At the time when the Thai Institute of Directors conducted “Director Leadership Certification Program (DLCP)” class 0, so-called pioneer class, a number of directors and executives from leading organizations had attended and shared their experiences.   The facilitator asked participants to share views about disruption that their organizations were then facing.  A director at a property and retail developer raised an interesting point that while online channel provides fresh alternative for existing customers, the purpose of shopping malls or department stores are for customers or people to meet and enjoy variety of goods, services, and conveniences rather than being just a place to buy stuffs.  Afterall, human needs to socialize and the leisure in choosing the best goods and services.  After thoroughly analyzing this point, the company discovered that competitors that disrupted the company’s business also include other places that provide services or take away time of clients that may otherwise spend at shopping malls such as cafés that offer food and drinks and venues that offer adventurous activities.  According to direct experience of this particular participant, if the company sees online channel as the only disruption, it would tackle the challenge by offering greater variety of goods, launching price promotion campaign to fight against online shops, developing its own online channel, or even partnering up with online operators etc.   However, doing so will not be able to deal with challenges concerning competitors that take away time of shopping mall clients.  That means the analysis of challenges or disruption facing the company is an essential matter that must be comprehensively contemplated. 

Smartphone is one business that disrupted many other businesses even though they are neither direct competitors nor having direct connection with smartphone.  Therefore, many companies and manufacturers   have to view smartphones as potential disruptor of their respective businesses.  For instance, companies in audio, calculator, flashlight, and camera industries are materially affected by the development of smartphone.  To accurately analyze challenges or disruption with wider coverage, the company must assess various aspects of surrounding factors altogether.  In this regard, the IOD would like to suggest three key factors for companies to consider at the very least including 1) Analyze the company's market and industry - which will help the company identify challenges or disruptions concerning its business or direct competitors; 2) Assess technological advancements – both in parts that related and not related to the business to assess the possibility of other things or evaluations replacing goods and services of the company through innovations and technologies and; 3) Evaluate customer behavior – to detect pattern that could become the company’s challenge.  If the company at least has assessed these three aspects, it will be better prepared to deal with challenges or disruptions.

Actually, we all know well that we have to assess business environment but it is not easy to conduct accurate and comprehensive assessment.  Therefore, each company has different approach in dealing with challenges or disruptions.  In this article, the IOD would like to share views compiled from participants in training classes on approaches and strategies to deal with challenges or disruptions.

1.      Be the Disruptor – Create challenge

The strategy is usually applied by organizations that do not emphasize challenges or disruptions but rather focus on pain points or existing opportunity gap to fix the problem and eventually become the disruptor.  Organizations that apply this strategy usually are agile, have culture that aims to create change, and invest immensely in research and development.  Most organizations with such characteristics are start-ups as they are willing to take risks, have not fear of failure, and always ready to fall.  As long as these companies can develop and cerate change, they will explore new things to fix existing pain points.  Apple and Tesla are fine examples of this such companies that tried to create new things to replace or fill opportunity gap in the world at present.

Despite abundant available resources, not all big players can afford to apply this strategy.  Well-established organizations usually take fairly long time to adapt, lack agility, and sometime get stuck with the success trap which are all rather difficult to fix.  However, there are other approaches commonly applied by sizable companies under existing constraints to match this strategy such as invest in start-ups or open new company to operate specifically in this aspect.  The separated entities or invested companies are more flexible with independent management while having different operations and corporate culture.  Nowadays, we have seen many major Thai firms pursuing this approach. 

2.      Be Diverse – Create diversity

Organizations employing this strategy usually have clear awareness of challenges or disruptions they are facing but lack confidence in their abilities to disrupt the industry.  Therefore, they choose to create diversity by applying diversification strategy.  Under this concept, organizations should diversify risks and businesses because if any business is disrupted, others can still operate normally while the diversification will streamline overall operations and create new business opportunity.  Many major companies fundamentally applied this strategy while some applied this together with the first and third strategies (to be mentioned) to cope with challenges and disruptions.

3.      Be Adaptive – Create adaptive environment

Businesses in fast-changing industries and unable to see challenges or disruptions clearly while not in the position to be disruptor.  With limited resources, the best they can do is to adapt and try to catch up with the fast and everchanging trends.  Organizations that apply this strategy must track the trend and be highly adaptive. Although they are not the pioneers or change makers, they are among the first groups to catch up and offer goods and services that match with the latest changes. 

Above are just approaches and strategies to deal with challenges and disruptions that the IOD compiled from experiences shared by training course participants though there may be more. However, there is no mention about “be big” strategy because being big these days do not guarantee viability without alongside implementation of one of the three strategies mentioned above. 

It is certain that more challenges and disruptions will emerge in the future. It is crucial for the Board and organization leaders to emphasize and consider them on a regular basis to be able to handle potential occurrence. Do bear in mind that business environment is getting more and more complex and competitors that used to be industry peers may now emerge from all directions. Therefore, the Board needs to work closely with the management to steer the organization toward sustainable growth.

Tanakorn Pornratananukul
Vice President- Training and Facilitators
Thai Institute of Directors Association (IOD)