Digital disruption is not new, and it’s been coming for all businesses — it has just been a matter of when and how big it was going to be. So how can you respond now that we are living in a post-disruption society? How can your business take advantage of advances without losing your human touch?
The Story So Far
Book pages that used to be turned by hand are now swiped, and cash that used to live in a physical wallet now gets transacted via a digital wallet. Music encoded on vinyl can now be accessed — as opposed to owned — via digital streaming. Many businesses in these industries have seen their profits decimated as they digitized their analog products and ended up with commodities customers weren’t willing to pay as much for.
Digital disruption has been coming not just for products, but also for services. This is because the internet is a digital disintermediator, giving consumers the power to shine a torch on the entire supply and value chain and question whether they could get a better price somewhere else, or whether a particular link in the chain is even necessary. We’ve seen intermediators such as travel agents and financial advisers cut out, as people move online to organize the service themselves or seek answers from their digital communities. Think of the move from human advisers to robo-advisers.
The internet has also democratized information, making it much more symmetrical. From knowing how the eggs at Hungry Jack’s are sourced to finding out where the wool in your Icebreaker sweater comes from and how the producers work with the company, consumers are more empowered to make sure production values and brand stories align with their values.
Why Businesses Fail
The pace of change and disruption is exponential. According to 2015 figures from French business consulting firm Cap Gemini, 52 percent of Fortune 500 businesses have gone bankrupt, been acquired or ceased to exist since 2000. These companies failed to do three things: accurately spot the oncoming trends; get a feel for the underlying currents of technological and customer behavior driving the disruption; and position themselves in a way that took advantage of the tidal shift.
How You Can Respond
How can you make sure your company is still around in 10 years? Use these five questions to start thinking about how your business can respond to disruption:
- How is digitization and information symmetry affecting your industry right now? What trends are you ignoring, and what fundamental shifts are you doing nothing about?
- What challenges and/or opportunities does digital disruption pose for you and your business? Write these down in two columns: one for the challenge and one for the opportunity.
- What is the underlying meaning of this disruption? Think about key drivers — convenience, speed, empowered consumers or globalization. How can you tap into the underlying drivers?
- What key uncertainties does this create for the future viability of your career or your business? Think about your top five uncertainties — commoditization, margin squeeze or sustainability.
- What does this mean for your future positioning in the minds of tomorrow’s customers? Do you want to position your business as offering a premium service, or would you rather be fast, cheap, high-quality or green? For which key target segment? Conservative investors, wealthy parents, sporty millennials? Research five keywords that appeal to your new or bread-and-butter buyer persona, and focus your digital marketing on them.
A Pre-mortem Is Always BetterThan a Post-mortem
Don’t wait until your business is dead before you try to work out the trends you missed or opportunities you didn’t pursue. Instead, spot those trends and opportunities now, and start taking advantage of them.
From the March-April 2019 edition of The NAFCU Journal magazine.
Want to receive The NAFCU Journal in your inbox? Update your email preferences.