Citation Download PDF

International Journal of Management Science and Business Administration

Volume 10, Issue 5, July 2024, Pages 19-31

Self-Disruption As A Strategy For Leveraging A Bank’s Sustainability During Disruptive Periods: A Perspective from the Caribbean Financial Institutions

DOI: 10.18775/ijmsba.1849-5664-5419.2014.105.1002
URL: https://doi.org/10.18775/ijmsba.1849-5664-5419.2014.105.1002

Jennifer Davis-Adesegha 

Research Associate: Cloud Analytika-London, United Kingdom

Abstract: During crisis situations, self-disruption is becoming one of the strategies through which businesses disrupt the existing operations to introduce new approaches and capabilities that enable them to identify the emerging disruptive trends before they can affect the business’ effective market performance. Since this often bolsters the capabilities of the business to recover from the crisis, it is such values of self-disruption that motivated this study to explore how self-disruption is used by the Caribbean financial institutions as one of the strategies for leveraging a bank’s sustainability during disruptive periods. The study used the quantitative survey research method to evaluate the opinions of 80 bank personnel who were drawn from five different banks that are operating in the Caribbean financial market. Even if some of the respondents disagreed, the survey suggests to achieve the desired outcomes, the strategic process of a bank’s self-disruption requires the analysis of the existing financial market trends as well as proactive sensing of the likely financial market changes. As these are accompanied with the evaluation of the existing bank’s capabilities and weaknesses, it informs the radical change of the areas of weaknesses that must be undertaken to turnaround the performance of the bank during crisis situations. Even if such approach was found to be important for enhancing the effectiveness of self-disruption to take the bank out of the crisis situation, findings still indicated that it is not just lack of innovativeness and inflexible organisational culture which is a challenge, but also the tendency of some banks to use the “wait and see” business philosophy. Combined with the supportive leadership style and approach this was found to affect the efficacy of self-disruption as a strategy for introducing new capabilities that can enable the bank to come out of the unfolding crisis situation. To respond to such challenges, it is suggested that bank executives must adopt the use of a three-stage self-disruption process that leads to self-reinvention that introduces new capabilities to bolster a bank’s quests to come out of the crisis.

Keywords: Self-Disruption, Self-Reinvention, Self-Regeneration, Crisis situation, Bank’s performance

1. Introduction

As the Caribbean banking terrain becomes increasingly competitive and disruptive, self-disruption is emerging as one of the new business strategies for a bolstering a bank’s sustainability (Kramer, 2024). Self-disruption enables a bank avoid turbulences and risks of being affected by disruptive innovations by taking actions that create advantages that disrupt the disrupters. It is the strategic process of thinking and evaluating the existing trends to take actions that enable the bank to stay ahead of the competition (Kramer, 2024). Self-disruption enables a bank avoid being disrupted by new technological forces by integrating the use of new technologies before the competitors are able to do so (Kramer, 2024). Even if the competitors are already using such novel technologies, self-disruption enables the bank re-evaluate itself to discern how it can effectively use such technologies to create and deliver values that its existing rivals are unable to do so. These bolster the bank’s overall effective competitiveness, performance and sustainability in the increasingly more disruptive banking terrain. But even if that is the case, the challenge is often still getting the banking executives to disrupt their businesses before disrupters are able to do so (Giry-Deloison, 2020).

Most banking executives hold the view that it is essential to reap maximum values from the existing business strategies and operational approaches until it is impossible to obtain any more values. The belief of banking executives is that it makes business sense to reap as much values as possible from the existing business operations until it is disrupted by the disrupters (Clarke, 2019). In that approach, most of the banks tend to adopt a reactive approach, where they wait until the turbulence sets in before taking action to adopt new business approaches.

Besides such reactive approach, some of the banking executives argue that it can be an acute wastage of resources to take actions to disrupt the existing operations and introduce new ones before understanding whether the change will occur as well as the magnitude of change (Clarke, 2019). Some of the banking executives posit that it only makes business sense to take actions after the change or disruption has occurred because it is only through the evaluation of such changes that the banks can understand how the changes in the market behaviours can affect its performance. Due to such beliefs and thinking, it is often only a few best performing banks and leaders that dare engage in self-disruption to take actions and introduce new changes before they are disrupted. Unfortunately, as most of the banks delay to take actions of self-disruption, it often becomes difficult for them to recover and regain competitive edge once they are disrupted (Dehesa and Druck, 2022; Ewart, 2010; Richardson and Morvin, 2022; Masetti, 2019; Whitney, 2012).

Since this affects a bank’s sustainability during periods of discontinuities, it is in that context that given the constantly changing Caribbean financial market, this study sought to evaluate how self-disruption is used as a strategy for leveraging a bank’s sustainability during disruptive periods. Through such analysis, the study aimed to discern the major challenges of using self-disruption as well as the improvement initiatives that must be adopted.  Not many studies have been conducted on the use of self-disruption as a strategy in the banking sector. But the argument that self-disruption bolsters a bank’s sustainability during disruptive periods is still implicitly evident in various theories and literature on self-disruption.

