Disruptive changes are fast becoming a common phenomena in the present-day dynamic business environment. Individuals are also impacted in the race for the ‘most skilled’ to match the needs of emerging corporate and business models. But how disruptive, really, are these changes? Could we have seen some of them coming? Let’s discuss in the context of system thinking .......
These days, it appears that changes are the order of the day, with a frequency higher than had been experienced in the past. Thriving businesses are suddenly on the brink of bankruptcy or extinction. Individuals are also not spared as the experts of yesterday, the go-to persons for all things problem-solving suddenly lose relevance, overtaken by the new kid on the block or the latest technology / personal assistant applications in town. The culprit of these near-obsolescence is the all-too-familiar term - disruptive innovation/change. The often unanticipated or undermined change leveraged by those whom a couple of years earlier were considered the "wanna-be" without a seat at the table of the industry giants or technical experts or whatever names the stars of the group were called.
The strength in disruption often appears to be the fact the changes are often missed or ignored by the incumbents until they become strong enough signals, at which point it’s too late to respond to the signals. Given my recent inspirations in system engineering and seeking to understand the linkages between seemingly unrelated events, I explore the concept of connectedness of many small signals which are not really as unrelated as they appear. They are often symptoms of a bigger underlying wave, disease, phenomena, etc. called disruption.
The strength in disruption often appears to be the fact the changes are often missed or ignored by the incumbents until they become strong enough signals at which point it’s too late to respond to the signals.
One of the anchors of business analyses and education is the Michael Porter’s Five Forces of Industry profitability which highlights the five focus areas to evaluate the profitability of a business / industry - the bargaining power of buyers, bargaining power of suppliers, industry rivalry, threat of new entrants and threats of substitutes. Business practitioners have varying opinions on whether these are still relevant or not to current business practices. In recent times, applying system thinking insights, I have been intrigued by the linkages between two or more of these forces and what that means for sustained long term performance of a business, corporate system or even professional individuals. My conclusion is that these forces and the interactions between them, as somewhat discussed in this blog post, are absolutely relevant for anyone delivering services and/or goods in a dynamic environment with many moving parts. So, let's start with the definition of the true value of your service.
Your true value proposition..
A key concept in system thinking is solution-neutrality (#value; #SolutionNeutral) which is the ability to define the true value that a service/offering looks to deliver in order to meet a need without thinking of the technology options available. Essentially, it is answering the ‘What’ question first before thinking of the ‘How’. What business or service delivery model are you in? What is the solution-neutral definition of your value proposition? Answering these questions correctly as a service provider unlocks a number of insights. It helps you better understand the boundaries of the industry/career/business in which you are. For instance, when asked to identify the competition for a vehicle brand, the list typically includes other brands of vehicles; but when you step one level higher you start to think of other modes of transportation such as bikes, trains, airplanes etc. So it may be safe to say that the car manufacturer in this case is really in the business of getting people from one point to another in the most efficient manner based on key criteria of efficiency as defined by the unique selling point of the specific business / case in point.
What business or service delivery model are you in? What is the solution neutral definition of your value proposition?
The customer or recipient’s view... While understanding the solution-neutral definition of your value proposition is great, it is more important to understand how the customer perceives your value offering in terms of what needs it meets for them. In essence, their own solution-neutral definition of your value proposition. Often, therein lies the key to one of the aspects of disruptive change that is a blind spot for those delivering goods or services (#StakeholderValue). Who would have thought that technology would be a competitor to Air Travel? Surprised?... Let’s think about it... While I defined the business of the vehicle manufacturer earlier as that of moving people from one point to the other, the true need that is satisfied in the eye of the customer is probably one of interaction. So similarly the solution-neutral value proposition for air travel, except for individuals who just love to ride alongside the clouds, is really to facilitate interactions as fast as possible. As the virtual interactions of people are being enhanced by technology such as virtual meeting platforms, 3-D experiences, augmented reality etc., the need to hop on a plane to get to that destination is somewhat diminished. One would argue that a virtual meeting does not present the full benefits of a physical meeting such as touch and feel... Well, then that brings me to the next aspect of the disruption which is the changing behavior patterns of buyers aided by other contextual factors(#foresight).
Who would have thought that Technology would be a competitor to Air Travel?
And now, the shifting dynamics.....
