Monday, December 17

When disruption strikes, will you be ready?

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Best to assume it’s a constant feature of business

Picture the scene: an early 21st Century music industry boardroom where a young executive is trying to convince his senior management that a revolution in the way music is distributed is under way. The execs weren’t buying his vision of the apocalypse until this: when one commented that he’d heard MP3 recordings and they were rubbish (may not have been his exact word) and then demonstrated the poor quality by playing a track on his tinny laptop speakers, the young executive walked over with a jack lead and plugged the laptop into the sound system. High quality rock and roll filled the room, at which point the assembled execs realised that, unless they changed the way they thought about their industry they were doomed to extinction.

The young executive in question was Barney Wragg, at that time a senior vice-president with Universal’s eLabs who was one of the speakers at an evening on the topic of digital disruption organised by The Foundation. You’ll be able to go to their site and get a full write-up of the session in due course but there were a number of take-aways for me that I thought had relevance for companies trying to build a customer-centric organisation.

Disruption is not what it used to be

At around the same time as Universal was facing disruption from the likes of Napster I read Clayton Christensen’s definitive book on disruptive technology (The Innovator’s Dilemma) where he described cases in different industries where incumbent suppliers had been usurped by “disruptive” players: new technology initially offering more limited features but at a significantly lower price. These new products would initially seem unthreatening to the functionally richer incumbents but, over time, they would eat away at the incumbents’ market share.

Christensen’s examples included hard disk drives and earth moving equipment, but the pattern was clear and applicable to newer technologies. At the dawn of the internet age it was prescient, but since then two things have changed: firstly, the term is much more commonplace – if you’re in any newish business it’s de rigueur to describe yourself as disrupting something or other. Secondly, the pace of change means this:

Disruption is now a constant feature of business

That’s right, there’s no opportunity for rest or stability in business: the opportunities presented by digital technology are immense and if you don’t capitalise on them, someone else will. The question is: do you focus on defending what you currently are, or do you look at what your business might become?

Data helps you focus on customer outcomes

The growth of gig economy players such as Deliveroo and Uber has tended to focus on the employment implications for their riders and drivers – more on that later – but what struck me was that these disruptors are using data not only to manage their core operations but also as a fundamental part of forward strategy.

Lisa McDowell, Head of Brand Strategy and Insight at Deliveroo, also spoke at the event and described how they were using their data on what customers were searching for in geographical areas, leading them to take action to plug gaps in the supply side. In Battersea, South London, ordering data told them there’s a dearth of good Indian restaurants serving the area. Their solution: set up a unit with an upmarket Indian restaurant just to supply the area. Such “dark restaurants” worry people like me who grew up in brightly-lit ones but there’s no denying the trend towards eating good food at home without the hassle of cooking it or going out.

What’s important here is that Deliveroo’s business is not about delivery (what they do) but thrives on a detailed understanding of their customers’ desired outcomes (a wide choice of good food when I want it), leading them into new ventures that take them beyond their initial proposition.

The old values still apply

Disruption doesn’t mean having to turn everything upside down: you still need to keep your people on board. For Deliveroo this applies at the rider level: whilst they encourage riders to work for other services such as Uber Eats and Just Eat – a counter-intuitive approach to loyalty – they have also introduced incentives to ensure the best riders (the ones who do the most deliveries) prefer to ride for them. Good internal communication about any change and the impact on them was also highly valued.

At the senior level, Sarah Speake, the third speaker, previously CMO at mobile disruptor Trufone and formerly Senior Marketing Director at Google, emphasised the importance of nuanced peer-to-peer communication in getting senior executives to buy in to the change required as a result of disruptive forces. Confrontational approaches tend not to work.

Monetheless, all three speakers concluded that you needed “mavericks” on the board – or trusted by them – to be able to anticipate or manage disruption. Diversity of thinking style was also seen as important.

Disruption-proofing

With the threat of disruption ever-present, what can you do to protect yourself against new entrants and keep going towards a customer-centric future? The cynic might say nothing, but an optimist (that would be me) might suggest asking the following three questions:

  • Look at the possibilities afforded by digitisation in your marketplace: how do customers consume your or your competitors’ products? what channels do they use?
  • What data do we have on our customers’ behaviour and what does it tell us about current and future demand?
  • What are the outcomes our customers want when they use our products? How might digitisation, big data or other new technology approaches help deliver those outcomes?

The above isn’t intended to be anything more than a stimulus to start the debate at a senior level but if you’re not having the debate, it’s definitely time that you started.

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About Author

Business strategist, consultant and change manager who helps companies become genuinely customer-centric. Nick delivers customer-driven business transformation projects and has worked across many industries including banking and finance, insurance, telecommunications, industrial and public sector. Has held senior roles with variety of blue chip names including BT, Royal Bank of Scotland, CSC and Sema Group. Currently Head of Delivery at NextTen Innovation Solutions

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