Warding Off the
Threat of Disruption
Innovation scholar Joshua S. Gans argued in MIT SMR that established businesses have
more time than they may think to respond to innovations that may prove disruptive.
But a software executive questions that advice.
HOW QUICKLY DO COMPANIES need to respond to innovations that could upend their markets? In “Keep Calm and Manage
Disruption,” an article in the spring 2016 issue of MIT Sloan Management Review, Joshua S. Gans argued that companies may have more
time than is commonly believed. For example, his research suggested that established companies can often employ a “wait and see”
approach, and if a new technology demonstrates its potential, the incumbent can acquire it.
That advice didn’t satisfy at least one reader. Daniel Cohen, vice president of business operations and strategy at Adobe Systems Inc., a
software company based in San Jose, California, wrote to explain why he thinks companies need to move swiftly to avert disruption before
it affects their performance. What follows is Cohen’s perspective, Gans’ response — and an informative dialogue about the importance of
monitoring disruption in markets related to one’s own.
Why You Shouldn’t Wait
BY DANIEL COHEN
Managers facing a disruption are often advised to take a cautious approach
by creating a separate business unit that can
experiment with the new model. However, a
cautious approach can be disastrous. While
the leadership team first monitors developments and then experiments with new
product and business models, upstarts are
gaining critical competencies that put them
miles ahead of the incumbent companies.
When a company faces transformative
changes that disrupt both product offerings
and business models, there is no time to
waste. Although it can be costly to retool
offerings, and business model changes may
mean lower prices to existing customers, the
revenue decline is a short-term trade-off for
Adobe knows this from experience. With the advent of cloud
computing, we faced disruption in the software market. For
software companies, cloud
computing represents a change
in how products get developed
and delivered to customers as well
as a business model change —
from a one-time sale to a subscription model. Even though
we were not yet seeing major
inroads from cloud competitors,
we realized we needed to get ahead of
this trend and overhauled our business
model in a span of 18 months in 2012 and
2013. The results have been customer growth
and stronger customer relationships.
Until 2010, Adobe primarily sold pack-
aged software that ran on desktop computers.
Revenue was driven by product releases with
enough new features to convince
customers to purchase upgrades.
Today Adobe’s offerings are
cloud based, and the proportion of our revenue that is
recurring has climbed from
While it’s important to react
quickly, companies can’t respond to every new market
trend. Two key early indicators
to watch are disruptions in adjacent markets and changes in the
growth profile of your own company.
Adjacent Markets Being Disrupted At
Adobe, as we looked across the software landscape in 2010 and 2011, we noted that nearly
every software company that was founded
in the last decade and reached scale did so
with a cloud model.
is vice president of
and strategy at
(Continued on page 95)
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