Capital Allocation in a Disruptive Environment

Disruptive technologies are reshaping what we do and how we do it. There is always the possibility that a recent disruptive technology presents you with the chance to launch new initiatives.  Disruptive technologies oftentimes bring about a shift in the competitive landscape; acquisition opportunities may abound with longstanding competitors becoming vulnerable and promising startups may provide a solution or offering that complements a company's capabilities.With these extraordinary conditions come unique opportunities, challenges, and risks.  Making informed decisions regarding your capital allocation (even if that means doing nothing) is the key to capitalizing on these opportunities, addressing the challenges, and mitigating potential risks whether you are the disruptor or the one being disrupted.  We recommend companies employ a consistent and uniform process for evaluating, analyzing and filtering which opportunities to pursue.  Sophisticated organizations have a strong game plan that evaluates scenarios whether they be acquisitions or licensing deals or the sale of assets so that when a market opportunity arises they are prepared to act.Capital allocation strategies in a world with accelerating disruptive innovation are as unique as the companies pursuing them. No single strategy will be right for every company but having a framework and process to evaluate opportunities quickly and correctly provides organizations with a skill that may be the envy of their competition.