Combatting Disruptive Change

Beating Unruly Competition at Their Own Game

Ian I. Mitroff

• Publisher: Palgrave Macmillan
• Year: 2016
• Print ISBN: 9781137600431
• eBook ISBN: 9781137600448
• Topic: Business
• Subtopic: Etica aziendale
• Index: Business

This book is a critical examination of the main ideas regarding disruptive change and startups. It systematically lays out the full set of challenges and tasks one needs to master in order for existing organizations to weather severe change or make a startup successful. Ian Mitroff outlines the protective actions business leaders must take to ensure their continued existence, providing a clear demonstration of the key roles leaders must assume such as Applied Epistemologist, Applied Ethicist, Applied Systems Thinker, Applied Social Psychologist, and Applied Crisis Manager, and how to perform these roles competently.

Citing cases such as Facebook, Uber, and Airbnb, this book uniquely analyzes the disrupting agent in emerging industries, which is crucial for success in today's complex and turbulent world. It will be of value to students, academics, and entrepreneurs looking to develop a new product or service.

© The Editor(s) (if applicable) and The Author(s) 2016

Ian I. MitroffCombatting Disruptive Change10.1057/978-1-137-60044-8_1

Begin Abstract

1. It Is All About Assumptions: The Critical Role of an Applied Epistemologist

Disruptive Versus Evolutionary Change

Ian I. Mitroff¹

(1)

Center for Catastrophic Risk Management, Haas School of Business, Berkeley, California, USA

Abstract

Through examining three extremely important cases—Facebook, Uber, and Airbnb—this chapter illustrates the general kinds of assumptions one has to make in starting new businesses and keeping existing ones successful. Uber and Airbnb are especially noteworthy since they are the quintessence of organizations that have produced disruptive change.

A well-tested method known as Strategic Assumption Surfacing and Testing (SAST) for uncovering, challenging, and monitoring key assumptions and stakeholders that underlie key business plans is described in detail. In essence, assumptions are the presumed properties of key stakeholders.

End Abstract

Figure 1.1 presents a few examples of various organizations and technologies and the types of changes that they have produced. The horizontal dimension shows whether an organization has produced change that is primarily disruptive versus evolutionary, that is, whether something is totally revolutionary and thus produces dramatic changes in an industry or society, or whether it merely extends already existing ideas and technologies. The vertical dimension shows whether the effects of the change are primarily technical or social. Of course, in many situations, they are both.

Fig. 1.1

Disruptive versus evolutionary change

In particular, notice the case of Facebook, about which I say more shortly. It is a prime example of an innovation that is both disruptive and evolutionary. That is why I have placed it at both ends of the spectrum at the same time. It is evolutionary in that the online technology per se did not introduce anything that was completely new or revolutionary. At the same time, it is clearly disruptive in how it changed the communication habits of young people, who of course have migrated to newer, edgier platforms. (Facebook now mostly serves adults.) In other words, it has produced changes with both positive and negative effects.

I could have easily placed many more organizations that are simultaneously at both ends of the evolutionary and disruptive dimension. Thus, there is no doubt whatsoever that Amazon has certainly been disruptive with regard to the book publishing industry. Furthermore, its use of drones is also disruptive in the sense of being able to deliver goods even faster. At the same time, its use of computer-based platforms is more evolutionary.

The distinction between disruptive and evolutionary is important because different types of change are based on different kinds of underlying assumptions.

While the organizations I consider shortly are clearly well past their initial startup phases, I have chosen them deliberately because they illustrate some of the many kinds of general assumptions that are necessary to make when a business is first starting out.

In addition, each of the organizations is highly atypical in that they became successful in very short times. This is another reason why it is important to analyze the assumptions on which they were founded.

Because I have had to infer many of the assumptions, it is not my contention that the organizations were necessarily conscious of or stated them in the exact form that I have, if they were even aware or conscious of them at all. Nonetheless, there is no doubt that important assumptions not only were, but had to be, made.

Because we live in a constantly changing and highly uncertain world, not everything important can be known prior to our starting a new venture or to keep existing ones running smoothly. The best we can do is to be aware as much as is humanly possible of the key assumptions we are making and to monitor their status carefully over time so that as key assumptions change, we can change our crucial business strategies and plans that depend on the assumptions.

Finally, once we have viewed the assumptions that each of the organizations made, I want then to describe in some detail a method known as Strategic Assumption Surfacing and Testing (SAST) that my colleagues and I have developed for uncovering assumptions as comprehensively and systematically as possible. ¹ It is precisely because I have used SAST repeatedly over the years in both my professional work and daily life that I am able to uncover assumptions. In other words, the ability to surface and critique key assumptions is a learned skill.

Facebook

In 2004, Mark Zuckerberg, his fellow Harvard University roommates, and Eduardo Saverin founded Facebook. It was not the first attempt to make it easy for people to be and to stay in touch with one another, but it was one of the most successful. As of this writing, Facebook has become the first company to attain a market value of $250 billion in the shortest time in the history of the New York Stock Exchange.

As is well known, Facebook was originally designed to allow Harvard students to communicate easily with one another. It caught on so fast that it quickly spread to other Ivy-league universities.

