Hey friends 👋,
The pandemic created some of the most disruptive times for businesses.
Supply chains disrupted, staff shortages, lives in turmoil.
Businesses had to find new ways of doing things to remain viable.
Many took the initiative to digitally transform to gain efficiencies and reduce the dependence on manual tasks.
From what I can see, the energy for innovating and making change is not subsiding.
Many leaders have realised that they cannot sit back and let external conditions dictate what they do.
Because whether it’s competition, customer needs or global conditions driving change, the likelyhood of being disrupted remains.
Today, we’re looking in to Why Disrupting Your Own Business Is Essential for Survival.
How to Anticipate Disruption
Disruption usually isn’t a total surprise. There is likely many signals that in hindsight indicated pending change.
Here’s four signals to consider:
1) Keep a finger on the pulse of the startup community.
The average lifespan of a corporation on the S&P 500 is only about 15 yearsdue to acquistions, losing dominance or losing their way.
That’s reduced down to a quarter of what it was in the late 1950’s.
So, being aware of latest developments in the startup community will provide the ability to respond as new businesses and technologies emerge at the edges.
2) Stay close to customers.
The erosion of customer trust and satisfaction may be slow and silent, until one day you notice acquisition and retention rates dropping.
Losing customers is a sure sign that transformation is needed. However, sometimes it can be too late.
Being curious and engaging with customers frequently provides the best opportunity to pick up on weak signals and respond early.
3) Keep an eye on your financial performance trends.
Dropping margins may indicate all is not well.
Things can still seem fine on the outside, sales and confidence up. But, noticing pressure on margins provides opportunity to review the business model.
4) Engage in the leadership community.
Participating and being involved in business groups provides the opportunity to check the thoughts of other leaders.
You may be able to pick up on general themes of pending difficulties and also what others are doing about it.
Partnerships and alliances may form from this approach to mutually stengthen each others business.
3 Examples of Business Model Disruption
These 3 examples illustrate diverse approaches to disrupting the current beliefs.
1) Reframe customer relationships.
Previously, it was all about building customer loyalty.
Retaining customers decreases costs and enables higher sales. Also, they are likely to be open to product improvement and feedback.
Makes total sense to focus on loyalty.
However, the approaches were passive. Now, empowered communities have formed across many sectors.
What’s more, they are actually determining product and business direction in an ‘open innovation’ approach. One example is the Lego Fandesigner community.
2) Reframing operational activities.
In many businesses being ‘lean’ was where the gains were made.
Cutting costs and streamlining meant that you were inching ahead of the competition.
Now, intelligence is being built in to many parts of the value chain to provide feedback from dynamic testing.
An example might be testing the ‘feel’, the fonts and messaging on a booking website each day to increase customer engagement.
Constant feedback loops, testing and learning is being embedded.
3) Reframing asset ownership.
Traditionally, businesses competed on the belief that owning assets was the best way to secure exclusivity.
Now businesses are reframing ‘ownership’ to accessibility. A clear example of this is Uber, who do not own the vehicle asset.
But examples also show up in the other sectors like the underutilisation of wharfs that sit idle for one paticular company’s refueling use.
Some port authorities now are approaching utilisation on an ‘on demand’ basis when any company’s boats are needing to access fuel.
What Action Can You Take?
The steps outlined in the ‘anticpate disruption’ section will go a long way to help you sense pending change.
The question is how to respond?
But, I think the most useful advice is to think about this as building capability across innovation pillars.
Pillar 1) Sensing.
- Keep a finger on the pulse of the startup community.
- Stay close to customers.
- Keep an eye on financial performance trends.
- Engage in the leadership community.
Pillar 2) Idea generation.
In my view, many organisations do not lack ideas. But, it is good practice to enable an environment that constantly fosters and captures ideas.
You can read about idea generation in last weeks issue.
Pillar 3) Developing skillsets.
Innovation is implementing creative ideas.
But, it’s the ability to use processes, tools and techniques that will enable the development of creative ideas through prototyping and testing.
There are many proven ways to do this including learning design thinking and design sprints.
Pillar 4) Developing the right culture.
One of the biggest impediments to innovation is a weak culture.
A weak innovation culture often raises it’s head through hierarchical leadership, siloed structures and ‘business as usual’ mentality.
There is a lot to unpack here and too much for today’s issue. But, here are some recent posts that struck a chord with many in the innovation community.
They’ll help to further frame some of the important considerations.
That’s all for today friends!
As always, feel free to reply to this email or reach out to me on LinkedIn as I’d love to hear your feedback.
Thanks for reading and I’ll catch you next week.