2. Literature Review

Self-disruption is a strategic approach of sensing, analysing and making the required radical and incremental changes to respond and adapt to the unfolding market and industry changes (Clarke, 2019). It is a strategic process of thinking and rethinking the new direction that the business must undertake in the context of the unfolding trends. This requires the evaluation of the existing capabilities vis-à-vis the unfolding industry trends to discern the novel disruptive innovations that must be created and introduced to spur a firm’s competitiveness and improved market performance. Self-disruption is a business change and transformational process aimed at leveraging a firm’s proactive adaptation to the unfolding industry and market changes (Giry-Deloison, 2020). Instead of waiting to be disrupted and led by the revolution, self-disruption requires a business to influence and lead industry disruption and revolution.

Self-disruption is not a reactive change management process, but a proactive one that requires the business to undertake proactive approach to change and influence industry changes prior to the industry changes instigating the need for the business to effect the required changes (Kramer, 2024). The notion of self-disruption emerged as part of the strategies for countering disruptive innovations. To counter disruptive innovations, most of the highly innovative firms began to invest substantially in RandD as well as innovations to create and deliver novel disruptive products or business models before potential disrupters could do so (Clarke, 2019). In the approach which is dubbed “disrupt yourself before being disrupted” (Giry-Deloison, 2020), most of the self-disruption businesses tend to evaluate their areas of internal operations that may be most affected by the emerging industry and market trends.

If the business is not evaluating its internal weaknesses, then it evaluates the existing gaps and unfulfilled market needs that disrupters can easily use as the basis for attack on the incumbents. Self-disruption is about taking the industry innovation leadership to change and reshape the existing industry terrains before the disrupters opt to do so. This minimises the impact of the disrupters’ activities. It places the self-disruption business at the fore of the industry change and revolution leadership. This enables the more innovative self-disruption business to continuously gain from first-mover advantage (Kurniawan et al., 2023). Walt Disney’s self-disruption strategy reflects how self-disruption can leverage a business’ continuity and sustainability through a series of more destructive waves.

Disney’s continuous self-disruption business approach is reflected in the stronger belief in the culture of continuous innovation and creativity that has supported its self-disruption business philosophy and models (Whitney, 2012). Using such similar business philosophy, Disney also migrated from pay-subscription TVs to digital streaming services that integrate its TV services with films and theme park and resort services without consideration that streaming services would cause the decline of its Pay-TV subscriptions.

Besides imagining and re-imagining more inspiring stories, Disney also continues to think and re-think how to improve its customer experience in its different theme parks so as to create and deliver values that customers cannot easily obtain from its rivals (Tahir et al., 2018). Yet, as such self-disruption business philosophy has influenced Disney’s sustainability since its establishment in the 1960s; Disney has also adopted a combination of strategies for the successful management of its innovation processes. When Walt Disney visited amusement parks and watched children play in a less well-developed theme park, it was such analysis that prompted Disney to develop the ideas on how to create theme parks that would create excitement for parents, children and other categories of customers (Zheng et al., 2022). However, after Walt Disney’s death, Disney began to experience poor sales indicating that self-disruption and reinvention was the way to go. In effect, Bob Iger introduced cartoons and more impressive TV programmes to turnaround Disney’s poor sales and revenues.

Some of the poorly performing films like “fantasia” also prompted Disney to think and re-think to develop ideas of introducing more advanced cinema technology that created “Fantasound” to turnaround Fantasia’s poor market performance (Resti, 2021). World War II was another crisis that Disney took advantage of, to emerge with ideas that created propaganda films like the “Victory Through Airpower” to create fear about the US Navy’s capabilities. Besides brainstorming and ideas’ exchange and sharing between Disney brothers and film distributors, Disney also uses crowdsourcing which entails in-depth interactions with its customers through its TV channels and other digital platforms to emerge with ideas on new products/services that must be created, or how the existing ones must be improved to create more delighting customer experience(Luigi, Lee and Thomsett, 2020). Self-disruption requires a business to take the advantage of the enormous resources, technology, skills, experience and competencies associated with incumbency to engage in revolutionary actions that reshape the industry terrain to their advantage (Giry-Deloison, 2020).

Due to the faster technological change and advancements instigating higher proliferations of disruptive innovations, it is only in recent years that the notion of self-disruption emerged to gain significant traction and usage amongst most industry players. However, the notion of self-disruption has been quietly existent prior to even its intense usage in recent years (Jain, 2024). Most of the highly innovative and best performing businesses like Unilever, Toyota and General Mills used self-disruption strategies in their early years of operations and they still do today. However, in theory ies, the concept of self-disruption is analogous to the logic in the “Dynamic Capabilities’ Theory”. After evaluating the actions of different firms, Teece, Pisano and Shuen postulated the “Dynamic Capabilities Theory” in 1997 to require firms to continuously analyse, sense and modify their capabilities to proactively respond to the industry and market changes that are most likely to arise in the near future.

