We all kind of know what this means; a technology or way of working that is so game-changing that the very dynamics of a marketplace are fundamentally changed. But from a business perspective, how do you respond to innovation that has such a striking effect?
What’s particularly interesting to note is that the phrase was first coined as recently as 1995 by US academic, economist and business analyst Clayton M. Christensen. It isn’t hard to see why that is. Back then, we were on the cusp of the internet age. It was generally known that the world was about to change markedly – but it was still anyone’s guess as to exactly where the chips would fall.
Since then, there have been many examples of technology and innovation which have disrupted the way we live and have certainly disrupted business. Whether such fundamental change has been for better or worse, though, depends on which side of the fence you’re sitting.
A recent report by the Voucherbox site looked at ten things that are cheaper today than they were a decade ago. As you read through the list you can better understand where disruptive technology most affected businesses.
For example, the rise of Uber has lowered cab fares in London quite significantly since 2006, whilst consumer electronics and mobile phones have also plummeted in price. But what is perhaps more interesting is the wider ripple effects of disruptive technology. For example, let’s look at the travel agent industry. The same report points out that many flights are now cheaper than they were a decade ago – driven in large part by the fact that we can now act as our own mini travel agents via the web in ways that weren’t as open to us 10 years ago and certainly not at all 20 years ago.
In reaction to the fact that we can all arrange our own flights directly with the airlines and booking accommodation via hotel websites or through booking.com and Airbnb, traditional travel agencies have had to work on their internet presence and reduce prices to ensure that they are still in competition.
Although many people question why travel agencies still exist, the industry has managed to adapt to the challenge of lower prices that can be found directly online. The American Society of Travel Agents even stated that 60% of independent US travel agents had reported increased sales and revenues in 2015 compared with 2014, a trend which keeps improving since 2011.
It seems that there is still a significant number of travellers who prefer going through a travel agent as they can remove the “hassle” factor of searching for the best deals for themselves, and they can benefit from the agent’s knowledge and expertise in putting together the most suitable itinerary. In short, some people are willing to pay that little bit more in order to make the process easier than booking online. The travel agency industry has risen to the challenge of disruptive innovation by focusing on what it can offer that online services can’t.
But the real biggie in disruptive business has been the explosion of the smartphone. In fact, just nine years after Apple introduced its first iPhone, it’s now estimated that a quarter of the world’s population has a smartphone today.
The smartphone is the device that we all use to run our lives now and every business sector has had to respond to the consumers’ preference for using apps on their phones. Even internet banking feels a little old-fashioned these days, compared with tapping on a banking app to see what transactions have gone through or split a payment between flatmates for utility bills.
Every industry has had to rise to the smartphone challenges: without an easy-to-use app to navigate different daily tasks such as banking and shopping, consumers vote with their feet and switch to a brand that is more mobile-friendly.
The smartphone has not only affected the way businesses interact with their consumers, it has also changed life within organisations. People can now conduct all their business affairs on the hoof – from wherever they can get a signal.
The internet and rise of BYOD (bring your own device) had already facilitated the concept of remote working and it is now a standard practice, with many employees expecting greater flexibility. Now, people don’t even need to lug a laptop around with them – emails can be accessed and meetings can be attended through apps such as Skype on their smartphone or phablet.
Most businesses will not be disruptive brands – those that understand and capitalise on consumer trends before they become trends – and create the technology that changes everything.
But the key to survival in the business world when faced with disruptive innovation is the ability to adapt to it as quickly and seamlessly as possible. It’s either that or facing the prospect of being left behind and appearing dinosaur-like in comparison to the competition.
Image: FIGURE 15.5 Innovation Adoption Curve” by Jurgen Appelo