Be Disruptive or Be Obsolete

Re-posting this article originally written by Sourabh Soni on LinkedIn Pulse couple of months back.

As the author Adam Brandenburge and Barry Nalebuff described in their book, “Co-opetition” that

A player is your competitor if customer value your product less when they have the other player’s product than when they have your product alone

Trends

In today’s business world, new and unknown breed of competitors are evolving rapidly and disrupting the businesses at usual. It is an unprecedented time in the history of mankind when companies have sensors/interfaces (BLE, beacons, RFID, etc.) to gather data, have massive capacity to store data, have massive computing power to convert data to some meaningful information and have hype-connectivity to transfer the data/information with the fast-speed. The ubiquity and increased accessibility of such digital technology to common people is transforming the life, work and business significantly. The digital technology advancements have made the world more and more connected. It is not just the human-to-human interaction across the globe that have become easy but also the human-to-machine interfacing have also started changing it shape in big way.
The advancements in digital technology are basically “layered” i.e. the one layer of technology enabling the development of another layer of technology. Taking the example of world-wide-web, the desktop internet have laid the foundation for innovation in the mobile-internet and so the mobile-internet is laying the foundation for innovation in Internet-of-Things (IoT) or Industrial Internet. These layered advancements not cumulative but rather multiplicative in nature as it is not only enabling more advancements with much higher pace than anytime earlier but also enabling companies to innovate on new business models (e.g. subscription) that were not possible earlier.

Digital technology advancements are layered which in turn multiplicative in nature

Having said above, this all should be seen as a great opportunities by the companies who can adapt the digital technology and capitalize on the same. On the flip side, it is creating a big threat of becoming obsolete to the companies who cannot adapt to the change with the accelerated pace. In the book “Only the Paranoid Survive” author Andrew S Grove written that “What such a transition does to a business is profound, and how the business manages this transition determines its future.” He quantified and explained in the book that when a business goes through significant change (termed “10X rule”), the business no longer responds to the action in the same manner as it used to do earlier. The management has to take different actions than before, to ensure not to lose control over business.

Impacts

The digital technology disruptions are creating enormous values to both the companies and their customers. Few of the examples are listed below:

Customer don’t need a drill machine, they need a hole in the wall in actual

The success stories of companies such as Uber, Airbnb and Netflix have already disrupted the transport, travel and entertainment by providing on-demand and personalized solutions to the customer. Their customer-first approach of understanding the customer’s need and their double-sided platform for manipulating both demand and supply side of the market have created enormous value to the customer. Many of such disrupting companies have grown big to extent that they are now a threat to the mainstream companies who are finding it difficult to adapt this change.

Customer-first approach and double-sided platform (both demand and supply side of the market)

The value proposition of such digital disruptions can be classified as below:

While the digital technology is enabling the change but it is the information what really a game-changer. The companies are using the information about the customer to provide the tailored things to the individual customer of their choice and at their convenience. The digital interfacing to things are allowing creation of new business model like subscription/pay-as-you go model and model to sell the goods as a service, which in turns help the customer to convert their capital expenditure (cap-ex) to operational expenditure (op-ex). Further, the two-sided platforms are adding more suppliers and disrupting the supply-chain.

There is no choice left the companies but to adapt to this wave of digital technology advancements before it too late for them. Companies must first change their mindset to adapt to digital technology. They should attempt to introduce software driven approach to remove human interventions or interfacing, to achieve more agility in their business. Human should do what only human has to do, other places machines and algorithms can take over. The system thinking should be imbibed with the focus on real-time conversion of data to actionable information to create rich experience to the customer and other stakeholders (e.g. employees). With this, I invite your thoughts in the comment section below with your experience of digital disruptions.