Last week I had the chance to attend the #NextAct2020. In one of the sessions I followed a very interesting talk. The whole topic was about disruption. In detail, they talked about taking a bold step and spinning a part of the company off, to give it a chance to build its own brand and identity. Despite all the cool and fancy ideas, it was still the same business model and even more import in the core the same product. Product in this particular case means it was not a software or service product, it was a physical thing. Something like a car.
Now the idea is about having it in different colors and flavors and everything you can imagine.
After a while, it came to the „killer“ question.
Is this disruptive?
Interestingly the following discussion was about business models, process optimization and innovation.
I still listend the very intense discussion and it became more and more clear the audience or at the least the ones speaking up didn’t see it as a disruptive act. For the presenter as such it somehow felt, because it was a very bold move and it goes a long with a high risk.
I still suffered from a cold and didn’t engage in the discussion, but since then I’m thinking about „Disruption“ in a not software driven context, what it is, how it feels and what it is not.
I share the view of the majority of the audience, the presented concept was not disruptive but efficiency innovation. The reasoning I see quite different. I’m not just missing the disruptive business model. From my point of view, it is still about the same thing and the product, in this case, is physical, so it must be an evolutionary step.
Let me explain with my own words why I’m seeing it that way and what disruption really means.
Talking about a physical product of any kind and making it more personalized, cheaper, easier to get, more efficient or sustainable, is always something you can foresee. It’s a matter of time, money and tech. At the sweet spot of these three aspects you can enter the next evolutionary step of your product. If you get it right, do the necessary go to market and sell it, you’re certainly at the edge and you’ll deserve the opportunity to take advantage of it – outperform you competition.
I tend to say that in these cases your competitors are well known. There’s very little chance that there’s someone new to the game, doing that.
So let me make a statement, disruption these days isn’t about physical things.
There is no disruption without any kind of software.
15 years back, this may sound like a bold statement but these days it isn’t. It’s hardly to imagine to create any kind of product without at least a relevant part of software in future, despite consumer goods.
Disruption means to revolutionize something in a way others wouldn’t expect it and generating new value with the potential of an exponential growth curve. Sometimes it’s a completely new market.
Take the meanwhile well known example of the iPod revolution. What’s mostly missed, is that the iPod without iTunes would not have the power to disrupt the entire music industry. It would have been an evolutionary step, like going from LPs and cassettes to CDs. The fact that we now could buy and organize our music in iTunes and then having an individualized playlist in our pockets made the difference. It was a completely new customer experience.
Let’s have look at a more technical example. When a new generation of processor, memory and server tech became available, we could have built faster datacenter and optimize what we had. Now putting a new software layer above the tech let to the rise of cloud software, since then heavily disrupting existing business models and onPremise software products.
Let’s say innovation without a software component is never disruptive. But does that mean? Does innovation always need to be disruptive? I don’t think so. But be aware and watch out for new potentials that you could use in a disruptive scenario, because if you don’t there will be someone who does. If that happens you’re in trouble, because along with disruption comes a better, often cheaper product and even more important a new customer experience often leading to an exponential growth curve. To catch up in such a case will be at least very tough if not impossible because of the gained momentum from your „new“ competitor.
It gets even more interesting by digging deeper in the topic and the connected challenges, that come along with the digital transformation.
What’s your strategy? Do you playing defense or offense?