How to Survive and Thrive in Digital Disruption

“We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten,” is an oft-quoted line from Bill Gates’ ground-breaking book The Road Ahead.

But the timeless advice that follows is even more important:

“Don’t let yourself be lulled into inaction.”

That sums up the importance of not only staying afloat but also swimming with the current in the river of technology that keeps flowing faster than ever.

Being relevant – to the market and to consumers – is paramount for businesses. In today’s rapidly evolving marketplace, companies and individuals alike must keep up with new digital trends if they are to continue meeting consumer expectations. Traditional business models are being pushed to the wayside, and many organizations are struggling to keep pace or, worse yet, resisting change altogether.

How a company responds to these changes and trends will determine its ability to survive (or thrive). Even if it has embraced digital transformation, knowing what changes to make, when to make them, and how to manage updated business processes and outcomes is a significant challenge.

However, as the poet Robert burns mused, “The best laid plans of mice and men often go awry.” The COVID-19 pandemic threw the meticulous plans of business leaders and technology architects to the wind in a shocking, historic, and irreversible turn of events in 2020. It changed the way the world lived, worked, and conducted business. It forced companies and organizations to become even more agile, even more responsive, even more adaptable than they ever thought they could be.

In fact, a McKinsey study found that companies acted on digital adoption initiatives 20 to 25 times faster than their own estimates in the wake of the pandemic.

The only way to minimize the negative impacts of a disruption is to understand it better. And barring black swan events like the pandemic, technological disruption is something the world has come to understand quite well.

What is digital disruption?

Gartner has answered that question: Digital disruption is an effect that changes the fundamental expectations and behaviors in a culture, market, industry or process that is caused by, or expressed through, digital capabilities, channels or assets.

Put simply, digital disruption is a change caused by emerging technologies and new business models. Importantly, these innovations can affect (mostly diminish) the value of existing products and services – or even entire marketplaces or industries. That’s why it’s called a “disruption” – the very markets, whole business models, and the businesses operating within them need to be re-evaluated and revalued.

In the past two decades, technology has moved far beyond a functional role in business. The majority of businesses are today based on and built on tech. Counting tech, digital disruption is made up of four elements:

• Technology – the invention, design, development and usage of the product
• Business – how the product is marketed, priced and sold
• Industry – involves standards, regulations and approaches to satisfying the need
• Society – the cultures, mindset and habits that lead people to adopt new products

Amazon, Uber and Netflix are classic examples of companies that combine these elements and embody the very face of digital disruption. Both platforms capitalize on new technologies and changing consumer habits, and both have significantly impacted traditional businesses and systems in their respective industries. Their disruptive presence – and rapid rise – forced established and entrenched (until then) companies to rethink their tried-and-true models.

Companies that didn’t – or couldn’t – adjust to the bleeding edge, evolving-by-the-minute status quo that Amazon, Uber and Netflix brought to the retail, taxi and entertainment industries fell by the wayside as fast as the gravity of new age economics could pull them.

How does an average company deal with or even bring about disruptive innovation in their industry? Here are eight concrete steps…

1. Don’t change for the sake of change

While change is good more often than not, companies need to understand the need for change, especially when it comes to technology. There might be a lot many advantages that new technology can bring to an organization but leadership also needs to beware of the pitfalls and security and regulatory concerns surrounding the change.

Instead, companies should do their due diligence and focus on how digital adoption will create value – either for the business or its customers. Usually, when a business is able to implement and manage game changing technology successfully, it enjoys benefits such as:

• A genuine competitive advantage
• Optimized business processes
• A rise in the value of its products or services
• Product differentiation in the market
• Cost savings in IT deployments

One rule of thumb is to keep an eye on technological trends, how they affect the nature of business in a given industry, and the number and nature of businesses adopting them. A great paradigm shift came when user-facing application software went from running on desktop computers or a client-server system to the cloud. Once businesses, consumers, and even application developers realized the all-round benefits such technological change brought about, they were quick to ditch the old ecosystem.

2. Focus on the problem, not the technology

Digital disruption and innovation are not limited to a certain technology or its use. They are all about how the business leverages technology to solve a problem or meet an objective.

Technology can certainly change the world. And it has already in many ways. In fact, the “age of technology” is now well over three decades old and there are a lot of technologies themselves that have become old – creating problems and opportunities in equal measure.

Businesses, therefore, need to find and focus on a problem to solve. They already have technologies galore to help solve the problem – AI/ML, blockchain, robotics, AR/VR and IoT to name a few. However, many companies get so caught up in the latest and greatest in tech that they forget the goals and solutions on which their business is based.

Instead, businesses need to use technology to measure and track key metrics, streamline processes, enhance offerings, serve more customers, or whatever – the goal is to deliver a solution in the simplest, fastest way possible.

The most disruptive companies are built on the simplest of ideas: Amazon brings the mall home. Uber connects drivers with riders. Netflix provides movies and TV shows on demand.

3. Embrace technology

While this may seem counterintuitive to the point above, the stark reality is that “digital” disruption can only be countered, managed, and outlasted when the organization has a certain level of technological maturity. It pays to be in a constant state of digital transformation – or at least digital flux. Just like a boxer who keeps jumping around the ring, adopting new technologies helps a business remain agile, allows it to change direction quicker, increases its reach, and improve its core product (pack a punch, so to speak).