Just like self-disruption theory, dynamic capability emphasises the need for firms operating in a more turbulent business environment to “integrate, build, and reconfigure their internal and external competencies to address the changes in the rapidly changing environment (Kjellman et al., 2019). It reflects the capability of a business to purposively create, extend and modify its resource base to bolster its competitiveness and sustainability in the constantly changing business environment.

Dynamic capability assumes that core competencies can be used to modify and create a short-term competitive position that in the long run, can be used to build longer term sources of competitive advantage (Nagy et al., 2016) (Hang et al., 2015; Gans, 2016). However, given the controlling environment in which banks operate, there is often a challenge of maintaining the desired flexibility to enhance thinking and rethinking as well as trials and experimentataions that are often associated with the use of self-disruption strategies (Dehesa and Druck, 2022; Ewart, 2010; Richardson and Morvin, 2022; Masetti, 2019). It is inter alia such dynamics as well as the constantly changing dynamics in the Caribbean financial markets that motivate this study to explore how the Caribbean financial institutions use self-disruption as a strategy for leveraging their sustainability during disruptive periods.

3. Research Methodology

To explore how the Caribbean financial institutions use self-disruption as a strategy for leveraging their sustainability during disruptive periods, the study used the survey research method as one of the quantitative research methods and techniques.

3.1 Survey Research Method

Survey research method refers to the research approach through which the views of the sample population are sought using a pre-determined questionnaire to elicit the facts that explain the phenomenon being investigated (Anahita, 2023). Like statistical content analysis or a quantitative meta-synthesis, quantitative research method is a research approach that focuses on using techniques that extract only summarized numerical information on the concept being investigated. It is aligned with the positivist research paradigm that emphasises the evaluation of the concept of being investigated using certain scientific parameters (Creswell and Creswell, 2017).

Such approach differs from the thinking and approach in the interpretivist research paradigm as well as the qualitative research method emphasises the extraction of detailed information as well as social construction and reconstruction of the extracted information in order to reach logical conclusions about the concept being investigated. However, whilst the quantitative approach, the study used the simple random sampling as the techniques for determining the sample population that must be used in the study (Bryman, 2023).

3.2 Sampling

Sampling is the strategic process of extracting and using the units of analysis from the target population which reflect the entire units that are the focus of the study (Anahita, 2023). In this study, the target population connotes a total of 300 management employees who are working for about five selected banks which are operating in different countries in the Caribbean. To determine sample population that must be extracted from this target population of 300 management employees, the study used Yamane’s Formula for Sample Size Determination:In this formula, n is the sample size, N is the target population for the study and e is the margin of error in the analysis of the sample size. To therefore calculate the sample population for about 300 bank managers and supervisors, the study used the margin of error of 10%:The calculation indicated that the most suitable and valid sample size for the study would be 100 respondents. To draw these 100 respondents from the target population of 300 bank managers and supervisors, the study used a mix of cluster and simple random sampling. In the first instance, the 100 sample population was divided according to the five Caribbean Countries that included The Bahamas, Saint Vincent and Granadines, Barbados, Saint Lucia and Trinidad and Tobago. This was followed by the distribution and extraction of 20 sample population using simple random sampling from each of the selected five countries in the Caribbean. When the 100 sample population was drawn from the target population, the process of extracting the required statistical data from each of the 100 sample population was accomplished using the survey questionnaire.

3.3 Data Collection

Data collection was accomplished using the survey questionnaire. To ensure the collection of only the information which is relevant to the study, the survey questionnaire was designed in alignment with the research objectives and questions. In effect, the survey questionnaire contained four main sections that encompassed:

• Strategic Process of a Bank’s Self-Disruption
• Areas for Financial Market Analysis
• Radical Change of a Bank’s Existing Capabilities
• Limitations of a Bank’s Self-Disruption Strategy

Under each of these sections, they used questions that required the respondents to express their opinions using the Five Likert-Scale of Strongly Disagree-1, Disagree-2, Unsure-3, Agree-4, Strongly Agree-5. Upon the completion of the design of the survey questionnaire, a Cronbach Alpha analysis was undertaken to test the validity and reliability of the survey questionnaire. Outcome of Cronbach Alpha analysis was 0.8 which is above the mark of 0.7 to 1 which indicates the validity and reliability of the survey questionnaire (Bryman, 2023).

Such analysis was followed by a pilot testing on five respondents to test the effectiveness of the survey questions. As all was found to be in order, the survey process commenced by either emailing the survey questionnaire or doing one-on-one personal administration of the survey questionnaire until the required data was gathered from each of the 100 sample management staff. The obtained quantitative data was analysed using the SPSS (Statistical Programme for Social Sciences).

3.4 Data Analysis

Data analysis was accomplished using SPSS and it aimed to get the descriptive statistics reflecting the frequencies, mean and standard deviations for each variable. Though this enabled the study to achieve its fundamental research objective which was to explore how the Caribbean financial institutions use self-disruption as a strategy for leveraging their sustainability during disruptive periods. The entire research process was integrated with the measures for improving the overall validity and reliability of the study. Measures for improving validity of the study entailed the use of content, construct, criterion, face, internal and external validity (Babbie, 2021; Creswell and Creswell, 2017). Improvement of reliability entailed the use of inter-rater, test-retest, split-half and parallel form reliability. As these improved the overall validity and reliability of the study, below are the details of the findings of the study.

