Two worlds of business are colliding. On one side is the world of incumbents, boasting a rich legacy of well-fortified brands and businesses. On the other is the high-velocity world of technology, exemplified by companies like Apple and Microsoft, which has patterns that can be instructive for incumbents. Having lived and worked in both worlds, I discussed three principles that can help business leaders grapple with complexity and uncertainty in my recent TEDxWalden Pond talk, “Thriving In Turbulent Times.” 

 1. Understand mega-trends that shape disruption

The true cause of disruption is a convergence of mega-trends. Some are trends in behavior — what is “it” that people want to pull into their lives? Far better to unpack the “jobs to be done,” problems that matter (that is, ones where customers have genuine desire for progress). Then there are societal trends — what will society accept or reject? Often regulation or mounting pressure for regulatory reform will signal societal trends, and technology evolves in concert with those trends. Technology, while triggering broad fascination and investor fervor, should be framed as an enabler, not the main driver, for other forces underway that are tipping the world toward some new normal.  

So rather than immediately training attention internally on existing assets and products, companies need to start with a time for observation, for understanding relevant mega-trends, and asking crisp questions about the course and speed of forces at work. Formulating the right questions is much more important than pushing for answers.

Let’s unpack this a bit with an example. Why is it that electric vehicles (EVs) are so disruptive? I submit: It is the growing consumer desire and global policy trends toward a net-zero and nature-positive future, intersecting with the convenience of buying a car online and having it “serviced” with a software download while it’s sitting in your driveway. There are real issues that need to be addressed to unlock widespread EV growth and adoption, like greater availability of charging stations, but the trend line is predictable.  

Disruptive forces are knowable, then, triggered by mega-trends that can be observed and tracked. The question shifts from “Will disruption happen?” to “When will it hit?” and “Am I prepared, moving on the right course, at the right speed?”

2. Learn through strategically designed experiments

When disruptive forces hit and the outcomes seem inevitable — digital wallets, streaming TVs, computerized cars — timing really matters. I’ve often seen a tendency among companies to greet big disruptive potential by swinging for the fences. However, a big swing can exhaust costly resources and management attention too soon, and with underwhelming results. It can dampen enthusiasm and give a false impression that the opportunity wasn’t worthwhile to begin with. 

There are many examples of this, particularly in the financial services sector. Some companies attempted greenfield bank launches; others made forays into fintech products. In many cases these were “sidecar” experiments, not focused on the difficult challenges of transforming the core business. Some of these were arguably too early, others were expensive acquisitions that had outsize synergy expectations.  

Unfortunately, too often incumbents overreach in this way, preventing the chance to learn vital knowledge. A more useful approach would be to launch a few well-crafted experiments to test different pathways to the future, and to learn about market timing. Here’s where the world of tech provides a playbook that incumbents can put to work, with some modifications. The startup model argues for stage-gates that unlock investment based on building conviction, moving from conviction to confidence and, if appropriate, making a sustained commitment. It is an active experiment, co-created with customers to unpack the real problem and inform the appropriate action, whether to pivot or persevere.

Let’s take the current hot topic of generative artificial intelligence (AI), and AI more generally. What might generative AI mean for your business if you are an incumbent? Does it apply best to customer acquisition or customer service? Complex or routine processes? And should employees adapt their ways of work to embrace new, AI-powered tasks? 

In this example, there is a clear view that AI will reinvent work and create new value. But never confuse a clear view for a short distance. The pace of adoption is less known. And the challenge of changing work approaches and behaviors is non-trivial and can only be learned by doing. Well-crafted experiments can help make sense of the unknown, and help leaders move toward conviction and increasing confidence.  

3. Scale with confidence and commitment

Next, it’s time to weaponize your scale advantage and shift from confidence to sustained commitment. It’s time to hold ’em, not fold ’em, and act with grit and tenacity to work through turbulence.  

Here again the world of tech innovation provides a model that incumbents can follow and tailor with their unique advantages. The stage-gate model from the tech sector calls for shifts in intensity and focus as a company builds product traction with real customers. The highest-value concern at the later stages is maintaining laser focus on making the race to materiality. There are useful frameworks for better understanding this race (in particular by my former partner and friend Geoff Moore, the guru of "Chasm-Crossing" and playing "Zones To win"). The challenge here is to separate the motion of scaling from both business as usual (BAU) and the test-and-learn, bob-and-weave experimentation framed in the second principle. 

Leaders of late-stage tech ventures either morph from their early-stage selves or get swapped out for a “near IPO” leader who is passionate about scaling a business that has proven it has products and solutions worthy of widespread customer attention. Now it is time to fortify the lead and build an enduring company, with as much momentum as possible.  

Here is where an incumbent organization can be formidable — with advantages that will take years for a late-stage startup to achieve. Leaders of incumbent companies should seize this moment to apply their unique “crown jewels” such as customer reach, brand, balance sheet, and geographic presence.   

Implications for transformation leaders

Often incumbents focus on the supply side of the equation. But when faced with rapidly moving and uncertain conditions, starting at the end point of demand chains and understanding mega-trends can be more useful. Next, leaders must act as — or partner with — disciplined innovators and embrace a test-and-learn, active experimentation approach. Finally comes the moment for doubling down, for applying scale advantage to separate from the pack. These three key principles can make the difference in de-risking transformation journeys and ensuring they will yield real value for investors, employees, and customers.