There is much fear attached to the concept of Disruption especially when the term is used as a battle cry by digital start-ups as they wage their war against the tyranny of traditional business.
The irony is, even those who feel they are successfully wielding this weapon poorly understand Disruption. Contrary to the belief held by the digital start-up scene, Disruption itself is not a weapon, it is an outcome. Understanding how it happens is key to being able to avoid it or have the opportunity to disrupt others.
The term Disruption was coined by Clayton M. Christensen in his 1995 article “Disruptive Technologies: Catching The Wave” he later changed this to disruptive innovation out of a recognition it is not always the technology itself but a new business model enabled by the technology which causes disruption. In simple terms disruption occurs when a business creates or employs a technology in a new way, forming a model of business that provides an edge over competitors.
Often this edge is not because they offer a better product or service but their offering is able to satisfy new customers who were not being properly considered by existing players or products in the market. To see a clear example of this type of disruption consider digital cameras. Originally no professional would consider the poor results offered by emerging digital cameras. However to the less discerning amateur, they provided instant feedback and offered zero wastage, allowing them to experiment towards their perfect shot. This uptake by less sophisticated users allowed digital cameras to gain traction and quickly improve to the point of taking market away from film-oriented players like Kodak.
Even more recently this same cycle repeated with the evolution of the mobile phone camera. Although early offerings were extremely poor, a phone being on the person at all times allows for quick capture of memories and through Internet connectivity, instant sharing via social media helps propagate this behaviour. Today the phone camera has become so good the amateur end of the digital camera market is evaporating and the iPhone has officially become the world’s most popular camera.
In both of these evolutionary steps in camera technology; the existing businesses were over-serving the majority of possible customers. The existing products were too good, meaning too costly and too complicated for many to bother with. The new entrants although not as good, were able to offer value on a new vector and used this as a competitive edge. In this case a simpler more available solution attracting the non-consumers to gain traction and move up-market to replace the incumbent product.
Disruption in itself is not a negative, but it means change and those that cannot or will not change are left behind. The dilemma is that the adverse effects are indiscriminate, the ones left behind are not necessarily the small or the weak, they can even be the most established player in the field. Digital Disruption is more specifically related to online technologies, with websites and mobile apps being the enablers of this disruptive change. For example a website allowing the online retailer the advantage of lower overheads to that of the bricks and mortar store.
Important to remember is that the disrupting business is not necessarily a better offering. For most people buying clothes online surely it is not as good as visiting a store to try an item on, but if the price is right and the convenience of staying at home is attractive, then online wins. Identifying important and unsatisfied jobs and needs of customers can lead businesses to develop offerings that are grounded in the true motivations customers have for purchasing. If this means making a change even if it is at the expense of your existing products or services, you should seriously consider doing this to yourself, before someone else does. It may even provide you an edge over your existing competitors who cannot find the courage to enact the same change.
It turns out that the techniques for warding off this new type of disruption are very old. They are, understand your customers and offer them what they value most.
– This article was supplied by Grant Hull, CEO of Enabled Solutions Pty Ltd. Grant is an Accredited Adviser of Family Business Australia, however the advice is intended to be general in nature.