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Disruptive innovation: How businesses rise and fall

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One of the best advices I have ever gotten is, “Eizu, no one is loyal to you, but their needs that has to do with you”. With this, I never let a win get to my head and a loss to my heart. I have seen empires rise and fall. It starts off when we grow too big to think small and in details to the detriment of our stakeholders. It’s called neglect.  From politics to relationship to business, we see this every time. It comes from strategy without tactics. And like the Art of War puts it “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat”.  Bear that in mind as you build, as you grow and scale, ensure you stay relevant by always tactically putting the customer first.

Every customer gets edgier, lazier and more price conscious with time. The antidote will be convenience and cost saving for him.  Staying relevant means being disruptively innovative. There are different types of innovations, but there is one that cuts cycle time and cost for the customer.  That’s what Prof Clayton of the Harvard Business School defines as Disruptive Innovation.

Disruptive Innovation is when a company (most times startups) produces and eventually masters the marketing of products that seems to be simpler, superior and more affordable than the prior products in the market place, thereby creating a new value network. It’s mostly by the new comers. At this point this underdogs takes a neglected market place that the incumbent leader isn’t interested in because its focus is to make better products at a better price for profit. While they are it, the underdog sneaks up and takes them out. Disruptive Innovation is a strategy game of the underdog.

Let’s take a look at these underdogs and how they took out brands:

Google Map: Took out compass, asking for directions and a need for maps.

Wikipedia: they took out Encyclopedias, libraries and even Encarta.

Apple/ITunes: it took out millions of CDs and Tapes from music.

Netflix: It’s taking out television and cable networks.

Evernote: is currently taking out jotters and your need to remember anything.

Google: it took out your ignorance, and any need for your local library.

Uber: currently taking out cabs in major cities.

YouTube: it is taking out TV.

Drop Box: it took out the need for an external hard drive

Instagram: it took out photo albums.

Space X: is helping human’s commercially escape out of earth.

In these examples, what we see is a lean underdog carrying out a successful coup in the market place.

Disruptive Innovation usually starts from lean underdogs who can build strong marketing concepts for new value market space. More African SMEs must learn about it and how to apply it. In a world where we all want to scale up fast, we are either ashamed of being small; we treat small business as if it’s a disease. It is not. It’s actually a good and stealth place to be. It’s the best position from which to disrupt the market as it requires speed which is something SMEs have but don’t know how to use best.

In comparison between a truck and sports car, checking out of a large mall versus buying from a neighborhood store, or in the biblical story of  David and Goliath, what we consistently see is how being a plus size can make you slow. And being small means you’re not always in a disadvantage. At least you have speed and can be more intimate and closer to the ground. Startups and SMEs are like this but tend to not realize how powerful that is.

For big businesses, it’s so easy to forget to look at what you do in the eyes of the customer or any other stakeholder at that. It’s a Golden Rule of life that business people forget, which makes them lose intimacy and value, and eventually the market!

In my years of studying innovation, I have come to the summary that what kills companies is widening the gap between corporate (executives) and the operational (client serving) level teams. And also when they move strategic decision making from customer facing departments to back ends, say the accounting department.  They make strategic decisions now dependent on ROI(return on investment) with higher IRR (Internal Rates of Returns) and NPVs (Net Present Values);that is when the concern is now mainly on Returns on Investments with higher Internal Rate of Returns and Net Present Values with shorter Pay Back Periods as against how truly users lives can be made easier, more exciting and better with their products. This keeps them distracted till a new company comes from the bottom. And then provides that more intimately and more affordable experience.

Disruptive Strategy isn’t only valid for businesses but our individual lives.  We complicate things for ourselves. We neglect the simpler yet more important things. For such I ask, what are we doing right now to make our lives better and easier in the coming years?

Personally, the  amount in profit we make today at the detriment of better capital budget equivalents in our lives; I mean variables like health, spirituality, mental/emotional state and family may not in any way equal that. Same way we watch our cost of sales, we need to watch our cost of success.  In any sphere, success is the greatest enemy of success. The same mistakes big organizations make, high achievers also make.  We are all on the verge of disruption.

Disruptive Innovation means recalibrating your scale based on your evolving market position, raising the bar and keeping the stakeholders in mind.  A few months ago, I discussed disruptive strategy with my mentor, Seyi Wright, a former bank MD. I was glad to be able to discuss some other works of Professor Clayton, the Harvard Professor who invented it. He felt it was complicated.  So he asked me, can you find two “2” simple keyword for disruptive strategy? And my answer was

  • Creative Destruction
  • Game Changing!

Just like what you and your business should do, it always starts with an underdog with limited or no resources, taking out the big guys who are awfully slow and too heavy to notice or pioneer change.

Life and business is dinner time; you’re either on the table or on the menu. To Eat or be eaten. It depends on your scale, perception and vision. In the words of the artist J. Cole, “if you aren’t aiming too high, then you’re aiming too low! “. I say if you’re not getting better, then you’re getting worse. In the words of James Cameron, “If you set your goals ridiculously high and it’s a failure, you will fall, but above everyone else’s success. Think disruptively, take over!

 

Eizu Uwaoma

 

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