In retrospect, it is easy to pinpoint some of the many critical, taken-for-granted assumptions that were not only made, but were also necessary to make, in order for Facebook to be adopted by a wide range of users other than Ivy-league undergraduates and thus be a business success. The following are some of the more obvious, but necessary assumptions:

No matter what their age or social position, people have an inordinate need to communicate, i.e., stay and be in touch; therefore, they will flock to an easily available means (cellphone and computer apps) that allow them to communicate quickly and effortlessly with others 24/7; indeed, they will want to be in touch with one another 24/7; in addition, Facebook will make it easy to compile lists of friends with whom one wants to be in regular communication.

Other key but not as obvious assumptions are:

No matter what their age or social status, other parties (stakeholders) will behave on Facebook similar to Harvard undergraduates. Further, because Harvard undergraduates have not used Facebook to bully their friends and classmates, we don’t have to worry about bullying when younger kids use Facebook; in short, people of all ages will use Facebook responsibly; therefore, there’s no need to involve parents or other responsible adults from the very beginning in overseeing its design and operation. In other words, a highly important and implicit assumption was that Facebook would not be socially disruptive when it came to fostering anti-social behavior.

Notice carefully that whether Harvard students were actually responsible or not, a key point is that all businesses and organizations make assumptions with regard to how important stakeholders on which they depend will or will not behave. One of the ways in which they do this is by having some set of stakeholders serve implicitly as role models, standards of behavior, and so on.

More to the point, all organizations make a great deal of assumptions about the nature of their users, their responsibility to their stakeholders, critical factors that lead to success, and so on. To emphasize an earlier point, because everything cannot be known beforehand, they have to make such assumptions.

Since I do not expect readers to agree necessarily with my exact wordings or even the assumptions themselves, I strongly encourage them to come up with their own. This is in fact one of the prime purposes of the book, that is, to help people be more aware of their assumptions and those of others.

As an aside, Zuckerberg has been accused of bullying himself when he broke into sites to get pictures of girls he wanted to date. Far more serious is the fact that Facebook was used to distribute child pornography. In this regard, Facebook was not socially responsible from the beginning.

Notice carefully that even if the number of instances of distributing child pornography were small in relation to the total number of posts on Facebook, from the standpoint of Crisis Management, if not plain human decency, this does not let Facebook off the hook. It should have anticipated such behavior and done everything humanly possible to prevent it. Organizations and individuals have been ruined for less. One act of child pornography is one act too many!

Despite the fact that people do not always trust it to keep their personal data safe, Facebook has been a business success, although not as much as was promised. Still, judged solely in terms of profits, all is seemingly well and good. On the other hand, I cannot castigate Mark Zuckerberg and others too strongly for not anticipating that teenagers and younger kids would not use Facebook responsibly. Key stakeholders such as parents, psychologists, teachers, historians of technology, and kids themselves should have been involved from the very beginning in helping to anticipate and to curb abuses such as cyber-bullying.

Enough is known about how various technologies were misused in the past. Thus, there is no valid excuse for not having thought seriously about such issues from the very beginning and doing something significantly about them. Indeed, because they were hounded 24/7 by extremely nasty and vicious posts, several young girls committed suicide. But then in the words of Andrew Keen (see directly below), from its very inception, someone other than a computer geek with low empathy would have had to be involved in the design and implementation of Facebook. And of course, Crisis Management would have had to be given high priority.

Inspired by Max Weber’s Protestant Ethic and the Spirit of Capitalism, the American sociologist Robert Merton popularized the idea of the ‘unintended consequences’ of purposeful social action. The history of Facebook is an excellent example of Merton’s theory. Facebook has been designed to bring us together as a happy global village. [Needless to say an important assumption!] But the reverse is true. [In other words, the assumption is false!] Rather than uniting us, a 2013 study by the University of Michigan…shows, Facebook is making us unhappier and more envious of others. Rather than establishing trust, a 2014…poll of Americans found, Facebook was trusted with our personal data by only 5% of the respondents, significantly less than either the 35% of people who trusted the Internal Revenue Service or even the 18% who trusted the National Security Agency. Rather cheering us up, a 2013 study of 600 Facebook users…found, Facebook made more than 30% of its users feel lonelier, angrier, or more frustrated.

None of this should be surprising. It’s what happens when you hand over the conversation to a geek [Mark Zuckerberg] who talks like a computer. It’s what happens when you trust somebody [a critical stakeholder] with zero empathy. ²

All of which helps identify another critical assumption that drives many organizations, and not just startups, namely, that quickly building a mass audience is more important than in thinking about what can go wrong and harm users. Quickly building a mass audience is all-important because the dream—fantasy!—is that one will then be acquired for billions.

Even if one excuses Facebook for not thinking ahead, in today’s highly charged environment, there are no longer valid excuses for any startup for not planning ahead for crises. But then sadly, existing businesses are not always any better in thinking about and preparing for crises as well.

Uber

In 2009, Garrett Camp began working on an iPhone app that would launch a different kind of taxi service. The basic premises were as follows:

People were tired of having to wait needlessly for regular cab services; ...

Table of contents

• Cover
• Frontmatter
• 1. It Is All About Assumptions: The Critical Role of an Applied Epistemologist
• 2. Doing What Is Right: The Role of an Applied Ethicist
• 3. Think Like a System: Be an Applied Systems Thinker
• 4. Thinking Like a Crisis Manager
• 5. Wisdom: How the Leaders of Purpose-Driven Organizations Manage from Their Values
• 6. Applied Epistemology, Part 2
• 7. Assumptions and Stakeholders Revisited
• Backmatter