The Irony in Digital Disruption...

Disrupt or be disrupted. That’s today’s digital business mantra.

But how do you disrupt? Or how do you respond if you are being disrupted?

Digital Disruption is much more than improving efficiency within a business, it is essentially a transformation aided by emerging technologies, processes and business models to positively impact the value of an existing service or product. By connecting all the different parts of the business, greater working relationships can be formed with partners, customers, suppliers and even organisations typically seen as competitors.

Some well known examples which demonstrate Digital Disruption would include -

Netflix

Think of Netflix, they disrupted the movie rental market. Blockbuster was the go to place if you wanted to rent a movie, it is safe to say they dominated the market in the UK but they failed to innovate and failed to leverage the emerging technology available to them. Netflix saw an opportunity, they started with a delivery service and then moved into providing movies digitally. Blockbuster didn’t see it coming and furthermore weren’t agile enough to adjust to the demand of the market.

Uber

A somewhat controversial disruptor, they came into a market that had been stable for around 4 centuries and completely tore up the rule book. They saw an opportunity to digitalise the way we consume our travel and align it with the on demand needs of the market.

Lego

This example is slightly different as it is an insight into the future. Lego, who have a fair proportion of the market they operate in see future disruption coming from horizontal markets. The CEO explained how he anticipates the likes of Facebook and Google being the biggest rivals over the next five years and that Lego must innovate and change their own business model to compete. He sees the rise in virtual reality being the big trend and expects the physical and virtual worlds to collide. He understands the importance of adapting in a market disrupted by technology companies.

How to begin thinking about Digital Disruption

Here are 10 business models behind digital disruption, as covered by Jo Caudron and Dado Van Peteghem in their book Digital Transformation, and 7 strategies to respond to disruptors if you are getting disrupted, as enumerated by IMD’s Professor Michael Wade, co-director of the IMD Leading Digital Business Transformation course.

7 STRATEGIES TO RESPOND TO DIGITAL DISRUPTION

1. The Block Strategy. Using all means available to inhibit the disruptor. These means can include claiming patent or copyright infringement, erecting regulatory hurdles, and using other legal barriers.
2. The Milk Strategy. Extracting the most value possible from vulnerable businesses while preparing for the inevitable disruption
3. The Invest in Disruption Model. Actively investing in the disruptive threat, including disruptive technologies, human capabilities, digitized processes, or perhaps acquiring companies with these attributes
4. The Disrupt the Current Business Strategy. Launching a new product or service that competes directly with the disruptor, and leveraging inherent strengths such as size, market knowledge, brand, access to capital, and relationships to build the new business
5. The Retreat into a Strategic Niche Strategy. Focusing on a profitable niche segment of the core market where disruption is less likely to occur (e.g. travel agents focusing on corporate travel, and complex itineraries, book sellers and publishers focusing on academia niche)
6. The Redefine the Core Strategy. Building an entirely new business model, often in an adjacent industry where it is possible to leverage existing knowledge and capabilities (e.g. IBM to consulting, Fujifilm to cosmetics)
7. The Exit Strategy. Exiting the business entirely and returning capital to investors, ideally through a sale of the business while value still exists (e.g. MySpace selling itself to Newscorp)

All well and good you might think, but how do you actually go about implementing these strategies within your business? How do you know which strategies will suit your business and how do you implement your key projects to enable your transformation??

Here lies the most ironic part of digital disruption - "you need to get face to face and speak to people"!! Change has to be managed and delivered by people and the knowledge that supports that is the key and is held within the customers,peers and competitors around you.

1- Understanding how your customers feel about digital disruption, what innovations will help them, how can you provide your service/product to them differently.

2- Understanding how your peers are acting in this space, what are they doing to disrupt, how have they implemented projects, what technologies have they used?

3- Finally, how do you meet companies who can help you on this digital journey. what partners, suppliers and actors can assist you while you create your digital strategy?

All of this key and critical information when implementing an offensive or defensive digital strategy can be gathered by having conversation and here lies the best advice in digital transformation - talk to people, ask the questions, understand your customer and listen closely. The answers are out there you just need to have the conversation...

.... Happy Disruption!

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