Traditional business models have seen disruptions from many newcomers and start-ups over the last 15 years and the pace of disruption is not slowing down. With increased competition in most sectors and challenging economic environments it has become more and more difficult to remain ultra-competitive. We can all name several start-ups that have suddenly appeared, attracting a large portion of customers and disrupting established companies in their market. The strategy of these new contenders is to improve the existing products or services already available or to create a completely new market segment by coming up with a disruptive business model. This disruptive innovation is helped by the fact that these firms are nimbler and can trial their products or services in a more flexible way as they do not have to worry about an established reputation.
The economic environment means that most companies need to find ways to create new markets or at least to reshape their existing offering to make it more attractive. To stay relevant and up to date with clients’ expectations most businesses now have to disrupt themselves. Established companies can struggle with carrying out drastic changes, they often prefer improving an existing product or service that has been lucrative rather than changing a business model which has been successful in the past. This strategy may work in the short term and it may seem sensible to avoid taking the risk of investing in a niche market as the financial risks and the potential of failure are high. However, this risk averse approach may hurt your business in the long term.
Disruptive innovation is about identifying your customers’ future needs and capitalising on it. Being innovative is not enough, transforming your company digitally might give you a competitive advantage but it is unlikely to substantially disrupt your market segment. Established firms must be willing to review their operating model and potentially cannibalise part of their business to disrupt the market.
Be customer centric; by listening to your customers you will keep up with their evolving expectations. By addressing unmet needs you can make a real impact on the market and develop a new niche. Ask questions, take the feedback onboard and find new ways of tackling emerging issues by keeping a fresh outlook.
Reassess your value proposition, analyse your business processes, make your products or services more attractive and focus on business model innovation. You can protect your company against disruption by revamping your business model. Being open-minded and flexible is key to finding the idea you need to move through business disruption. It can be refocusing on areas that are not addressed by the competition or finding alternatives to your existing proposition. Either way you need to embrace change and not be afraid to self-disrupt.
Being agile is fundamental, analysing your market value, doing your own SWOT analysis and building a plan from the outcome of this process will help your firm through a crisis. You will need to make sure your business is robust enough to lead the disruption and be the winner. Strategic areas externally and internally will have to be mapped. Making sure you have the resources, talent and skills required to transform your business model will be critical to ensure you turn your plan into a sustainable and successful model.
Although we often think of start-ups when disruptive innovation is mentioned, it would be reductive to think that established businesses cannot create disruption. The key to this is the capacity and willingness to break existing operating models and to evolve your business to follow the needs of your customers. Disruption means doing things differently and making a deliberate effort to break with convention. Nobody can say with certainty where the next disruption will come from, but keeping an eye on the trends and keeping an outsider outlook on the market might make the difference between being disrupted and being a disruptor.