This morning’s news contains a wonderful set of items representing a span of traditional organizations and digital disruptors – Uber, GE, and Hasbro with Mattel – as they attempt to succeed in their representative markets. If nothing else, the headlines and their implications represent somewhat of a microcosm of the effects of disruption, the need for organizations to continue to willfully disrupt, and an illustration of some of the impediments to sustaining disruption as recently published in Gartner’s report, “Successfully Riding the Big Waves of Digital Disruption” available here.
Uber to Receive Cash for Shares: Uber will receive a $1B investment from a consortium led by Softbank and and Dragoneer Investment Group, followed by a potential purchase of $9B in existing shares by the same groups (see a TechCrunch article here). This is formidable news for a variety of reasons: it provides additional capital to help battle disruptive competitor Lyft, a recent recipient of $1B from Alphabet/Google; and it will diminish the negative impacts currently associated with former CEO Travis Kalanick (lawsuit potentially dropped by an investor and less board power). Notwithstanding its habit-forming services, Uber requires significant capital to market and sustain its services across the globe. It also provides yet another investment outlet for Softbank, which has been continually positioning itself in areas key to future digital disruption (e.g., mobile, communications, and even other ride share entities). This is a big win for new Uber CEO Dara Khosrowshahi and will likely help him continue to diminish a lot of the negativity surrounding the company. We noted Uber’s past hubris with respect to regulation and corporate governance in the report referenced above; today’s news suggests positive changes are afoot.
GE Regroups (Predictably?): GE’s CEO, John Flannery, discussed plans to help fix whatever might be ailing his company, which has suffered this year as the worst performing stock on the Dow according to this Reuters article. Most interestingly given GE’s recent history and what has been a continual front page example/case study of digital disruption, news outlets note that Flannery may drive layoffs in GE’s software business. This would be on the heels of statements from Flannery about focusing the groups efforts on key verticals going forward (see this article). While this isn’t at all a statement about the potential for IoT, digital twin, or any other disruptive technology endeavors, it is an example of GE having to overcome elements of hubris, organizational design, and its ability to focus its energy appropriately on key markets (in addition to appeasing shareholders).
Hasbro and Mattel Toy with Merger: Hasbro, according the the Wall Street Journal (read here), is talking to competitor Mattel about merging. Both companies have been impacted by industry disruption: how and where people buy toys has shifted (see Toys-R-Us’ bankruptcy), with online sales through companies like Amazon distancing customers from traditional in-store brand experiences; and with many types of toys themselves taking a back seat to computers/electronics and other forms of entertainment. While consolidation may help the combined entity create efficiencies and enhance its market stature, recent struggles by innovative stalwart Lego indicate that the entire sector is being disrupted. These organizations can not be complacent in terms of their organizational structures or offerings, meaning the simply consolidating may not be enough.
A digital native disruptor (Uber), a traditional organization attempting to digitally disrupt (GE), and established organizations under pressure from disruption (Hasbro and Mattel) are all in the news on a Monday morning, and while they represent vastly different markets and product sets (and customers), their circumstances and potential outcomes can all be viewed through lenses of disruption.