Disruption is a word that has been high on most business agendas for some time. Even if your market has not yet felt any major disruption, the threat has incumbent businesses thinking about how they defend against disruption. But besides getting Severus Snape in to run a few “defense against the dark arts” classes, how can businesses respond?
Before we get to that, let’s unpack what we mean by disruption a little more. When using the word ‘disruption’, in most cases, we are referring to new players entering markets with innovative/non-conventional, products, services, and business models that challenge and eventually replace industry incumbents over time.
But it can also arise from elsewhere including competitor incumbents, regulation, or black-swan events, as evidenced by COVID 19.
Whether it arises from more nimble competitors or a black swan type event, there’s actually a lot you can do about it.
Shift the focus
The majority of businesses are structured to deliver for today. What I mean by this is that our teams, tools and key performance indicators are built around and focused on delivering our existing products and services. While this is important, and we shouldn’t stop, it often means businesses can find it difficult to move beyond Horizon 1 type innovation.
Here’s a slide from my latest talk for Disruptors Midlands where I spoke about all of this.
The Three Horizons of Innovation is a concept created by McKinsey, and whilst there is debate around the time element of their model, the descriptions are helpful in understanding where your business sits across types of innovation.
Self-disruption and the death of the iPod
Top secret — you know your solutions better than anyone and are in a unique position to disrupt yourselves. Competitors would love to know as much as you do about your solutions and market. You should be using this to your advantage and seeking to disrupt yourself before it’s done to you.
My favourite example of this comes from Apple. In 2007 the iPod, the product that many believe saved Apple from demise, was riding high. Having been launched in 2001, for 6 years the iPod was a game-changer for the fortunes of Apple. It opened the brand up to a whole new customer and market. But little did we know that in the background something strange was happening. Apple were working on an iPod killer, the iPhone. Launched in 2007 the iPhone killed off the most successful product Apple had ever launched.
You are in a unique position to disrupt yourself. Competitors would love to know as much as you do about your business. Use this to your advantage and look to disrupt yourself before it’s done to you.
You could argue the iPhone was only as successful as it was because of the iPod, but that’s my point. As the incumbent, you have the permission to play, to evolve the market, and push boundaries. You have access to the market and the resources to deliver.
So how do you self-disrupt?
Besides Horizon 1 type innovation, employees who operate within ‘the rules’ will find it almost impossible to generate Horizon 2 and Horizon 3 type solutions. While we do need faster horses, we also need to be exploring and building cars for the future.
So to disrupt, I believe businesses need to create, adopt or partner with a team that has the permission and ability to operate outside of ‘business as usual’ rules and to challenge the core business itself.
This could be via a partnership with an agency, hiring what I like to call a “ventures team” or a combination of both.
The agency argument
Freestyle have ready made expert teams for this and as a separate entity we operate outside of your business structure, perceptions and practices which usually means we can move faster and challenge the status quo without the fear of losing our jobs.
The venture team argument
Having your own team of disruptors is a good move as long as they are given permission to act and think differently to the core business. This team needs to be protected from the core business, whilst being able to access its resources and information when required. Their role is to generate and validate new business models, products and services to build a business case for further investment and if successful hand these solutions over to delivery teams.
The combo for the win
Where an internal ventures team often struggles is with the volume of work. Identifying and validating new business models, products and services can cause a bandwidth issue for internal teams, which can prevent the team from rapidly responding to change. So combining this with resources from an external partner allows the business to flex and respond when it needs to.
Let’s Go Offense!
In terms of disruption, the best defense is a good offense. Your venture team or partner is your offense and can create a plan of attack for disruption, using all that precious knowledge you have of your business and its customers. Being proactive about change and seeking those new horizons is how you will ensure you are disrupting your competition, not the other way around.
At Freestyle, we partner with organisations to help them evolve their business and customer experiences for the future, by building venturing capability and creating new products and services.
Author: Ritchie Brett, Strategy Director, Freestyle