Disruptive innovation is not just something that is happening in many industries.
It is both a threat to companies that fail to adapt and an opportunity for companies that drive the disruption. One of the most common issues in strategic planning is a failure to embrace disruptive innovation as an opportunity. This failure inevitably will put your company in the position of being threatened by disruption, which is far more dangerous.
As an established supplier of some product or service, it’s much easier to see disruptive innovation as a threat.
Disruption is both more difficult and riskier than staying the course. In terms of strategic planning, there can be a significant cost to changing strategy. Also, what got you here is likely a very consistent and focused strategy.
In strategic planning work, I have found three questions we can ask that will highlight the disruptive innovation choices available. When doing strategic planning, asking these questions, and formulating strategies, is likely to put you far ahead of any competitors.
The first question is “What are we afraid of?”.
The biggest obstacle to becoming disruptive is the natural human instinct to avoid threats and seek a safe space. Unfortunately, there is no safe space in business. We work hard to create the illusion of safety. But the existence of disruptive innovation in many industries highlights the fact that anyone can be threatened.
By figuring out what we are afraid of, we can assess the effect that fear is having on our strategic thinking. Also, we can assess the economic advantages some disruptive innovation threats may be bringing into our market space. This both poises us for more courageous strategic thinking and suggests possible avenues for our own strategy. Ask this question before you brainstorm and assess probabilities on page 4.4 of the Simplified Strategic Planning Manual (Perceived Opportunities).
The second question is “What are our customers excited about?”.
Disruption is most likely in situations where the market is excited about new developments that fundamentally improve the customer’s situation. There would be no iPod if customers had not been excited about smaller devices that can hold lots of music. There would be no Uber or Grab Lyft? if people weren’t excited about the increase convenience and efficiency of a crowd-sourced transport network. Disruption inevitably follows customer excitement – and history shows that attempts to resist such disruption are expensive and inevitably futile.
The third question to ask is “What will fundamentally change what is possible with our product or service?”.
This question can unearth new opportunities for disruptive innovation that may not yet be visible. Wireless digital cash transactions are a good example. While they are increasing in popularity in the USA, the Chinese markets are far ahead in application of this technology. In China, you can use services like WePay and AliPay (the most popular Chinese counterparts to Venmo and Cash) to pay for almost anything. Flea market vendors, street performers and fast food restaurants accept these digital payments. One source estimates digital payments in the US currently are in the billions, and in China in the trillions.
In other words, how we spend money has changed in China, and that makes some new approaches to business possible.
Of course, if you are in banking or financial services, this would be a central strategic issue. But what about airlines, retail shops and home services? Can we create opportunities from the ability to do smaller transactions in a way that is both cheaper and more convenient? In many industries, the answer is yes, and that change will enable new business models that don’t exist today. Perhaps your industry is one of them!
How are you handling disruptive innovation in your strategic planning? Do you see it as a threat or an opportunity? Let us know – and ask us any questions you may have about how to handle it. Consider holding a one-day workshop on Simplified Strategic Planning.
M. Dana Baldwin is Senior Strategist with Center for Simplified Strategic Planning, Inc. He can be reached by email at: email@example.com