I find it interesting to see how buzzwords are part of the conversations in business conferences and meetings. A few years back it was ‘Cloud’ and now I get to hear ‘Disruptive Innovation’ more frequently in conversations. These buzzwords are a symbol of current ongoing trends, and people are more interested to see how these trends would impact their business. Five or six year ago it was ‘Cloud’ that was a hot trend and businesses were wondering how would cloud help them.
Today, almost every business can benefit from Cloud. Similarly, ‘Disruptive Innovation’ is a much-talked about trend these days; but how can businesses cope with disruptive innovation and most importantly how we handle or adapt to these in our day to day life ? In his book “The Innovator’s Dilemma”, Clayton Christensen had coined the term ‘Disruptive Innovation’, where he described it as an innovation that creates a new market by discovering new categories of customers and displaces an existing market.
A classic example would be of Kodak, which used to be a renowned film-based camera manufacturer but was caught napping when the digital photography era began. By the time Kodak entered the digital camera domain, its market was already seized by the likes of Canon and Nikon. Irony being Kodak had invented the core technology used in the digital cameras, yet it failed to capitalize the digital camera market. It was not that Kodak was not innovative, just that it was slow to adapt the transition to digital photography. And now we have all of them struggling to catch –up with mobile phones who seems to have tripped all of them!
This is a pattern that can be observed throughout the history; a company dominating the industry and with dawn of new technology, the company struggles to maintain its top spot. These disruptions happen with every new technology and trend, but the challenge that organizations face is how to anticipate, adapt and approach these sudden changes. The world we are in today is changing every day, with new technologies around the corner that could affect us in a very disruptive way. 3D printing, Internet of Things, wearables and robotics are few of the technologies that are on verge to bring massive disruptions in every aspect of our lives.
The way an organization would have been doing business till now, could be at risk because somebody would have found an innovative product from the new technology that could create a whole new market or they can transform the way a product/ service is delivered and consumed today. The main difference is that in today’s world this process of creation; disruption and destruction is happening at quite a fast pace! Speed and ability to predict is the key. Few years back nobody had envisaged that with just 140 character-message limit Twitter could become a platform for real-time information media or Facebook could have any business usage.
Twitter and Facebook had been able to carve their own space in social media front; likewise Flipkart and Snapdeal have shaped the Indian e-commerce market. These e-commerce companies with market-place models and minimal or zero inventory have “almost” rocked the brick and mortar retail over a very short span. These disruptors emerged from nowhere and are instantly seen almost everywhere. Retailers have been sulking, and will continue to do so as they don’t have a plan-B in place to combat this wave of disruption. And in their defense, the e-tailers say, their business model wasn’t targeted at anyone.
E-commerce was a change; a change that the consumers embraced whole heartedly. Online retailers capitalized on that, while “brick and mortar” stores could just watch their customers turn tech-savvy, who could now do their shopping anytime, anywhere at the press of a button through mobile apps. Similarly, Uber Cabs changed the way cities travel. With a multi-nation presence, Uber web app, matches consumers to car services. With not having to maintain a fleet and other fixed assets, Uber services are both cheaper and faster than their traditional competitors.
When they entered India last year, indigenously developed Taxi for Sure and Ola –also app based cab haulers — were ready to take them head-on. And with these three cab aggregators spreading roots, the traditional cab services – Meru and EasyCabs etc., (business models where companies owned cars) faced threat. Only recently, Meru launched Meru-genie, but looks like it is a little late in the day. As we know, disruptions in e-tailing space or the cab-hauling space did not come from competitors in the same industry. Nor did new technologies follow a planned strategy.
The disruptors came with a bang and addressed the consumer need with an innovative and mass appealing solution. The users did not decide or plan to make the switch, but naturally transitioned to the newer solutions over other traditional solutions. The traditional companies were not able to recognize the threat from the disruptors, as they stole their customers and ended up in reshaping the entire industry. As our world is becoming digital rapidly thanks to the Internet and connected devices; the potential is huge for companies that have proactively invested on digital competence.
The advent of social media has actually forced companies to explore the platform for delivering innovative customer services; else the platform has the potential to tarnish their brand image. If an organization overlooks a trend or technology then there is risk that its competitors will move faster by following that trend or technology. Taking the decision to take this strategic risk has become a top agenda for the companies.
One Big realization is: there are only 2 types of customer segments – one who is on internet and other who is not! A lot is happening to get the other half also on internet. Thus don’t ignore , just dive in and learn to swim! While the companies want their CEOs and his team to evaluate the strategic risks of adopting new trend and technologies; the challenge with strategic risks is that often there is no historical information to analyze on the impact of these trends as they are new.
These strategic risks if spotted early and mitigated well can be the game-changer for the company, but if are followed late then it becomes difficult to gain the ground from its competitors. Disruption is not a business model that an organization can adopt or plan; rather they can prepare themselves for mitigating such disruptions. As technological advances will continue, this will not only have the disruptive influence on the companies but also on the job market.
Few years back when smartphone apps became the trend, there was a tremendous spike in demand for mobile app developers of different platforms. The introduction of any new disruptive technology also creates the demand for skillset required for that technology. One who takes the risk to enhance his/her skills on that technology in early stage can reap benefits to boost the career growth. 3D technology can redefine the prosthetic limbs market. Wearable devices like wrist bands for remotely monitoring body vitals can be used in healthcare sector. Self-driven cars improving the city transport.
All are potentially disruptive technologies that can redefine the market terrain. The disruption will never announce itself, it will happen, and an innovation would be the trigger for that. If organizations overlook the possible disruptive trends early on, the history will repeat itself: Company with a market prominent position will be toppled by competitor as they didn’t pursued the trend as it wasn’t meeting their customer’s needs.
This article was first published in The Hindu Business Line