CREATING VALUE FROM DISRUPTION

Author: Isabel Salazar, ISA fellow 2019/20.

What is disruption? I was trying to define my article’s title when this word came to my mind. Nowadays it is a word that you hear often in the business world: business disruption, disruptive innovation or creative disruption just to name a few, but what disruption really means? If you google it, you will find out that disruption is: a disturbance or problem that interrupts an event, activity or process. But I have always heard about disruption in an innovative and positive way, so I decided to title my article: “Creating value from disruption”.

We cannot deny that the coronavirus outbreak is a disruption on how we face the world daily. It is bringing new challenges to society and the economy outstanding, among them the disruption on global value chains with large losses for companies, governments, consumers and the global economy.

In the last weeks, we all have seen on social media the hashtag #flattenthecurve. Flattening the curve is not only about slowing a virus’ spread so the health care system does not get overloaded beyond its capacity, but also about doing business within the planetary boundaries. We need to realize that in order to restore a well-functioning planet within its capacity, we must all be part of the solution.

This current situation brings an ideal opportunity for leaders to think and act differently to address the near-term challenges and to be prepared for the long-term disruption, which means building a more resilient value chain that is able to cope with future extreme events.

How should companies and governments build their value chain to be more resilient?

There are different perspectives that companies and governments can use to address this challenge. However, I believe that redesigning value chains through a circular lens is an interesting strategy on how to approach this outbreak. Circular economy is where the value of resources, components and products is retaining through circular loops. Moreover, it allows regions and cities to decouple economic growth and development from the consumption of non-renewable resources while boosting job creation and social fairness.

This redesign calls for companies and governments to use a system thinking approach to gain a deeper understanding of the dynamics surrounding value chains. This approach allows the identification of strategic leverage points to create circular loops in order to retain value and play a new dynamic out towards a sustainable change including local value loops.

How circular economy boosts local value loops?

Circular economy is an enormous opportunity to boost local value loops. Introducing local distribution channels and promoting local production generate significant economic, environmental, and societal benefits. Local value loops imply the ability to make more effective use of local resources, inspire businesses of all sizes to innovate, to create practical solutions and to provide a better living environment for citizens by adopting circular economy strategies.

This transition cannot be achieved by one single actor. Co-designing solutions open up an opportunity for companies and governments to act strategically and collaborate along with their value chains to unlock the circular loops. We cannot, of course, leave aside the citizen participation, as the co-creation process is a fundamental piece in disruptive innovation.

So, at the end of this pandemic, will you keep on operating business-as-usual? Or will you be part of those who create value from disruption? When we really understand what is our purpose, we will be able to identify opportunities to create shared value for society.