How 'Disruptable' will you be in 2016?

Fri Nov 11 2015 Michael McQueen

As we stare down the barrel of a new year, it’s only natural to wonder what 2016 will hold. One certainty is that the world will look different in 12 months time. For some businesses and professions, these changes will be an updraft that will propel them to ever greater heights. For others, the changes ahead will feel like disruptive headwinds blowing them off course or at least making life less pleasant.

So how vulnerable are you to being in this second group and what can you do now to prepare for the changes ahead?

Naturally, any business is vulnerable to disruption. However, in my role consulting with clients across a wide variety of industry sectors, I routinely come across 3 tell-tale signs that disruption is imminent:

  • High cost to value ratio – In any sector where high margins are enjoyed by incumbent players, lean and agile entrants who are willing to do more for less will never be far away. Added to this, increasingly empowered consumers are always on the lookout for ways to circumvent any element of the distribution process that adds cost without value. Known as disintermediation, this would have to be the single biggest shift in the business landscape over the past 5 years. Retailers, advisers, brokers and agents of various persuasions have found themselves needing to prove the value they add to consumers. If the value proposition is questionable and all these middlemen are offering is clip-the-ticket cost, consumers are ruthless in their efforts to get around them and go direct to suppliers and providers.
  • Poor efficiency - When there are simply easier ways to do things due to new technologies or approaches, industries and companies whose business models relied on an existing inefficient status quo become sitting ducks. Consider the threat that highly efficient payment gateway operators like Stripe pose to the incumbent Paypal. Incumbents always face an uphill battle owing to the fact that their organisational structures, business models and operational paradigms are oriented around the historical norms that have been favourable. Abandoning the very approaches that have been profitable and comfortable in the past is a big ask.
  • Market dominance - In his book, ‘Innovation and Entrepreneurship’, Peter Drucker suggests that conceit tends to arise in any industry where a small number of key players have dominated and remained unchallenged for a long time. Drucker describes a process by which arrogance inevitably creeps in amongst these established operators. Further still, when big providers start controlling the market through manipulation of supply channels, the market longs for freedom and looks to unseat the incumbents through innovation. When corruption or arrogance of the incumbents is thrown into the mix, the market will be merciless in its disruptive drive. This was the primary factor behind Motorola’s fall from dominance over a decade ago.

Bearing the above three tell-tale indicators in mind, here are three keys to becoming ‘indisruptable’ in the face of the inevitable changes and upheaval ahead:

1. Develop healthy paranoia. In order to avoid the arrogance trap that Peter Drucker warns of, any business or organisation would do well to foster a healthy sense of paranoia. Remember, your very success means a target is painted on your back and hungry new entrants are ready, aimed and probably in the process of firing. Failing to maintain healthily paranoid tends to result in incumbents ignoring or even scoffing at new market entrants until the more agile and responsive start-ups begin eroding the dominance of established player. Typically, at this point, the incumbents take action but often find that it is too late.

2. Become remarkable. As a colleague of mine once shared with me, remarkableness is the key to staying relevant in a crowded marketplace – ‘If you’re not remarkable, you’re invisible’, he said. As the business environment becoming increasingly competitive, finding a potent point of difference will be key. The message I often give to small-to-medium sized businesses is that you have three choices: go big, go boutique or go broke. If you can't go big and compete with large-scale competitors (and you don’t want to go broke), then having a boutique point of difference is your only other option.

3. Don't wait to be cannibalised – The famed words of Steve Jobs are more pertinent today that ever: ‘If you are not willing to cannibalise your own business, someone else will do it for you’. You may be enjoying high margins, a protected market or even minimal competition right now but don’t let this lull you into a false sense of security. Lean new entrants, a changed operating environment or low-margin alternatives may be just around the corner. Why wait till they arrive before you adjust? Get ready now. Re-invent yourself before change forces you to. That way you are making decision based on strategy than survival.

Jim Collins in his book How the Mighty Fall, said it best: “There is no law of nature that the most powerful will remain at the top. Anyone can fall and most eventually do.” In the year ahead, disruption is inevitable. Whether the changes ahead are an updraft or a headwind is up to you.

 

Michael McQueen is a multi award-winning speaker and business trends expert. His new keynote presentation 'Indisruptible' explores the key trends that will shift the business landscape in the coming 5 years and offers a game plan for leaders looking to navigate change and stay relevant.

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