What You Need to Know About Disruption

Article by:

Ashton Bishop
EO Sydney
Ashton Bishop - EO Sydney

Why are there no more Blockbuster chains? No more Borders bookstores? Why did Kodak declare bankruptcy in 2012? It’s simple: When disruption hit, innovation took too long. We call this “innovation lag.” In 2015, John Chambers, CEO of Cisco Systems, predicted that 40% of the Fortune 500 companies would not exist in 10 years’ time. We are living in an age of unprecedented disruption where every industry is predicted to be disrupted in the next 10 to 15 years. With this in mind, how can we manage disruption as a business owner?

Disruption in Technology

Virtual reality, augmented reality, artificial intelligence and 3D printing— these types of technologies are challenging businesses to think about what their industries will look like in the next 10 years. Innovations that seem disruptive are only disruptions because of the trajectory they follow; from the fringe to the mainstream. Watching and accessing films online was available since the 1990s. Over time, Netflix was able to bring it into the mainstream, disrupting all DVD-rental companies. Virtual reality was a medium first explored in 1960 but has only recently entered the mainstream, with companies like Samsung now selling virtual reality headsets. These are just two examples of how disruption breeds innovation.

Disruption in Business Models

Stepping away from technology, disruption can occur in the way businesses manage their hiring, systems and operations. Many businesses are aware of the “fickleness” of Gen Y, and they are also aware of the need to attract talent. So, to attract top Gen Y employees, these businesses must ensure the company structure, opportunities and methodology employed can attract and retain them. Google’s innovative hiring methods mean they attract A-grade people; those who aren’t only intelligent but are also driven by a purpose. Their 20% rule (where 80% of an employee’s time is spent on their current project and the other 20% is spent on whatever they choose) means Google’s employees are constantly learning as they provide new perspectives and insights. As a result, Google can stay on top of trends and innovate new products and processes.

Gone are standard protocols in large companies. With tech giants like Google, Facebook and Atlassian leading the field, business models are adapting and becoming more creative. For example, Zappos is no longer outsourcing parts of their business for cheapness and convenience. Instead, they’re creating their products in-house. This gives them creative control over the way their items are made.

Dealing with Disruption

When faced with new technologies or business models, entrepreneurs must make a strategic choice between avoiding the disruption, being the disruption or bridging the disruption. Avoiding the disruption means either going “premium” or using avoidance as your strategic positioning. An example of where avoidance was successful is how Moleskine still sells high-quality, luxury notebooks, even when faced with the trend of mobile phones and the rise of digital documents.

Being the disruption means you’re the one bringing the disruption into your industry. There are countless examples of this: Uber, AirBnB and Airtasker, to name a few. Bridging the disruption means a company has found a way for the new disruption and their existing model to coexist. This puts the customer at ease because while there are elements they recognise and are comfortable with, they will also get to enjoy the benefits that disruption typically offers. For example, Bond.co composes your notes patterned after your handwriting within seconds using a robot.

As a business owner facing disruption, it’s always a great idea to reconsider your strategy, plan how you will manage your business’s future trajectory and anticipate how disruption will impact your plans. So, here’s your challenge for today: Have a look around your industry and assess any new entrants that are bringing in processes that could disrupt your business. It’s time to anticipate the implications they might have on your business in the future and plan your response.

Ashton Bishop (pictured) is an EO Sydney member and founder of Step Change, an organization that helps challenger businesses outsmart their competitors. Contact Ashton at ashton@hellostepchange.com.​​​​​​​​​​​


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