Threatened by disruptive competitors? Become one

In dynamic markets, disruption begets more disruption, as new products, services and business models continually replace obsolete ones. What does that look like in practice? Something like the chart above, which shows that the more that CEOs anticipate threats from adjacent industries, the more they collaborate with entrepreneurs and start-ups.

The data, derived from the findings of PwC’s 26th Annual Global CEO Survey, are consistent with related analysis that finds companies are also increasingly reaching out to competitors, industry consortia, governments and academic institutions. Among the implications: expecting disruption from adjacent industries, companies are actively seeking to become the disruptors. Call it a laboratory for new ecosystems.  

Successful business ecosystems come with great promise—but aren’t without peril. Companies can’t sit by and wait while first-movers nudge them into obsolescence, nor can they jump at everything that looks like an opportunity. Instead, CEOs should keep three things in mind as they look ahead to a shifting competitive landscape.

1. Your neighbour’s neighbour is your friend. As collaboration redefines the future of economic ecosystems, your most challenging competition—and your most rewarding innovation—may come not just from immediately adjacent industries, but also further afield. AI, for example, is already creating new relationships between companies where none were previously conceivable. CEOs will need to continually monitor the landscape for new competitors and opportunities alike. Pay special attention to which companies in any industry might value capabilities you have—or offer capabilities you lack.  
2. Be a skeptic. Not every collaboration or innovation will disrupt existing businesses.  Just as there are abundant examples of companies and investors that ignored innovation to their detriment, there are many that threw their support to innovations that never lived up to the hype. CEOs and their leadership teams should have frequent and candid conversations among themselves—and with customers, investors and other stakeholders—to evaluate what is working, what might work and what is headed for the dustbin.
3. Be your own disruptor. Savvy CEOs know the perils of cognitive and behavioural biases that get in the way of effective decision-making. The sunk-cost fallacy and confirmation biases alone have cost many companies dearly. New collaborators bring new ways of doing things, and CEOs should be as prepared to abandon existing ways of working as they are to stick by them. 

Data analysis by Shir Dekel