Source: Taylor Callery

Disruptive Innovation: What does it mean for your Supply Chain?

Disruptive Innovation.

The epic love/hate counterpart of businesses and supply chains globally.

With new-disruptive innovation and technology usually comes great gain, economically, but also non-monetary gain. Paired with that gain usually comes great hardships and challenges for businesses.

But,

“You can’t win a marathon without putting some bandaids on your nipples.” (Horrible Bosses).

Disruptive innovation and technology challenges the commonality and inter-workings of business by creating entirely new methods for conducting business, at its very core.

“Disruptive innovation describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors” (www.claytonchristensen.com/key-concepts/).
Source: HBR

This kind of core-shaking innovation not only disrupts the current business landscapes, in which it penetrates, but it can literally flip market models upside down; crushing competitive/current innovation in its path.

Current businesses and supply chains strive to fill their four walls and beyond with agile innovation, and employees who strive to find new methods by creating disruptive technology.

Testing the boundaries of the norm has become the new norm.

So,

Are you ready to be disruptive?

Disrupting Supply Chains

After scouring a fewDisruptive Technologies in Supply Chains 2017” lists I deciphered that there are 4 disruptive innovations, which will become apparent in 2017.

1. Automated Vehicles/Machinery

2. Artificial Intelligence (AI)

3. Drones

4. Internet of Things

Each of these innovations has gained exposure in the past year, and some of them for some time before 2016.

Then again, a few years ago these innovations were just theoretical. They are today reality and taking the market by storm.

Disruptive makes the difference.

Adding these kinds of technologies and innovations to globally functioning brands, in many cases, can show a substantial economic impact. The implications of this economic impact can typically be seen within the businesses, which adopt the disruptive technology, but also within the marketplace at large.

In a study by Mckinsey in 2013, they estimated that by year 2025, the IoT (alone), “offers the potential to drive productivity across $36 trillion in operating costs of key affected industries.”

The long-term implications for the adoption of disruptive innovations can create massive returns in business worldwide. At the same time, some of these innovations hold the potential to improve society at large.

This study projects that the use of autonomous or nearly autonomous vehicles “could save 30,000–150,000 lives from potentially fatal traffic accidents”.

What’s the catch?

Just like the adoption, acceptance, and implementation of any innovation, or technology into one’s supply chain, implementing disruptive innovation comes at a cost.

Monetarily, companies must be willing to put money into: research, self-driven improvements to meet specific demands, passing of regulations to meet international standards, hiring of new experts to implement the technology, beta testing and much more.

That’s the thing about disruptive innovation.

It’s mysterious, and has the potential to show great profitability and efficiency in its applied area, but its potential for returns holds the same unpredictability, as it’s potential for complications.

Source: marketoonist.com

Some of the main costs, when adopting disruptive innovation, would come in non-monetary forms.

Such as: education of how to use disruptive technology, the potential for technology replacing human workers, the shift of business strategizing, right down the company culture; things will be questioned at ever twist and turn of innovation adoption.

Who ever said this would be easy?

Spend to stay with the Trend

Though disruptive technology and innovation seems frightening in certain aspects, it is going to take a stronghold in the future global marketplace.

Do you want to be a wallflower or in the middle of the dance floor?

Adopting the current trends is necessary in the current business landscape. Competitiveness to stay innovative and futuristic is at an all time high.

“The fact that disruption can take time helps to explain why incumbents frequently overlook disrupters” (Harvard Business Review)

That’s what Blockbuster thought about a little company named Netflix in 1997. Blockbuster saw Netflix as a minuscule competitor and Netflix saw an opportunity to integrate video streaming (at that time a disruptive technology), which subsequently led to Blockbuster’s demise (hbr.org).

Ignoring the trends, or feeling comfortable, because ‘there are no competitors doing what we’re doing today’ is exactly what the Netflix’es of the world want you to think. While you’re getting comfortable, they are innovating.

Innovate from within.

To highlight a previous post from Kodiak Community about SEI, one of the best ways to stay in on the ground floor, and gain knowledge of innovative products and services that could affect your supply chain, is to listen to your supply chain.

Talk to your suppliers; create a mutual understanding and appreciation for innovation and growth. This will not only make it easier to adopt and implement disruptive technologies in your supply chain, but it will instill a culture of innovative thinking internally.

Until next week.


This publication is brought to you by author Sam Jenks, but also on part by Kodiak Rating — A Supplier Relationship Management SaaS functioning out of Stockholm, Sweden. Kodiak Community intends to challenge traditional business practices with innovative thinking and creation.