Disruptive innovation can be a positive and help you generate revenue OR a negative and destroy your business. Either way, it MUST be on your radar. It is a business resilience factor.
I was watching Emily Chang’s technology interview show recently on BBC (R) Channel 105 in New York. According to my wife, odds are that you did not see the show. She tells me I am one of the few people that watches tech shows like Studio 1.0, SciTech, Horizons, Click, Hello World and Henry Ford’s Innovation nation. Every weekend I watch them all! I love every minute of them. So, what were we talking about again? Oh yeah, disruptive innovation and how it may impact you.
Emily was interviewing Troy Carter the CEO of Atom Factory (R) which is a Mergers and Acquisitions firm. They were talking about his investment in Uber (R), which is about as big a disruptor as you can find. Uber is disrupting the ‘people moving’ sector. They have already changed the way people move from one place to another and Troy mentioned there is a lot more innovation in the planning stages.
Wikipedia defines disruptive innovation as an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances. The term was defined and the phenomenon analyzed by Clayton M. Christensen beginning in 1995. In the early 2000s, “significant societal impact” has also been used as an aspect of disruptive innovation. By the way, I have read Clayton’s books and I enjoyed them very much.
Consider how disruptive innovation might impact your company. Especially if your company is the ‘disruptee’ and not the ‘disruptor’. I am sure Blockbuster and Sears would agree that disruptors such as Netflix and Amazon had a devastating impact on their business models. If you knew anyone working for either of those formerly profitable companies, chances are they are working somewhere else now – I hope.
Here are more examples of companies that have disrupted entire industries. Some are already household names, but some of the upcoming companies and the industries they are disrupting may surprise you. Is your industry on the list?
- Salesforce (R) – sales
- Airbnb (R) – travel accommodations. They own no hotels or real estate but are valued more than many major hotel chains
- Coursera (R) – education
- Klarna (R) – electronic payments
- Snapchat (R) and Instagram (R) – photos
- Oscar (R) – health insurance, health care
- Mapques (R)t – maps (remember paper maps)
- Apple (R) – many industries including portable music players – remember the Sony (R) Walkman – I do!
- devRant.io (R) – tools for niche specific social networking
- Tesla (R) – car industry, battery industry, space exploration industry, travel (Hyperloop). We need more visionaries like Elon Musk’s in the world!
- Waze (R) – driving directions, walking directions. I give credit to Garmin and Tom-Tom as both pivoted to health trackers
- Synack (R) – crowd-sourced cyber security
- LinkedIn (R) – recruiting – They disrupted recruiters, who now make up a significant portion of LinkedIn’s revenue stream
- Uber (R), Lyft (R) – moving people from place to place. They not only disrupting the taxi and limo industries (without the cost of ownership) but an Uber (R) owned company successfully made the first commercial deliveries of beer in the U.S. Their subsidiary autonomous tractor-trailer delivered 40,000+ cans of Budweiser (R). It was autonomous (self-driven) on the highway and then a driver, who was in the sleeping bay, drove the last-miles in the city. But soon a truck will do end-to-end routes and in the future, there will be no drivers needed
- iTunes (R), Spotify (R) – rewrote the music industry
- 23andme (R) – affordable genetic testing, ancestry
- Craigslist (R) – newspapers – those little classified ads were a big revenue stream for newspapers back-in-the-day, but not anymore
A few things you should start thinking about so you do not get a nasty surprise:
- Do you have a way of identifying disruptors in your industry?
- Does your company innovate?
- Could you possibly get blindsided today, next week, next month or next year by a couple of visionaries working in a garage? It does not take a big staff or a lot of advertising to become a disruptor. Keep in mind, a company like Uber did not even own taxis and was able to disrupt an entire industry. It only requires an idea and a creative plan to execute the idea. Disruptors can use low-cost Internet guerrilla marketing techniques to own an industry
Technology has been a great enabler of new platforms. Innovative startups can roll out product quickly and grab market share. The disruptive nature of technology will continue to become more powerful and available in the coming decades as the cost for the three most critical technology components: chip power, data storage and bandwidth their assault on approaching nearly ‘free’ or too small to measure. For a great book on this phenomenon I recommend you read, ‘Free: The Future of a Radical Price‘, by Chris Anderson.
It is important for your company to have a pulse into what is occurring in your industry. Fortunately, there are tools that can help you. Google alerts is a good free tool. Twitter also has a search capability. The trick is to turn this avalanche of raw data available to us into insights. In the technology section of the book I discuss how we can leverage situational awareness tools in more depth.
Market research tools can also provide great insight in a rapidly changing environment. These tools intrigue me as my favorites use cutting edge technology to gather, analyze and publish rich information in a timely manner. Brilliant technologists are leveraging sophisticated machine learning techniques and predictive analytics to identify meaningful insights buried in terabytes of data. Rather than simply passing the raw data through, they add value that matches a business’s needs. They monitor thousands of news sources plus social media. Many of the sources are commercial grade subscription services that they have partnered with.
Importantly, some use machine learning and predictive analytics algorithms to provide insight into what may happen next, before it happens! I am not saying it is a crystal ball but it does give you sort of a peak into the future and potentially a competitive advantage.
I was impressed so I passed on some of the insights to friends in the business plus a few supply-chain professionals. They told me it generally took them at least half a day to discover what I had produced in minutes and in some cases they would never have stumbled across the information that was automatically generated by the system while I was sleeping.
Mapping the results from these tools to your BIA and RA can help you create the ultimate near real-time business continuity threat, risk and opportunity tool. This dynamic information can give you an edge in the marketplace.
I do not recommend tools in the book as the landscape changes and new tools come on the market. If you are interested in my current favorite tools please contact me – firstname.lastname@example.org.
The bottom line is you must keep disruptive innovation on your radar. Always be the disruptor not the disruptee!