Strategy is about trade-offs. In every organization, the chief executive faces difficult decisions on myriad issues such as which market opportunities to pursue, where to invest scarce resources, and how to ensure results through the right governance and controls. They make these decisions in the context of environmental factors like emerging trends, competitor actions, customer priorities, and the requirements introduced by regulations or employee expectations”

The book discussed risks in details, including stating that, “Resilience through risk, Interconnected approach, Expert data analysis. Stanford economist James March expanded on the [ambidextrous] concept by describing the work of organizations as being in two primary areas—the “exploration of new possibilities” and the “exploitation of old certainties.””

The book is fascinating to read. It sometimes felt like a lengthy feature in the HBR, given how current many of information are, including several examples and cases. There are also questions for reflection at the end of some chapters, making it a practical book.

A sequel to the book, exploring profitability and disruption would be excellent, given the burn rate of some tech businesses like Amazon and Uber during their early years, and what it may forebode in the AI Era. Especially seeking out the apathy to pay, for certain internet services, like search and most social media, but others like gaming, devices and others are easier?

Managers, aspiring entrepreneurs, digital media companies, and others interested in understanding how to approach disruption can read the book. The writing style is also excellent. The book ended with a call to action with captivating key questions for executives.

David Stephen currently does research in conceptual brain science with focus on the electrical and chemical configurators for how they mechanize the human mind with implications for mental health, disorders, neurotechnology, consciousness, learning, artificial intelligence and nurture. He was a visiting scholar in medical entomology at the University of Illinois at Urbana Champaign, IL. He did computer vision research at Rovira i Virgili University, Tarragona.

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