You May Run From It, But Disruption Is Going to Occur All the Same -- Here's How to Embrace Change
Grow Your Business, Not Your Inbox
Elon Musk has a reputation for blazing trails. Whether it's electric cars, a cave rescue or space travel, the billionaire business mogul has no problem doing things his own way.
Education is no exception. Since 2014, Musk has operated Ad Astra, a nonprofit school at SpaceX headquarters. Students explore everything from AI to robotics without any set class structures or grades. They can even opt out of subjects they don't enjoy.
This sort of innovation is, sadly, absent from many areas of our education system. Education technology companies have transformed classroom experiences, but layers of bureaucracy have made it a challenge to explore truly new and innovative methods of teaching students. As is the case in most industries, it’s easier to rely on the way we’ve always done things than to try to reinvent the wheel.
When entrepreneurs observe this sort of static situation, they begin to dream up ways they might be able to disrupt a marketplace. A lack of innovation presents an incredible opportunity for individuals who are able to see things differently.
Entrepreneurs will find ways to disrupt every industry -- it’s simply a matter of time. The lingering question is whether organizations will embrace the evolution or fight tooth and nail to avoid change. Disruption might be an inevitability, but industries that stubbornly stick to the old way of doing things are only making the process more painful.
A recipe for creative destruction
As I often tell my students, all sectors of an economy are subject to creative destruction. New and better innovations naturally replace old and comparatively inefficient processes.
A decision to postpone necessary change until later can have serious consequences: It's like delaying a trip to the mechanic to check out a nagging issue with your car. When a whole marketplace remains static for a significant stretch of time, changes become even more unpleasant than usual. The longer an industry goes unaltered, the more it struggles to adapt to innovation.
The world is constantly changing and improving, which means any business that does not innovate will be outpaced by the rest of the economy. To ensure your company evolves with the times, consider the following tips:
1. Find inspiration in unlikely places.
Instead of fearing change, consider how cutting-edge technologies might help you gain an advantage over the competition. One of the best ways to do this is by looking at techniques used in completely different industries, then attempting to apply them to your own. These creative applications of existing tech can dramatically increase the value of your company’s offering -- particularly if you’re able to use them to reach new audiences or expand your service lines.
Why, then, do so many companies maintain their established ways of operating rather than paying attention to trends? Vijay Govindarajan, a professor of business at Dartmouth College, claims it boils down to investment fatigue. Leaders who have spent a great deal on their existing systems and equipment are reluctant to do it all over again when something new comes along.
These companies choose to rely on the things that made them successful in the first place, ignoring untapped potential because it feels foreign.
Some industries, such as health care, endeavor to avoid disruption by placing strict regulations on what and how providers can serve customers. Countless companies have tried to disrupt health care over the years and always encounter plenty of red tape. The latest attempt is a joint venture by Amazon, Berkshire Hathaway and JPMorgan Chase. Stay tuned: The disruption there may be big.
2. Stay ahead of technology trends.
It’s great to adapt to trends when everyone else has done it, but it can be far more effective to explore those advances long before your competition does. Consider a study by Deloitte that found that 90 percent of managers and executives surveyed said they expected their industries to be disrupted by technology -- though fewer than half said they were prepared for that change.
So, some advanced knowledge can make all the difference between sinking and swimming.
To help you keep tabs on new technologies hitting the marketplace, browse reports from reputable outlets such as Thoughtworks Technology Radar. You might also consider tracking the open-source community to see which projects are garnering a lot of attention. Software that is popular in these communities today could end up being a revolutionary tool for your company tomorrow. This isn’t to say you need to adopt this technology immediately, but it’s a good idea to be aware of what’s out there.
For an example of what happens to an industry that loses because it's ignored consumer demand and new technology, just look at the taxi industry. The taxi universe went largely unaltered for decades (aside from its tendency to keep raising rates). Then, Uber came along and flipped the situation on its head.
The change from ride-sharing has been a net positive for consumers, but the taxi industry hasn’t been as fortunate. A study by economists at the University of Oxford indicated that the income for salaried taxi drivers had decreased by 10 percent in cities where Uber was rolled out.
The Los Angeles Times reported that in Southern California, the total number of taxi trips there dropped by about 30 percent in the three years following the launches of Uber and Lyft. While taxis are still outperforming ride-hailing services in New York City, research from Morgan Stanley indicates a 9 percent drop in taxi use there from 2015 to 2016.
3. Lean into disruption as a positive force.
In all fairness, disruption is no fun for established businesses. Leaders who are able to view the shifting sands as a prompt to improve their organization and evolve with consumer demands, however, stand to gain financially.
Amazon Go, for example, is disrupting the grocery game. While it would be easy for food titans like Kroger, Safeway and Hy-Vee to stubbornly refuse to adapt, they can benefit from changing consumer demands. These companies are already investing in delivery services to appeal to consumers who no longer want to leave the comfort of their own homes to get food. Next, they might consider commanding an army of drones and driverless vehicles to deliver the next generation of groceries.
In short, stop fighting change. Pay attention to what's changing in your sector, think of ways you can potentially adjust your business model to keep pace and take steps that will help your company evolve rather than stagnate.
A protected industry is never truly protected from disruption -- its own “Uber-ification,” if you will. The process simply takes longer and is more painful when it eventually does happen, as taxi companies and their drivers know all too well. Once someone is able to offer a service that meets the same consumer demands while skirting protected regulations, businesses are forced to either adjust or be completely replaced.
As disruptors dream up and offer better alternatives, more established players will ultimately be forced to either reinvent themselves or go under. Has it been a while since a revolution has swept through your sector? Stay alert for change -- maybe make one yourself.