Why Disruption Is Coming for Your Industry -- And How to Embrace It
Entrepreneur's New Year’s Guide
The rate of disruption is escalating across every industry, thanks to an increase in computing power, technology adoption and information sharing. These global shifts have made markets more efficient, given companies access to a broader pool of talent and resources and expanded competition to a global scale. The resulting changes and pressures are challenging virtually all companies, from startups to established enterprises.
Leaders know change is coming, but feel unprepared.
Disruption is not just a matter of technology-first companies uprooting legacy competitors. Established players that adopt technology efficiently are also shaking up industries and gaining market share. In the face of rapid change, many companies don't feel that they are ready for the future. According to a recent Accenture report, "while 93 percent of executives ... say they know their industry will be disrupted at some point in the next five years, only 20 percent feel they're highly prepared to address" that threat.
This lack of confidence is rooted in two major misconceptions: a) disruption happens by chance, rather than resulting from predictable forces, and b) the only possibility is a winner-take-all situation. Typically, neither of these scenarios is the reality. Disruption can be positive for an industry, forcing legacy players to inject a new level of innovation and continue to evolve, while startups bring new ideas to the table. And when larger companies partner with smaller companies, they can generate new ways of thinking that benefit their customers and the industry as a whole.
Why you should embrace disruption
In some cases, a new technology-driven business model can completely disrupt incumbents (think Blockbuster in the face of streaming video services). But, it doesn't have to be that way. Change is always scary, but companies that efficiently adopt new technologies can survive and thrive amid disruption and emerge as industry leaders. The threat of competition provides an opportunity for legacy companies to become more innovative, which ultimately serves consumers and strengthens the playing field.
Companies that embrace disruption know the importance of investing in transformative technologies like artificial intelligence, mobile and data management. But, even organizations that grasp the benefits of these technologies can have trouble adopting them. Selecting the right tools and integrating them into existing infrastructure and processes can be difficult. Navigating the learning curve for employees is another challenge. Setting aside the resources to fund major investments in technology can be tough, especially in low-margin industries. Finally, as much as they may want to, it's hard for companies to change existing business models and work cultures overnight.
To overcome these challenges, companies should have a business process in place to identify vulnerabilities and the emerging business models and technologies that can mitigate them. Instead of starting with technology solutions, companies should work backwards by asking, "What's our biggest challenge, and which tool would address it?" It's not enough to stop there: Companies then need to cultivate a culture of experimenting with and implementing the new models and tools. Any new technology should move the business from siloed, manual workflows toward automation and connectivity. Look for an integrated solution that can unify data management and bridge teams across the company, rather than combining multiple point solutions that are hard to stitch together.
How established players have embraced disruption
Examples of companies that have thrived amid industry change are everywhere. A quintessential disruptor is Amazon, the ecommerce giant that started out as an online bookseller and became the world's largest online retailer. Best Buy was challenged by Amazon's rise, like many others. But, it has evolved by applying advanced technology through its entire supply chain. Sophisticated data wrangling and management have enabled the retailer to create a single view of the customer. In-store associates are armed with mobile devices that give them visibility into a customer's past purchasing behavior.
Best Buy has made ordering in-store, online or on mobile a seamless experience. Artificial intelligence tools learn from customers' preferences and past choices to make smart recommendations, driving personalized experiences. Partly thanks to these investments, the company's total revenues and ecommerce sales have grown significantly over the past two years.
From the rise of telemedicine to medical information websites, technology-driven competition has also challenged traditional players in the healthcare industry. While hospitals have often been slow to adopt new technologies because of heavy regulatory oversight, San Francisco's UCSF Medical Center is one example of an incumbent that has embraced change and thrived in the new healthcare landscape. The hospital was named one of the "Most Wired" in the country in 2017, for the third year in a row, by the College of Healthcare Information Management Executives.
That's because UCSF has fully invested in mobile, allowing patients to message medical providers securely and to request prescription renewals via apps on mobile devices. Patients can request virtual visits with physicians and behavioral health providers instead of having to show up in person. The hospital also maintains electronic health records and takes advantage of data and analytics to help doctors and nurses make better decisions and improve quality of care. By adopting transformative technologies that improve patients' experiences and help medical professionals provide better care, an institution with roots dating back more than a century has navigated the tumultuous waters of disruption.
Impending disruption is a reality that no company can ignore. Yet, established businesses that adopt key technologies thoughtfully and look to partner with emerging startups can stay relevant and thrive. Initially, technology adoption is an opportunity to innovate and gain a first-mover advantage. Eventually, it becomes a necessity.