What do Dodo birds and compact digital cameras have in common? Extinction! And your company could be next, unless you learn how to anticipate and manage disruptive forces that are coming to your industry.
When smart phone cameras began to proliferate I made the bold prediction that our neighborhood camera store would be out of business within a year. I was wrong. It only took six months. Smart phone disruption strikes again. Of course, the point-and-shoot digital camera is only one of many victims. What about portable music players, GPS devices (just ask Garmin), and portable gaming systems? All are down in recent sales numbers, and industry experts predict drastically lower revenues in the future. These industries were high performers just one or two years ago. Yes, disruption can happen fast, but it need not take you by surprise. Here are four ways to stay ahead of the tsunami of disruption that may be coming straight at you.
1. Evaluate technology—especially outside of your industry. Chances are, the very technology that will revolutionize your industry in the future is already doing so in a completely unrelated industry today.
2. Don’t wait for disruption to start nipping at your heals. Be the disrupter, not the disruptee. The first-mover advantage is often a key to success when executing a disruptive strategy.
3. Watch your competition like a hawk. Be ready to match and even surpass innovative actions on the part of competitors. If you can, anticipate competitors’ plans and think five moves ahead.
4. Keep a finger on the pulse of your customers. They can be your early-warning system, allowing you to react in real time to market changes. Without customer guidance you will most likely be creating products and services for a market that no longer exists.
Self-disruption is not self-destruction
One of the biggest obstacles to executing self-disruptive strategies is the concern on the part of successful companies that their efforts will cannibalize their current success. They fear profits may decrease and they could disappoint shareholders. This short-term view has been the downfall of many a company that, ironically, has ended up being disrupted by competitors. The result: shrinking profits and disappointed investors. So much for the cautious approach.
Apple has recently demonstrated successful self-disruption as a long-term strategy. Last quarter, iPod sales fell by 32%. Why? Because of the disruptive effect of smart phones, one of which is Apple’s own iPhone. Sales of the iPhone were up 20% last quarter. During Q3 2013, overall iPhone revenue ($18 billion) far exceeded the reduction in sales of the iPod ($345million). Self-disruption seems to have worked well for Apple. In what ways could it work for you?
When I first heard about ScrapGo.com I smiled because of their use of disruption is such a seemingly unexciting market—scrap metal. I thought, if this industry can be disrupted any industry can. That’s what makes this a good example for today’s article on this topic. Let’s see how ScrapGo.com is disrupting by bringing new technology to an old-school business.
Buyers, sellers and brokers populate the scrap metal industry. In exchange for putting buyers and sellers together, brokers take a percentage of each transaction. Brokers have been making money for a long time in this industry by connecting sellers with buyers. Many of these transactions have been based on geography, specialized expertise and personal relationships.
What would happen if someone created a broker-type exchange service online that was not dependent on geography, specialization or relationships? What if this service could connect buyers and sellers at a fraction of the traditional broker cost? That’s exactly the disruptive model that ScrapGo.com is hoping buyers and sellers will start using.
Apparently, this value-adding system is working. Since it went live in June 2013, ScrapGo.com has amassed 147 deal opportunities amounting to a cumulative 42,764 tons of metal. Congratulations ScrapGo. We’ll be watching your progress.
If you know of any entrepreneurs (or are one of them) who are winning at self-disruption, feel free to contact me at email@example.com or through Facebook at Larry Myler.
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