Business leaders across the globe agreed in general that continued investment in technology was essential for generating bottom line value, as per a report by Celerity.

4. Watch out for old wine in new bottles

Many times, vendors try to pass off repackaged existing systems as “new and improved” disruptive technologies. Large companies with established brands and proven solutions are especially great at this – they dress up their existing products with promises of radical new features and benefits.

IT organizations should be able to differentiate this marketing speak from genuinely game-changing products to avoid unnecessary vendor lock-in.

5. Drive strategy and operations with data

Today, every business is an information business. Data is a company’s greatest asset. Every company needs digital systems that enable it to collect, manage, use and share data in a secure, reliable and efficient way – without increasing complexity!

Data is changing business models at a pace never seen before, even in traditional industries such as automobiles, oil and gas, finance, and healthcare. The better a company can analyze its data and integrate it into processes, the faster, more accurate, and more agile its response to market disruptions.

6. Always be customer-centric

A business might start on founders’ or investors’ money but it’s always the customers’ money that keeps it going. It is vital not to lose sight of this fact. If a disruption benefits customers, the business is duty bound to embrace it wholeheartedly.

Technological innovations and disruptions invariably enables service providers, manufacturers, or retailers to connect better with their target markets. They offer limitless opportunity to businesses to gain deeper insights on consumer behavior and address their pain points. How the business uses these insights to minimize friction along the customer journey and improve their experience will influence its success.

Which is why Professor Sandra Vandermerwe opened her book Breaking Through: Implementing Disruptive Customer Centricity with this line: “Customer centric enterprises consistently outpace those who are not, in good times and in bad. And invariably they are disruptive.”

7. Go all out with radical innovation

The pace of technological innovation is accelerating exponentially. “If it ain’t broke, don’t fix it” is no longer a truism. “Good enough” falls short of enough by a wide margin. Companies that aren’t trying to make their best and most profitable product innovations obsolete are under threat from digital-native thinkers who will do it anyway.

Yes, many organizations truly focus on technological innovation as a process. They have “champions” and “evangelists” who lead from the top. Yet, they’re mostly concerned with creating new and better versions of their existing products. Making horses go faster, if you will.

The need of the hour is not incremental innovation; it is radical innovation. Companies shouldn’t take a product and ask how it can be improved. Rather, they should take a problem and ask how it can be solved. And then have a process to deliberate any number of far out, crazy ideas that have the potential to disrupt the industry and reinvent the business.

8. Build a disruption department

By their very nature, both processes and people are designed to resist change. Disruption, then, is a huge ask of an established business. The bigger the business, the more difficult it is to make radical innovation a way of life or a part of the culture. The only solution is to decouple radical innovation from the core business, core operations, the core teams, and the organizational structure.

1. Recruit employees who can think strategically, synthesize new information, intuitively understand hardware and software, don’t balk from coding, and are passionate about improving customer experience.
2. Form a team whose sole mission is to reinvent. Products, processes, anything. Give them the authority to create whole new business models, small or big.
3. Isolate them from everyday operations and strategy.
4. Provide resources and support to build a separate enterprise or brand in itself.

Radical innovation involves reliable, adaptive, and talented individuals with knowledge of not just IT, but also marketing, finance, HR and just about everything, albeit with a digital tilt. It isn’t easy to build such a team but making the right people coming together can help cultivate ideas into invaluable, innovative, industry-disrupting new realities.

Any company attempting to build a star-studded A-team for innovation also needs to guard against exclusivity or elitism in the organizational structure. Nobody gets there until everybody gets there. The Project Management Institute (PMI) has identified six key aptitudes that every company absolutely needs to reskill their employees with to build an effective digital workforce.

Value Creation in the Face of Disruption

“Creative destruction” is a term coined by economist Joseph Schumpeter to describe incessant innovation that replaces outdated products and processes with new ones. Most organizations that simply “follow the market” need to fundamentally change how they think and “create” value from the new circumstances created by digital disruption instead of playing victim to it. They can do it in three steps:

1. Disruptions rarely affect only one company; they shape entire industries. Companies need to identify the opportunities that come to the fore and see how they can create value for consumers.
2. The second step is not just to reinvent the business model but also make full use of technology and enable employees to push the boundaries of innovation. Only then will they achieve digital transformation at scale.
3. Finally, companies must constantly look for ways to disrupt their industry before others do it. Today, organizations have the tools to analyze data with unprecedented accuracy and speed. They need to figure out how to use these insights to drive sustainable competitive advantage.

Rewards await those that adapt, but bigger rewards await those that disrupt. Grab that first-mover – and fast-mover – advantage.

Michael Brenner is a keynote speaker, author and CEO of Marketing Insider Group. Michael has written hundreds of articles on sites such as Forbes, Entrepreneur Magazine, and The Guardian and he speaks at dozens of leadership conferences each year covering topics such as marketing, leadership, technology and business strategy. Follow him @BrennerMichael.

Dipti Parmar contributed to the revision of this article. She is a marketing consultant and contributing writer to Nutanix. She writes columns on major tech and business publications such as IDG’s CIO.com, CMO.com, Entrepreneur Mag and Inc. Follow her on Twitter @dipTparmar or connect with her on LinkedIn.

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