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Three Ways to Face Down Disruption

Screen Shot 2015-10-13 at 2.50.28 PMHave you heard the joke about the disrupted barber? He was happily running a one-chair barbershop for years when a discount haircutter opened across the street. Customers deserted him. Business plummeted. The man grew desperate. Till one day he fought back: he created a sign and put it out front: “We fix $9 haircuts.” Business returned.

As I travel this fall listening to the challenges business leaders face, disruption tops the list. While disruption has always been an issue – recall the buggy whip makers who failed to adapt to the horseless carriage — what is strikingly different today are the mushrooming sources of industry turmoil, and the ever-shorter window leaders have to mount a response.

Kodak had 16 years to fend off digital disruption, and failed. Blackberry had only four. “The first thing [Blackberry co-founder] Mike Lazaridis said when he saw the iPhone was that this will never work, the network can’t sustain it, it has rapid battery drain and a lousy keyboard,” notes the book Losing the Signal: the Untold Story Behind the Extraordinary Rise and Spectacular Fall of Blackberry. While they were impressed with what Apple had created, Blackberry’s leaders didn’t give any additional thought to the iPhone for months, delaying their response.

As disruptive forces press down upon almost every business and industry sector, we’ve all got to objectively assess the new playing field, and use creativity to go on offense.

New Yorker writer Jill Lapore’s well-publicized takedown of Clayton Christensen’s Theory of Disruption misses the point. Fifteen years ago, the Harvard professor pointed out how low-cost upstarts like steel producer Nucor, Southwest Airlines and others disrupted existing industry players with stripped down, “good enough” products and services, to upend markets. Lapore challenged the theory by questioning whether certain incumbents that Christensen wrote about were really overtaken after all. Both miss the larger point. Today, disruption is a broadly-inflicted phenomenon whose origins range from regulatory, technological, social, geopolitical and demographic. Whatever causes the malady, its only commonality is that it is often fatal to businesses that don’t respond boldly. To wit:

  • The iPhone disrupted Nokia and Blackberry, not with a stripped down, lower-cost product, but from the high end with exciting style and functionality. Uber and Lyft disrupted the taxi industry, not by offering a lower price, but by introducing “surge pricing.”
  • A regulatory disruption has hobbled hundreds of small banks in the USA, as they struggle to cope with a complex new financial restrictions (Dodd Frank) passed by Congress.
  • The cemetery and funeral industries are undergoing a lifestyle disruption. As cremation gains favor fewer people buy burial plots, and fewer people opt for expensive caskets, and expensive funerals. The golf industry has been disrupted as millions of golfers have given up the game, citing “lack of time” as their key reason. And so it goes.

Fending Off Disruption

Here are several ways to respond to disruptions that may be looming in your industry:

  1. Realize denial is the enemy. Faced with the need to change our business model or prove that adverse conditions are temporary, most of us get busy on the proof. As someone who studies industry disruption, I can tell you denial is the most common reaction. “Let’s ignore this bit of reversal, and maybe it will go away. But it’s the worst thing you can do. Place the disruption at the top of your strategic priorities list and dig in to its causes and cures.
  2. Walk in the customer’s shoes. If you’re experiencing a disruption it could mean that it’s time to do a reset of your understanding of what’s producing value for your customer now. Several years ago, I first realized how serious a threat Uber was to the taxi industry when I began asking cabbies about it. Cabbies in Orlando, Florida, a convention city I often visit, employed by Mears Transportation, told me that their employer responded to Uber by raising their fees and lowering their earnings. Uber drivers told me they were happy to be free to work as much or as little as they wished, and they were satisfied with their earnings as well. Not hard to figure out which business model had momentum in that case. If your industry is experiencing disruption, realize that what customers are doing is reassessing your value proposition versus new ways of solving their problem. By empathizing with customers, you’ll be able to understand the trajectory of the threat. And intense customer listening may help you spot innovative ways to respond.
  3. Work on engaging the opportunity mindset. In periods of uncertainty, the natural tendency is to get caught up in the internal affairs of your company. Getting out in the world, and in your market, is essential. Make time to attend association meetings and other conferences, network with people and pick their brains, study the lessons of history, and seek to develop a point of view about where things will be three to five years from now. Ask yourself at the end of each day: did I manage the past today, or did I manage the future? As the great German writer Johann Goethe once said, “Be bold and mighty forces will come to your aid.”
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