Like a shark, disruption comes from below…
Why does disruption not get taken seriously until it's too late? Because it's cheap…
Why is disruption so hard to see coming? Yesterday, we saw how retailers have been killed off by the internet, even though they had a decade's warning of the problem that were coming. Harvard Business School professor Clay Christensen has some of the answers, as Matthew Ingram highlighted in a post yesterday on PaidContent:
A key part of Christensen’s theory is that the incumbent players in a particular industry routinely fail to make the necessary changes to the way they do things, even when they can see the disruption occurring all around them. In almost every case, they see the disruptors as not worthy of their attention because they are operating at the low end of the market, and either don’t see that as important or are too committed to their existing business models.
It seems to be a characteristic of big business that they assume that unless something is expensive, it's not important or noteworthy. Look at the string of expensive but clumsy enterprise IT offerings that have made workers' lives miseries for decades now. The particular discussion was in the context of the media business, which completely failed to take low-cost, web-only publishing operations seriously, because their form and structure didn't look like those of traditional media. The same could be said of retailers, who didn't take the online threat seriously until too late, persuading themselves that their biggest costs - sales staff and retail property - were advantages, not cost burdens, until it was far, far too late.
So is there hope for existing businesses in all this?
The key to managing that disruption, Christensen says, is to find those other value-added businesses or markets or functions — “jobs to be done,” as he calls them — that news or journalism consumers are looking for. One example, he suggests, might be taking in all of the information people are deluged by and telling them what is true and what isn’t
That's a great idea - but it doesn't really save any businesses from disruption. There's no inherent advantage to being a big business to do verification. You can look at small startups like Storyful to see that's the case.
The world has gone a little start-up crazy in recent years. Governments are encouraging them, the press writes about them with the fervour and respect once accorded only the biggest of businesses. In this context, you can see the reason why. If you can meet a need better than an existing business, and do it ore cheaply, even if it looks very different in the way you deliver it, then you're on to a winning combination. The big, old businesses have proved that there's money there - and if you keep lean and agile, you only have to grab a small part of that revenue from them before you can get profitable - and set your sights on the rest,
For big business, start-ups are their dragons, breathing cheap but deady fire.
Photo by Andrea Esuli on Flickr, and used under a Creative Commons licence