Let’s first start with disruption. What is it? Is it another word for change? Is it intense change? Is it fast or deep change? There’s a lot of talk about disruption. The term disruptive innovation was coined by Clay Christensen. It’s a word used to describe the process “whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses”.
That’s it. And by doing so that smaller company disrupts not only the smaller company, but also the bigger one.
In the face of disruptive change established companies seem to have difficulties in responding. Why is that, one might ask.
When a company is confronted with a new product, it often does not see the risk. That is because the company focuses on another customer segment.
But the customers become interested anyway, when the product is good enough. And when is that? When the product is good enough in terms of performance and superior in one element such as price, size, emotional benefits, …
So what a company should not do is to neglect that new offer. Instead, it should compare its product to what the customer wants. The problem of established companies is often that it over-engineers its product by adding features that make the product more expensive without having an advantage to the customer.
In this HBR article you can find a summary of disruptive change theory. But these are some conclusions from that article:
- 1. Disruption is a process.
- 2. Disrupters often build business models that are very different from those of incumbents.
- 3. Some disruptive innovations succeed; some don’t.
- 4. The mantra “Disrupt or be disrupted” can misguide us.
It’s the last point that is intriguing. We hear that phrase a lot. But it’s not a dichotomy.
Disrupt or be disrupted?
It’s a mantra. When facing disruption, companies should not panic and dismantle their existing business. It’s commonly accepted that when companies want to disrupt, they should do it next to their existing business. So companies will manage both a traditional and a disruptive business.
I strongly believe that every sector and industry will be disrupted some day. I’m not sure that this is in itself new. There have been disruptive technologies before. These technologies have replaced incumbent technologies. However, these changes took some time. That has changed. Some disruptions are extremely fast. The traditional process of adoption has been replaced by a shark-fin shaped innovation curve.
This shows how threatening a disruption can be. It’s like a tsunami.
Should we be afraid of Disruption?
There are basically two ways to look at disruption. We can fear it and be paralysed. Or we can embrace it and see it as an opportunity. Probably you need to do both. If you’re in a traditional business you might dread the day a young start-up eats away your market share and your profits. But instead of dreading, an established company should innovate, change, disrupt, check the disruptors, … A passive approach is never the right approach.
My next blog will be on HR Disruption: 3 Lenses on HR Disruption.