01 October 2017

Interrupted or Disrupted?

"Disruption is a process. not an event, and innovations can only be disruptive relative to something else."

--Clayton M. Christensen


There are different kinds of interruptions in our lives.  Some involve personal and family matters.

Others are work-related as when colleagues step into cubicles to ask a question, or just chat.  "The average American worker has 50 interruptions a day, of which seventy percent have nothing to do with work," said W. Edward Demings, a statistician and best-selling author.    

What about the time a colleague was interrupted as they were speaking? 

Overtaken by a corporate ADD, managements have been known to interrupt their strategies, and plans to get there, after reading a book, or going to a seminar, or having a new member join the team.  

Most of the time an interruption is something we initiate and therefore control its frequency. 

Defining our terms

What about disruptions?  They're largely external to the business. 

Most are familiar with the book, The Innovator's Dilemma, published in 1997.   The main idea is that "disruptive innovation is one that transforms a complicated, expensive product into one that is easier to use or is more affordable than the one most readily available," according to its author, Dr. Christensen who is quoted above.

That type of disruption makes it possible for a wider population to have access to products (Warby Parker--eyeglasses) and services (Spotify--music) previously reserved for certain market segments based on cost. (Innosight)

Another definition which quickens the pace of destructive forces is called "big-bang disruption."  As the theory goes that kind of disruptive behavior doesn't come from competitors in the same industry or even from companies with a remotely similar business model.  (Downes and Nunes:  Big Bang Disruption)

And switching from one product to another was a matter of weeks, not months or years.  To illustrate their point the authors highlight free navigation apps, preloaded on smartphones, doing a quick number on TomTom, Garmin, and Magellan.

Navigating disruptions

In an economy as large as the U.S., with an estimated 2016 Gross Domestic Product (GDP) of $18.5 trillion, there's room for several disruptive theories.  Regardless of which idea you subscribe to, if any, what are ways incumbents can survive, or even thrive by becoming a disruptor?

S
ome thoughts:

1. Beware mortal threats.  External markets and customers continually send out signals as to shifting interests.  However, those caution flags, which can become red flags, are only helpful if someone pays attention, interprets the signals properly, and passes on the intelligence. 

Is anyone listening?

The caveat is that consumers didn't know they wanted a minivan, a PC, or an iPhone until the products were placed in front of them.    

Being part of an inner circle is a disadvantage when it comes to minimizing disruptions.  Those positions are generally too far removed from the changing tastes of ordinary people.  

If there's any good news it's that the pace of major disruptions, from appearance to impact, is slower than conventional wisdom suggests.  Big-bang disruption not withstanding.  (Leinwood and Mainardi). 

Nonetheless, the arrival of a disruptive force (Netflix waiving late fees against Blockbuster),  aimed in your direction (digital cameras providing instant gratification), potentially becomes a mortal threat (Facebook leveraging its platform to compete with SMS Messaging).  

2. Stay close to current users.  No business should take its customers for granted.  Customers today can be former customers tomorrow.  That's why building relationships carries greater weight than mastering a particular kind of social media.    

The taxi industry had only to explore their customers' wants and needs to limit the damage inflicted by Uber and Lyft.  Apparently no one in the surface transportation business bothered to look in the direction of convenience.    

Consider Amazon's philosophy: "Pay attention to competitors but obsess over customers."

3. Get close to potential users.  Current customers are one source of growth but have their limits.  Screened carefully, potential users are another way to grow profitably.  

What do you know about potential customers?  Their thinking?  Their practices?  Their current suppliers?  What are they dissatisfied with where they currently buy?   When is the last time anyone on the management team held a series of in-depth conversations with prospects and circulated those findings?      

4. Keep improving.   Corporations may contribute to their own disruption by holding on to the status quo.  Being good at manufacturing or services can be detrimental to the health of an enterprise as success is taken for granted. 

The current business model may need to change to take on new types of competition.  

How to improve the execution of current strategy?  That's a dedicated meeting waiting to happen.    

5. Don't panic.  What good does it do to hit the panic button when you see disruption coming?  

In September, there were numerous meteorologists in Florida helping us through Hurricane Irma. Working long hours, they offered spaghetti maps and cones, provided tips on safety, but just as important kept encouraging everyone to stay calm.  

Brian Shields, WFTV (ABC), Orlando, repeatedly said, "We're going to be okay."  Without  diminishing Hurricane Irma's potential threat, Brian was a source of emotional strength.  

When it comes to being disrupted, be realistic, but don't panic.

What else to learn?

If you're not capable of disrupting then look for holes in existing markets where competition is scarce.  "Non-disruptive creation," promoted by W. Chan Kim and Renee Mauborgne, may be a third option as it's not always necessary to beat the current competition. 

Sometimes the way forward is finding new markets like The Honest Company.  After the birth of her first child, actress Jessica Alba, couldn't find high-quality, eco-friendly baby products, so she started a company, now with a $1 billion valuation, to produce them. 

Create your future and not let others do it for you.  

Hear this

It comes from Anshu Sharma, a venture capitalist.  In a recent interview with The Wall Street Journal, Mr. Sharma offered:

"In terms of who wins in a given market, the fundamental question is and has always been, who understands the user better?"



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