Insights Companies without disruptive business strategies are slowly going out of business

Companies without disruptive business strategies are slowly going out of business

There are two types of enterprise companies. Those leveraging technology to disrupt their market and those going out of business. The latter might be a slow burn, or more-likely a cliff. Do you have a technology leadership strategy that is positioned to navigate this transition, or are you sitting on the sidelines in an endless cycle of preparation while you watch your competitors change the market? Let’s find out. A low focus company develops and sells a product based on what their customers buy in the market. If people are buying it today, they want to sell it. A high focus company develops and sells a product based on what their customers need. Notice in this diagram the relationship between the low focus and high focus company. One looked at the customer needs, the other looked at the current market.

The companies executing the disruptive strategy are those willing to disrupt themselves. Its hard to look at your own company as a sunk cost, but if you don’t, you’ll continue to let your current business model prevent you from positioning yourself for the future. Think about the example above… Blockbuster had the opportunity to buy Netflix, passed, then failed to compete with the disruptive model. This wasn’t just about DVD shipping, but the reality that content production and distribution are one in the same. The disruption looks like this, with the initial foray into the market appearing non-competitive with the current offer, but the disruption cuts off the bottom of the market, then disrupts the market as a whole:

You can see this in the Blockbuster vs. Netflix model where the capabilities of Netflix were actually less feature rich. You had to schedule proactively, could only have two, and had to ship them back. Blockbuster was more agile, had an immediate selection, and was local. Despite those feature advantages, Netflix disrupted the market at the low feature end.

The initial disruption by Netflix then showed their strategy to disrupt themselves, following and in conjunction with the death of Blockbuster. It began with the move from DVD to streaming. Many thought of Netflix as just a way to “get movies through streaming”. Customers would get frustrated if a particular movie wasn’t available in time, or a certain title was not available ever. Netflix’s strategy wasn’t to become a DVD streaming company, it was to become a content delivery company. They disrupted their own DVD offering (both physical and streaming) by moving toward original content creation and delivery.

Taking these examples, consider your own company in an image of how you disrupt. Think of it as though you are your own competitor and how you change the business despite your existing business. Yes, you have to change the wheels while you are driving, but the bold business is the one that allows itself the ability to change.

There are four types of activities that companies define to build their disruptive strategy, all of which are necessary to maintain and execute the existing business in conjunction with allowing for its disruption.

  1. Incremental. The needs right now that are immediate to your business. If you have a hole in the boat, you fill it.
  2. Evolutionary. The improvement in what your customer is already buying from you, even if it doesn’t fulfill your aspirational strategy.
  3. Experimental. The exploration of a new product avenue to determine if your aspirational strategy makes sense.
  4. Aspirational. The disruption of your current business to a new business. This assumes your current business as a sunk cost and determine a path forward in a new market.

Here is how this looks visually. You can see two distinct workstreams. The light blue is the evolutionary project flow, from immediate to iterating on what your customer is buying today. The second is the green which leads to the aspirational journey through an experimentation step.

My challenge to you is to have the courage to think aspirationally. This often isn’t easy and political barriers will limit your progress. If you are in a company that refuses to think aspirationally, despite your efforts, either change tactics, or move on. Now is the time to move… have the conviction to seek new ideas and execute on them.