We talk about being disruptive, but we can often forget how hard that can be for both the disruptive and the disrupted parties.
A couple of weeks ago Uber got its licence to operate in London back, but it came with an ultimatum from TFL to continue to reform or get out. It got us thinking in the Lab:
Can disruption occur from with the traditional marketplace, or will it always be the newcomers that shake things up?
Can you ever innovate by starting from a position of what you already do, stipping it back rather than building from a radically different starting point?
How can traditional markets, sectors and organisations adapt, and is it always a case of them or us?
We thought that for this month’s #BlabChat it would be good to discuss disruption, in particular how traditional sectors and organisations are adapting to keep up with the world around them. So last Thursday, we posed similar questions to Twitter. We were perhaps a little ambitious with the questions this month with each one being quite broad, but despite this and competing with Love Island, The World Cup and Mediterranean weather here in the UK, our loyal #BlabChat(ters) as well as some new faces, didn’t fail to deliver.
Here's a roundup of the conversation. . .
There was widespread recognition that the impact of ’disruption’ on ‘traditional organisations’ could be quite different depending on the type of disruption and the type of organisation being disrupted. On the whole, disruption isn’t a new problem and isn’t always bad. Disruption of the status quo has been occurring for millennia and has given rise to a huge number of benefits for society as a whole - fire and the wheel were disruptive once. Perhaps the real problem with disruption though isn’t that it happens, but that when it’s happening in our time, it’s impacting both positively and negatively upon us. We aren’t looking at how Uber or the legacy it leaves behind will shape the world in 100 years time, we’re the displaced cabbies and the exploited drivers and governments wondering who’s paying the tax!
A recent Harvard Business Review article suggests that the perception of disruption being mysterious, random, unpredictable and out of control is a misconception. They have developed an index that measures an industry’s current level of disruption as well as its susceptibility to future disruption. It seems therefore that the likelihood of an organisation being disrupted is based on a range of factors.
This was a view shared in our conversations last Thursday. Market leaders or those organisations who can shield themselves behind legislation might be able to weather the storm for longer, buying themselves some time, but total failure to understand a changing landscape will inevitably end badly. Any sector that is dominated by multiple players performing the same function is ripe for disruption. Many incumbent organisations are big, slow, and often too complex to adapt to new technologies or customer expectation. We've seen the rise and fall of many organisations because they failed to keep pace, but legacy sectors such as local government, housing, health, social care, might be slower to feel the impact simply because of the way they are structured.
Part of the luxury that the public sector has been afforded over the years is being the only providers of the services they offer. Afterall, if the local authority didn’t do it, who else wants to empty your bins? But with recyclables becoming a commodity and new technology enabling the creation and facilitation of a whole new range of services, the traditional public sector markets are opening up. In some cases, this is happening without the help of the local authorities, but increasingly, largely driven by the budget cuts presenting an existential threat to the public sector, many are now realising that they can only survive if they adopt radical change; moving beyond less of the same and on to something new. This is opening the doors for different types of partnership.
One way to minimise the likelihood of being on the negative end of disruption is to keep ahead of the game by looking out for new trends which can lead to new types of opportunity. One of my first jobs was working for a company which started in the early 1990’s installing high-end stereos into cars. As standard stereos got better and replacements easier to fit at home the company started to install electric windows and sunroofs. Again, just before electric windows and sunroofs became ubiquitous they moved to designing and retrofitting air conditioning systems and once again just as that started to come as standard they started to manufacture and supply air conditioning kits to the motor manufacturers themselves. These days the company is still going strong, but now imports and distributes the leading brand of air conditioning servicing equipment to garages across the UK and runs training courses for the engineers who use it.
With most traditional organisations thinking in short term 2-5 year cycles, a se change is required in order to ensure that they are able to stay agile and competitive. Spotting and anticipating trends is perhaps one of the most important emerging skills for organisations to adopt today.
We have perhaps now reached a tipping point where the Internet has raised people's expectations for everything to work everywhere at any time. Whilst everyone needs healthcare, even our medical needs have changed substantially in the 70 years since the birth of the NHS. With a rise in life expectancy and quality of life comes the rise in the diseases of old age (e.g. type II diabetes, cancer). It’s no longer just the NHS providing health services, with startups like Thriva spotting the trend for health tracking and prevention and Push Doctor both capitalising on a new type of customer willing to pay for clutter-free online convenience. Perhaps The NHS is a good example therefore of a sector who through its own success is driving its own disruption. The rapid advancement of tech allows new business models to be introduced with rapidly declining costs. That means the barriers to entry into markets like health, housing and social care get reduced substantially.
Startups by their nature are often disruptive to existing sectors and markets. It’s perhaps easier for an organisation with nothing to lose to operate in a radically different way to what the market they are entering is used to. This of course can have both positive and negative effects. Regardless of what you think of Uber and their business practices, it is in all likelihood in response to them that similar technology is now being deployed by some of the more traditional players in the market.
More established organisations can find it more difficult to fundamentally change their offers because often their shareholders, boards and elected members are driven to think about short-term returns rather than the long-term investment. But sometimes it's just about knowing your customers. As organisations get older they break into silos and internal culture becomes fragmented. Ideas get fragmented and people focus on solving their own problems - focusing on the micro rather than macro. The result of getting locked into this way of working is that organisations get better at improving existing products for current customers and weaker at creating anything new. This is compounded by the fact that traditional organisations often have incredibly complex systems, and that makes it difficult for them to respond to change quickly.
Perhaps one of the only ways for traditional organisations to really ensure that they are able to meet the needs of their customers is to break down the thinking that ‘this’ change, project, programme or innovation will fix all of their worries. If traditional organisations have a chance of keeping up they have to understand that change is constant. We’re living in a time of high-frequency change, so the aim should be to create spaces in organisations that identify trends and opportunities well in advance as well as flexible business models that can evolve in line with ever-changing customer need.
For a business to become innovative enough to keep pace with fast changing customer needs the whole organisation has to transform how it organises work and take an introspective view of its values and culture.
To be sustainable organisations have to get serious about R&D and move away from concentrating solely on delivering today’s strategy. Providing space and resources to embrace future forecasting and anticipate trends is essential. The attitudes of organisations need to change so that they can become comfortable with taking risks, because regardless of the level of susceptibility to future disruption, future disruption is always inevitable.
Organisations who are self-aware of their customers' needs, are able to move at pace and can keep up to date with the high-frequency change that surrounds us today are undoubtedly the ones who will give the startups a run for their money.
As always, thank you to everyone who joined the conversation on Thursday evening and ultimately contributed to this post! Looking forward to seeing you all again on 2nd August 2018 for the next instalment!