Five ways to adapt to world of 'constant disruption'

A new study from AlixPartners suggests that the level of disruption businesses face has fallen for a second consecutive year. However, with escalating geo-political tensions and accelerating technological change contributing to an uncertain 2024, the firm has proposed five key ways in which CEOs can insulate their companies from external pressures.

Each year, AlixPartners compiles a disruption index, weighing up the potential threats to business security on the horizon, and those which came the following year. In 2022, this index score spiked dramatically – with the war in Ukraine and record rates of inflation causing difficult trading conditions around the world. In 2023, with inflation slowing, the level of perceived disruption fell by around 4%, and at the start of 2024, this has fallen by a further 5%. 

But with a range of challenges on the agenda for the new year, AlixPartners still found that anxiety remains prevalent among CEOs, with nearly 60% say they are worried about losing their job due to disruption. At the same time, nearly all CEOs anticipate needing to overhaul their business models in the next year due to disruptive forces. In particular, CEOs are concerned with geo-politics, with 68% worrying US-China tensions will disrupt their businesses; climate change, with 68% feeling pressure from regulators to take a stance on environmental issues; and technological innovation, with 63% of executives saying they worry they cannot keep pace with the current rate of AI-powered change. 

Simon Freakley, CEO of AlixPartners, said of the findings, “CEOs largely navigated 2023’s bumpy road of disruptions successfully, but the way forward looks to be every bit as rugged and with more hidden curves, demanding even greater agility, acceleration, and speed. We are entering a new age of post-pandemic, longer term, and less controllable disruptive forces. Those who succeed will be the ones who act quickly and decisively in the face of external challenges and at the same time execute brilliantly on the factors under their direct control. The winners will be those who can harness external challenge for internal benefit, in particular by unlocking the force multiplier effect afforded by AI.” 

Looking ahead, AlixPartners issued pieces of advice on five different fronts, to help companies navigate the coming months.

Market intelligence

Ultimately, being able to come up with the best answers requires an understanding of which questions are actually being asked. Arguing for firms to “put yourself in the right game”, AlixPartners noted that winning companies “respond to disruption by asking fundamental questions about where to play and how to win”. For example, if a company decides to invest in AI, they should be sure that they are responding to a concrete need of their business or customers, rather than simply doing so for the sake of it. 

Harness digital power

Following on from that, AlixPartners was clear that firms do need to “put digital disruption on your side”. From AI to analytics, from cybersecurity to the cloud, staying abreast of the still-accelerating advance of digital technology is essential to success – both because it can help businesses to understand the threats facing their current mode of operation, and also because it presents opportunities and “a way to become the agent of disruptive change”. 

Value the human touch

Even as firms look to tap the latest technology, they must remember that they will depend on their human labour to get the most from those investments. AlixPartners warned that firms must “get the most from your talent” – not only for this reason, but because companies cannot thrive amid disruption unless “they can attract the best people, develop and empower them, and create a culture that’s agile, engaged, and prizes accomplishment”.

Balance the books

While responding in an agile manner to the challenges around, firms must be careful not to fall into the trap of seeing efficiency and expansion as mutually exclusive. In a disruptive environment, AlixPartners argued that they are enablers of each other, and that beyond taking practical steps to identify, protect, expand, and grow value, “the best companies achieve rapid growth on both the top and bottom lines”. 

Prepare for change

AlixPartners concluded that firms must broadly “prepare for a business climate with more potential for disruption”. No business will be immune to future shifts, so companies need to create the financial, organisational, and cultural conditions that will enable them to constantly adapt to change, and thrive in turbulent times.