4. Results

Survey findings are analysed and presented according to four subsections encompassing:

• Strategic Process of a Bank’s Self-Disruption
• Areas for Financial Market Analysis
• Radical Change of a Bank’s Existing Capabilities
• Limitations of a Bank’s Self-Disruption Strategy
• Details of the findings are as follows.

4.1 Strategic Process of a Bank’s Self-Disruption

Though Table 1 indicates 43% of the respondents to have disagreed, it is noted that 41% of the 100 surveyed respondents agreed that most of the Caribbean banks still undertake analysis of the existing financial market trends in order to discern how the prevailing trends are affecting their performance or even offering new opportunities that can bolster their effective market performance. Such approach is consonant with the fundamental self-disruption theories and literature (Giry-Deloison, 2020; Kramer, 2024) that suggests a critical analysis of the prevailing trends is essential for evaluating how a bank can change a few things to improve its performance.

Such a finding implies that self-disruption often commences with the evaluation of the market trends to inform decision on the critical areas that would require disruption, change and transformation. However, with a mean score of 3 and the standard deviation of 1.2 which is relatively dispersed from the mean, the findings imply that most of the Caribbean banks recognise the importance of frequent market analysis, it is also unlikely that most of them do it as part of the critical process of self-disruption. In some crisis situations, the banking executives may become overwhelmed and this can distort their understanding of how to respond to the devastating trends that are unfolding in the financial market.

Table 1: Strategic Process of a Bank’s Self-Disruption

It is not only the periodic accomplishment of financial market analysis that is a challenge, but also the proactive sensing of the likely financial market changes. In self-disruption, theories (Clarke, 2019) imply that strategic sensing is the part of the proactive process for a bank to recognise and respond to such a challenge before it escalates out of control and becomes quite probalematic to respond to such a challenge. But the survey results in Table 1 illustrate that of the 100 surveyed respondents, only 28% agreed that their banks often use such approach to sense and respond to the changes in the Caribbean financial markets before such challenges cause irreversible damages. In that process, 33% were unsure and 39% disagreed to suggest that as much as proactive sensing and response to trends is done, it is often the normal process of undertaking market evaluation and analysis that tend to be used by most of the financial institutions. Just like most of the financial institutions, findings suggest that there is often the tendency of some of the Caribbean financial institutions to just use the basic process of financial market analysis without using the strategic proactive sensing technique to discern the unfolding disruptive ecosystem trends that the bank must respond to before it becomes difficult to counter such threats.

Though the mean score is 3.3 and the standard deviation is 1.5, which is dispersed from the mean, to suggest that not all the Caribbean banks tend to engage in proactive strategic analysis and sensing. The survey results in Table 1 insinuate that the majority of the 100 surveyed respondents of approximately 52% still agreed that periodic evaluation of the existing bank’s capabilities and weaknesses is also conducted as part of the strategic process of self-disruption.

Despite 43% disagreeing, this suggests that when faced with market challenges, most of the Caribbean financial institutions often evaluate their capabilities and weaknesses in order to discern the improvement initiatives that must be adopted. Even if the mean of 2.6 and the standard deviation of 0.9 also support such statistical narrative, the fact that a significant number of 43% of the 100 sample respondents disagreed, this also suggests that such analysis is not necessarily done as part of the self-disruption exercise, but as part of the normal operational processes that banks use to discern the areas of weaknesses that must be addressed to bolster their overall effective market performance. Such a view is further echoed in the findings that suggest that out of the 100 surveyed respondents; only 36% agreed that radical change of the areas of weakness can bolster the bank’s overall effective performance.

Since 11% were unsure and 53% disagreed, such a finding suggests that some changes are undertaken, but not necessarily radical change to enhance a bank’s effective self-disruption and re-generation. Self-disruption and re-generation strategies often require radical instead of minor changes. This implies that since most of the Caribbean banks focus on using minor as opposed to radical changes, at times there is still a challenge of using self-disruption as part of the self-regeneration strategies that bolster a bank’s effective performance and sustainability during crisis periods. In that process, it also seems the implementation of radical or even just minor changes is not followed with the constant evaluation that discerns whether the desired outcomes are being achieved.

Such a view is accentuated in the fact that the findings of only 18% of the 100 sample respondents agreed that banks undertake the evaluation of new disruptive values to determine further improvement initiatives that must be adopted. Just like critical analysis is required as part of the strategic process of a bank’s self-disruption, survey results also imply that most banks do not evaluate all the areas of the financial market that require analysis to discern the kinds of changes that are affecting the bank’s effective market performance.

