Over time markets strive to find equilibrium.  Markets in equilibrium are fairly static and predictable.  Competition has all but steadied to a gentleman’s agreement of “you respect my bottom line, and I will respect yours…”  These markets are closed off to new competitors so the incumbents are left to atrophy and grow fat on their relatively easy existence.

However, periodically something will happen that will knock the economy or market out of its equilibrium.  We call these disruptions.  Disruptions lead to change and opportunity for challengers.  If this is an existing marketplace, the incumbents will do everything in their power to try and regain the old status quo once found in the equilibrium.

If the disruption is big enough, the nature of the marketplace changes to the point where there is no chance for the incumbent’s survival unless they are able to adapt to the new ecosystem brought about by the disruption.

We have seen this a number of times.  The classic example I heard over and over again in business school was the plight of the buggy whip manufacturers after the invention of the automobile.  The automobile was such a disruptive invention that the entire nature of the transportation market, heck, the entire world changed.  The world was turned upside down.

Today’s economy is in disruption and I’m not simply talking about the global economic downturn.  Very few could have predicted the impact of the widespread adoption of the Internet.  Like the invention of the car, the ramifications of this invention are being felt far and wide, even in markets that don’t seem to have direct connections to the net.  Newspapers, magazines, the music industry, the movie industry; these were all easy targets for the Internet.  They were all in direct competition with what the Internet does best.

The wider ramification of the Internet is that the entire nature of our economy is changing.  Starting in the early 80’s, countries that could manufacture better, and for less money, than the United States, started a change in the fundamentals of our economy.  This was the first sign that the industrial revolution had run its course.

Ten years later, the widespread adoption of the Internet has hastened that transition.  The nature of the US economy has continued to change at an increasing rate.

Deloitte recently released a report called Measuring the forces of long-term change: The 2009 Shift Index. It does a great job of framing the current situation that businesses face.  Customers have nearly perfect information and thus are less brand-loyal.  Competitors also have access to nearly perfect information.  The time between your company establishing a competitive edge and the competition catching up or worse, leap-frogging you, has shrunk dramatically.  If that weren’t bad enough, companies are finding it harder than ever to keep leadership.  Your leaders also have access to nearly perfect information which means they know about advancement opportunities elsewhere, and they’re taking them.

All of this adds up to a major disruption in the status quo.

Here is the great news about disruption; disruption equals opportunity.  Companies that can decode and execute on that opportunity are tomorrow’s success stories.  The problem is, how do you build a team who can make the most of this opportunity?  You need a team that is comfortable with change.  You need a team that can quickly and correctly identify opportunities.  You need a team that is passionate about the cause way beyond titles and job descriptions.

These are the teams that will knock out the faltering incumbent companies and replace them.  These are also the teams who will redefine and revitalize dying incumbent companies and transform them into vibrant companies again.