Digital Disruption: How to Disrupt and avoid disruption

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

To give and deepen our discussion on digital disruption (see our last post on the notion of Future Surfing), let’s examine how you can leverage digital technologies and mind-sets to produce new company opportunities within highly complex environments.

We’re surviving 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 investing in longer product cycles and little technological change, you can be rational and measured making use of their investments. We now have time to construct comprehensive business cases, and run proof-of-concept and proof-of-value programmes, once we develop standardised services in fairly static markets. We can “prove” the work before we start.

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

In this complex environment, decision-makers want to use Invest to check.

Invest to check is a dynamic approach… Start with some well-founded assumptions, but don’t forget that however confident you may be, they are still only assumptions. Invest the littlest viable quantity of resources (financial, human capital, intellectual etc) in building real-world prototypes and services that can reliably test these assumptions. Here you’re trying to make variables “constant” (no less than for a while).

Let’s assume, for instance, that the customers i would love you to quote competitor prices when presenting quotes in their mind. Don’t immediately dismiss this as irrational or despite best-practice. Test the belief: develop a prototype experience and present it to 50 of your most loyal customers. Ask for their feedback… Is it as useful as they believed it would be? Will it increase trust and loyalty in the brand? Does it enhance the customer experience? Would they be also willing to purchase this type of service?

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

digital transformation from here, you will find three options: to abandon the item or feature, to pivot it (re-cast it something slightly various and test again), or continue further incremental investments and cycles of user feedback.

The short answer is ‘not necessarily’. In precisely what your small business does, we must draw a clear, crisp among two approaches:

Future-Proofing… fast-following your competitors start by making sure you’re aware and prepared for industry change, positioned to quickly adjust to new demands, however, not being the catalyst for change.
Future-Surfing… as we introduced in our last blog, this can be about actively taking the find it hard to your competition and inventing entirely new ways 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 the average 5.3% revenue uplift as compared to the competition. The true disruptors (“future surfers”), however, enjoyed a 12.3% revenue improvement.

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

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