Why Disruption is Coming for Your Industry – And How to Embrace It
Are you ready for the disruption coming to your industry?
If you are an established business that has been operating for many years, you may not like this subject. Maybe you’re even trying hard to ensure it doesn’t happen.
If you have a big market share, you may be able to command some influence and keep disruption at bay. Or can you?
The truth is that you cannot stop an industry disruption. And the more you work towards it, the worse the effect of it will be on your business.
Just as life has been changing and no-one could stop it, so must disruption take place.
HOW SOME INDUSTRIES GOT DISRUPTED
Disruption is not a new phenomenon. Neither is it something which came and went on its way, never to return. Disruption and innovation go hand in hand.
One of the biggest drivers of disruption is technology.
As technology develops and matures, more people get to do things they couldn’t do before.
Technological advances open doors no-one thought existed. By doing so, some doors also get permanently shut.
Here are some disruption examples to consider.
This is one website which unless you research a lot, you may have little respect for.
Or maybe you give it an occasional visit but don’t think much of it. Yet it’s a big disruption in a big way.
Maybe its name can give you a hint.
In the days before the internet became widespread, you would go to a public library to do your research. Libraries contained many books you could read.
But one set of books was a must if you wanted thorough historical information.
That set of books was the encyclopedia. It was usually published in volumes and labeled in letters. Like a dictionary, entries were ordered alphabetically.
But since the books contained detailed information, it would end up being very big.
For convenience, an encyclopedia was split into several books. For example, one would contain entries for words beginning with letter A to letter D. The next one from letter E to G and so forth till Z.
With internet, came digital versions of the encyclopedias. Encyclopedia publishers had to reconsider how they did their business.
Social media is so popular that younger generations may wonder what existed before the apps.
If you’ve come across some of the previous-generation communication tools, then you know something about the transition.
Invented to facilitate socializing, these sites and apps have really changed how we communicate.
Initially, you would meet someone and talk with them face to face. If leaving them, you would have to wait till the next time you met.
If you missed them too much, a convenience called a letter came in handy. Write a letter, put it into an envelope, buy stamps then send it.
Today, this type of letter and everything else using this method is referred to as “snail mail.” The speed of communication is seen to be similar to a snail’s pace.
Currently, you have a myriad of ways in which you can communicate with anyone almost instantly. And just as users have had to adapt, so have businesses.
If you expect customers to write you letters of complaint, that won’t happen. If waiting for them to visit your store and share their experience of your product, you might wait a long time.
Social media has changed communication. Your business has to go where customers are. You have to research and find out which platforms your target market is in and become a member.
And that’s not all. You have to stay updated with the trends.
You’ve got to familiarize yourself with consumer habits and preferences and adapt to them.
It is no longer a case of big businesses dictating how customers will be served.
As they say, customer is king. That makes your business the servant.
Home owners have different stories on how they bought their homes. Some had very bad experiences while others had good ones. For others, it was just a plain old boring routine.
They looked around and saw a good home. Asked some questions and decided to buy.
Others spent so much time shopping for a good home and eventually got tired. The more tech-savvy kind shopped online, contacted an agent for a visit then bought.
All of these have one thing in common: they bought their homes.
But are you aware that the process is quickly changing?
It’s all mobile now. Everything is happening on your smartphone. From searching for a home to visiting it. You can do everything from the comfort of your sofa.
360-degree videos have made physical visits less necessary.
Or maybe you visited an agent’s office and used a VR headset to view the homes on sale.
Just that experience was probably enough for making a buying decision immediately.
SIGNS YOUR INDUSTRY IS ABOUT TO BE DISRUPTED
Disruption did not stop with these industries.
Since change is never stopping, you can expect disruption to continue happening.
To avoid being disrupted out of business, you need to be on the lookout for signs of impending danger.
Here are some you can easily identify.
1. Customer habits are changing.
Your customers buy from you for a good reason. You have invested in your business processes and you are making good money. You know that certain products are loved by certain customers.
They buy during certain times of the day and in particular amounts.
