Digital Disruption: How you can Disrupt and avoid 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 relating to the idea of Future Surfing), let’s take a look at how to leverage digital technologies and mind-sets to produce start up business opportunities within highly complex environments.

We’re residing 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 that with longer product cycles and little technological change, one can be rational and measured with their investments. We have time to build comprehensive business cases, and run proof-of-concept and proof-of-value programmes, once we develop standardised products and services in fairly static markets. We are able to “prove” the work before we begin.

However in VUCA environments, where product cycles are short and technological change is fast, going for a traditional approach to decision-making actually turns into a liability – potentially costing time, money and lost opportunity. Variables replace constants as our decision-making factors.

On this complex environment, decision-makers want to use Invest to try.

Invest to Test is really a dynamic approach… Start with some well-founded assumptions, bear in mind that however confident you may be, they are still only assumptions. Invest the littlest 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” (a minimum of for some time).

Let’s assume, for example, that your customers would like you to quote competitor prices when presenting quotes to them. Don’t immediately dismiss this as irrational or contrary to best-practice. Test the belief: build a prototype experience and provide it to 50 of the most loyal customers. Request their feedback… Could it be as useful since they believed it would be? Will it increase trust and loyalty within the brand? Does it improve the customer experience? Are they going to even be willing to purchase such a service?

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

From this point, there are three options: to abandon the item or feature, to pivot it (re-cast it as being something slightly different and test again), or continue further incremental investments and cycles of user feedback.

Rapid response is ‘not necessarily’. In exactly what your company does, we need to draw a pointy distinction two approaches:

Future-Proofing… fast-following your competitors start by making sure you’re aware and prepared for industry change, positioned to quickly adapt to new demands, although not indeed being the catalyst for change.
Future-Surfing… even as introduced within our last blog, this can be about actively using the find it hard to the competition and inventing entirely new ways to solve customer pain points.

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

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

For details about business model disruption go to the best webpage.