Big Bang Disruption: The good, the bad and the ugly
This week, the article being explored in class is ‘Big Bang Disruption’, published in the March 2013 edition of the Harvard Business Review, and written by Larry Downes and Paul Nunes.
They contend that big bang disruption is the blind spot in Christensen’s Disruptive Innovation model and that it doesn’t create dilemmas for innovators, it trigger disasters, and most importantly is that is unplanned, unforeseen and unintentional. They add that most often, big bang disruption comes from competitors who were never traditional competitors, either in different industries or with completely different business models. They use the example of Apple and Google who disrupted the GPS industry (TomTom, Garmin) with their free map apps — they were a different competitor from a different industry, and didn’t target the low-end foothold.
So — what exactly does big bag disruption look like and what makes it different than regular disruptive innovation? First of all, it differs in magnitude, and it also differs in kind. Big bang disruption can be characterized as being cheaper, more inventive, better integrated, exploiting customer’s access to information, being rapidly and widely adopted and generally is technology-driven. And what is more, generally it isn’t your usual customers who disrupt you and those atypical competitors aren’t intentionally trying to lure your customers, which makes it much more unpredictable.
There are 3 defining characteristics that Nunes and Downes list as being critical to big bang disruption:
1. Unencumbered development — this means that the product development was unintentional — for instance many big bang disruptions come out of hackathons as rapid-fire, low-cost experiments — and and whatever ends up working works, and the current incumbents are just the collateral damage.
2. Unconstrained growth — this refers to the ability to continue growing and is characterized traditional 5-segment customer profile that has been cut down to 2 segments — trial users and everyone else. The product lifecycle has also been simplified to development, deployment, and replacement.
3. Undisciplined strategy — this refers to the fact that companies now align with all 3 value disciplines (1) Low cost 2) constant innovation and 3) customized offerings) instead of traditionally only aligning with one and strategy is overall less disciplined and just goes with the flow of what is working.
In order for firms to try to survive this, Downes and Nunes suggest a few different strategic survival principles that current incumbents should try to adopt:
1. See it coming — find internal/external users who can predict insight into the market and these people are often visionaries are buried within organizations, so don’t discount them
2. Slow the disruptive innovation process — lower your prices to compete with the disruption to retain market share until you can improve your product, and also leverage your assets in different markets.
3. Get close to the exits and be ready for a quick escape — many companies are tied-in and restricted by red tape or significant investment in certain industries — so try to be in a situation where you can exit quickly
4. Diversify to protect yourself — hedge your bets.
While these are all great suggestions, they tend to be a bit unrealistic and idealistic. The overall framework they suggest is logical and makes sense, but where they lost me was at the suggestions on how to survive this — and in my mind, you don’t know what you don’t know. Because of this, there is no guaranteed way to truly survive or predcit big bang disruption, which is by nature unpredictable. All incumbents can really do is adapt and continue to innovate to “out-disrupt” their competitors.
Food for thought…