Disruption rarely happens overnight. Uber didn’t disrupt the taxi industry by swooping in with magical new technology. The technology was readily available, but the taxi industry chose to ignore it.
The same applies to banks being disrupted by fintech, traditional real estate agents being disrupted by online portals, and Kodak being disrupted by digital cameras (in fact, Kodak invented the first digital camera).
The signs of future disruption are clear – if you’re observant enough to notice them and willing to act. Here are five clear signals that disruption is just around the corner for you, your business and your industry.
You’re using out-of-date metrics
The old metrics for success such as market share, profit, revenue growth, share price and market cap are all internal measures. You’re either comparing with your past self or with others in your industry. But disruption usually comes from outside, and these metrics won’t show you where it’s coming from.
Unfortunately, most Australian companies aren’t ready. According to Accenture’s Technology Vision survey of Australian CEOs, 55% expect the greatest disruption to come from established companies. A further 25% were willing to concede disruption could come from start-up companies, but only within their industry. That means a whopping 80% will be caught unawares by start-up companies outside their industry. And in almost every industry, it’s that group that will create the greatest disruption.
You think your assets are assets (spoiler alert: they’re not)
In the past, your assets gave you strength and stability, and protected you from current and future competitors. But because the world has changed, those assets have now become liabilities.
An efficient supply chain restricts you from using new suppliers. A strong reputation stifles innovation that risks a backlash. Premises tie you to physical locations. Instead of strengthening your position, these ‘assets’ now hold you back from better opportunities. Disrupters don’t have these assets, but they also don’t have the baggage the assets bring with them.
You’re slow, bumpy or expensive
The world is moving towards ‘Fast, Flat and Free’: everything is moving faster than ever before; we’ve broken down hierarchies and barriers, and expensive things are now cheap or free. Disruption strikes hardest at companies that are the opposite — that is, Slow, Bumpy and Expensive:
- Slow: If your product or service is technical or complex, AI will eventually automate it. In fact, if it’s a service at all, it will first be outsourced and then automated.
- Bumpy: If your industry is regulated, licensed or controlled, that might have protected you in the past; it now makes you vulnerable to nimble and agile disrupters.
- Expensive: If you provide an expensive service, customers will look for more affordable alternatives – such as online, global, subscription, ‘freemium’, or free (advertiser-supported).
If anything in your organisation is slow, bumpy or expensive, you’re vulnerable to disruption.
You don’t know your customers
Do you really know your customers? Or do you just lump them together into profiles, avatars or demographic groups? A hundred years ago, a local store owner knew every customer personally, and gave them individual attention. But that didn’t scale, so the best you could do was group customers based on demographics and psychographics.
Peppers and Rogers briefly revived the conversation about treating customers as individuals in their 1996 book The One to One Future. But we didn’t have the technology at that time to support this idea at scale. We do now. And it’s exactly what disrupters do to lure your customers away. If you’re not engaging with them daily – through tools like wearables, mobile apps, and IoT devices, a disrupter will.
You’re no longer solving customer problems
Ultimately, your biggest protection against disruption is to focus on your current and future customers, and help improve their lives through your products and services. That sounds so simple to be almost simplistic, but most businesses do start life doing exactly that.
But over time, they get further and further away from the customer, and spend most of their time engaging with other stakeholders — such as staff, unions, layers of managers, suppliers, regulators, boards, shareholders, media and the community.
These are all important, but should never come at the expense of customers. Disrupters act the way you used to act: by understanding customer wants and needs, and finding a way to meet them.
How can you head off disruption? Disruption is just another word for change. Granted, it’s change at unprecedented speed and magnitude, but it’s still just change. And change is inevitable. The solution to avoiding disruption is simple (but not easy): Disrupt yourself. In other words, innovate. It’s disruption when it happens to you, it’s innovation when you do it yourself.