4.2 Areas for Financial Market Analysis

In terms of the areas for financial market analysis, 44% of the 100 sample respondents agreed that periodic analysis is undertaken to assess the technological changes that form part of the strategies of understanding the nature of the unfolding trends that can influence decisions on whether or not to undertake self-disruption strategies. 51% disagreed and 5% were unsure, but the findings still suggest periodic analysis of the changes in technological trends is part of the initiatives of discerning the magnitude of the changes that the bank can avoid by modifying or even radically changing and improving its capabilities before it is disrupted by the unfolding disruptive technological changes. This enables Caribbean financial institutions that use such approaches to disrupt the disruptive technological trends before their businesses are disrupted. Figure 1 indicates that 62% of the 100 respondents agreed that competitors’ disruptive behaviours are also evaluated, in order to discern the magnitude of the impact of their disruptive behaviours and the remedial self-disruptive strategies that can be adopted.

However, as 35% disagreed, and 3% were unsure to suggest that it is not necessarily true that all banks use such approaches as part of their strategic process of undertaking ecosystem analysis to discern whether or not to change certain aspects of their operations to acquire new capabilities that bolster their overall effective performance during periods of discontinuities. Even if that is a challenge, findings indicated that just like in any other financial institutions around the world, 77% of the respondents agreed that most of the Caribbean banks tend to evaluate the emerging consumers’ disruptive behaviours as part of the self-disruption strategies to determine how to respond to such changes.

Such a finding echoes the theoretical articulations that imply it is only through periodic analysis of the changes in the consumers’ behaviours that banks are able to understand the operational changes that must be undertaken to respond to changes in the customer preferences and behaviours. Though most banks pay significant attention to evaluating and understanding the changes in competitors’ and consumers’ behaviours, findings still indicated that the respondents were divided on whether most Caribbean financial institutions undertake periodic analysis of the regulatory changes in order to discern the self-disruption changes that must be undertaken to bolster a bank’s effective performance during crisis periods. Such a view is echoed in the fact that as 48% agreed, an almost equal percentage of 46% disagreed and 6% were unsure as to whether evaluation of the regulatory changes is undertaken as part of the strategic analysis process that informs the self-disruption decision. Just like theories and literature (Giry-Deloison, 2020; Kramer, 2024), survey results seem to suggest that the evaluation of regulatory change is undertaken not to inform self-disruption decisions, but for the sake of enhancing compliance. This is because it is the changes in competitors’ and consumers’ behaviours that are more disruptive when compared to regulatory changes or changes in socio-economic dynamics affecting a bank’s performance.

Figure 1: Areas for Financial Market Analysis

Compared to the 31% who agreed, Figure 1 indicates that a significant number of the respondents, of about 49% disagreed that the analysis of the socio-economic dynamics affecting a bank’s performance is undertaken to discern the improvement initiatives that must be adopted. When compared to regulatory changes and socio-economic dynamics affecting a bank’s performance, most banks seem to focus on just analysing the technological changes, and the disruptive behaviours of competitors’ and consumers. Yet in some of the crisis situations like the 2008 financial crisis, it is the regulatory changes that tend to influence a bank to undertake more radical self-disruptive initiatives in order to survive and come out of the crisis.

4.3 Radical Change of a Bank’s Existing Capabilities

In terms of the radical change of a bank’s existing capabilities, findings imply that there is limited investment in innovation. Compared to 61% of the 100 sample respondents that disagreed, Table 2 indicates only 31% to have agreed that investment in innovation is undertaken as part of the radical change strategies to improve the bank’s existing capabilities. As theories suggest (Whitney, 2012), it is through innovation that businesses are able to think and rethink to emerge with novel concepts on how to improve their overall effective performance.

Innovation enables businesses think and rethink to disrupt the existing operations by introducing radical new changes that can enable the bank that has been under-performing to improve its performance. However, as compared to investment in innovation, findings revealed 68% of the respondents to have agreed that most of the Caribbean banks commit enormous investments in the required banking technologies as part of their strategy of disrupting the existing operations to unlock the bank’s new operational potential.

With a  mean score of 2.4 and standard deviation of 0.3 supporting the respondents who disagreed, it implies most of the banks consider investment in the required banking technologies as essential for unlocking the bank’s new operational potential. Just like investment in relevant technologies, 48% of the 100 sampled respondents also agreed that most of the Caribbean financial institutions also tend to consider investment in training and development as essential for unlocking a bank’s new operational capabilities. Such a finding supports the argument in theories that reveal training and development to improve skills and competencies that bolster a bank’s overall effective performance. Training and development introduce new skills and competencies that enable the employees to question the effectiveness and value of the existing operational approaches. It is through such diagnosis that managers are able to disrupt the existing poor operational systems and introduce better approaches to turn around a bank’s overall effective performance.

Though 42% of the respondents insinuated that there is a problem with increasing investment in training and development, Table 2 still indicates 66% of the respondents agreed that the acquisition of external resources is also used as part of the strategy for improving a bank’s self-disruption. Though 12% disagreed and 22% were unsure, such a finding still supports the theoretical articulations that suggest that in the situations where the bank lacks some unique capabilities and resources, the acquisition of the external resources is part of the strategies through which the bank acquires new capabilities to gain momentum to come out of the crisis situation.

