Why the Best-Run Companies Are Often the Most Vulnerable to Disruption
One of the most dangerous assumptions in business is that great people and great execution automatically protect you from disruption.
They don’t.
Some of the most successful, well-funded, and forward-looking organizations are often the most exposed when markets shift not because they’re blind to change, but because they’re too optimized for the past.
Brilliant Teams Can Still Be Unprepared
I’ve seen this over and over again. Established companies are filled with intelligent, hardworking, and deeply capable people. Talent is not the issue.
The problem is that intelligence alone doesn’t guarantee adaptability.
When organizations grow, they don’t just accumulate people, they accumulate processes, governance, and systems designed to maximize efficiency. Over time, those systems quietly begin to limit flexibility, experimentation, and speed.
The “Well-Oiled Machine” Problem
Most mature organizations pride themselves on running like well-oiled machines. They optimize infrastructure, workflows, incentives, and performance metrics to extract as much value as possible from the current business model.
But here’s the paradox:
Well-oiled machines are very hard to turn.
Operational excellence is incredible for execution, but it often creates rigidity. Once everything is optimized, even small changes feel disruptive. New ideas don’t fit neatly into existing structures. Experiments feel inefficient. And pivots become painfully slow.
When Optimization Becomes a Vulnerability
The more a company optimizes:
Its processes
Its governance
Its operating model
The harder it becomes to embrace something fundamentally different.
New business models don’t simply “plug in” to old ones. They challenge incentive systems, decision-making structures, and cultural norms. That’s why over-optimization can quietly reduce an organization’s ability to respond to disruption even when leaders see it coming.
Blockbuster Didn’t Miss Netflix It Couldn’t Move
Blockbuster is often framed as a cautionary tale of ignorance. That story is wrong.
They understood the shift.
They recognized Netflix as a threat.
They even attempted to acquire it.
What stopped them wasn’t a lack of awareness, it was organizational inertia.
Their stores, revenue model, and internal systems were built for physical rentals. Pivoting to a digital-first future would have meant dismantling the very infrastructure that made Blockbuster successful. And that’s incredibly hard for optimized organizations to do.
Kodak Knew About Digital Photography
Kodak’s story follows the same pattern.
They weren’t unaware of digital photography. They saw it early. But awareness doesn’t equal readiness.
Kodak was deeply optimized around film manufacturing, distribution, margins, and identity. Digital didn’t just disrupt their product line; it threatened their entire operating model. And when disruption challenges how value is created, organizations hesitate.
Familiarity With Disruption Isn’t Enough
One of the most overlooked lessons here is that knowing about disruption doesn’t mean you’re prepared for it.
Blockbuster and Kodak both understood the trends. What they struggled with was transforming systems, incentives, and structures fast enough to respond. Attempts to pivot exposed deeper, systemic issues that couldn’t be solved with surface-level decisions.
The Real Threat Is Organizational Inertia
The biggest risk to established companies isn’t competition, technology, or startups.
It’s inertia.
Inertia lives in:
Rigid governance
Slow approval processes
Legacy incentive structures
Cultures designed to protect the existing model
When change requires breaking the system that made you successful, most organizations slow down instead of speeding up.
Balancing Efficiency and Flexibility
The lesson isn’t that optimization is bad. It’s essential.
But optimization without flexibility is dangerous.
Organizations that survive disruption learn how to:
Run today’s business efficiently
While creating room to experiment, pivot, and reinvent
That balance is difficult but necessary.
Because in fast-changing markets, success doesn’t belong to the most optimized companies.
It belongs to the ones that can overcome their own inertia and move before they’re forced to.
Frequently Asked Questions
Q1. Why do companies fail even after seeing disruption early?
Companies fail because seeing disruption doesn’t mean they can act on it. Their systems, budgets, and incentives are built for the old model. This makes early action difficult, even when leaders clearly understand what’s coming.
Q2. How do company incentives block long-term innovation?
Incentives reward short-term performance, not experimentation. When careers and bonuses depend on existing results, teams avoid risky ideas. This silently kills long-term innovation inside established organizations.
Q3. Why do startups beat large companies?
Startups move faster because they have fewer rules and less to protect. They can test new ideas, learn quickly, and change direction easily, while large companies often need many approvals before making decisions.
Q4. How does operational efficiency become a problem?
Operational efficiency becomes a problem when it removes flexibility. Systems built for speed and scale resist change. When new opportunities appear, these systems slow down decision-making and make pivots difficult and expensive.
Q5. What is organizational resistance to change?
Organizational resistance happens when employees and systems push back against new ideas. This resistance comes from fear, comfort with routines, and lack of incentives to change.
About the Author:
Shawn Kanungo is a globally recognized disruption strategist and keynote speaker who helps organizations adapt to change and leverage disruptive thinking. Named one of the "Best New Speakers" by the National Speakers Bureau, Shawn has spoken at some of the world's most innovative organizations, including IBM, Walmart, and 3M. His expertise in digital disruption strategies helps leaders navigate transformation and build resilience in an increasingly uncertain business environment.