Digital Disruption: The best way to Disrupt and avoid disruption

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

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

We’re surviving in a so-called “VUCA world”: characterised by Volatility, Uncertainty, Complexity and Ambiguity. Across just about 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, it’s possible to be rational and measured using their investments. We have time to construct comprehensive business cases, and run proof-of-concept and proof-of-value programmes, once we develop standardised services and products in fairly static markets. We could “prove” the work before we begin.

However in VUCA environments, where product cycles are short and technological change is fast, having 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.

Within this complex environment, decision-makers need to use Invest to check.

Invest to Test can be a dynamic approach… Start with some well-founded assumptions, but remember that however confident you may be, they’re 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 looking to make variables “constant” (no less than for some time).

Let’s assume, as an example, your customers would love you to quote competitor prices when presenting quotes to them. Don’t immediately dismiss this as irrational or contrary to best-practice. Test the idea: build a prototype experience and give it to 50 of one’s most loyal customers. Require their feedback… Can it be as useful as they believed it would be? Can it increase trust and loyalty within the brand? Does it enhance the customer experience? Would they even be willing to purchase this kind of service?

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

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

The short fact is ‘not necessarily’. In precisely what your small business does, we have to draw a clear, crisp distinction between two approaches:

Future-Proofing… fast-following the competition by looking into making sure you’re aware and prepared for industry change, positioned to quickly conform to new demands, but not actually being the catalyst for change.
Future-Surfing… as we introduced inside our last blog, this is about actively using the battle to your competitors and inventing entirely new approaches 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 an average 5.3% revenue uplift as compared to the competition. The actual disruptors (“future surfers”), however, enjoyed a 12.3% revenue improvement.

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

To read more about business model disruption website: click for more info.