Michael Lenox and Stuart MacDonald discuss the challenges organizations face when they address disruptive innovation in the marketplace, especially on issues with long-term horizons and impacts such as climate change.
Stuart MacDonald (00:10):
How do we close the “rhetoric to reality gap” in sustainability objectives from organizations?
Michael Lenox (00:45):
I’m going to go a little bit of a side tangent and we’ll get back to your main question. The track record of established companies navigating significant disruptive events in their industries is not good. We have so many anecdotes we can reference (Kodak for imaging, Blockbuster for video sales, and so on down the list). There’s any number of reasons why a large incumbent companies when faced with disruption and changes and shifts in the marketplace struggle. That doesn’t suggest that they shouldn’t try, of course. There are many organizations that are active and trying to make such transitions. What companies have to think about in terms of something like climate change, there are these longer term impacts here that are fortunately getting closer and closer in real time to us today. Those motivate behavioral change by the companies to some extent, but I think the thing that’s going to motivate change more quickly. What requires companies to be more agile is the larger competitive kind of institutional responses to those challenges. I think of something like electric vehicles. We have a technology that’s being driven in part because of concerns about the environment. That’s now beginning to get a foothold. My suspicion is this will expand. That transition will happen actually quickly. So one might look at this and say, in 2050, we have to be worried about climate change. But in 2020, you need to be worried about electric vehicles becoming the dominant market force. We can go through different sectors and talk about how those sectors are being transformed here. There is a competitive imperative that innovation and technology shifts should be motivating companies to be taking action sooner than just the longer term kind of environmental impacts that we’re dealing with as well.
Lenox is the Tayloe Murphy Professor of Business Administration, Senior Associate Dean, and Chief Strategy Officer at the University of Virginia Darden School of Business.
MacDonald is the Vice President of Product Development at Minneapolis-based 2DegreesCooler™.