Disruptive Innovation – The New Normal
Let us start by defining the term “Disruptive Innovation.” The Wikipedia definition is “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.”
Almost every business today is worried about disruption in their industry. Where will the next competitor come from? What business models will they adopt? How will the disruptor erode the value of my product or service offering or possibly upend the competitive dynamics of my industry?
But is it a zero-sum game? Is it always “winner takes all”? That’s not necessarily the case. When e-comm start-ups came on the scene, many predicted the death of brick-and-mortar stores. Today, these brick-and-mortar stores have survived the onslaught, and the talk has now shifted from pure online shopping to “omnichannel” experience—meaning, there is an interplay of offline and online.
What Are They Disrupting?
While disruption has become a fact of life in the business world, that does not help with worries about who might disrupt. There may be so many of them that it is difficult to find out who or where the disruptor is. Rather, look back at your business model to understand where the source of disruption in your business might be. It could be your business model itself or certain parts of your business model that now need to be reconfigured to consider new customer expectations.
Key questions to consider are:
- How relevant is my business to the customers I serve?
- Have my customers’ preferences changed?
- Have my customers migrated to other offerings because I don’t have them in my portfolio?
- How should I reconfigure my value proposition to stay relevant?
Recognizing the potential sources of disruption in your industry and taking steps to address them before anyone else can serve as an effective deterrent. But this is easier said than done because it may require cannibalizing profitable portions of your business, settling for smaller margins, or recasting your organizational structure to address the new realities. Not many have the appetite to undertake such gut-wrenching changes. But it is a stark challenge that organizations must address to survive.
The ability to adapt is a key imperative in this new world order. Businesses need to assess the factors of competition that served them well until now and how this can be reordered to meet customers’ expectations. The Blue Ocean strategy canvas can be a good starting point for understanding the areas in which your business can compromise and the areas in which to excel or deliver a superior experience compared to what your competitors offer. Needless to say, this has to be tested to ensure there is a sizeable customer segment that responds positively to this value proposition. Once this is proven, it then sets the stage for a review of how the current operating model needs to be recast to deliver to the new value proposition.
Conclusion Addressing the nature of disruption can give businesses more confidence to meet the challenges of a “digital first” world. Business cycles go through periodic upheavals driven by technology, changing consumer preferences, or consumer demographics. The key to success is adaptability. Just as Darwin put forth his principle of “survival of the fittest,” in the business world, it may well be “survival of the adaptable.”