SA Law’s experts along with Helen Webb, provide an explanation of how digital disruption can apply to organisations of all shapes and sizes, and how you can incorporate digital disruption into your business strategy.
Digital strategist Helen Webb from Webb Strategy provided her unique perspective on the subject of digital disruption at our recent think tank event and what in particular SMEs can do to think, act and plan ‘disruptively’.
What is digital disruption?
Disruption is the new word for radical change through innovation. Therefore, digital disruption can be defined as the innovative use of technology to transform product and service delivery, and it’s become a fitting way to describe the emergence of sector-changing business models such as Airbnb, Amazon, eBay, Deliveroo, Facebook, Netflix, Spotify, Uber and many more.You can read more about the 7 key digital disruptors here.
Technology has always had a disruptive effect on commercial markets, and we tend to attribute the first major technological disruption to the introduction of steam in the late 1700s. If that was the first industrial revolution, then many see us at the start of a fourth industrial revolution based around AI and the greatly increased functionality of mobile devices. However, the timeframe between these step-change evolutions is getting shorter and shorter, and our modern era has generated many new factors to consider. Most notably, modern technology has facilitated direct access with customers, bypassing many traditional ‘gatekeeper’ businesses. As former Accenture CEO Pierre Nanterme pointed out, “new digital business models are the principal reason why just over half of the names of companies on the Fortune 500 have disappeared since the year 2000.”
Should I be thinking disruptively?
The entrepreneurial dream is to think of something so innovative that the entire sector reshapes around you. Considered more practically, digital disruption is looking for ways that technology can help you serve customers better. Approached holistically, it’s also a mindset that can reduce costs and improve the way your business operates, from internal processes to the supply chain.
Organisations also need to bear in mind that customers are getting a taste for the benefits of technology, and can even start to question business models that don’t appear to have moved with the times. In other words, more and more customers are actively looking for disruptive ideas that step-change their lives. Forward-thinking organisations are seeking new ways to satisfy these appetites, and not just in technology-orientated sectors such as IT and telecoms. So, if you’re not actively changing your business model, bear in mind that a competitor might be. Furthermore, it might not be a traditional competitor who has an eye on your sector.
Therefore, the short answer is yes – it pays to think disruptively, yet practically. And the best-case scenario is to become an organisation that is perpetually at the beta stage of testing the next big evolution of its offering.
I have a disruptive idea, so what next?
Disruption brings many opportunities, but it also puts you in the firing line for some risks, both internal and external.
Disruptive ideas require development, which can impact your core business without a careful approach to resourcing. Larger ideas will require more significant resources, and may even require third-party funding or partnerships with other organisations. If you need to bring finance and partners in, take time to set the arrangements in stone as early as possible. Even the closest business partnership can sour if one party believes they are being unfairly cut out of the rewards, particularly if you find yourself with a runaway success.
Disruption can also impact your business structure and operations, from your need for premises and staff, to the way you use information. All of this needs to be planned and managed. For example, if your disruptive model is going to increase the amount of personal data that customers share with you, then you need to fulfil the obligations of the newly updated Data Protection Act, which incorporated the General Data Protection Regulation in May 2018, and greatly increased the fine for non-compliance.
External issues can also be wide-ranging, with perhaps plagiarism being the most serious. There’s nothing more disheartening than launching a potentially disruptive product, only to find that a major player notices and tries to achieve it quicker and better with the larger amount of capital they can field. A stringent approach to protecting your intellectual property plays a big role in preventing this.
The other external risk is competitors and commentators who don’t like what you’re doing. Change can cause downturns in other businesses, generate layoffs and even change communities – all of which generates anger. For example, some countries are taking a legal stand against disrupters such as Airbnb. Taxi drivers in many cities are protesting about the arrival of Uber. Think about how the market will react to your idea, but bear in mind the impacts may be wider reaching.
