Digital Disruption: How you can Disrupt and prevent disruption

Adopt an ‘Invest to Test’ philosophy to quickly abandon, pivot, or continue…

To increase and deepen our discussion on digital disruption (see our last post on the concept of Future Surfing), let’s examine the best way to leverage digital technologies and mind-sets to create new business opportunities within highly complex environments.

We’re living in a so-called “VUCA world”: characterised by Volatility, Uncertainty, Complexity and Ambiguity. Across virtually all industries, we’re seeing product lifecycles shortening, technology change accelerating, and customers demanding ever-greater value from businesses.

In studying decision-making in VUCA environments, British organisational theorist Professor Ralph Stacey notes by using longer product cycles and little technological change, you can be rational and measured with their investments. We have the time to construct comprehensive business cases, and run proof-of-concept and proof-of-value programmes, once we develop standardised services and products in fairly static markets. We could “prove” the project before we begin.

However in VUCA environments, where product cycles are short and technological change is fast, having a traditional method of decision-making actually becomes a liability – potentially costing time, money and lost opportunity. Variables replace constants as our decision-making factors.

Within this complex environment, decision-makers need to use Invest to try.

Invest to check is really a dynamic approach… Focus on some well-founded assumptions, but don’t forget that however confident you might be, they are still only assumptions. Invest the tiniest viable amount of resources (financial, human capital, intellectual etc) in building real-world prototypes and services that may reliably test these assumptions. Here you’re trying to make variables “constant” (at least for some time).

Let’s assume, as an example, your customers would love you to quote competitor prices when presenting quotes to them. Don’t immediately dismiss this as irrational or unlike best-practice. Test the belief: create a prototype experience and provide it to 50 of one’s most loyal customers. Request their feedback… Can it be as useful as they believed it would be? Does it increase trust and loyalty in the brand? Will it enhance the customer experience? Are they going to even be ready to buy this kind of service?

It’s important to ask the proper questions, to stress-test your assumptions and choose whether they’re valid.

From this point, you will find three options: to abandon the item or feature, to pivot it (re-cast it something slightly different and test again), in order to continue with further incremental investments and cycles of user feedback.

Rapid fact is ‘not necessarily’. In exactly what your small business does, we need to draw a pointy among two approaches:

Future-Proofing… fast-following your competitors by looking into making sure you’re aware and ready for industry change, positioned to quickly adjust to new demands, but not actually being the catalyst for change.
digital transformation -Surfing… even as introduced inside our last blog, this really is about actively utilizing the battle to your competition and inventing entirely new approaches to solve customer pain points.

Interestingly, in McKinsey’s ‘The case for digital reinvention’ report, the analyst firm showed that fast-followers (future-proofers”) saw an average 5.3% revenue uplift as compared to the competition. The actual disruptors (“future surfers”), however, enjoyed a 12.3% revenue improvement.

Nevertheless the real goal is to merge both strategies into your organisation, using each one where it can make the most sense. As an example, you could apply future-surfing to your core areas of differentiation, and future-proofing for those more commoditised locations where you’re not planning to distinguish yourself. Adopting both strategies, and executing them well, `could generate revenue uplifts up to 18.6%, in accordance with McKinsey.

More info about disrupt the industry you can check this resource.