However, only 36% of the 100 sample respondents agreed that such initiatives are accompanied with the use of the unique business philosophy that encourages continuous innovation. Since 45% of the respondents disagreed and 19% were unsure, such a finding is consonant with the literature review findings (Giry-Deloison, 2020; Kramer, 2024) that imply as most banks operate in a more controlling environment; it tends to be difficult to adopt a culture that encourages creativity and innovation.

Table 2: Radical Change of a Bank’s Existing Capabilities’ Analysis

Table 2 further notes, 59% of the respondents disagreed that the banks have adopted a unique organisational culture that encourages creativity and innovativeness. Despite poor culture of creativity and innovation, the overall survey findings also indicated most of the Caribbean banks to experience a combination of various challenges and limitations during the self-disruption quests aimed at turning around their performance during crisis situations.

4.4 Limitations of a Bank’s Self-Disruption Strategy

Among the major limitations of the process of using self-disruption as part of the turnaround strategy during crisis situations, 76% of the 100 surveyed respondents agreed that the use of “wait and see” business philosophy is one of the limitations of the self-disruption strategy. As theories suggest, this implies most of the banks tend to adopt the reaction approach in which the business first waits for its operations to be disrupted before taking actions to respond to the unfolding turbulence. Though 21% disagreed and 3% were unsure, 58% of the respondents still noted organisational culture inducing inflexibility to be the other challenge affecting the successful undertaking of self-disruption that introduce new capabilities to bolster the ability of the bank to come out of the crisis situation. 22% disagreed and 20% were unsure.

Such a finding echoes the theoretical and literature findings (Clarke, 2019 Whitney, 2012) that suggest most of the businesses face the challenge of adopting a more flexible organisational culture that encourages trials and experimentation of new ideas during the self-disruption processes. Because banks stringently control their operational procedures, it is such inflexibilities that often undermine the successful implementation of changes associated with self-disruption to leverage the bank’s ability to come out of the crisis situations. Besides the existence of inflexible organisational culture, 62% of the respondents also indicated challenges affecting the effectiveness of self-disruption during crisis situations to arise from the bank’s lack of innovativeness. Though 23% of the respondents disagreed that lack of innovativeness is the challenge, the findings still accentuate the theoretical findings that suggest during crisis, self-disruption requires a lots of innovation for the bank to think and rethink to emerge with the best strategy that the bank can apply to recover from the crisis which is undermining its effective performance.

Figure 2: Limitations of a Bank’s Self-Disruption Strategy

Yet as 62% agreed, it is not only lack of innovativeness which is often a challenge, but also the tendencies of some the Caribbean banks to capitalize on exploiting the existing capabilities instead of balancing such initiatives with the exploration of the emerging opportunities that must be exploited.

Such challenges are noted by 55% of the respondents who agreed to often be exacerbated by the uncooperative leadership/management that tends not support creativity and innovativeness aimed at improving self-disruption as one of the strategies of coming out of the crisis situations. Even if 39% of the respondents disagreed and 6% were unsure, uncooperative leadership and management is noted in the literature to affect not only the commitment of the required resources for self-disruption exercises, but also the adoption of the business philosophy of continuous improvement and flexibility. Since self-disruption requires a lot of thinking and rethinking as well as trials and experimentation aimed at trying the effectiveness of new strategies. Such unsupportive leadership/management tends to affect the effective use of self-disruption strategies.

Figure 3: Limitations of a Bank’s Self-Disruption Strategy

As the Caribbean banks struggle with such challenges, 77% of the respondents further revealed that the defined industry practices can also affect the successful implementation of changes that may arise from the application of self-disruption as a strategy for coming out of the crisis situations. These findings raise significant managerial implications for the contemporary bank managers.

5. Discussion

Even if some of the respondents disagreed, the survey suggests to achieve the desired outcomes, the strategic process of a bank’s self-disruption requires the analysis of the existing financial market trends as well as proactive sensing of the likely financial market changes. As these are accompanied by the evaluation of the existing bank’s capabilities and weaknesses, it informs the radical change of the areas of weaknesses that must be undertaken to turnaround the performance of the bank during crisis situations. Even if such approach was found to be important for enhancing the effectiveness of self-disruption to take the bank out of the crisis situation, findings indicated that it is not just lack of innovativeness and inflexibility within the organisation which is a challenge, but also the tendency of some banks to use the “wait and see” business philosophy. Combined with the supportive leadership approach this was found to affect the efficacy of self-disruption as a strategy for introducing new capabilities that can enable the bank to recover from the unfolding crisis situation. To respond to such challenges, it is argued that just like building a firm’s dynamic capabilities to respond to opportunities whilst also converting threats into opportunities; self-disruption is a three stage process.  As Figure 5.1 reflects, self-disruption that leads to self-reinvention is a cyclical innovative business activity that unfolds according to three stages encompassing:

Stage 1: Sensing and Analysis of Potential Industry and Market Changes

Stage 2: Accomplishment of Self-Review and Disruption Process

Stage 3: Self-Reinvention Turning the Business into a Disrupter and not the Disrupted

