With the pace of social and technological change increasing rapidly year on year, is your organisation deploying the right digital tools and strategies to keep up with these changes? Could your products or services cause a disruption within your industry and beyond? Or are you choosing to ignore the exponential rate of which small businesses can quickly emerge into a real competitive force leaving your organisation significantly disrupted? This article aims to help you understand the difference between disruptors and the disrupted and where your organisation currently exists in the age of digital business.
What is disruption and how does it apply to an organisation?
Industry disruption is the very thing that few companies can predict and even fewer education authorities can train one to simply do within a business. Companies that achieve disruption within an industry usually have several qualities about them and a start-up mentality that more older or larger companies fail to pay attention to with having an established comfortable market share in that industry. A prime modern day example is the recent success story of the accommodation booking company Airbnb.
Several years ago larger hotel chains around the world would had never noticed or considered Airbnb as a direct competitor or threat, but with their exponential growth over the last several years they will be booking more rooms than the world’s largest hotel chains by 2016. Apply this globally and you have a disruptive ripple effect throughout the hotel industry which effects all major competitors within it, including those companies that didn’t even consider Airbnb as a viable threat years ago.
Companies like this can make the exponential growth in size much more easily than larger companies by being more agile to react and adopt change with minimal overhead expenditure. The immune system of a large hierarchical organisation will usually fight extreme change by its very nature to maintain control processes traditionally formed by a classic hierarchical business structure and overhead commitments to business assets. A key enabler of this exponential growth is digital technology and strategy.
What makes these new emerging companies grow so rapidly is the combination of speed and risk, but more importantly the speed at which disruptive companies are enabled by new emerging technologies such as cloud computing, real-time KPI analytics and using the community through social networks to enable growth and scale well beyond their core business structure. This in turn gives the exponential companies a greater advantage by using their time to manage abundance (staff-on-demand) instead of managing scarcity (job role fulfilment).
A traditional business model operates by measuring product demand vs company resource to meet their targets. This method looks at the number of assets a business has in order to fulfil that customer demand. A business will naturally want to increase over time to create more demand for their product and in response mirror their resource identically to ensure internal staff can handle increased demand.
An example of a traditional vs exponential business approach could be a music company that has bought a new venue to manage. They would need additional staff to run the venues physical operations and staff to promote their shows and services. But as their product (tickets) is now information enabled, would they still need more staff to sell / promote tickets to that venue? A traditional company would say yes and therefore hire more staff to meet demand, where an exponential company would look at using the crowd or digital tools to enhance existing staff productivity and to increase their ticket selling opportunities without increasing long-term internal expenditure.
An exponential example of this is the taxi company Uber whose business model is based on empowering external resources and crowd to work for them to scale their business in size to meet demand enabled by technology. Therefore if Uber had a lower level of customers during one day then the self-employed taxi drivers who work for and with the business would of course not earn as much income. Uber as the company will not lose out on staff overheads because they use a ’staff on demand’ model. Unlike the venue that would have a new full time member who would still be getting paid full time salaries just in case demand increases again so they could meet it. Abundance vs Scarcity.
A key factor to allow a seamless enablement of staff on demand is due to 'information enablement' of your business products. Once your product becomes digitised it is then susceptible to the paradigm of accelerating pace that we are seeing globally with the speed that technology advances. An organisation should be aware of this fact and react to it accordingly.
How should an organisation react to this transition from physical to digital?
Well the prime examples are all around us today. Digital companies such a Google, Facebook & LinkedIn set the standards for data utilisation to generate market value and define future predictions of industries. They have also gone as far as building algorithms to help automate and manage this process more efficiently. For a business that sells physical products and services via a digital information enable method on the Internet, they can now use rich data to understand their customers and big data to help them in predicting customer and industry trends.
There are two key performance areas of indicators that can be applied to help assess how your business currently operates and if it has the promise of becoming an industry disruptor. Todays successful exponential companies will use at least 4 performance indicators, and some up to all 10 to maintain their growth and dominance over a market:
External Factors (SCALE):
Staff on demand - Empowers a company to quickly scale up or down in size to meet demand as long as they are needed of the project
Community & Crowd - Utilising both of these to work with and for your businesses to allow you business to have reach outside of your fixed staffing team
Algorithms - Automatisation of data processing and rules at speed to return useable rich data
Least assets on demand - Ability to successfully run a business at minimal costs and assets, but still perform at the level a large organisation with high costs and ownership of fixed assets
Engagement - Using incentives and gameification with your customers to drive participation and interaction with your brand to better market to and understand them
Internal Factors (IDEAS):
Interfaces - Filtering / Rules / Reporting, managing abundance well and scientifically
Dashboards - Real Time reporting to show true KPI conversions
Experimenting - Constantly tuning and adapting behaviours to markets and customers to optimise performance
Autonomy - Decentralised authority system - Also referred to as the bee-hive effect, empowers employees to operate autonomously towards a collective goal without being micro managed
Social Technologies - Keep communication in real time though the organisation to increase efficiency
All the points above can be enabled with technologies to help performance of your organisation and staff, which will allow you to switch from the traditional management model of scarcity to meet demand to the exponential model of managing abundance.
If your business is a medium-large sized organisation then start by breaking large departments into smaller teams to take on multiple departmental challenges and encourage the collection of talent within those teams to be self managed to draw upon their talents as a collective.
A newspaper organisation is a perfect physical and digital example. They have a collection of journalistic talent that mainly involves hiring freelance talents as the business requires and collectively they produce a high standard of output under the organisations name towards one unified goal of publishing a newspaper frequently and on time.
The life span of larger organisations are now on the decline, while we are seeing new startups quickly grow in size and market share using exponential technologies with miniminal operational outgoings.
Is your business equipped to deal with this change and do you have a strategy in place to respond to change? Like global giant Apple, do you purposely plan to disrupt other industries with new innovation or are you content at staying within the boundaries of your own industry? If the majority of your answers are gravitating towards “no”, then now is the time to look at how your organisation will exist in an exponentially increasing digital age.
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