Disruption as a noun means “disturbance or problems that interrupt an event, activity, or process.” To cause (something) to be unable to continue in the normal way. For business, however, disruption is viewed in broader terms as ‘disruptive innovation’, a term first introduced in 1995 by Clayton Christensen, the author of “The Innovator’s Dilemma”.
“A disruptive innovation is 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.”
Fast forward to today, what does disruption look like in 2017? Businesses generally still have two options when faced with disruptive innovation. Try and hold on to existing market space by doing the same thing(s) better, or attempt to capture new markets by embracing new business models and technologies, and adapting to rapid change.
“Change is good if it leads to improved performance, highly engaged employees and more satisfied customers.”
This has not always been the case when dealing with new innovation, change or a “disturbance in the force”. A perfect example was the 1980s when the term ‘Ready, Fire, Aim’ became the buzz words for many businesses, particularly entrepreneurs and those in the technology or telecom sectors. Both established and start-up companies alike forgot to take their books with them in their haste to uproot the competition.
Many senselessly wasted a lot of ammunition (i.e. time, resources and capital) operating by the seat of their pants, and violated some of the basic fundamentals of business trying to hit the intended target. Attempting to short-cut the system, or best practices, in order to ‘shake things up’ or increase speed-to-market is not disruptive innovation and can lead to organizational chaos, dysfunction or worse.
“Practice doesn’t make perfect if you’re doing it wrong.” – Frank Sonnenberg
Disruption on the other hand, should be about making things better through risk-taking, experimentation, innovation, transformation and radical change. Here are some of the more recent real-world examples (good, bad and ugly) of how disruption is transforming the landscapes of both traditional and emerging businesses.
- Payless considers plans to close 1,000 stores.
- Sears Holdings plans to close 150 Sears and Kmart locations.
- JC Penny plans to close 138 stores this Spring.
- GameStop is closing 150 stores.
- Uber has become the largest transportation company in the U.S. and doesn’t own a car, bus or train.
- AIRBNB is now the largest accommodations company in the world, but doesn’t own a single hotel.
- Amazon has surpassed Walmart as the nation’s biggest retailer despite having no stores!
While some of the nation’s largest retailers have been hit the hardest by disruption via ecommerce and online shopping, other nimble start-up companies have thrived by creating new markets, while embracing new business models and technologies, and establishing new value networks and alliances. In doing so, they also discovered entire new customer segments who were excited about this non-traditional approach to doing business.
What does all this mean for small businesses like yours?
The good news is that small businesses are generally better positioned to survive disruption when it occurs than their larger, global counterparts. That is because they’re more agile in adapting to market shifts, and don’t have billions of dollars invested in the current business models, existing markets, infrastructure, etc. Don’t allow disruption to become a problem for your business.
Stay true to your core values when responding to change on any level, build upon your strengths and stay attuned to the market. Consider these important questions before moving ahead with major changes that could be disruptive. Are we making things better or worse? How does this impact our valued employees? How will this make it easier for more customers to do business with us?
And finally, don’t forget your books!
John
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