Disruption is becoming increasingly important in business. It is changing how we think, behave, do business, learn and go about our day-to-day-lives. Not every emerging technology will transform the business or social landscape, but there are some that have the potential to disrupt the status quo and alter the way people live and work.
Everything in today’s world has changed, except the way we build businesses. This leaves us wide open to the disruptive technologies and businesses that spring off this opportunity: huge businesses and seemingly dominant and robust brands are vulnerable to attack.
Perhaps one of the best known big bang disruptions was the demise of Blockbuster.
Blockbuster looked like it was here to stay until a little-known start-up calling itself Netflix began mailing out dvds to customers at much cheaper rates than Blockbuster – and with no late fees. But the big bang disruption came with the advent of Netflix’s streaming video service. This offered a better and cheaper service, plus all the TV and movies you could watch without having to set foot outside your home. And with its move into original programming such as House of Cards, it spelled closure for Blockbuster. Netflix currently has over 33 million customers.
At present, disruptors can be broken down into six types. By identifying them, brands can work out how best to mitigate against them – or better still, become part of the disruption.
1. Collaborators: Connecting people at scale, giving them more impact.
A good example of a collaborator is Street UK, based in Birmingham. Launched in 2000, Street UK is a non-profit organisation specialising in the provision of a range of financial services for those who cannot access mainstream credit and banking services. This is a similar scheme to the Grameen Bank in India whose main activity is granting loans to poor people in Bangladesh. Street UK’s operations are supported by charitable and governmental donations, while its loan book is funded by loans from commercial banks and community bonds.
2. Crashers: Crashers can go direct to consumers, by disrupting the supply chain and offering better and cheaper innovation.
The Khan Academy illustrates how everyone can now get a free world-class education. It’s a not-for profit, with the goal of changing education for the better by providing a free world-class education for anyone, anywhere. Its YouTube channel has garnered a staggering 202 million total views.
3. Maximisers: Maximers take the assets you already own and max their value.
By tapping into a readily available but unexploited resource, ParkatmyHouse has become the UK’s largest online parking marketplace. It connects home and business owners who would like to earn money from renting their driveways /space with drivers in need of a convenient, safe and cost-effective place to park. It manages the entire booking process and all the payments.
4. Realtimers: We don’t go to them, they come to us. Everything will be available when and where you want it.
A good illustration of this is Amazon’s planned PrimeAir. The goal of this new drone delivery service is to get packages into customers' hands in 30 minutes or less using unmanned aerial vehicles that deliver goods to your door. Amazon is hopeful that this will become a reality within the next five years.
5. Mobilers: Mobility means information, convenience, and social all served up on the go, across a variety of screen sizes and devices.
In the last two years, Tesco has not only created interactive grocery stores at tube stations and a virtual supermarket at Gatwick airport, but will soon be offering a ‘click and collect’ grocery service at a number of underground stations too. Tesco also offers movie streaming and e-books. More than 20 per cent of Tesco online sales now come via smartphones, and 10 per cent of all orders from Tesco Direct come through its mobile website.
6. Crunchers: Attribution, Optimisation, Allocation.
Due to be launched later this year in the UK, smart thermostats are small, low power, web connected devices that use the Internet to become smarter and more efficient, and Nest is being hailed as one of the best. Devised by Tony Fadell, the creator of the iPod, the device offers remote control of heating (it learns your heating preferences over time), saves the consumer money and gives us greater insight into our energy use. With energy bills rocketing, who can’t afford to get one?
These are all great examples of innovation at its best, and show how businesses can embrace digital technologies to reinvent their organisations, often through an non-traditional approach.
For while the impact of big-bang disrupters is certainly amplified for technology and information-intensive businesses, most industries are at risk. Even in industries where regulations limit competition, there is growing pressure from big-bang disrupters homing in on large-scale inefficiencies. So disruptive technologies are often cheaper, better and more integrated.
These and other mature industry segments – including many professional services, manufacturing, distribution, and retailing – are already experiencing their early failed experiments. Today’s experiments may not be scalable, but an undisciplined disruption could lurk within them all. Their big bangs may not be far off.
The best way to fend off disruptors is through a relentless focus on the customer. Build your organisational structure around serving the customer (breaking down the silos between sales, marketing and IT), incentivise your teams to work together and share customer data, make your marketing programs agile and responsive to changing customer needs and invest in loyalty and retention.
Sebastian Dreyfus is managing director, Europe at Rosetta