How Can You Measure Disruption?

Dr Mathew Donald is a leadership, management and organisational change specialist and author of Leading and managing change in the age of disruption and artificial intelligence. In his latest post for B&T, the good Doctor offers his tips on determining the pace of disruption in any business…

A 2019 PWC report concluded that disruption is now part of the everyday business environment, where it has great potential to distract business leaders away from their core business.

Whilst disruption may have once been associated with technology, it is now a broader term according to Dr Soren Kaplan in a 2016 PWC discussion paper. Dr Kaplan also noted older style organisations with little modernisation may be most vulnerable to future disruption, where technology is now also the enabler of broader change. The disruption term is now broad and includes a variety of sudden changes in economics, politics, Brexit, trade wars and presidential tweets. It is the emergence of globalisation with its interconnectivity through the internet, social media and electronic business that has aided the increased speed and sharing of information that forms this modern age disruption.

Issues emerging from disruption are more than merely the increased speed of information, other issues difficult issues emerging out of disruption include integrity, completeness and authenticity of data and information. There is an increased level of unpredictability, uncertainty and risk emerging in this new age due to the lack of authenticity and predictability of future change. Business decision models of the past were so often based on conservatism and reasonable predictability, that base assumption is no longer appropriate so it is likely that the decision-making models of the past may fail organisations of the future.

So what about disruption ?

In a 2017 KPMG report, titled “decoding disruption”  it was noted that business leaders are now under almost constant pressure to understand and adapt to ongoing change, where avoiding change may no longer be an option. The issue of ongoing change is significant as a 2016 global transformation study by KPMG executives reported that 96% were in some form of transformation, whilst research at Western Sydney University of 2017 found a number of organisations had over 50 change in just a 3 year period. Organisations writing annual plans and monthly forecasts, trying to operate as normal,  may simply be too slow and out of date for this new age.

The nature of disruption has serious implications for the trust relationship between investors and management, as investors may not accept that disruption is unpredictable or out of the management influence. Investors, without more information, may continue to believe that management are responsible for financial results irrespective of new tariffs or presidential tweets or climate change, or any other disruptions.

The case for a disruption measure

Business success has for so long been measured by the financial profit and loss, yet with so much change in the air it may no longer be a good measure of management skills. Measuring organisational value and success through traditional systems may be too late, or too slow and inappropriate, so some new measures are urgently needed. It may also be beneficial if new organisational measures can provide data and insights during change, rather than at the end of a project or financial year. It may be more important to measure the inputs of change, rather than the outputs, if organisations are to improve and influence change more successfully. Research at Western Sydney University in 2017 proposed a tool to measure seven change success factors, derived from managers responsible for change, where the factors are related to leadership and management, including trust, engagement, planning and communication.

A 2016 global transformation study by KPMG indicated that despite all the effort and costs involved in organisational change, many executives do not believe that the potential benefits of transformational changes are ever actually met. Organisational change has been linked to many individual factors over the past century, where no one factor appears to hold all the answers. Academics and practitioners now believe that change factors are interrelated, where many change factors may influence success or failure of change together.

The future of disruption measures

In a disruption age, a metric for the quantity, type and speed of change may be required instead of the traditional measures, especially if management performance is to be assessed in a balanced way. The new measurement tool developed at Western Sydney University discussed above, may be useful to investors and boards alike as it can provide insights into change early, where the insights may be used to adjust and improve change as it occurs. This new age change measurement tool will also be useful in assessing change, management and leadership performances between changes, between divisions, over time and across industries.

Business leaders may need to seriously consider disruption where adopting new measurement tools may assist them realise more of their change benefits, benefits that have been so elusive in the past.