Incumbents approach to self-disruption

The popular belief that incumbents can’t disrupt themselves is a myth. It requires intent, vision, discipline, the right strategy and right resources, to drive the change and look inwards to disrupt themselves.

Introspection: Are you getting jolts of disruption from companies you never imagined would become your competition? If yes, it is a symptom of complacency within your organization.

Self-disruption is a journey with crazy ups and downs. It needs an altered DNA and mind-shift to thrive through this journey. To stay relevant, businesses must shift their orientation in the following ways…

From ‘Myopia’ to ‘Farsightedness’

Disruption is often engulfed within a lot of noise but is detectable. Companies need to gain sharper and privileged insights (as they are in a position to get more meaningful data to analyse), overcoming the myopia of this stage to spot the early signs. They must challenge their own growth strategy and view their business from a disruptor’s lens.

Companies have their inherent preconceived beliefs about their customer preferences, technological advancements, cost drivers, value customers, their competitions and differentiators. They often consider these factors as sacrosanct and impenetrable — until someone comes and challenges them. There is willful ignorance and overconfidence, which leads to the potential downfall.

From ‘Conformist’ to ‘Iconoclasts’ talent

Is your company losing your most valued talents to the competition? Are your costs of recruitment increasing even as your internal recommendations drop? Is the common topic of discussion in office about how long it takes to get things moving within the company? These are leading indicators that the company is getting into a complacent state.

We must learn to appreciate talents that are bold enough to challenge the stagnant stage of the company since such questions instigate healthy debates. These people can become the torchbearers when it comes to keeping an eye out for the competitive landscape.

Iconoclasts can not only see through the current business, but they can also see the bigger picture. If they are entrusted with authority and independence, they can work in silos to string together the best ideas and opportunities from the organisation.

From ‘Part of the core’ to ‘New business unit’

Companies find it extremely difficult to adopt new business models as there is always the danger of upsetting their existing customer expectations. It is when a low-end disrupter enters the market and slowly shifts the core customer base from the one-time established leader, that businesses wake. By that time, however, it is too late to respond.

For incumbents who are willing and able to take on the challenge, building a brand new business model can be the best way to ensure maximum control and least cost in key strategic markets.

The best way is to encourage and facilitate ‘intrapreneurship’ from within the organisation by giving the new leaders support, resources and independence to operate.

From ‘Laggard’ to ‘Accelerated’

Reed Hastings, CEO of Netflix, said in an interview, “Companies rarely die from moving too fast, and they frequently die from moving too slowly.”

The ability to identify the threat at an early stage and respond boldly before it’s too late requires foresight. Everyone can be a great strategist in hindsight.

Companies need to embark on the transformational journey as soon as they sense the threat to be a ‘THREATCON ALPHA’. Here, however, the force that must be applied is that of ‘THREATCON DELTA’, which is, harnessing the complete power of iconoclasts with a new vision and putting together a winning team of vendors, associates and partners at this stage.

From ‘Existing profit pool’ to ‘New profit formulas’

Incumbents usually sit pretty on a fixed target segment giving them their regular growth and profits. After all, the fear of rippling the steady stream is the topmost factor for resisting change.

Now, once the incumbents set up the new sub-business unit and allow its protagonists to operate independently — letting them cannibalize the products and services required for quick growth — new profit formulas start to emerge. These profit formulas might not be as sizable as the core business and therefore, need a different lens to be valued through.

In most likelihood, the new business unit would be dealing with the problems of new markets with originally non-consuming customer base. Consequently, the volume might be higher than the value.

From ‘Deliberate’ to ‘Emergent strategy’

Companies have this inherent need to seek validation and rigorous data analysis on market growth, competition strength, its weaknesses and technology trajectories. They are carefully crafted strategies, typically implemented top-down. Internal alignment of these deliberated strategies becomes so critical that objecting or challenging them is seen as an offence from the senior management.

The emergent strategies, on the other hand, are the spontaneous and day-to-day prioritisation and investment decisions made by people on-ground who interact with actual customers on a regular basis and observe their needs, existing behaviours and behaviour-shifts closely. They have the pulse of the market and believe that the continuously changing competitive landscape needs strategy updates regularly till they come up with a winning tactic.