Preparing for disruptive competitors with design
Disruptive services are breaking through worldwide in an ever accelerating pace. Old markets are being threatened by start-ups with large fundings that gives them unexpected power.
The start-ups are small, driven and agile. Using the latest technology to their advantage and focusing primary on the customer experience and true incentives that creates true needs. These start-up entrepreneurs creates new economical structures and business models, nearly impossible to compete with for the established companies that are fighting hard to stay relevant with old products, services and business models.
How can the established companies survive the new competitors?
To be honest, most won’t. Looking back, the result of this quick development can be seen in the turnover of the Fortune 500 list:
- 70% of the companies have disappeared since 1990.
- 52% of the companies have disappeared since 2000.
Some companies survive. By being ready to change their culture, business model and adapt to the new world around them, focusing on delivering new values based on human needs. Many of these have been focusing on using the knowledge they already have in different areas and ideating on those. One great example is 3M (Minnesota Mining and Manufacturing) today know for post-its and tape.
The hardest part is to realize that when the company is doing as best, is usually when it’s about to die. Take a look at cash-handeling for example. There is only a few companies left in Sweden working in this field, and they are doing great. But I think we all can agree on the fact that we won’t use printed paper and stamped out metal in order to pay much longer. The competitors are disappearing, and the profits for those left are increasing. For now.
Preparing for disruption in your business with design
Basically it is a combination of thinking outside your “box”, but working with the knowledge within it.
- First, you have to take a look at the development in your business field. Scenario planning is a great way of doing this. It is the process of systematically analyze and portray different outcomes of an uncertain future. Based upon changes in the world, such as technology, politics, economy, socially, environmentally, legally etc, Scenario Planning aims to develop a set of different scenario strategies in order to be a step ahead.
- Second, you might have to develop a new business model and a great service. Service design is a great way of doing this. The purpose of service design methodologies is to establish best practices for designing services according to both the needs of customers and the competencies and capabilities of service providers. If a successful method of service design is employed, the service will be user-friendly and relevant to the customers, while being sustainable and competitive for the service provider.
- Third, you have to create a great experience of using the service.
User Experience Design is a great way of doing this. User experience design is the process of enhancing user satisfaction by improving the usability, accessibility, and pleasure provided in the interaction between the user and the product. User experience design encompasses traditional human–computer interaction design, and extends it by addressing all aspects of a product or service as perceived by users.
During this whole process it is vital to make sure to involve competence from the entire company, working across silos and hierarchy, putting the internal politics aside, realizing that customer involvement is crucial and that it is vital to invest for the future.
If your company can’t change all that needs to be changed, you still have a chance by creating a new subsidiary company. A start-up owned, and invested in, by your current company. However, it’s vital that this new company have the freedom to do what ever necessary, without short-term profit goals from stockholders or stakeholders.
This means even stealing the customers from your old company.
Quick-fixes can be great, but it won’t make you survive in the long term. Adapt to the future now, what ever it costs.
This blogpost is based on a talk called “IoT, The Next Wave of Creative Destruction” by Erik Westerdahl, at “XDSthlm Meetup” on the 20th of May 2015 in Stockholm, Sweden.
//Erik Westerdahl, Senior Service Designer @ Daytona
