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Russell is a professional company director. His board experience includes Chairman ASX listed Tesserent, board member ASX listed Powerhouse Ventures, Wunderman Bienalto, the Victorian Government Purchasing Board and the Alannah and Madeline Foundation. He is an experienced director, entrepreneur and innovator, with expertise in technology, strategic & business planning and an extensive knowledge of government. Russell was appointed a Fellow of the Australian Institute of Company Directors in 2012. His expertise has been recognised by SmartCompany as one of Australia's 12 Most Influential People in Tech and as an Honorary Member of the Australian Computer Society.
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The Resolution

Why the board shouldn't focus on disruption

Everybody is talking about disruption. We’re in an agile economy. It’s easy to imagine we’re at constant risk of being made redundant by something newer and sexier. I’m here to say: stop. You can’t set out to be a disruptor. You can only look for ways to innovative, to challenge the status quo. I’m a strong believer that the more you focus on ‘disruption’ as your outcome, the more likely you are to be the disrupted.

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Everybody is talking about disruption. We’re in an agile economy. It’s easy to imagine we’re at constant risk of being made redundant by something newer and sexier.

I’m here to say: stop. You can’t set out to be a disruptor. You can only look for ways to innovative, to challenge the status quo. I’m a strong believer that the more you focus on ‘disruption’ as your outcome, the more likely you are to be the disrupted.

Boards need to shift their focus. Instead of obsessing over disruption, they need to think hard about how to be even better at what they already do – and how to be better than their competitors.

Disruption doesn’t have to be fatal

Worrying about being disrupted is a short-term strategy. It’s almost impossible to predict – even when it comes from inside. But there’s a difference between being blindsided and just wilfully ignorant. A strong market player should be so good at what it does and so market-aware that it can adapt and refocus – and survive.

A board should be realistic about the market, but not spend all its time focusing on it. It should think about risk, but not at the expense of growth. It should see potential disruption as an opportunity, not a death sentence.

In my experience, successful boards have stopped talking about disruption. Why?

Instead of defending your current market, focus on where your next market might exist

An established company already has a value offering and a unique differentiator. That’s what keeps it in business. Focusing on what might happen – how it might be disrupted – is time that would be better spent thinking about what it can do next.

Let me give you an example. Almost everyone knows that Kodak invented the first digital camera, the same digital technology later put them out of business. So why did Kodak become redundant? I’m simplifying a little bit, but the quick explanation is because Kodak defined their business as film processing and tried to defend this market.

Fujifilm, on the other hand, saw an opportunity. Instead of looking at the market it currently played in, the company looked at what it was already good at – chemistry – and adapted. It shifted its focus to completely new product areas in pharmaceuticals and industrial chemistry. Unlike Kodak, it played to its strengths in the face of change.

Instead of worrying about being taken out by the new wave of digital photography, it generated an entirely new market. Fuji still produces photographic products, but they’re no longer its core business. Today, Fuji is posting record profits whilst Kodak has slipped to irrelevance.

Be more like Fuji.

There’s no return on building a bigger bomb shelter

Focusing on disruption is pointless. Boards that will survive in a changing market are looking ahead. They’re asking themselves:

  • How can we be even better at what we do?
  • Are we creating value and working towards our goals every day?
  • Why did we start doing this in the first place?

They know there’s no return on worrying about how to build a bigger bomb shelter.

A board can’t just be focused on who’s coming to eat its lunch. A risk-focused company can spend all of its resources trying to avoid being disrupted, and have nothing left over to invest in what it’s good at.

Companies – like anyone – are afraid of becoming redundant. They’re afraid of being taken over, of being replaced. But I think the bigger risk is failing to invest in your strengths.

Have no doubt: a board that’s focused on disruption is terminal.

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