Considering the state of technological advancement around us, Joseph Schumpeter’s words above should give every mature company cause for worry. What that statement means is that you are about to be disrupted. And your company will not be able to innovate enough internally to prevent your demise. But why is this the case? There are two basic reasons why companies struggle to disrupt their own business model. These two reasons are that your company will have to i) admit that it is wrong and ii) companies do not have the internal expertise to answer the unknown questions that will define the future of the business/industry.
i) It Will Mean Accepting That You Are Wrong About What You Believe
To truly work on a business model/idea/product that will fundamentally change your company is to admit that you are about to be wrong regarding the core beliefs that make your business what it is. It’s a utility company admitting that distributed energy might challenge its centralized business model. And the feeling of wrongness is one we (as individuals and organizations) don’t willingly come to admit or accept. As Kathryn Schulz suggests in ‘Being Wrong’,
This is the thing about fully experiencing wrongness. It strips us of all our theories, including our theories about ourselves. This isn’t fun while it’s happening — it leaves us feeling flayed, laid bare to the bone and the world — but it does make possible the rarest of occurrences; real change.
ii) The Expertise Your Company Needs Is Outside Your Walls
The authors of Machine, Platform, Crowd suggest that there are two reasons why, even though you have experts within your organization, you should look outside your firm for innovation