Suddenly, the trend is no longer the same. They are either buying different products or dropping some from their shopping.
Your customers’ shopping trends are changing. They are picking on new preferences.
If you notice this, and you probably hear it from one of your competitors, something is cooking.
Change doesn’t just happen overnight. Change is usually triggered. In most cases, the availability of options is what makes people choose differently.
Changes are also facilitated by the availability of new, or at least newly-available information.
In the retail world, this came in the form of internet.
Whereas the traditional brick and mortar stores were doing very well, an online bookstore took them head-on.
With promises of convenience and home delivery, customer shopping habits changed. Eventually, their choice of retailer changed.
That former bookstore’s name is Amazon.
2. Unchanged business models despite customer complaints.
Business are started to solve problems. Unfortunately, some businesses become so big that they start defining and enforcing the means by which customers should experience the solution.
If these businesses are big enough, they build castles with thick walls to keep competitors at bay. And with the competition under control, so are the customers.
Customers give feedback but the businesses largely ignore it since they are firmly established. The feedback develops into complaints but still falls on deaf ears.
The businesses can’t risk changing. They are too invested in their systems and models that changing is dangerous for business.
Suddenly, the complaints stop coming. The feedback stops coming.
Have the customers finally given up on the hope for change?
No. They have just discovered an alternative way of getting the same services. There is a new entrant in the industry. Small but sweet.
He understood the problems faced by the complaining customers and addressed them.
Customers are trooping to his business.
They are spreading the news and the small new entrant is growing big. You lose your market share to someone who was eager to listen to the ignored voice.
Listen to your customers. Check what they are saying on social media. Use their frustrations to improve your operations lest you get affected by the coming exodus.
3. Reduced revenues.
When you quickly recognize the changing customer habits and listen to their feedback, you will avoid many problems. You will be able to act fast enough to prevent reduced revenues.
But if you don’t, this will be the third proof that you are about to lose. It will still be possible to turn things around but you’ll have lost so much ground.
When you realize that your sales are low, do not be quick to conclude that it’s a tough season. Someone else may be cashing in on the “tough” season.
By the time your sales are going down to scary levels, your customers are already gone.
Convincing customers to love your brand is not easy.
So when you finally get them to do it, you need to ensure that they keep loving your brand.
When growth is slow, it is customer loyalty that keeps you ahead of the pack. This will guarantee sustained revenues for your business.
4. High regulations for new entrants.
Is your industry controlled by many regulations which make it difficult for newcomers to join?
If so, you might be happy that there is reduced competition. But before you celebrate, look more keenly.
One danger with industries where it’s difficult for new entrants, is that the rate of innovation is low.
The current businesses work on securing their market share and end up holding on to business models which have been proven to work.
It is in this situation that a new business idea takes off. It seeks to overhaul normal business processes and utilize a new way of working.
Many of such businesses are built on technology. And as such, taking off becomes easy.
For example, consider the banking sector.
Starting a bank is no small feat. Apart from the money required for buildings, employees and computer systems, you have to go through strict regulations. These have all to do with your ability to run the business.
You will also need to comply by rules pertaining to security in different ways.
Look at what cryptocurrencies like Bitcoin did to the banking sector. Cryptocurrencies have a high usage potential and they are already being embraced.
Though banks thought they could control the financial industry, they are now scared of cryptocurrencies.
Though they have to struggle with price volatility issues, cryptocurrencies are gradually working their way into people’s wallets.
A bank like JP Morgan Chase has noticed the potential and come up with their own version: JPM Coin.
5. More startups in your industry.
One of the surest ways of detecting a new or upcoming disruption is by looking for disruptors. Often, these come in the form of startups.
With new startups, there are venture capital investors.
These are the people who get business ideas pitched to them. If they like the idea and see the potential of it, they put their money there. With money being a crucial part of a business, the startups will develop the idea which will replace old businesses.
If you read about how popular startups succeeded, you will understand that they bring in a new way of doing things. They also have youthful staff who are quick to innovate and work flexibly.
If you are to ignore any of these signs, this should not be one of them.