Stage 1: Sensing and Analysis of Potential Industry and Market Changes

As reflected in Figure 5.1, the executives are required to be constantly alert and aware of the changes unfolding or most likely to unfold in its external business environment. Through the usage of the modern technologies like the Internet of Things and Big Data, the executives can be able to achieve this by sensing and conducting in-depth analysis about the magnitude of industry or market changes that are most likely to emerge. In some of the cases, this may require imagination and use of guesswork based on the available industry and market data. Whether the business is correct in predicting potential variations in trends to undertake the required innovative initiatives to respond, it still becomes quite relevant for aiding a business to introduce changes that will proactively avoid turbulence that could arise. Using the three steps process in Figure 5.1, the first step will require the executives to sense and undertake in-depth analysis to evaluate the potential industry or market changes that will be influenced by the emerging technology. This must be followed by the evaluation of the threats or opportunities that are most likely to arise from the changes in customer taste and preferences.

Besides the identification of the potential emerging disrupters in related/unrelated industries, the executives must also analyse, interpret and sense how the existing competitors’ behaviours are most likely to affect their market competitiveness and performance in the near future as well as in the long-term. Potential causes of disruptions are endless to imply the executives must approach the overall process of sensing and analysis with an open mind so as to spot the future potential risks. However, in that process, the executives must also evaluate the potential regulatory changes, social pressure groups and consumerism actions that are most likely to create new threats or opportunities for the business. With this process of sensing and analysing changes in industry and market trends built and integrated as part of the organisational culture, the next step for accomplishing self-disruption requires the accomplishment of self-review and disruption process.

Stage 2: Self-Review and Disruption Process

This is a self-review, disruption and re-invention stage in which the business is actually required to engage in in-depth self-evaluation and re-evaluation. It is in this stage where the business must think and rethink whether given the existing business capabilities, the identified unfolding industry and market trends are most likely to pose problems or even opportunities in the near future. Whether it is a problem, threat or opportunities, the executives must ask questions like given such trends what are their implications on the future performance of the business. How can the business discover new innovative products, processes and business models to thrive in the midst of such trends? All such questions are answered using the insights gained from the analysis in the previous stage. Previous analysis could have revealed changes in customer preferences that require new products or significantly improved versions of the existing products. It could also have revealed the emergence of new technology whose increasing adoption is most likely to change how the industry operates.

Figure 4: Three Stage Process for Self-Disruption and Re-invention

Or the analysis could also have indicated competitors’ behaviours and actions that are most likely to create threats or even opportunities reflecting gaps that can be filled using different novel innovative products. With that information in mind, self-disruption which is an innovation-led process, will require increment of RandD investment to create new products or improve the attributes and features of the existing products. This is not a comfortable exercise to undertake and it is referred to as self-disruption because it entails the change and sometimes abandonment of products or processes that are still generating values for the business to create and deliver novel products or processes that can generate more values for the business. It is a self-disruption process because it entails questioning the capabilities of the existing products, processes and business model to withstand the unfolding industry and market shocks.

Whether the business has the requisite capabilities, self-disruption is an initiative that leaves nothing to chance and it may extend to the review and change of the existing products/services, and business processes to unlock new cost and efficiency advantages. To unlock the potential of the business to engage in innovations that bolster its self-invention and sustainability, self-disruption can require the abandonment of the outdated business processes and thinking to introduce new ones and culture that support new business operational approaches. To create and deliver the desired value, such novel business thinking must be aligned with the unfolding or the likely industry and market trends that may unfold in the near future. It is these that enable a business to turn into the disrupter as opposed to the disrupted in the next stage.

Stage 3: Self-Reinvention Turning the Business into a Disrupter and not the Disrupted

It is at this stage that self-disruption is completed using self-reinvention to create novel disruptive values that turn the business into a disrupter and not the disrupted. This is accomplished by continuous innovation to create and deliver disruptive novel products as well as business processes, position and paradigms to revolutionise the entire industry and market terrains. Self-disruption is the process of reviewing and shifting away from the innovative behaviours, practices and business models that are causing failure or potential failure to novel initiatives that changes and transforms the overall nature of a firm’s operations. It is the process of abandoning the existing business approaches and inventing and building novel business approaches that will change how the business as well as the overall industry operates.

Self-disruption differs from disruptive innovation on the basis that as disruptive innovation is externally generated, self-disruption is an internally generated innovation activity that not only disrupts a business’ internal operations, but also ripples into the operations of the other competitors within the industry. Self-disruption is a sober refined process of evaluation and thinking that identifies and responds to market gaps using new products or technology. It may also involve the modifications of the features and attributes of the existing products. After the product is introduced into the market, self-disruption involves the promotion and encouragement of the product to gain market traction even against the firm’s existing brands. As this disrupts a business’ internal operations and the existing market, self-disruption must create and deliver a disruptive innovation that creates a new market.

