Have you been hearing the word ‘disruption’ or ‘digital disruption’ lately?
I know I have. Quite too frequently actually, almost to the point that is has begun to blur the meaning or the idea that revolves around it.Every other industry or business, from a tech startup, to online retailers, to insurance companies, to the butcher shop down the street, everyone seems to be digitally ‘disrupting’ their way to jostle for a piece of the ‘consumer pie’. A sweeping trend which has engulfed every businesses and entrepreneurs in the digital realm of this 21st century.
Professor of Harvard Business School, Clayton Christensen, initially coined the term as ‘disruptive innovation’. An innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances.
Disruption, as we know it is not a new phenomeno, we have all seen how steam engines and electricity disrupted and revolutionised the industries and world economy since the 18th century.
It’s just that, for current times, the tools or the intelligence for the ‘disruption’ is the internet, robotics, data analytics and artificial intelligence (AI).
The only difference is digital disruption today is a much more dynamic and highly accelerated process which is rapidly reshaping how the industries, economy and humans function in this world.
The World Economic Forum (Jan 2016) Report says that - In 2005, there were just 500 million devices connected to the Internet; today there are 8 billion and by 2030, the numbers are expected to reach 1 trillion!
One disruptive factor is the rapidly decreasing cost of technology. You can see below how the costs of new technologies are increasingly becoming affordable:
COURTESY: World Economic Forum
However, technology alone doesn’t constitute digital transformation, businesses and market leaders are required to re-think the ways in which innovation in technologies can be used,- to bring people, data and processes together, to optimise operations and create higher values for customers.
As Jenny Beresford, Research Director at Gartner says, “Within three years, the average person will have more conversations with bots than with their spouse” – It's imperative that in these complex times of ‘digital change’, incumbents or the Goliaths alike, pull up their sleeves to embrace the oncoming change, before the ‘disruptive’ Davids of the business world take down the ‘status quo’.
The following are two key concepts to help any business survive the waves of digital disruption and stay in the game:
Reinvention doesn’t mean you grab your product line and put it through your ecommerce site or digitise your customer experience.
It's about rethinking about your business itself, your vision/mission statement if you will. Companies need to stop and ask fundamental questions such as, “Are we a tech company or are we an online retailer helping customers to find products they are seeking for?” The answers will reshape and reinvent the way you present and perform in the market.
Take Apple for example, if it stuck with its roots as a computer manufacturer, it would have never reinvented itself as a music and lifestyle brand, powered by iPhone, and iTunes ecosystems. That however, didn’t mean Apple had to stop building computers, instead it still revolutionised the PC industry with Macs and iPads.
Or as Reed Hastings, the CEO of Netflix says, “Companies rarely die from moving too fast, and they frequently die from moving too slowly”. Reed was able to sense the pattern emerging in the online industries and was swift enough to reinvent his business from selling DVDs to streaming TV shows and movies directly to the homes and palms of his customers.
An example many give for a company that was way too slow to embrace the digital revolution and reinvent itself in times of disruption, is none other than Kodak, once a household name whose lack of rightful vision at crucial point in time, had to file for bankruptcy in 2012.
The challenge these days for any high-growth companies is to constantly seek ways to disrupt the industry they’re in, before a startup, a competitor, or some smart innovators working from a garage from an unexpected region of the business world, makes your core product or your business model, completely obsolete.
However, not everyone is well suited to constantly disrupt the industries as the giants like Google, Amazon or Apple. For most of us constant disruption is not an available option and could term to be risky if the stakes are too high.
One trick to survive and even thrive on disruption is to make oneself indispensable by building a diverse network of partnerships. The incumbents can always partner with the companies looking to disrupt the industries, as it is always a win-win situation
Startups possess the ingenuity to identify new technologies, but it is the incumbents who have the channels to scale the business.
Take for example, the materials innovator Corning, it’s partnerships with smartphone manufacturers as the inventor of scratch-resistant Gorilla Glass, keeps it well above the disruptive waters.
Similarly, the toy company Lego, is today not just a plastic component manufacturer, it currently collaborates with retailers, academics and tech inventors to establish itself as a design firm, engaged in providing experiences that goes beyond physical plays into the digital worlds of Become Indispensable.
Wrapping it Up…
The restless disruptions in the digital industries are constantly hammering the minds of CEOs and industry leaders, who struggle to adapt to the evolving marketplace and the new world equilibrium. It's essential that such new innovators and the incumbents build capacities that are receptive to change and those which can adapt, learn and move quickly to ride the waves of any disruptions, coming their way.
Call Andy Fox (me) on (03) 5249 5570 or email firstname.lastname@example.org
Our Website is element7digital.com.au