HOW TO PREPARE FOR DISRUPTION
Reading the signs on the wall is great for urging you towards action. And even if you don’t see any of these signs but your industry has been long behind in technology, consider innovating.
Staying ahead of the competition will definitely help you avoid the last minute rush. With the innovation though, you need to ensure it’s in the right direction.
Otherwise you can innovate and still be caught by surprise by better innovations.
Whatever is going on in your industry, here are some of the general actions you can take to be ready for change. You can also use these action points to jump start a disruption.
Analyze Your Data
You cannot be proactive in your business and make good decisions if you don’t have data.
If you have data but it’s not managed in a way which makes it usable, then you have a problem. Despite the data being a real asset, your inability to utilize it is a sure setback.
If this is the challenge you have, then start working on a data management solution as soon as possible.
In the meantime, you can make use of publicly-available data about your industry. Get the answers to some of the questions which touch on the signs listed above.
- What are the industry’s consumption trends?
- How are the different companies fairing?
- What is the historical growth in business?
- What are the disruption or innovation predictions in your industry?
- How are the related industries fairing?
The importance of having data is to facilitate research. Research about trends in expenses, revenues, customer loyalty etc.
When you have this information, you are better placed to understand the situation you are in.
The publicly-available research findings will also come in handy even if you had your own data.
This is because it gives you more than a glimpse on what is going on in your competitor’s world. You can use this to gauge where the industry is at and where it’s headed.
Fix Your Business Model’s Weaknesses
Many disruptions occur when the method of doing business is changed.
Facebook changed the way businesses communicated with customers.
Uber changed the way people were riding and being charged. WhatsApp changed the way smartphone users communicated, moving them from traditional SMS to real-time chat.
For these disruptors to succeed, they used different business models. Consider Uber for instance.
To ride in the traditional cab, you would hail one, get in, be driven to your destination then charged as the driver saw fit. Negotiating the price was acceptable and expected.
What about the Uber option?
You need to use your smartphone to get a ride. The app shows you the different vehicles around your location for you to choose.
Some of the details available on the app are the car’s registration number and the driver’s information and rating.
Before deciding on one, you indicate your destination and the charges are displayed for you. Payments are then done using cash, credit/debit cards or mobile money.
With algorithms determining the cost of your trip and the best route in a system incorporating customer feedback, the business model was certainly different.
Such a business model puts everything in place, even records for future evaluation.
Did any of the traditional taxi operators see that coming?
Update Yourself on Business Technology
This is another critical part of preparation. The more informed you are about what is happening in the business tech world, the easier it is to adapt.
There is no way you will hear of the launch of a new innovation today and implement it quickly if you don’t understand it.
And you won’t be able to understand it if you haven’t spent time reading about it. Or studying it.
Note that the key here is to stay ahead of the competition.
You cannot be ahead of the competition if you wait to hear about new tech through the mainstream media.
Whatever comes through such channels is not really fresh. And chances are that your competitors probably have more information about it than you do.
If so, are you sure they won’t act before you do?
When it comes to technology, the one who jumps in first and runs with it most often accumulates the most benefits.
Start Acting Now
Staying updated is a smart step towards preparing yourself for an industry disruption.
But if all you accumulate is information, then you will be at a loss to show the importance of the same.
Many companies have information. The difference comes in the implementation.
Take note that embracing disruption is not knowing about the disruption. It is all about acting accordingly so as to stay afloat during the period.
And after staying afloat, to swim and even lead the way.
Since embracing disruptions come at a price, you will be better off paying that price in small amounts. Instead of waiting for the big announcement then rush to allocate resources and train your staff, make gradual and more manageable moves.
As you gather insight into industry trends and predictions, cultivate a workplace culture of experimenting with the new.
Let employees discuss the figures and think about how to develop new solutions.
Allow them resources to test the solutions, which are really innovations, and see how they work. When small change is easily embraced, then the big change will be easier.
The fact that disruptions will characterize all industries is enough fuel to urge you towards embracing it first.
Staying ready, looking for it and even trying to create it will ensure you are ahead of everyone else.
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