6. Conclusion

During crisis management situations, self-disruption becomes one of the strategies through which businesses disrupt the existing operations to introduce new approaches and capabilities that enable them to identify the emerging disruptive trends before they can affect the business’ effective market performance. Since this often bolsters the capabilities of the business to recover from the crisis, it is such values of self-disruption that motivated this study to explore how self-disruption is used by the Caribbean financial institutions as one of the strategies for leveraging a bank’s sustainability during disruptive periods. The study used the quantitative survey research method to evaluate the opinions of 80 bank personnel who were drawn from five different banks that are operating in the Caribbean financial market.

Even if some of the respondents disagreed, the survey suggests to achieve the desired outcomes, the strategic process of a bank’s self-disruption requires the analysis of the existing financial market trends as well as proactive sensing of the likely financial market changes. As these are accompanied with the evaluation of the existing bank’s capabilities and weaknesses, it informs the radical change of the areas of weaknesses that must be undertaken to turnaround the performance of the bank during crisis situations. Even if such approach was found to be important for enhancing the effectiveness of self-disruption to take the bank out of the crisis situation, findings still indicated that it is not just lack of innovativeness and inflexible organisational culture which is a challenge, but also the tendency of some banks to use the “wait and see” business philosophy.

Combined with the supportive leadership style and approach this was found to affect the efficacy of self-disruption as a strategy for introducing new capabilities that can enable the bank to come out of the unfolding crisis situation. To respond to such challenges, it is suggested that bank executives must adopt the use of a three-stage self-disruption process that leads to self-reinvention that introduces new capabilities to bolster a bank’s quests to come out of the crisis.

 References

• Anahita, G. (2023). An overview of quantitative research methods. International Journal Of Multidisciplinary Research And Analysis, 06(08), 37-94.CrossRef
• Babbie, E. (2021). The practice of social research. New York: Cengage Learning.
• Bryman, A. (2023). Social research methods. London: Oxford University Press.
• Clarke, D. (2019). How to self-disrupt before you’re disrupted. London: PWC.
• Creswell, J. W., andCreswell, J. D. (2017). Research design: Qualitative, quantitative, and mixed methods approaches. London: Sage Publications.
• Dehesa, M., andDruck, P. (2022). The Eastern Caribbean Central Bank: Challenges to an effective lender of last resort. Washington, D.C.: International Monetary Fund.
• Ewart, S.W. (2010). Impact of financial crises on the Caribbean. Port-of-Spain: Central Bank of Trinidad and Tobago, at the Caribbean Centre for Money andFinance (CCMF)/Caribbean Community.
• Gans, J. (2016) The disruption dilemma. Boston: MIT Press.CrossRef
• Giry-Deloison, P. (2020). Why let others disrupt you? Take the smart self-disruption journey! Boston: Innovation Management.
• Hang, C.C., Garnsey, E., andRuan, Y. (2015). Opportunities for disruption. Technovation, 39(40), 83–93. CrossRef
• Jain, N. (2024). Digital banking innovation in the age of disruption. Palo Alto:Woodside Capital Partners.
• Kjellman, A., Bjorkroth, T., Kangas, T., Tainio, R. andWesterholm, T. (2019). Disruptive innovations and the challenges for banking. International Journal of Financial Innovation in Banking, 2(3), 232–249. CrossRef
• Kramer, M. (2024). Sustaining the self-disruption journey. Austria: Innovation.
• Kurniawan, S., Maulana, A., andIskandar, Y. (2023). The effect of technology adaptation and government financial support on sustainable performance of MSMEs during the COVID-19 pandemic. Cogent Business and Management, 10(1), 166-182.  CrossRef
• Luigi, W., Lee, J., andThomsett, M.C. (2020). Disruptions and digital banking trends. Journal of Applied Finance and Banking, 10(6), 15-56.
• Masetti, O. (2019). Private and financial sector resilience in the Caribbean. Washington, D.C.: The World Bank.
• Nagy, D., Schuessler, J., andDubinsky, A. (2016). Defining and identifying disruptive innovations. Industrial Marketing Management, 5(7), 119–126. CrossRef
• Resti, A. (2021). Did the pandemic lead to structural changes in the banking sector? Brussels: Economic Governance Support Unit (EGOV) Directorate-General for Internal Policies of the European Union Parliament.
• Richardson, C., andMorvin, G.W. (2022). The causes and consequences of failures of financial institutions in Antigua and Barbuda. St John’s Antigua: Financial Services Regulatory Commission.
• Tahir, S. H., Shah, S., Arif, F., Ahmad, G., Aziz, Q., andUllah, M. R. (2018). Does financial innovation improve performance? An analysis of process innovation used in Pakistan. Journal of Innovation Economics and Management, 27(3), 195–214.
• Teece, D.J., Pisano, G., andShuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509-533.
• Whitney J. (2012). Disrupt yourself. Boston: Harvard Business Review.
• Zheng, L., Dong, Y., Chen, J., Li, Y., Li, W., andSu, M. (2022). Impact of crisis on sustainable business model innovation—the role of technology innovation. Sustainability, 1(4), 115-139.