DISRUPT to grow!!!

Disrupt to grow

disrupt to growAdapt or die? Innovate or die? No… Disrupt to grow! All disruptive innovations stem from technological or business model advantages that can scale as disruptive businesses move upmarket in search of more-demanding customers. Disruptive innovations tend to be produced by outsiders. The business environment of market leaders does not allow them to pursue disruption when they first arise, because they are not profitable enough at first and because their development can take scarce resources away from sustaining innovations. In this article, a case is made to suggest that in today’s fast-changing business environment, all companies have to disrupt (using disruptive innovation) their own industries (and others) to ensure sustainable profitability – in fact to DISRUPT TO GROW.

Disruptive innovation

Michael Raynor suggested in his book The Innovator’s Manifesto (2011), “all disruptive innovations stem from technological or business model advantages that can scale as disruptive businesses move upmarket in search of more-demanding customers. These advantages are what enable the extendable core; they differentiate disruption from mere price competition.”

Disruptive innovation, a term of art coined by Clayton Christensen, describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.

According to Innosight:

“Why is it so difficult for established companies to pull off the new growth that business model innovation can bring? Here’s why: They don’t understand their current business model well enough to know if it would suit a new opportunity or hinder it, and they don’t know how to build a new model when they need it.”

Executives are so busy trying to survive, spending all their time on day-to-day operations, that they fail to develop and implement a strategy to counter all the competitive, and disruptive, innovations taking place around them. From my experience, many company executives, spend their time addressing operational issues, and very little time on strategy. They have little information about the “real world”, and even if they do, they tend to ignore what is surrounding them. Innovations are discussed briefly and then they spend hours talking about their website, their financial results, HR issues and other operational issues.

Executives have to get out of their air-conditioned board rooms and get in touch with their customers, take note of their competitors and read about the rapid changes in various industries. And may I say – start talking to their employees. Employees are generally more in touch with what is happening, what customers want and what competitors are doing. Employees have many of the answers, and ideas, of how to counter competitive action, because they are faced with it every day. They are not isolated from this, like the executives. MWA – Managing by Walking (wandering) Around may be an old management style – but is just as valuable today. Expose yourself – get first hand information – talk to those that know. GET OUT YOUR OFFICE!

Do you really believe that your business is so great and special, that “nothing can touch (disrupt) it”? It has happened to many successful businesses before you, and it will happen again MANY times. Ignorance, arrogance and inflated egos have sunken many large corporates. And YOUR company is next, unless you start observing the changes happening in your industry and adapt your business model to things that are bound to disrupt your business.

It is no longer good enough to just survive by maintaining your current income level. You need to GROW your business to ensure sustainability. And to ignore disruption, is to plan for failure.

In the strange new world of better and cheaper innovation, every industry will experience transformations. Yet most executives, in my experience, underestimate the potential of digital disruptors. In doing so, they systematically undervalue their own intangible assets.