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The Disruption Dilemma$
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Joshua Gans

Print publication date: 2016

Print ISBN-13: 9780262034487

Published to MIT Press Scholarship Online: September 2016

DOI: 10.7551/mitpress/9780262034487.001.0001

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(p.83) 6 Self-Disruption
The Disruption Dilemma

Joshua Gans

The MIT Press

The second way of dealing with disruption and its uncertainty is via the equivalent of an insurance policy – or proactive management. This involves taking key actions that change the organization of your business so that should disruptive events arise they either pass over your organization or alternatively put you in a position to easily deflect them. In other words, you invest in a better shield. Like all insurance, however, you have to pay a premium. Importantly, the insurance actions that you take out to insure against demand-side disruption are distinct from those that you take out to insure against supply-side disruption. To insure against demand-side disruption requires a policy of independence. This is what Christensen recommends: firms should ‘disrupt themselves’ before they are disrupted. In the hard disk drive industry Quantum Corporation set up an independent division to compete against itself and ended up making that division the main one in the company. While there are examples such as Quantum, which demonstrate that independence can provide an effective insurance policy, the chapter then considers whether this is a good approach in general. The evidence indicates that simply setting up an independent division is rarely effective and often costly. In many cases, when firms pursue a policy of independence it usually makes them more rather than less likely to be disrupted. The reason for this is that the independent division has to actually end up developing the products and technologies that may turn out to be disruptive on the demand-side. If it misses one of these, it will not be effective. Moreover, if it turns out that the disruption is mainly from the supply-side, an approach of independence will not be effective

Keywords:   Independence, hard disks

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