For those who grew up in the era when there were no phones, interactions meant meeting in the playground, hugs, handshakes to seal agreements etc. and so a virtual interaction somewhat did not fulfill the essence of the exchange. So, physical interaction was a key assumptions for businesses built around those customer profiles. However, with increase in urbanization and digital natives, where next door neighbors may not see themselves in weeks/months driven by busy schedules and individuals in the same household call themselves on phone to ask someone to get the door, the definition of interaction clearly takes on a new meaning. Building on that, a video conference call for instance covers the basics for such an individual and is in fact the norm than the exception. So the key question is - As a business, "Do you know how your customer(s) define(s) you?" or as a professional, "Do you know how your organization or industry views the actual need that your skillset meets?". Are there underlying shifting trends that change the preferences and patterns of key stakeholders - Either in their intrinsic definition of value or in how they rate the delivery mode?... So really, if the intrinsic need that air travel meets for a group of individuals is facilitating interaction then the industry boundary is expanded and so also is the "competition" and potentially a change/lowering in the barriers to entry for new players whose offerings are more aligned to latest trends in customer preference - "the disruptors".(#ShiftingPatterns)
As a business, "Do you know how your customer(s) define(s) you?" or as a professional "Do you know how your organization or industry views the actual need that your skillset meets?"
Then, on to the exponential effects of the interactions....
The interactions between the dynamics of the various competitive forces appears to be one of the key harbingers of disruptive change (#SystemicInteractions). Let's build on the airplane example. Given the options that the customer now has for interactions, the buyer power is strengthened and as such with increased knowledge on climate change amongst others, they can now make demands on criteria that must be met by airlines and others if they must use their services for their means of interactions. It then becomes the survival of the fittest and considering that some Technology options do not have the overheard costs that airlines carry, your guess is as good as mine as to who the winner in the contest is, except there is a major change in strategy by the incumbent (if the options exists at all).
There are many examples that speak to this, such as how banks are truly a means to facilitate exchange of value for individuals. Again, if other means of those exchanges exist that align with the preferences and context of the emerging customer group such as payment platforms facilitated by fin-techs, then the competition for banks are not only their peers but also the technology companies in the emerged industry. The banks only continue to have a strong place in the game as long as the means of exchange of value is still anchored to money. If other anchors of value emerge, much like how some people shifted from gold as an anchor, then the banks may be looking for another business to be in in the long run.
This probably would not have made any sense 20 years ago in a developing nation where income/salaries were received in physical cash, albeit through the banks, and most disbursements done in the same way. But nowadays, the only confirmation that my salary has been paid is a beep on my phone or a line item in my account statement that shows the deposit even if my bank doesn't have that amount of physical cash held at the time. Hence, spending same from the click of a phone or a website becomes easy and even second nature - speaking to the changing underlying behaviors. So, for extreme simplicity, if the anchor of value became the number of likes on a social media account verifiable by everyone and i could buy items just by exchanging 'likes'.... What then do I need a bank for? There is probably a solution along the spectrum between my 'simplistic likes' and the present day money denomination that may serve as a disruptor for banking as we know it today, in my humble opinion.
The connectedness of buyers, customers, stakeholders may in itself be another example of an enabler of disruption. This was seen in the news, earlier in the year, on how the connected individual buyers on an investment platform showed the strength in numbers that challenged established institutions and practically beat them at their game. Which reminds me of the Lion King story where the wildebeest stampede led to the death of the king of the jungle - Mufasa - when this King on a normal day would have easily taken on a few of them. The Question is - What technology is enhancing your business that may also be making life easy for your competitors or even creating new ones?
The interactions between the dynamics of the various competitive forces appears to be one of the key harbingers of disruptive change.
So, what next? .......
As an industry leader or 'highly-skilled and high-demand' professional, how vigilant are you as the 'king' of your jungle.... While it is hard to get to the top, sustaining the leadership is even harder..... To sustain the lead, you must therefore be a learning organization, person, business, enterprise.. so that you don’t get blindsided... Think of the neighborhood bully who threatens everyone for so long... only the problem is he has fought and been around so long that the new comer has studied him and knows his areas of weakness. He thinks he is the king of the neighborhood until he is beaten up by the slimmer, agile newcomer or maybe even not so new but who had learnt to improve in the areas of weakness of the incumbent 'king of the neighborhood'.
What assumptions have you made that support your ‘kingship’? When was the last time you revisited those assumptions? Have they changed? Are the solution-neutral definition of your value offering aligned with what they represent to the buyer? Do you know who or what your true competition is? Are you aware of shifting trends and patterns that potentially impact you with their ripple effects? Are you learning and improving continuously? Do you have structures in place that enable you monitor signals, connect the dots and adequately interpret into actions? Do you have a back-up plan for that one-in-a-million potential titanic-sinking event? Ultimately, how relevant are the tools/skills you are carrying for the emerging future?
The answers to these questions, if in the affirmative, holds the keys to preparedness, minimizing the blindsiding effects of the connected changes termed “disruptive” as an incumbent leader. On the other hand, as an emerging business or a new talent seeking to lead in a competitive environment, being able to create options to the answers to the these questions in light of the practices of the incumbent may be the key to a tag line of a dear friend - “don’t let them ever see you coming, ...”, and my own addition, ".....until you arrive big".
Wishing you a transformational time ahead,